LOS ANGELES--(BUSINESS WIRE)--
Kilroy Realty Corporation(NYSE: KRC) today reported
financial results for its third quarter ended September 30, 2016.
Third Quarter Highlights
Financial Results
-
Net income available to common stockholders of $0.54 per share
-
Funds from operations available to common stockholders and unitholders
(“FFO”) of $0.92 per share
-
Revenues of $168.3 million
-
Net income and FFO included proceeds of approximately $0.05 per share
related to a property damage settlement
Stabilized Portfolio
-
Stabilized portfolio was 96.6% occupied and 97.8% leased at September
30, 2016
-
Signed approximately 314,000 square feet of new or renewing leases
Strategic Venture
-
Entered into agreements with Norges Bank Real Estate Management
(“NBREM”) through which NBREM will invest for a 44% common equity
interest in two existing companies that own office buildings in San
Francisco. The properties are located at 100 First Street and 303
Second Street in San Francisco’s SOMA district and aggregate
approximately 1.2 million rentable square feet of office space. NBREM
will contribute a total of $452.9 million to the companies, which is
net of approximately $55.3 million that represents a proportionate
share of the existing mortgage debt. The transaction was structured
with a staggered closing and the 100 First Street venture closed on
August 30 with a contribution by NBREM of $191.4 million. The 303
Second Street venture is scheduled to close in the fourth quarter
Capital Recycling
-
Completed the sale of two office properties aggregating 137,000
rentable square feet and a 7.0-acre land site in San Diego’s Sorrento
Mesa submarket for gross proceeds of $49.0 million
-
Agreed to sell a 68,000 square-foot office building in San Diego’s
Sorrento Mesa submarket for gross proceeds of $12.1 million with a
scheduled closing date in the first quarter of 2017. This property is
reported as held for sale as of September 30, 2016
Finance
-
Completed a private placement of $175.0 million of ten-year, 3.35%
unsecured senior notes and $75.0 million of twelve-year, 3.45%
unsecured senior notes with a delayed draw option required to be
exercised by February 17, 2017. No amounts were drawn or outstanding
as of September 30, 2016
Results for the Quarter Ended September 30, 2016
For the third quarter ended September 30, 2016, KRC reported net income
available to common stockholders of $50.6 million, or $0.54 per share,
compared to $101.4 million, or $1.09 per share, in the third quarter of
2015. Net income in the 2016 third quarter included $18.3 million, or
$0.20 per share, of gains from property dispositions and proceeds of
$5.0 million, or approximately $0.05 per share, related to a property
damage settlement. Net income in the 2015 third quarter included $78.5
million, or $0.85 per share, of property disposition gains. FFO in the
third quarter of 2016 was $88.5 million, or $0.92 per share, including
proceeds from the property damage settlement, compared to $73.6 million,
or $0.77 per share, in the year-earlier quarter. Revenues totaled
$168.3 million in the third quarter, compared to $141.6 million in the
prior year period.
All per share amounts in this report are presented on a diluted basis.
Operating and Leasing Activity
At September 30, 2016, KRC’s stabilized portfolio totaled approximately
13.6 million square feet of office space located in Los Angeles,
Orange County, San Diego, the San Francisco Bay Area and greater Seattle
and 200 residential units. During the third quarter, the company signed
new or renewing leases in the office portfolio totaling 314,026 square
feet of space. At quarter-end, the office portfolio was 96.6% occupied,
compared to 94.8% at December 31, 2015 and 95.6% at September 30, 2015,
and was 97.8% leased.
Real Estate Development Activity
At September 30, 2016, KRC had one project under construction totaling
approximately 700,000 square feet of space and representing a total
estimated investment of approximately $485.0 million. The company also
had two office properties encompassing approximately 450,000 square feet
in lease-up representing a total estimated investment of approximately
$275.0 million that were 81% committed at the end of the third quarter.
In addition, the company’s recently completed residential property was
22% leased at September 30, 2016.
