LOS ANGELES--(BUSINESS WIRE)--
Kilroy Realty Corporation(NYSE: KRC) today reported
financial results for its third quarter ended September 30, 2018.
Third Quarter Highlights
Financial Results
-
Net income available to common stockholders per share of $0.33
-
Funds from operations available to common stockholders and unitholders
(“FFO”) per share of $0.90
-
Revenues of $186.6 million
Stabilized Portfolio
-
Stabilized portfolio was 93.5% occupied and 96.6% leased at
September 30, 2018
-
Signed approximately 335,000 square feet of new or renewing leases
-
Through the first three quarters of 2018, signed approximately 2.0
million square feet of new or renewing leases
Finance
-
In August, issued 98,000 shares of common stock under the company’s
ATM offering program at a weighted average price of $73.24 per share,
generating net proceeds of $7.1 million
-
In August, completed a public offering of 5,000,000 shares of common
stock priced at $72.10 per share structured as a 12-month forward
sale; no shares were sold during the third quarter
Recent Developments
-
In October, commenced GAAP revenue recognition on all 312,000 square
feet of the office space at 100 Hooper, the company’s recently
completed development project in the SOMA district of San Francisco.
The remaining production, distribution and repair “PDR” space is 38%
leased, bringing the aggregate 400,000 square foot project to 86%
leased
-
In October, drew the entire $200.0 million of eight-year, 4.35%
unsecured senior notes privately placed in May 2018, the second of two
such debt transactions completed and drawn down this year
Results for the Quarter Ended September 30, 2018
For the third quarter ended September 30, 2018, KRC reported net income
available to common stockholders of $34.4 million, or $0.33 per share,
compared to $66.6 million, or $0.67 per share, in the third quarter of
2017. Net income in the 2017 third quarter included $37.3 million, or
$0.38 per share, of gains from operating property dispositions. FFO in
the third quarter of 2018 was $94.2 million, or $0.90 per share,
compared to $89.5 million, or $0.88 per share, in the third quarter of
2017. Both net income available to common stockholders and FFO in the
third quarter of 2017 included a non-cash charge of $0.04 per share for
the write-off of the original issuance costs in connection with
redeeming the Series H preferred stock. Revenues in the third quarter of
2018 totaled $186.6 million, up from $181.5 million in the prior year’s
quarter.
All per share amounts in this report are presented on a diluted basis.
Operating and Leasing Activity
At September 30, 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 third quarter, the company signed new or renewing
leases in the stabilized office portfolio totaling just under 335,000
square feet of space. At quarter-end, the stabilized office portfolio
was 93.5% occupied and 96.6% leased, compared to occupancy of 94.0% at
June 30, 2018 and September 30, 2017.
Real Estate Development Activity
At September 30, 2018, KRC had three projects under construction,
including 333 Dexter in the South Lake Union submarket of Seattle, Phase
I of Academy on Vine, a mixed-use project in the Hollywood submarket of
Los Angeles, and Phases I and II of One Paseo, a mixed-use project in
the Del Mar submarket of San Diego. These three projects encompass
approximately 1.0 million square feet of office space, 608 residential
units and 120,000 square feet of retail space and represent a total
estimated investment of approximately $1.1 billion. Currently, 82% of
the 96,000 square feet of retail space at One Paseo is leased. Further,
the company had two projects in the tenant improvement phase totaling
approximately 1.2 million square feet of office and PDR space. The
office components of the two projects are fully leased to Adobe and
Dropbox.
