Contact: | FOR RELEASE: |
Tyler H. Rose | October 28, 2020 |
Executive Vice President | |
and Chief Financial Officer | |
(310) 481-8484 Or | |
Michelle Ngo | |
Senior Vice President | |
and Treasurer | |
(310) 481-8581 |
• | Collected 96% of contractual third quarter rent billings across all property types, including 98% from office and life science tenants. Excluding rent relief provided to certain tenants, collected 98% across all property types, including 98% from office and life science tenants |
◦ | The collection rate for October across all property types was 94%, including 97% from office and life science tenants, as of the date of this release. Excluding rent relief provided to certain tenants, collected 95% across all property types, including 97% from office and life science tenants |
• | Limited lease expiration exposure with an average of approximately 6.6% of total rentable square feet expiring per year through 2023 |
• | As of the date of this release, the company had approximately $1.4 billion of total liquidity comprised of approximately $685.0 million of cash and cash equivalents on hand and full availability under the company’s $750.0 million revolving credit facility |
• | In August, completed a $425.0 million public offering of 12-year senior unsecured green bonds at 2.500% due November 2032 |
• | In August, fully repaid the company’s $150.0 million unsecured term loan facility |
• | No material debt maturities until 2023, excluding the company’s revolving credit facility, which matures in the third quarter of 2022 |
• | Weighted average debt maturity of approximately seven and a half years |
• | $1.9 billion of projects under development |
◦ | 90% leased across office and life science space |
◦ | As of the date of this release, all in-process projects were under active construction |
◦ | Remaining spending to complete the projects of approximately $550.0 million, fully funded with cash on hand |
• | Net income available to common stockholders per share of $0.42 |
• | Funds from operations available to common stockholders and unitholders (“FFO”) per share of $0.99 |
◦ | Both net income available to common stockholders per share and FFO per share included the following: |
▪ | $0.02 charge against rental income due to tenant creditworthiness considerations as a result of the COVID-19 pandemic |
• | Revenues increased to $228.3 million, net of the $1.8 million charge against rental income noted above |
• | In August, announced an increase to the regular quarterly cash dividend to common stockholders by 3.1% to $0.500 per share; an annualized rate of $2.00 per share |
• | Stabilized portfolio was 92.2% occupied and 95.5% leased at September 30, 2020 |
• | Signed approximately 123,063 square feet of new or renewing leases |
◦ | GAAP and cash rents increased approximately 32.1% and 14.6%, respectively, from prior levels |
• | During the quarter, commenced GAAP revenue recognition on an additional 136,000 square feet or 48% of our 285,000 square foot One Paseo office project in the Del Mar submarket of San Diego |
◦ | As of September 30, 2020, recognizing GAAP revenue totaling 56% of the project |
• | In July, completed construction on 146 residential units, the final phase of the residential development at our One Paseo mixed-use project in the Del Mar submarket of San Diego. The residential development is 51% leased and in lease-up |
• | In July, transferred 9455 Towne Centre Drive, a 160,000 square foot development project located in the University Towne Center submarket of San Diego from the under construction phase to the tenant improvement phase. The project is 100% leased to a Fortune 50 publicly traded company |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues | $ | 228,314 | $ | 215,525 | $ | 669,065 | $ | 617,219 | |||||||
Net income available to common stockholders | $ | 49,028 | $ | 43,846 | $ | 108,463 | $ | 122,943 | |||||||
Weighted average common shares outstanding – basic | 115,226 | 104,841 | 112,406 | 102,253 | |||||||||||