Management Comments
“We’re approaching the end of 2016 from a position of significant
strength,” said John Kilroy, the company’s chairman, president and chief
executive officer. “Our stabilized portfolio is generating strong
same-store NOI growth. Our existing properties and new development
continue to attract major leasing commitments, supporting the strategic
choices we’ve made in the ongoing evolution of our portfolio. And our
disciplined commitment to a strong balance sheet and strategic access to
multiple capital sources has enabled us to lock in our funding needs at
attractive rates for the next stage of our development pipeline.”
FFO per Share Guidance
The company has updated its guidance range of NAREIT defined FFO per
share (diluted) for the full year 2016 to $3.43 - $3.47 per share with a
midpoint of $3.45 per share.
These estimates reflect management’s view of current and future market
conditions, including assumptions with respect to rental rates,
occupancy levels and the earnings impact of the events referenced in
this release and otherwise referenced during the conference call
referred to below. These estimates do not include possible future gains
or losses or the impact on operating results from other possible future
property acquisitions or dispositions, other possible capital markets
activity or possible future impairment charges. There can be no
assurance that the company’s actual results will not differ materially
from these estimates.
Conference Call and Audio Webcast
KRC management will discuss earnings guidance for fiscal year 2016
during the company’s October 27, 2016 earnings conference call. The call
will begin at 10:00 a.m. Pacific Time and last approximately one hour.
Those interested in listening via the Internet can access the conference
call at http://www.kilroyrealty.com.
Please go to the website 15 minutes before the call and register. It may
be necessary to download audio software to hear the conference call.
Those interested in listening via telephone can access the conference
call at (888) 713-4214 reservation #27486596. A replay of the conference
call will be available via phone through November 3, 2016 at (888)
286-8010, reservation #81807567, or via the Internet at the company’s
website.
About Kilroy Realty Corporation
With nearly 70 years’ experience owning, developing, acquiring and
managing real estate assets in West Coast real estate markets, Kilroy
Realty Corporation (KRC), a publicly traded real estate investment trust
and member of the S&P MidCap 400 Index, is one of the region’s premier
landlords. The company provides physical work environments that foster
creativity and productivity and serves a broad roster of dynamic,
innovation-driven tenants, including technology, entertainment, digital
media and health care companies.
At September 30, 2016, the company’s stabilized portfolio totaled
13.6 million square feet of office properties, all located in the
coastal regions of greater Seattle, the San Francisco Bay Area, Los
Angeles, Orange County and San Diego. The company is recognized by GRESB
as the North American leader in sustainability and was ranked first
among 178 North American participants across all asset types. At the end
of the third quarter, the company’s properties were 51% LEED certified
and 72% of eligible properties were ENERGY STAR certified. In addition,
KRC had one office project totaling approximately 700,000 square feet
under construction and two office projects in lease-up totaling
approximately 450,000 square feet. More information is available at http://www.kilroyrealty.com.
Non-GAAP Financial Information
The company does not provide a reconciliation for its guidance range of
FFO per common share/unit - diluted to net income available to common
stockholders per common share - diluted, the most directly comparable
forward-looking GAAP financial measure, because it is unable to provide
a meaningful or accurate estimation of reconciling items and the
information is not available without unreasonable effort. This is due to
the inherent difficulty of forecasting the timing and/or amount of
various items that would impact net income available to common
stockholders per share - diluted, including, for example, gains on sales
of depreciable real estate and other items that have not yet occurred
and are out of the company’s control. For the same reasons, the company
is unable to address the probable significance of the unavailable
information and believes that providing a reconciliation for its
guidance range of FFO per common share/unit - diluted would imply a
degree of precision as to its forward-looking net income available to
common stockholders per common share - diluted that would be confusing
or misleading to investors.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are based on our current expectations,
beliefs and assumptions, and are not guarantees of future performance.