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 $3.54 to $3.61 per share, with a
midpoint of $3.58 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 September 30, 2018 |
| | Low End | | High End |
|
Net income available to common stockholders per share - diluted
|
$
|
1.30
| | |
$
|
1.36
| |
| | | |
|
|
Weighted average common shares outstanding - diluted (1) |
100,700
| | |
100,700
| |
| | | |
|
|
Net income available to common stockholders
|
$
|
131,000
| | |
$
|
137,000
| |
|
Adjustments:
| | | |
|
Net income attributable to noncontrolling common units of the
Operating Partnership |
2,600
| | |
3,000
| |
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
|
14,500
| | |
15,500
| |
|
Depreciation and amortization of real estate assets
|
244,000
| | |
244,000
| |
|
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) |
$
|
368,600
|
| |
$
|
375,000
|
|
| | | |
|
|
Weighted average common shares/units outstanding – diluted (3) |
104,000
| | |
104,000
| |
| | | |
|
|
Funds From Operations per common share/unit – diluted (2)(3) |
$
|
3.54
|
| |
$
|
3.61
|
|
| | | | | | | |
|
Key 2018 assumptions include:
-
Dispositions of approximately $375.0 million
-
Same store cash net operating income growth of 2% to 3%
-
Year-end occupancy of 94.0% to 94.5%
-
Net operating income margin of approximately 70.5% to 71.0%
-
Remaining development spending of approximately $125.0 million to
$150.0 million
|
________________________
|
|
(1)
|
|
Calculated based on estimated weighted average shares outstanding
including non-participating share-based awards.
|
|
(2)
| |
See management statement for FFO on page 9.
|
|
(3)
| |
Calculated based on weighted average shares outstanding including
participating and non-participating share-based awards, dilutive
impact of stock options, contingently issuable shares, and shares
issuable under forward equity sale agreements and assuming the
exchange of all 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 October 25, 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/krc181025.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/10115556.
A replay of the conference call will be available via telephone on
October 25, 2018 through November 1, 2018 by dialing (877) 344-7529 and
entering passcode 10115556. 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 September 30, 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 three
projects under construction totaling approximately 1.0 million square
feet of office space, 608 residential units and 120,000 square feet of
retail space as well as two projects in the tenant improvement phase
totaling approximately 1.2 million square feet of office and PDR space.
The office components of the two projects are fully leased to Adobe and
Dropbox.
The company’s commitment and leadership position in sustainability has
been recognized by various industry groups across the world. In
September 2018, the company was recognized by GRESB both as North
American leader across all asset classes and global world leader among
all publicly traded real estate companies. Other sustainability
accolades include NAREIT’s Leader in the Light award for the past four
years, the EPA’s highest honor of Sustained Excellence and winner of
Energy Star Partner of the Year for the past five years. The company is
listed in the Dow Jones Sustainability World Index. At the end of the
third quarter, the company’s stabilized portfolio was 59% LEED certified
and 77% 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 September 30, | | Nine Months Ended September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
|
Revenues
| |
$
|
186,562
| | |
$
|
181,534
| | |
$
|
556,456
| | |
$
|
541,440
| |
| | | | | | | |
|
|
Net income available to common stockholders (1) | |
$
|
34,400
| | |
$
|
66,558
| | |
