LOS ANGELES--(BUSINESS WIRE)--
Kilroy Realty Corporation(NYSE: KRC) today reported
financial results for its first quarter ended March 31, 2018.
First Quarter Highlights
Financial Results
-
Net income available to common stockholders per share of $0.36
-
Funds from operations available to common stockholders and unitholders
(“FFO”) per share of $0.94
-
Revenues of $182.8 million
Stabilized Portfolio
-
Stabilized portfolio was 94.3% occupied and 96.7% leased at March
31, 2018
-
During 1Q18, signed approximately 301,000 square feet of new or
renewing leases
-
Year-to-date, signed 97,000 square feet of leases at the company’s
Skyline Tower project in Bellevue, Washington
-
In April, signed lease renewals with three existing life science
tenants, two located in the Silicon Valley and one in Seattle, that in
aggregate total 310,000 square feet
Development
-
In January, commenced construction on Phase I of Academy on Vine, a
mixed-use development project located in the Hollywood submarket of
Los Angeles. Phase I is comprised of 306,000 square feet of office
space and 24,000 square feet of retail space with a total estimated
investment of $260.0 million
-
Year-to-date, signed leases totaling 33,500 square feet of production,
distribution and repair (“PDR”) space at the company’s 100 Hooper
project in San Francisco and leases totaling 31,800 square feet of
retail space at the company’s One Paseo mixed-use project in Del Mar
Acquisitions
-
In January, acquired three two-story lab buildings that are 78.5%
occupied and total approximately 146,000 square feet in South San
Francisco for $111.0 million
Finance
-
Borrowed the full borrowing capacity of $150.0 million under the
company’s unsecured term loan facility
Results for the Quarter Ended March 31, 2018
For the first quarter ended March 31, 2018, KRC reported net income
available to common stockholders of $36.2 million, or $0.36 per share,
compared to $26.3 million, or $0.26 per share, in the first quarter of
2017. FFO in the 2018 first quarter was $96.3 million, or $0.94 per
share, compared to $81.9 million, or $0.81 per share, in the
year-earlier quarter, which included a $0.04 per share non-cash charge
related to the redemption of preferred stock. Revenues in the period
totaled $182.8 million, up from $179.3 million in the prior year’s first
quarter.
All per share amounts in this report are presented on a diluted basis.
Operating and Leasing Activity
At March 31, 2018, KRC’s stabilized office portfolio totaled
approximately 13.9 million square feet of space located in Los Angeles,
Orange County, San Diego, the San Francisco Bay Area and Greater
Seattle. During the first quarter, the company signed new or renewing
leases in the stabilized office portfolio totaling 301,000 square feet
of space. At quarter-end, the stabilized office portfolio was 94.3%
occupied and 96.7% leased, compared to occupancy of 95.2% at December
31, 2017 and 94.1% at March 31, 2017.
Real Estate Development Activity
At March 31, 2018, KRC had five projects under construction, including
The Exchange on 16th and 100 Hooper in San Francisco, 333 Dexter in the
South Lake Union submarket of Seattle, and the first phases of One Paseo
and Academy on Vine, mixed-use projects located in the Del Mar submarket
of San Diego and the Hollywood submarket of Los Angeles, respectively.
These five projects total approximately 2.1 million square feet of
office and PDR space, 237 residential units and 120,000 square feet of
retail space representing a total estimated investment of approximately
$1.7 billion. As of March 31, 2018, all 1.1 million square feet of
office space at The Exchange on 16th and 100 Hooper were fully leased.
In aggregate, the office space for these five projects was 53% leased at
March 31, 2018.
Net Income Available to Common Stockholders / FFO Guidance and
Outlook
The company has updated its guidance range of NAREIT-defined FFO per
diluted share for the full year 2018 to $3.49 to $3.64 per share, with a
midpoint of $3.57 per share, reflecting management’s views on current
and future market conditions, including assumptions with respect to
rental rates, occupancy levels, and the earnings impact of events
referenced in this press release.