Forward-looking statements are inherently subject to uncertainties,
risks, changes in circumstances, trends and factors that are difficult
to predict, many of which are outside of our control. Accordingly,
actual performance, results and events may vary materially from those
indicated in forward-looking statements, and you should not rely on
forward-looking statements as predictions of future performance, results
or events. Numerous factors could cause actual future performance,
results and events to differ materially from those indicated in
forward-looking statements, including, among others, risks associated
with: global market and general economic conditions and their effect on
our liquidity and financial conditions and those of our tenants; adverse
economic or real estate conditions generally, and specifically, in the
States of California and Washington; investment in our real estate
assets, which are illiquid; trends in the real estate industry; defaults
on or non-renewal of leases by tenants; any significant downturn in
tenants’ businesses; our ability to release property at or above current
market rates; costs to comply with government regulations, including
environmental remediations; the availability of cash for distribution
and debt service and exposure to risk of default under debt obligations;
increases in interest rates and our ability to manage interest rate
exposure; failure of interest rate hedging contracts to perform as
expected and the effectiveness of such arrangements; the availability of
financing on attractive terms or at all, which may adversely impact our
future interest expense and our ability to pursue development,
redevelopment and acquisition opportunities and refinance existing debt;
a decline in real estate asset valuations, which may limit our ability
to dispose of assets at attractive prices or obtain or maintain debt
financing; significant competition, which may decrease the occupancy and
rental rates of properties; potential losses that may not be covered by
insurance; the ability to successfully complete acquisitions and
dispositions on announced terms; the ability to successfully operate
acquired, developed and redeveloped properties; the ability to
successfully complete development and redevelopment projects on schedule
and within budgeted amounts; delays or refusals in obtaining all
necessary zoning, land use and other required entitlements, governmental
permits and authorizations for our development and redevelopment
properties; increases in anticipated capital expenditures, tenant
improvement and/or leasing costs; defaults on leases for land on which
some of our properties are located; adverse changes to, or
implementations of, applicable laws, regulations or legislation; risks
associated with joint venture investments, including our lack of sole
decision-making authority, our reliance on co-venturers' financial
condition and disputes between us and our co-venturers; environmental
uncertainties and risks related to natural disasters; and our ability to
maintain our status as a REIT. These factors are not exhaustive. For a
discussion of additional factors that could materially adversely affect
our business and financial performance, see the factors included under
the caption “Risk Factors” in our annual report on Form 10-K for the
year ended December 31, 2015 and our other filings with the Securities
and Exchange Commission. All forward-looking statements are based on
information that was available, and speak only as of the date on which
they are made. We assume no obligation to update any forward-looking
statement made in this press release that becomes untrue because of
subsequent events, new information or otherwise, except to the extent
required in connection with ongoing requirements under U.S. securities
laws.
|
| |
| |
KILROY REALTY CORPORATION |
SUMMARY OF QUARTERLY RESULTS |