Weighted average common shares outstanding – diluted | 115,668 | 105,360 | 112,876 | 102,872 | |||||||||||
Net income available to common stockholders per share – basic | $ | 0.42 | $ | 0.41 | $ | 0.95 | $ | 1.19 | |||||||
Net income available to common stockholders per share – diluted | $ | 0.42 | $ | 0.41 | $ | 0.95 | $ | 1.18 | |||||||
Funds From Operations (1)(2) | $ | 117,391 | $ | 109,243 | $ | 320,653 | $ | 308,960 | |||||||
Weighted average common shares/units outstanding – basic (3) | 118,306 | 107,981 | 115,529 | 105,400 | |||||||||||
Weighted average common shares/units outstanding – diluted (4) | 118,747 | 108,500 | 115,999 | 106,020 | |||||||||||
Funds From Operations per common share/unit – basic (2) | $ | 0.99 | $ | 1.01 | $ | 2.78 | $ | 2.93 | |||||||
Funds From Operations per common share/unit – diluted (2) | $ | 0.99 | $ | 1.01 | $ | 2.76 | $ | 2.91 | |||||||
Common shares outstanding at end of period | 115,247 | 106,012 | |||||||||||||
Common partnership units outstanding at end of period | 1,932 | 2,023 | |||||||||||||
Total common shares and units outstanding at end of period | 117,179 | 108,035 | |||||||||||||
September 30, 2020 | September 30, 2019 | ||||||||||||||
Stabilized office portfolio occupancy rates: (5) | |||||||||||||||
Greater Los Angeles | 90.8 | % | 95.1 | % | |||||||||||
San Diego County | 86.7 | % | 90.4 | % | |||||||||||
San Francisco Bay Area | 94.2 | % | 89.1 | % | |||||||||||
Greater Seattle | 94.7 | % | 97.2 | % | |||||||||||
Weighted average total | 92.2 | % | 92.1 | % | |||||||||||
Total square feet of stabilized office properties owned at end of period: (5) | |||||||||||||||
Greater Los Angeles | 4,031 | 3,872 | |||||||||||||
San Diego County | 2,147 | 2,048 | |||||||||||||
San Francisco Bay Area | 6,350 | 5,600 | |||||||||||||
Greater Seattle | 1,802 | 1,802 | |||||||||||||
Total | 14,330 | 13,322 |
(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 September 30, 2019 include the office properties that were sold subsequent to September 30, 2019. |
September 30, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
REAL ESTATE ASSETS: | |||||||
Land and improvements | $ | 1,612,224 | $ | 1,466,166 | |||
Buildings and improvements | 6,535,637 | 5,866,477 | |||||
Undeveloped land and construction in progress | 1,938,923 | 2,296,130 | |||||
Total real estate assets held for investment | 10,086,784 | 9,628,773 | |||||
Accumulated depreciation and amortization | (1,744,325 | ) | (1,561,361 | ) | |||
Total real estate assets held for investment, net | 8,342,459 | 8,067,412 | |||||
Cash and cash equivalents | 849,009 | 60,044 | |||||
Restricted cash | 16,300 | 16,300 | |||||
Marketable securities | 25,073 | 27,098 | |||||
Current receivables, net | 16,083 | 26,489 | |||||
Deferred rent receivables, net | 375,939 | 337,937 | |||||
Deferred leasing costs and acquisition-related intangible assets, net | 208,306 | 212,805 | |||||
Right of use ground lease assets | 95,733 | 96,348 | |||||
Prepaid expenses and other assets, net | 55,706 | 55,661 | |||||
TOTAL ASSETS | $ | 9,984,608 | $ | 8,900,094 | |||
LIABILITIES AND EQUITY | |||||||
LIABILITIES: | |||||||
Secured debt, net | $ | 254,854 | $ | 258,593 | |||
Unsecured debt, net | 3,668,976 | 3,049,185 | |||||
Unsecured line of credit | — | 245,000 | |||||
Accounts payable, accrued expenses and other liabilities | 458,421 | 418,848 | |||||
Ground lease liabilities | 97,936 | 98,400 | |||||
Accrued dividends and distributions | 59,416 | 53,219 | |||||
Deferred revenue and acquisition-related intangible liabilities, net | 131,558 | 139,488 | |||||
Rents received in advance and tenant security deposits | 61,483 | 66,503 | |||||
Total liabilities | 4,732,644 | 4,329,236 | |||||
EQUITY: | |||||||
Stockholders’ Equity | |||||||
Common stock | 1,152 | 1,060 | |||||
Additional paid-in capital | 5,089,926 | 4,350,917 | |||||
Distributions in excess of earnings | (122,936 | ) | (58,467 | ) | |||
Total stockholders’ equity | 4,968,142 | 4,293,510 | |||||