|
| |
| |
| |
| | | Full Year 2018 Range at March 31, 2018 |
| | | Low End | | High End |
|
Net income available to common stockholders per share - diluted
| |
$
|
1.38
| | |
$
|
1.54
| |
| | | | |
|
|
Weighted average common shares outstanding - diluted (1) | |
99,300
| | |
99,300
| |
| | | | |
|
|
Net income available to common stockholders
| |
$
|
137,000
| | |
$
|
153,000
| |
|
Adjustments:
| | | | |
|
Net income attributable to noncontrolling common units of the
Operating Partnership | |
3,200
| | |
3,400
| |
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
| |
14,500
| | |
15,500
| |
|
Depreciation and amortization of real estate assets
| |
226,500
| | |
226,500
| |
|
Gains on sales of depreciable real estate
| |
—
| | |
—
| |
|
Funds From Operations attributable to noncontrolling interests in
consolidated property partnerships
| |
(23,500
|
)
| |
(24,500
|
)
|
|
Funds From Operations (2) | |
$
|
357,700
|
| |
$
|
373,900
|
|
| | | | |
|
|
Weighted average common shares/units outstanding – diluted (3) | |
102,600
| | |
102,600
| |
| | | | |
|
|
Funds From Operations per common share/unit – diluted (2)(3) | |
$
|
3.49
|
| |
$
|
3.64
|
|
| | | | | | | | |
|
Key 2018 assumptions include:
-
Dispositions of $250.0 to $750.0 million with a midpoint of $500.0
million
-
Same store cash net operating income growth of 0 to 1%
-
Year-end occupancy of 94.0% to 95.0%
-
Net operating income margin of approximately 70.5% to 71.0%
-
Remaining development spending of approximately $350.0 to 400.0 million
________________________
|
(1)
|
|
Calculated based on estimated weighted average shares outstanding
including participating share-based awards (i.e. nonvested stock and
certain time based restricted stock units).
|
|
(2)
| |
See management statement for FFO on page 9.
|
|
(3)
| |
Calculated based on estimated 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 estimated common limited partnership units
outstanding. Reported amounts are attributable to common
stockholders, common unitholders and restricted stock unitholders.
|
The company’s guidance estimates for the full year 2018, and the
reconciliation of net income available to common stockholders per share
- diluted and FFO per share and unit - diluted included within this
press release, reflect management’s views on current and future market
conditions, including assumptions with respect to rental rates,
occupancy levels, and the earnings impact of the events referenced in
this press release. Although these guidance estimates reflect the impact
on the company’s operating results of an assumed range of future
disposition activity, these guidance estimates do not include any
estimates of possible future gains or losses from possible future
dispositions because the magnitude of gains or losses on sales of
depreciable operating properties, if any, will depend on the sales price
and depreciated cost basis of the disposed assets at the time of
disposition, information that is not known at the time the company
provides guidance, and the timing of any gain recognition will depend on
the closing of the dispositions, information that is also not known at
the time the company provides guidance and may occur after the relevant
guidance period. We caution you not to place undue reliance on our
assumed range of future disposition activity because any potential
future disposition transactions will ultimately depend on the market
conditions and other factors, including but not limited to the company’s
capital needs, the particular assets being sold and the company’s
ability to defer some or all of the taxable gain on the sales. These
guidance estimates also do not include the impact on operating results
from potential future acquisitions, possible capital markets activity,
possible future impairment charges or any events outside of the
company’s control. 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 2018
during the company’s April 26, 2018 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 https://services.choruscall.com/links/krc180426.html.
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 (866) 312-7299. International callers should dial
(412) 317-1070. In order to bypass speaking to the operator on the day
of the call, please pre-register anytime at http://dpregister.com/10115550.
A replay of the conference call will be available via telephone on April
26, 2018 through May 3, 2018 by dialing (877) 344-7529 and entering
passcode 10115550. International callers should dial (412) 317-0088 and
enter the same passcode. The replay will also be available on our
website at http://investors.kilroyrealty.com/CustomPage/Index?KeyGenPage=1073743647.
About Kilroy Realty Corporation
Kilroy Realty Corporation (KRC), a publicly traded real estate
investment trust and member of the S&P MidCap 400 Index, is one of the
West Coast’s premier landlords. The company has over 70 years of
experience developing, acquiring and managing office and mixed-use real
estate assets. 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 March 31, 2018, the company’s stabilized portfolio totaled
approximately 13.9 million square feet of office space located in the
coastal regions of Los Angeles, Orange County, San Diego, the San
Francisco Bay Area and Greater Seattle and 200 residential units located
in the Hollywood submarket of Los Angeles. In addition, KRC had five
projects totaling approximately 2.1 million square feet of office and
PDR space, 237 residential units and 120,000 square feet of retail space
under construction.