(unaudited, in thousands, except per share data)
|
| | | |
|
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2016 |
| 2015 | | 2016 |
| 2015 |
|
Revenues
| |
$
|
168,348
| | |
$
|
141,553
| | |
$
|
473,927
| | |
$
|
433,862
| |
| | | | | | | |
|
|
Net income available to common stockholders (1) | |
$
|
50,582
| | |
$
|
101,446
| | |
$
|
251,112
| | |
$
|
195,508
| |
| | | | | | | |
|
|
Weighted average common shares outstanding – basic
| |
92,227
| | |
92,150
| | |
92,221
| | |
89,077
| |
|
Weighted average common shares outstanding – diluted
| |
92,920
| | |
92,639
| | |
92,832
| | |
89,593
| |
| | | | | | | |
|
|
Net income available to common stockholders per share – basic (1) | |
$
|
0.54
| | |
$
|
1.10
| | |
$
|
2.71
| | |
$
|
2.18
| |
|
Net income available to common stockholders per share – diluted (1) | |
$
|
0.54
| | |
$
|
1.09
| | |
$
|
2.69
| | |
$
|
2.17
| |
| | | | | | | |
|
|
Funds From Operations (1)(2)(3) | |
$
|
88,535
| | |
$
|
73,588
| | |
$
|
249,450
| | |
$
|
239,939
| |
| | | | | | | |
|
|
Weighted average common shares/units outstanding – basic (4) | |
95,992
| | |
95,097
| | |
95,760
| | |
92,048
| |
|
Weighted average common shares/units outstanding – diluted (4) | |
96,686
| | |
95,586
| | |
96,371
| | |
92,564
| |
| | | | | | | |
|
|
Funds From Operations per common share/unit – basic (4) | |
$
|
0.92
| | |
$
|
0.77
| | |
$
|
2.60
| | |
$
|
2.61
| |
|
Funds From Operations per common share/unit – diluted (4) | |
$
|
0.92
| | |
$
|
0.77
| | |
$
|
2.59
| | |
$
|
2.59
| |
| | | | | | | |
|
|
Common shares outstanding at end of period
| | | | | |
92,272
| | |
92,220
| |
|
Common partnership units outstanding at end of period
| | | | | |
2,631
|
| |
1,788
|
|
|
Total common shares and units outstanding at end of period
| | | | | |
94,903
| | |
94,008
| |
| | | | | | | |
|
| | | | | | September 30,
2016 | | September 30,
2015 |
|
Stabilized office portfolio occupancy rates: (5) | | | | | | | | |
| Los Angeles and Ventura Counties
| | | | | |
94.8
|
%
| |
94.1
|
%
|
| Orange County | | | | | |
97.8
|
%
| |
95.7
|
%
|
| San Diego County | | | | | |
94.5
|
%
| |
96.3
|
%
|
| San Francisco Bay Area | | | | | |
98.3
|
%
| |
96.8
|
%
|
| Greater Seattle | | | | | |
98.2
|
%
| |
94.7
|
%
|
Weighted average total
| | | | | |
96.6
|
%
| |
95.6
|
%
|
| | | | | | | |
|
|
Total square feet of stabilized office properties owned at end of
period: (5) | | | | | | | | |
| Los Angeles and Ventura Counties
| | | | | |
3,633
| | |
3,505
| |
| Orange County | | | | | |
272
| | |
272
| |
| San Diego County | | | | | |
2,643
| | |
3,318
| |
| San Francisco Bay Area | | | | | |
4,992
| | |
3,890
| |
| Greater Seattle | | | | | |
2,066
|
| |
2,066
|
|
Total
| | | | | |
13,606
| | |
13,051
| |
|
________________________
|
|
(1)
|
|
Net income available to common stockholders for the three and nine
months ended September 30, 2016 includes gains on sales of
depreciable operating properties of $18.3 million and $164.3
million, respectively. Net income available to common stockholders
and Funds From Operations for the nine months ended September 30,
2016 includes a loss on sale of land of $0.3 million. Net income
available to common stockholders for the three and nine months ended
September 30, 2015 includes gains on sales of depreciable operating
properties of $78.5 million and $110.0 million, respectively. Net
income available to common stockholders and Funds From Operations
for the nine months ended September 30, 2015 includes a gain on sale
of land of $17.3 million.
|
|
(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 and common
unitholders.
|
|
(4)
| |
Calculated based on weighted average shares outstanding including
participating share-based awards 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,
2015 include the office properties that were sold subsequent to
September 30, 2015 and held for sale at September 30, 2016.