$
|
98,195
| | |
$
|
122,720
| |
| | | | | | | |
|
|
Weighted average common shares outstanding – basic
| |
100,677
| | |
98,352
| | |
99,711
| | |
98,009
| |
|
Weighted average common shares outstanding – diluted
| |
101,228
| | |
98,912
| | |
100,209
| | |
98,591
| |
| | | | | | | |
|
|
Net income available to common stockholders per share – basic (1) | |
$
|
0.34
| | |
$
|
0.67
| | |
$
|
0.97
| | |
$
|
1.24
| |
|
Net income available to common stockholders per share – diluted (1) | |
$
|
0.33
| | |
$
|
0.67
| | |
$
|
0.97
| | |
$
|
1.23
| |
| | | | | | | |
|
|
Funds From Operations (1)(2)(3) | |
$
|
94,247
| | |
$
|
89,547
| | |
$
|
279,161
| | |
$
|
260,248
| |
| | | | | | | |
|
|
Weighted average common shares/units outstanding – basic (4) | |
103,841
| | |
101,618
| | |
102,923
| | |
101,353
| |
|
Weighted average common shares/units outstanding – diluted (5) | |
104,393
| | |
102,178
| | |
103,421
| | |
101,936
| |
| | | | | | | |
|
|
Funds From Operations per common share/unit – basic (3) | |
$
|
0.91
| | |
$
|
0.88
| | |
$
|
2.71
| | |
$
|
2.57
| |
|
Funds From Operations per common share/unit – diluted (3) | |
$
|
0.90
| | |
$
|
0.88
| | |
$
|
2.70
| | |
$
|
2.55
| |
| | | | | | | |
|
|
Common shares outstanding at end of period
| | | | | |
100,747
| | |
98,382
| |
|
Common partnership units outstanding at end of period
| | | | | |
2,025
|
| |
2,077
|
|
|
Total common shares and units outstanding at end of period
| | | | | |
102,772
| | |
100,459
| |
| | | | | | | |
|
| | | | | | September 30, 2018 | | September 30, 2017 |
|
Stabilized office portfolio occupancy rates: (6) | | | | | | | | |
| Greater Los Angeles | | | | | |
94.7
|
%
| |
91.0
|
%
|
| Orange County | | | | | |
89.6
|
%
| |
94.4
|
%
|
| San Diego County | | | | | |
92.6
|
%
| |
93.9
|
%
|
| San Francisco Bay Area | | | | | |
93.8
|
%
| |
95.9
|
%
|
| Greater Seattle | | | | | |
91.5
|
%
| |
95.2
|
%
|
|
Weighted average total
| | | | | |
93.5
|
%
| |
94.0
|
%
|
| | | | | | | |
|
|
Total square feet of stabilized office properties owned at end of
period: (6) | | | | | | | | |
| Greater Los Angeles | | | | | |
4,182
| | |
4,182
| |
| Orange County | | | | | |
272
| | |
272
| |
| San Diego County | | | | | |
2,054
| | |
2,044
| |
| San Francisco Bay Area | | | | | |
5,317
| | |
5,157
| |
| Greater Seattle | | | | | |
2,066
|
| |
2,066
|
|
|
Total
| | | | | |
13,891
| | |
13,721
| |
|
________________________
|
|
(1)
|
|
Net income available to common stockholders and funds from
operations includes a provision for bad debts of $1.3 million and
$6.7 million for the three and nine months ended September 30, 2018,
respectively, and a non-cash charge for the original issuance costs
of redeemed preferred stock of $3.7 million and $7.6 million for the
three and nine months ended September 30, 2017. Net income available
to common stockholders includes gains on sales of depreciable
operating properties of $37.3 million and $39.5 million for the
three and nine months ended September 30, 2017. Net income available
to common stockholders and Funds From Operations include a gain on
sale of land of $0.4 million for the three and nine months ended
September 30, 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, dilutive
impact of stock options, contingently issuable shares, and shares
issuable under forward equity sale agreements 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 September 30,
2017 include the office properties that were sold subsequent to
September 30, 2017.
|
| |
|
| |
| |
KILROY REALTY CORPORATION |
CONSOLIDATED BALANCE SHEETS |
|
(in thousands)
|
| | |
|
| September 30, 2018 | | December 31, 2017 |
| (unaudited) | | |
ASSETS | | | |
|
REAL ESTATE ASSETS:
| | | |
|
Land and improvements
|
$
|
1,127,100
| | |
$
|
1,076,172
| |
|
Buildings and improvements
|