The company has been recognized by GRESB as the North American leader in
office sustainability for the last four years and is listed in the Dow
Jones Sustainability World Index. At the end of the first quarter, the
company’s stabilized portfolio was 59% LEED certified and 71% of
eligible properties were ENERGY STAR certified. More information is
available at http://www.kilroyrealty.com.
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 the forward-looking statements, and you should not rely on
the 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 the forward-looking statements, including, among others:
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; risks associated with our
investment in real estate assets, which are illiquid, and with trends in
the real estate industry; defaults on or non-renewal of leases by
tenants; any significant downturn in tenants’ businesses; our ability to
re-lease property at or above current market rates; costs to comply with
government regulations, including environmental remediation; 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; 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, and which may result in write offs or impairment charges;
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, as well
as business and consumer reactions to such changes; 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 and
additional factors could adversely affect our business and financial
performance. 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, 2017 and our other
filings with the Securities and Exchange Commission. All forward-looking
statements are based on currently available information, 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 we are required to do so in connection with our
ongoing requirements under federal securities laws.
KILROY REALTY CORPORATION SUMMARY OF QUARTERLY RESULTS
(unaudited, in thousands, except per share data)
|
|
| |
| | Three Months Ended March 31, |
| | 2018 |
| 2017 |
|
Revenues
| |
$
|
182,822
| | |
$
|
179,308
| |
| | | |
|
|
Net income available to common stockholders (1) | |
$
|
36,246
| | |
$
|
26,329
| |
| | | |
|
|
Weighted average common shares outstanding – basic
| |
98,744
| | |
97,388
| |
|
Weighted average common shares outstanding – diluted
| |
99,214
| | |
98,018
| |
| | | |
|
|
Net income available to common stockholders per share – basic (1) | |
$
|
0.36
| | |
$
|
0.27
| |
|
Net income available to common stockholders per share – diluted (1) | |
$
|
0.36
| | |
$
|
0.26
| |
| | | |
|
|
Funds From Operations (1)(2)(3) | |
$
|
96,285
| | |
$
|
81,934
| |
| | | |
|
|
Weighted average common shares/units outstanding – basic (4) | |
102,030
| | |
100,883
| |
|
Weighted average common shares/units outstanding – diluted (5) | |
102,499
| | |
101,513
| |
| | | |
|
|
Funds From Operations per common share/unit – basic (3) | |
$
|
0.94
| | |
$
|
0.81
| |
|
Funds From Operations per common share/unit – diluted (3) | |
$
|
0.94
| | |
$
|
0.81
| |
| | | |
|
|
Common shares outstanding at end of period
| |
98,840
| | |
98,275
| |
|
Common partnership units outstanding at end of period
| |
2,071
|
| |
2,077
|
|
|
Total common shares and units outstanding at end of period
| |
100,911
| | |
100,352
| |
| | | |
|
| | March 31, 2018 | | March 31, 2017 |
|
Stabilized office portfolio occupancy rates: (6) | | | | |
| Greater Los Angeles | |
93.9
|
%
| |
91.5
|
%
|
| Orange County | |
89.6
|
%
| |
95.5
|
%
|
| San Diego County | |
98.0
|
%
| |
92.8
|
%
|
| San Francisco Bay Area | |
95.1
|
%
| |
95.5
|
%
|
| Greater Seattle | |
90.2
|
%
| |
97.2
|
%
|
|
Weighted average total
| |
94.3
|
%
| |
94.1
|
%
|
| | | |
|
|
Total square feet of stabilized office properties owned at end of
period: (6) | | | | |
| Greater Los Angeles | |
4,182
| | |
4,181
| |
| Orange County | |
272
| | |
272
| |
| San Diego County | |
2,043
| | |
2,719
| |
| San Francisco Bay Area | |
5,303
| | |
5,157
| |
| Greater Seattle | |
2,066
|
| |
2,066
|
|
|
Total
| |
13,866
| | |
14,395
| |
| | | | | |
|
________________________
|
(1)
|
|
Net income available to common stockholders includes gains on sales
of depreciable operating properties of $2.3 million and a non-cash
charge for the original issuance costs of redeemed preferred stock
of $3.8 million for the quarter ended March 31, 2017.