|
| |
|
|
| |
| |
KILROY REALTY CORPORATION |
CONSOLIDATED BALANCE SHEETS |
|
(in thousands)
|
| | | |
|
| | September 30, 2016 | | December 31, 2015 |
| | (unaudited) | | |
ASSETS | | | | |
|
REAL ESTATE ASSETS:
| | | | |
|
Land and improvements
| |
$
|
1,017,591
| | |
$
|
875,794
| |
|
Buildings and improvements
| |
4,669,442
| | |
4,091,012
| |
|
Undeveloped land and construction in progress
| |
945,805
|
| |
1,361,340
|
|
|
Total real estate assets held for investment
| |
6,632,838
| | |
6,328,146
| |
|
Accumulated depreciation and amortization
| |
(1,095,562
|
)
| |
(994,241
|
)
|
|
Total real estate assets held for investment, net
| |
5,537,276
| | |
5,333,905
| |
| | | |
|
|
Real estate assets and other assets held for sale, net
| |
9,440
| | |
117,666
| |
|
Cash and cash equivalents
| |
250,523
| | |
56,508
| |
|
Restricted cash
| |
57,501
| | |
696
| |
|
Marketable securities
| |
14,121
| | |
12,882
| |
|
Current receivables, net
| |
9,709
| | |
11,153
| |
|
Deferred rent receivables, net
| |
212,204
| | |
189,704
| |
|
Deferred leasing costs and acquisition-related intangible assets, net
| |
180,613
| | |
176,683
| |
|
Prepaid expenses and other assets, net (1) | |
60,752
|
| |
27,233
|
|
|
TOTAL ASSETS
| |
$
|
6,332,139
|
| |
$
|
5,926,430
|
|
| | | |
|
LIABILITIES AND EQUITY | | | | |
|
LIABILITIES:
| | | | |
|
Secured debt, net (1) | |
$
|
370,666
| | |
$
|
380,835
| |
|
Unsecured debt, net (1) | |
1,846,672
| | |
1,844,634
| |
|
Unsecured line of credit
| |
—
| | |
—
| |
|
Accounts payable, accrued expenses and other liabilities
| |
252,122
| | |
246,323
| |
|
Accrued dividends and distributions
| |
37,749
| | |
34,992
| |
|
Deferred revenue and acquisition-related intangible liabilities, net
| |
134,436
| | |
128,156
| |
|
Rents received in advance and tenant security deposits
| |
48,518
| | |
49,361
| |
|
Liabilities and deferred revenue of real estate assets held for sale
| |
74
|
| |
7,543
|
|
Total liabilities
| |
2,690,237
|
| |
2,691,844
|
|
| | | |
|
|
EQUITY:
| | | | |
|
Stockholders’ Equity
| | | | |
|
6.875% Series G Cumulative Redeemable Preferred stock
| |
96,155
| | |
96,155
| |
|
6.375% Series H Cumulative Redeemable Preferred stock
| |
96,256
| | |
96,256
| |
|
Common stock
| |
923
| | |
923
| |
|
Additional paid-in capital
| |
3,191,718
| | |
3,047,894
| |
|
Retained earnings/(distributions in excess of earnings)
| |
78,107
|
| |
(70,262
|
)
|
Total stockholders’ equity
| |
3,463,159
| | |
3,170,966
| |
|
Noncontrolling Interests
| | | | |
|
Common units of the Operating Partnership | |
93,270
| | |
57,100
| |
|
Noncontrolling interests in consolidated property partnerships
| |
85,473
|
| |
6,520
|
|
|
Total noncontrolling interests
| |
178,743
|
| |
63,620
|
|
|
Total equity
| |
3,641,902
|
| |
3,234,586
|
|
|
TOTAL LIABILITIES AND EQUITY
| |
$
|
6,332,139
|
| |
$
|
5,926,430
|
|
|
________________________
|
|
(1)
|
|
Effective January 1, 2016, the company adopted Financial Accounting
Standards Board Accounting Standards Update No. 2015-03 and 2015-15,
which changed the presentation of deferred financing costs on the
balance sheet. As a result, for all periods presented, deferred
financing costs, with the exception of deferred financing costs
related to the unsecured line of credit, have been reclassified as a
reduction to the related secured debt, net and unsecured debt, net
line items. Deferred financing costs related to the unsecured line
of credit are included in prepaid expenses and other assets, net.