5,056,050
| | |
4,908,797
| |
|
Undeveloped land and construction in progress
|
2,146,430
|
| |
1,432,808
|
|
|
Total real estate assets held for investment
|
8,329,580
| | |
7,417,777
| |
|
Accumulated depreciation and amortization
|
(1,411,529
|
)
| |
(1,264,162
|
)
|
|
Total real estate assets held for investment, net
|
6,918,051
| | |
6,153,615
| |
| | |
|
|
Cash and cash equivalents
|
86,517
| | |
57,649
| |
|
Restricted cash
|
—
| | |
9,149
| |
|
Marketable securities
|
23,353
| | |
20,674
| |
|
Current receivables, net
|
17,519
| | |
16,926
| |
|
Deferred rent receivables, net
|
261,003
| | |
246,391
| |
|
Deferred leasing costs and acquisition-related intangible assets, net
|
183,118
| | |
183,728
| |
|
Prepaid expenses and other assets, net
|
72,675
|
| |
114,706
|
|
|
TOTAL ASSETS
|
$
|
7,562,236
|
| |
$
|
6,802,838
|
|
| | |
|
LIABILITIES AND EQUITY | | | |
|
LIABILITIES:
| | | |
|
Secured debt, net
|
$
|
336,866
| | |
$
|
340,800
| |
|
Unsecured debt, net
|
2,207,049
| | |
2,006,263
| |
|
Unsecured line of credit
|
330,000
| | |
—
| |
|
Accounts payable, accrued expenses and other liabilities
|
360,674
| | |
249,637
| |
|
Accrued dividends and distributions
|
47,411
| | |
43,448
| |
|
Deferred revenue and acquisition-related intangible liabilities, net
|
149,059
| | |
145,890
| |
|
Rents received in advance and tenant security deposits
|
56,258
|
| |
56,484
|
|
|
Total liabilities
|
3,487,317
|
| |
2,842,522
|
|
| | |
|
|
EQUITY:
| | | |
|
Stockholders’ Equity
| | | |
|
Common stock
|
1,007
| | |
986
| |
|
Additional paid-in capital
|
3,965,405
| | |
3,822,492
| |
|
Distributions in excess of earnings
|
(161,654
|
)
| |
(122,685
|
)
|
|
Total stockholders’ equity
|
3,804,758
| | |
3,700,793
| |
|
Noncontrolling Interests
| | | |
|
Common units of the Operating Partnership |
76,486
| | |
77,948
| |
|
Noncontrolling interests in consolidated property partnerships
|
193,675
|
| |
181,575
|
|
|
Total noncontrolling interests
|
270,161
|
| |
259,523
|
|
|
Total equity
|
4,074,919
|
| |
3,960,316
|
|
|
TOTAL LIABILITIES AND EQUITY
|
$
|
7,562,236
|
| |
$
|
6,802,838
|
|
| | | | | | |
|
| |
| |
KILROY REALTY CORPORATION |
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
(unaudited, in thousands, except per share data)
|
| | |
|
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2018 |
| 2017 | | 2018 |
| 2017 |
|
REVENUES
| | | | | | | |
|
Rental income
|
$
|
162,288
| | |
$
|
159,954
| | |
$
|
489,674
| | |
$
|
475,527
| |
|
Tenant reimbursements
|
21,754
| | |
19,665
| | |
60,471
| | |
58,228
| |
|
Other property income
|
2,520
|
| |
1,915
|
| |
6,311
|
| |
7,685
|
|
|
Total revenues
|
186,562
|
| |
181,534
|
| |
556,456
|
| |
541,440
|
|
| | | | | | |
|
|
EXPENSES
| | | | | | | |
|
Property expenses
|
35,163
| | |
33,070
| | |
99,401
| | |
97,615
| |
|
Real estate taxes
|
17,462
| | |
16,371
| | |
52,421
| | |
50,878
| |
|
Provision for bad debts
|
1,338
| | |
1,036
| | |
6,714
| | |
2,743
| |
|
Ground leases
|
1,579
| | |
1,562
| | |
4,726
| | |
4,751
| |
|
General and administrative expenses
|
19,277
| | |
14,514
| | |
56,599
| | |
43,750
| |
|
Depreciation and amortization
|
62,700
|
| |
62,567
|
| |
189,421
|
| |
185,737
|
|
|
Total expenses
|
137,519
|
| |
129,120
|
| |
409,282
|
| |
385,474
|
|
| | | | | | |
|
|
OTHER (EXPENSES) INCOME
| | | | | | | |
|
Interest income and other net investment gain/loss
|
342
| | |
1,526
| | |
1,147
| | |
3,629
| |
|
Interest expense
|
(11,075
|
)
| |
(16,151
|
)
| |
(37,285
|
)
| |
(51,476
|
)
|
|
Total other (expenses) income
|
(10,733
|
)
| |
(14,625
|
)
| |
(36,138
|
)
| |
(47,847
|
)
|
| | | | | | |
|
|
INCOME FROM OPERATIONS BEFORE GAINS ON SALES OF REAL ESTATE
|
38,310
| | |
37,789
| | |
111,036
| | |
108,119
| |
|
Net gain on sale of land
|
—
| | |
449
| | |
—
| | |
449
| |
|