|
|
(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 (i.e.
nonvested stock and time based restricted stock units), dilutive
impact of stock options and contingently issuable shares 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 March 31, 2017
include the office properties that were sold subsequent to March 31,
2017.
|
|
|
KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
| |
| |
| | March 31, 2018 | | December 31, 2017 |
| | (unaudited) | | |
ASSETS | | | | |
|
REAL ESTATE ASSETS:
| | | | |
|
Land and improvements
| |
$
|
1,127,100
| | |
$
|
1,076,172
| |
|
Buildings and improvements
| |
4,987,617
| | |
4,908,797
| |
|
Undeveloped land and construction in progress
| |
1,530,949
|
| |
1,432,808
|
|
|
Total real estate assets held for investment
| |
7,645,666
| | |
7,417,777
| |
|
Accumulated depreciation and amortization
| |
(1,312,612
|
)
| |
(1,264,162
|
)
|
|
Total real estate assets held for investment, net
| |
6,333,054
| | |
6,153,615
| |
| | | |
|
|
Cash and cash equivalents
| |
53,069
| | |
57,649
| |
|
Restricted cash
| |
—
| | |
9,149
| |
|
Marketable securities
| |
21,572
| | |
20,674
| |
|
Current receivables, net
| |
17,602
| | |
16,926
| |
|
Deferred rent receivables, net
| |
251,744
| | |
246,391
| |
|
Deferred leasing costs and acquisition-related intangible assets, net
| |
181,567
| | |
183,728
| |
|
Prepaid expenses and other assets, net
| |
107,324
|
| |
114,706
|
|
|
TOTAL ASSETS
| |
$
|
6,965,932
|
| |
$
|
6,802,838
|
|
| | | |
|
LIABILITIES AND EQUITY | | | | |
|
LIABILITIES:
| | | | |
|
Secured debt, net
| |
$
|
339,501
| | |
$
|
340,800
| |
|
Unsecured debt, net
| |
2,155,794
| | |
2,006,263
| |
|
Unsecured line of credit
| |
50,000
| | |
—
| |
|
Accounts payable, accrued expenses and other liabilities
| |
223,973
| | |
249,637
| |
|
Accrued dividends and distributions
| |
43,512
| | |
43,448
| |
|
Deferred revenue and acquisition-related intangible liabilities, net
| |
149,563
| | |
145,890
| |
|
Rents received in advance and tenant security deposits
| |
56,117
|
| |
56,484
|
|
|
Total liabilities
| |
3,018,460
|
| |
2,842,522
|
|
| | | |
|
|
EQUITY:
| | | | |
|
Stockholders’ Equity
| | | | |
|
Common stock
| |
988
| | |
986
| |
|
Additional paid-in capital
| |
3,816,385
| | |
3,822,492
| |
|
Distributions in excess of earnings
| |
(130,514
|
)
| |
(122,685
|
)
|
|
Total stockholders’ equity
| |
3,686,859
| | |
3,700,793
| |
|
Noncontrolling Interests
| | | | |
|
Common units of the Operating Partnership | |
77,240
| | |
77,948
| |
|
Noncontrolling interests in consolidated property partnerships
| |
183,373
|
| |
181,575
|
|
|
Total noncontrolling interests
| |
260,613
|
| |
259,523
|
|
|
Total equity
| |
3,947,472
|
| |
3,960,316
|
|
|
TOTAL LIABILITIES AND EQUITY
| |
$
|
6,965,932
|
| |
$
|
6,802,838
|
|
| | | | | | | |
|
KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
|
|
| |
| | Three Months Ended March 31, |
| | 2018 |
| 2017 |
|
REVENUES
| | | | |
|
Rental income
| |
$
|
162,871
| | |
$
|
156,648
| |
|
Tenant reimbursements
| |
19,150
| | |
19,296
| |
|
Other property income
| |
801
|
| |
3,364
|
|
|
Total revenues
| |
182,822
|
| |
179,308
|
|
| | | |
|
|
EXPENSES
| | | | |
|
Property expenses
| |
31,671
| | |
31,241
| |
|
Real estate taxes
| |
17,146
| | |
17,964
| |
|
Provision for bad debts
| |
(265
|
)
| |
1,298
| |
|
Ground leases
| |
1,561
| | |
1,642
| |
|
General and administrative expenses
| |
15,559
| | |
14,933