|
| |
|
|
| |
| |
KILROY REALTY CORPORATION |
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
(unaudited, in thousands, except per share data)
|
| | | |
|
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2016 |
| 2015 | | 2016 |
| 2015 |
|
REVENUES
| | | | | | | | |
|
Rental income
| |
$
|
146,539
| | |
$
|
129,510
| | |
$
|
423,947
| | |
$
|
391,892
| |
|
Tenant reimbursements
| |
16,406
| | |
11,681
| | |
43,948
| | |
40,280
| |
|
Other property income
| |
5,403
|
| |
362
|
| |
6,032
|
| |
1,690
|
|
Total revenues
| |
168,348
|
| |
141,553
|
| |
473,927
|
| |
433,862
|
|
| | | | | | | |
|
|
EXPENSES
| | | | | | | | |
|
Property expenses
| |
30,050
| | |
26,684
| | |
85,236
| | |
78,264
| |
|
Real estate taxes
| |
14,501
| | |
12,087
| | |
39,378
| | |
37,232
| |
|
Provision for bad debts
| |
—
| | |
—
| | |
—
| | |
289
| |
|
Ground leases
| |
909
| | |
862
| | |
2,506
| | |
2,451
| |
|
General and administrative expenses
| |
13,533
| | |
10,799
| | |
40,949
| | |
36,200
| |
|
Acquisition-related expenses
| |
188
| | |
4
| | |
964
| | |
397
| |
|
Depreciation and amortization
| |
56,666
|
| |
49,422
|
| |
160,452
|
| |
152,567
|
|
|
Total expenses
| |
115,847
|
| |
99,858
|
| |
329,485
|
| |
307,400
|
|
| | | | | | | |
|
|
OTHER (EXPENSES) INCOME
| | | | | | | | |
|
Interest income and other net investment gains (losses)
| |
538
| | |
(694
|
)
| |
1,120
| | |
177
| |
|
Interest expense
| |
(14,976
|
)
| |
(12,819
|
)
| |
(41,189
|
)
| |
(44,561
|
)
|
|
Total other (expenses) income
| |
(14,438
|
)
| |
(13,513
|
)
| |
(40,069
|
)
| |
(44,384
|
)
|
| | | | | | | |
|
|
INCOME FROM OPERATIONS BEFORE GAINS (LOSSES) ON SALES OF REAL ESTATE
| |
38,063
| | |
28,182
| | |
104,373
| | |
82,078
| |
|
Net (loss) gain on sales of land
| |
—
| | |
—
| | |
(295
|
)
| |
17,268
| |
|
Gains on sale of depreciable operating properties
| |
18,312
|
| |
78,522
|
| |
164,302
|
| |
109,950
|
|
|
NET INCOME
| |
56,375
|
| |
106,704
|
| |
268,380
|
| |
209,296
|
|
| | | | | | | |
|
|
Net income attributable to noncontrolling common units of the
Operating Partnership | |
(1,453
|
)
| |
(1,945
|
)
| |
(5,892
|
)
| |
(3,850
|
)
|
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
| |
(1,027
|
)
| |
—
|
| |
(1,438
|
)
| |
—
|
|
|
Total income attributable to noncontrolling interests
| |
(2,480
|
)
| |
(1,945
|
)
| |
(7,330
|
)
| |
(3,850
|
)
|
| | | | | | | |
|
|
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
| |
53,895
| | |
104,759
| | |
261,050
| | |
205,446
| |
| | | | | | | |
|
|
PREFERRED DIVIDENDS
| |
(3,313
|
)
| |
(3,313
|
)
| |
(9,938
|
)
| |
(9,938
|
)
|
|
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
| |
$
|
50,582
|
| |
$
|
101,446
|
| |
$
|
251,112
|
| |
$
|
195,508
|
|
| | | | | | | |
|
|
Weighted average common shares outstanding – basic
| |
92,227
| | |
92,150
| | |
92,221
| | |
89,077
| |
|
Weighted average common shares outstanding – diluted
| |
92,920
| | |
92,639
| | |
92,832
| | |
89,593
| |
| | | | | | | |
|
|
Net income available to common stockholders per share – basic
| |
$
|
0.54
|
| |
$
|
1.10
|
| |
$
|
2.71
|
| |
$
|
2.18
|
|
|
Net income available to common stockholders per share – diluted
| |
$
|
0.54
|
| |
$
|
1.09
|
| |
$
|
2.69
|
| |
$
|
2.17
|
|
| | | | | | | | | | | | | | | |
|
|
| |
| |
KILROY REALTY CORPORATION |
FUNDS FROM OPERATIONS |
|
(unaudited, in thousands, except per share data)
|
| | | |
|
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2016 |
| 2015 | | 2016 |
| 2015 |
|
Net income available to common stockholders
| |
$
|
50,582
| | |
$
|
101,446
| | |
$
|
251,112
| | |
$
|
195,508
| |
|
Adjustments:
| | | | | | | | |
|
Net income attributable to noncontrolling common units of the
Operating Partnership | |
1,453
| | |
1,945
| | |
5,892
| | |
3,850
| |
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
| |
1,027
| | |
—
| | |
1,438