Gains on sale of depreciable operating properties
|
—
|
| |
37,250
|
| |
—
|
| |
39,507
|
|
|
NET INCOME
|
38,310
|
| |
75,488
|
| |
111,036
|
| |
148,075
|
|
| | | | | | |
|
|
Net income attributable to noncontrolling common units of the
Operating Partnership |
(691
|
)
| |
(1,394
|
)
| |
(2,008
|
)
| |
(2,633
|
)
|
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
|
(3,219
|
)
| |
(2,984
|
)
| |
(10,833
|
)
| |
(9,359
|
)
|
|
Total income attributable to noncontrolling interests
|
(3,910
|
)
| |
(4,378
|
)
| |
(12,841
|
)
| |
(11,992
|
)
|
| | | | | | |
|
|
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
|
34,400
|
| |
71,110
|
| |
98,195
|
| |
136,083
|
|
| | | | | | |
|
|
Preferred dividends
|
—
| | |
(808
|
)
| |
—
| | |
(5,774
|
)
|
|
Original issuance costs of redeemed preferred stock
|
—
|
| |
(3,744
|
)
| |
—
|
| |
(7,589
|
)
|
|
Total preferred dividends
|
—
|
| |
(4,552
|
)
| |
—
|
| |
(13,363
|
)
|
|
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
34,400
|
| |
$
|
66,558
|
| |
$
|
98,195
|
| |
$
|
122,720
|
|
| | | | | | |
|
|
Weighted average common shares outstanding – basic
|
100,677
| | |
98,352
| | |
99,711
| | |
98,009
| |
|
Weighted average common shares outstanding – diluted
|
101,228
| | |
98,912
| | |
100,209
| | |
98,591
| |
| | | | | | |
|
|
Net income available to common stockholders per share – basic
|
$
|
0.34
|
| |
$
|
0.67
|
| |
$
|
0.97
|
| |
$
|
1.24
|
|
|
Net income available to common stockholders per share – diluted
|
$
|
0.33
|
| |
$
|
0.67
|
| |
$
|
0.97
|
| |
$
|
1.23
|
|
| | | | | | | | | | | | | | |
|
|
| |
| |
KILROY REALTY CORPORATION |
FUNDS FROM OPERATIONS |
|
(unaudited, in thousands, except per share data)
|
| | | |
|
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
|
Net income available to common stockholders
| |
$
|
34,400
| | |
$
|
66,558
| | |
$
|
98,195
| | |
$
|
122,720
| |
|
Adjustments:
| | | | | | | | |
|
Net income attributable to noncontrolling common units of the
Operating Partnership | |
691
| | |
1,394
| | |
2,008
| | |
2,633
| |
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
| |
3,219
| | |
2,984
| | |
10,833
| | |
9,359
| |
|
Depreciation and amortization of real estate assets
| |
61,609
| | |
61,141
| | |
186,242
| | |
181,875
| |
|
Gains on sales of depreciable real estate
| |
—
| | |
(37,250
|
)
| |
—
| | |
(39,507
|
)
|
|
Funds From Operations attributable to noncontrolling interests in
consolidated property partnerships
| |
(5,672
|
)
| |
(5,280
|
)
| |
(18,117
|
)
| |
(16,832
|
)
|
|
Funds From Operations(1)(2)(3) | |
$
|
94,247
|
| |
$
|
89,547
|
| |
$
|
279,161
|
| |
$
|
260,248
|
|
| | | | | | | |
|
|
Weighted average common shares/units outstanding – basic (4) | |
103,841
| | |
101,618
| | |
102,923
| | |
101,353
| |
|
Weighted average common shares/units outstanding – diluted (5) | |
104,393
| | |
102,178
| | |
103,421
| | |
101,936
| |
| | | | | | | |
|
|
Funds From Operations per common share/unit – basic (2) | |
$
|
0.91
|
| |
$
|
0.88
|
| |
$
|
2.71
|
| |
$
|
2.57
|
|
|
Funds From Operations per common share/unit – diluted (2) | |
$
|
0.90
|
| |
$
|
0.88
|
| |
$
|
2.70
|
| |
$
|
2.55
|
|
| | | | | | | | | | | | | | | |
|
|
________________________
|
|
(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 $4.8 million and $4.2 million for the three months
ended September 30, 2018 and 2017, respectively, and $13.7 million
and $12.4 million for the nine months ended September 30, 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, dilutive
impact of stock options, contingently issuable shares, and shares
issuable under forward equity sale agreements and assuming the
exchange of all common limited partnership units outstanding.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181024005951/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