Noncontrolling Interests | |||||||
Common units of the Operating Partnership | 83,226 | 81,917 | |||||
Noncontrolling interests in consolidated property partnerships | 200,596 | 195,431 | |||||
Total noncontrolling interests | 283,822 | 277,348 | |||||
Total equity | 5,251,964 | 4,570,858 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 9,984,608 | $ | 8,900,094 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
REVENUES | |||||||||||||||
Rental income | $ | 227,122 | $ | 212,321 | $ | 664,111 | $ | 609,332 | |||||||
Other property income | 1,192 | 3,204 | 4,954 | 7,887 | |||||||||||
Total revenues | 228,314 | 215,525 | 669,065 | 617,219 | |||||||||||
EXPENSES | |||||||||||||||
Property expenses | 39,236 | 41,308 | 116,048 | 117,993 | |||||||||||
Real estate taxes | 23,868 | 19,998 | 67,924 | 56,563 | |||||||||||
Ground leases | 2,119 | 2,049 | 6,766 | 6,135 | |||||||||||
General and administrative expenses | 18,572 | 22,576 | 76,179 | 65,774 | |||||||||||
Leasing costs | 986 | 1,192 | 3,772 | 5,599 | |||||||||||
Depreciation and amortization | 71,863 | 69,230 | 226,318 | 203,617 | |||||||||||
Total expenses | 156,644 | 156,353 | 497,007 | 455,681 | |||||||||||
OTHER (EXPENSES) INCOME | |||||||||||||||
Interest income and other net investment gain | 1,869 | 761 | 1,579 | 3,205 | |||||||||||
Interest expense | (19,468 | ) | (11,635 | ) | (49,796 | ) | (34,605 | ) | |||||||
Gains on sales of depreciable operating properties | — | — | — | 7,169 | |||||||||||
Total other (expenses) income | (17,599 | ) | (10,874 | ) | (48,217 | ) | (24,231 | ) | |||||||
NET INCOME | 54,071 | 48,298 | 123,841 | 137,307 | |||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | (785 | ) | (852 | ) | (1,857 | ) | (2,423 | ) | |||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | (4,258 | ) | (3,600 | ) | (13,521 | ) | (11,941 | ) | |||||||
Total income attributable to noncontrolling interests | (5,043 | ) | (4,452 | ) | (15,378 | ) | (14,364 | ) | |||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 49,028 | $ | 43,846 | $ | 108,463 | $ | 122,943 | |||||||
Weighted average common shares outstanding – basic | 115,226 | 104,841 | 112,406 | 102,253 | |||||||||||
Weighted average common shares outstanding – diluted | 115,668 | 105,360 | 112,876 | 102,872 | |||||||||||
Net income available to common stockholders per share – basic | $ | 0.42 | $ | 0.41 | $ | 0.95 | $ | 1.19 | |||||||
Net income available to common stockholders per share – diluted | $ | 0.42 | $ | 0.41 | $ | 0.95 | $ | 1.18 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income available to common stockholders | $ | 49,028 | $ | 43,846 | $ | 108,463 | $ | 122,943 | |||||||
Adjustments: | |||||||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 785 | 852 | 1,857 | 2,423 | |||||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,258 | 3,600 | 13,521 | 11,941 | |||||||||||
Depreciation and amortization of real estate assets | 70,422 | 67,985 | 218,841 | 199,967 | |||||||||||
Gains on sales of depreciable real estate | — | — | — | (7,169 | ) | ||||||||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (7,102 | ) | (7,040 | ) | (22,029 | ) | (21,145 | ) | |||||||
Funds From Operations(1)(2)(3) | $ | 117,391 | $ | 109,243 | $ | 320,653 | $ | 308,960 | |||||||
Weighted average common shares/units outstanding – basic (4) | 118,306 | 107,981 | 115,529 | 105,400 | |||||||||||
Weighted average common shares/units outstanding – diluted (5) | 118,747 | 108,500 | 115,999 | 106,020 | |||||||||||
Funds From Operations per common share/unit – basic (2) | $ | 0.99 | $ | 1.01 | $ | 2.78 | $ | 2.93 | |||||||
Funds From Operations per common share/unit – diluted (2) | $ | 0.99 | $ | 1.01 | $ | 2.76 | $ | 2.91 |
(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 $4.4 million and $6.8 million for the three months ended September 30, 2020 and 2019, respectively, and $17.4 million and $14.9 million for the nine months ended September 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. |