| |
|
Depreciation and amortization
| |
62,715
|
| |
60,919
|
|
|
Total expenses
| |
128,387
|
| |
127,997
|
|
| | | |
|
|
OTHER (EXPENSES) INCOME
| | | | |
|
Interest income and other net investment gain/loss
| |
34
| | |
1,065
| |
|
Interest expense
| |
(13,498
|
)
| |
(17,352
|
)
|
|
Total other (expenses) income
| |
(13,464
|
)
| |
(16,287
|
)
|
| | | |
|
|
INCOME FROM OPERATIONS BEFORE GAINS ON SALES OF REAL ESTATE
| |
40,971
| | |
35,024
| |
|
Gains on sale of depreciable operating properties
| |
—
|
| |
2,257
|
|
|
NET INCOME
| |
40,971
|
| |
37,281
|
|
| | | |
|
|
Net income attributable to noncontrolling common units of the
Operating Partnership | |
(751
|
)
| |
(623
|
)
|
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
| |
(3,974
|
)
| |
(3,133
|
)
|
|
Total income attributable to noncontrolling interests
| |
(4,725
|
)
| |
(3,756
|
)
|
| | | |
|
|
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
| |
36,246
|
| |
33,525
|
|
| | | |
|
|
Preferred dividends
| |
—
| | |
(3,351
|
)
|
|
Original issuance costs of redeemed preferred stock
| |
—
|
| |
(3,845
|
)
|
|
Total preferred dividends
| |
—
|
| |
(7,196
|
)
|
|
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
| |
$
|
36,246
|
| |
$
|
26,329
|
|
| | | |
|
|
Weighted average common shares outstanding – basic
| |
98,744
| | |
97,388
| |
|
Weighted average common shares outstanding – diluted
| |
99,214
| | |
98,018
| |
| | | |
|
|
Net income available to common stockholders per share – basic
| |
$
|
0.36
|
| |
$
|
0.27
|
|
|
Net income available to common stockholders per share – diluted
| |
$
|
0.36
|
| |
$
|
0.26
|
|
| | | | | | | |
|
KILROY REALTY CORPORATION FUNDS FROM OPERATIONS
(unaudited, in thousands, except per share data)
|
|
| |
| | Three Months Ended March 31, |
| | 2018 |
| 2017 |
|
Net income available to common stockholders
| |
$
|
36,246
| | |
$
|
26,329
| |
|
Adjustments:
| | | | |
|
Net income attributable to noncontrolling common units of the
Operating Partnership | |
751
| | |
623
| |
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
| |
3,974
| | |
3,133
| |
|
Depreciation and amortization of real estate assets
| |
61,677
| | |
59,734
| |
|
Gains on sales of depreciable real estate
| |
—
| | |
(2,257
|
)
|
|
Funds From Operations attributable to noncontrolling interests in
consolidated property partnerships
| |
(6,363
|
)
| |
(5,628
|
)
|
|
Funds From Operations(1)(2)(3) | |
$
|
96,285
|
| |
$
|
81,934
|
|
| | | |
|
|
Weighted average common shares/units outstanding – basic (4) | |
102,030
| | |
100,883
| |
|
Weighted average common shares/units outstanding – diluted (5) | |
102,499
| | |
101,513
| |
| | | |
|
|
Funds From Operations per common share/unit – basic (2) | |
$
|
0.94
|
| |
$
|
0.81
|
|
|
Funds From Operations per common share/unit – diluted (2) | |
$
|
0.94
|
| |
$
|
0.81
|
|
________________________
|
(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, 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 $4.3 million and $3.7 million for the three months
ended March 31, 2018 and 2017, 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 (i.e.
nonvested stock and time based restricted stock units), dilutive
impact of stock options and contingently issuable shares and
assuming the exchange of all common limited partnership units
outstanding.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180425006798/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