| | |
—
| |
|
Depreciation and amortization of real estate assets
| |
55,460
| | |
48,719
| | |
157,587
| | |
150,531
| |
|
Gains on sales of depreciable real estate
| |
(18,312
|
)
| |
(78,522
|
)
| |
(164,302
|
)
| |
(109,950
|
)
|
|
Funds From Operations attributable to noncontrolling interests in
consolidated property partnerships
| |
(1,675
|
)
| |
—
|
| |
(2,277
|
)
| |
—
|
|
|
Funds From Operations(1)(2)(3) | |
$
|
88,535
|
| |
$
|
73,588
|
| |
$
|
249,450
|
| |
$
|
239,939
|
|
| | | | | | | |
|
|
Weighted average common shares/units outstanding – basic
| |
95,992
| | |
95,097
| | |
95,760
| | |
92,048
| |
|
Weighted average common shares/units outstanding – diluted
| |
96,686
| | |
95,586
| | |
96,371
| | |
92,564
| |
| | | | | | | |
|
|
Funds From Operations per common share/unit – basic (2) | |
$
|
0.92
|
| |
$
|
0.77
|
| |
$
|
2.60
|
| |
$
|
2.61
|
|
|
Funds From Operations per common share/unit – diluted (2) | |
$
|
0.92
|
| |
$
|
0.77
|
| |
$
|
2.59
|
| |
$
|
2.59
|
|
|
________________________
|
|
(1)
|
|
We calculate Funds From Operations available to common stockholders
and common unitholders (“FFO”) in accordance with the 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.
|
| |
|
| |
We believe that FFO is a useful supplemental measure of our
operating performance. The exclusion from FFO of gains and losses
from the sale of operating real estate assets allows investors and
analysts to readily identify the operating results of the assets
that form the core of our activity and assists in comparing those
operating results between periods. Also, because FFO is generally
recognized as the industry standard for reporting the operations of
REITs, it facilitates comparisons of operating performance to other
REITs. However, other REITs may use different methodologies to
calculate FFO, and accordingly, our FFO may not be comparable to all
other REITs.
|
| |
|
| |
Implicit in historical cost accounting for real estate assets in
accordance with GAAP is the assumption that the value of real estate
assets diminishes predictably over time. Since real estate values
have historically risen or fallen with market conditions, many
industry investors and analysts have considered presentations of
operating results for real estate companies using historical cost
accounting alone to be insufficient. Because FFO excludes
depreciation and amortization of real estate assets, we believe that
FFO along with the required GAAP presentations provides a more
complete measurement of our performance relative to our competitors
and a more appropriate basis on which to make decisions involving
operating, financing and investing activities than the required GAAP
presentations alone would provide.
|
|
|
| |
However, FFO should not be viewed as an alternative measure of our
operating performance because it does not reflect either
depreciation and amortization costs or the level of capital
expenditures and leasing costs necessary to maintain the operating
performance of our properties, which are significant economic costs
and could materially impact our results from operations.
|
|
|
|
(2)
| |
Reported amounts are attributable to common stockholders and common
unitholders.
|
|
|
|
(3)
| |
FFO available to common stockholders and unitholders includes
amortization of deferred revenue related to tenant-funded tenant
improvements of $3.5 million and $3.7 million for the three months
ended September 30, 2016 and 2015, respectively, and $9.6 million
and $10.0 million for the nine months ended September 30, 2016 and
2015, respectively.
|
| |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161026006990/en/
Kilroy Realty Corporation
Tyler H. Rose
Executive Vice
President
and Chief Financial Officer
(310) 481-8484
or
Michelle
Ngo
Senior Vice President
and Treasurer
(310) 481-8581
Source: Kilroy Realty Corporation