LOS ANGELES--(BUSINESS WIRE)--
Kilroy Realty Corporation(NYSE: KRC) today reported
financial results for its fourth quarter ended December 31, 2018.
Fourth Quarter Highlights
Financial Results
-
Net income available to common stockholders per share of $1.58 and
funds from operations available to common stockholders and unitholders
(“FFO”) per share of $0.78 included the following on a per share basis:
-
Charge of $0.13 ($0.12 for FFO) related to the early redemption of
the company’s 6.625% unsecured senior notes due June 2020
-
Total gains on real estate sales of $1.53, comprised of a land
gain of $0.12 ($0.11 for FFO) and operating property gains of
$1.41 (gains on sales of operating properties not included in FFO)
-
Non-cash charge of $0.12 related to accrued potential future
executive retirement benefits
-
Revenues of $190.8 million
Stabilized Portfolio
-
Stabilized portfolio was 94.4% occupied and 96.6% leased at
December 31, 2018
-
Signed approximately 768,000 square feet of new or renewing leases
Development
-
In October, commenced GAAP revenue recognition on all 312,000 square
feet of office space 100% leased to Adobe at 100 Hooper, the company’s
recently completed office and production, distribution and repair
(“PDR”) project in San Francisco’s SOMA district
-
In November, signed a long-term lease with Netflix for 100% of the
355,000 square feet of office space currently under construction at
the company’s Hollywood mixed-use project in Los Angeles
-
During the fourth quarter, commenced construction on the residential
component of the Hollywood mixed-use project in Los Angeles and the
office component of the One Paseo mixed-use project in the Del Mar
submarket of San Diego
-
The residential component of the Hollywood development encompasses
193 residential units and represents a total estimated investment
of $195.0 million
-
The office component of One Paseo encompasses 285,000 square feet
and represents a total estimated investment of $205.0 million. It
is approximately 42% pre-leased
Acquisitions
-
In December, completed the acquisition of 345 Brannan Street, a
110,000 square foot office building in San Francisco’s SOMA district,
for $146.0 million. The property is one of three adjacent KRC
buildings, all of which are 100% leased to GM Cruise
Dispositions
-
Across the fourth quarter, completed the sale of 11 operating
properties and a land parcel in three separate transactions for total
gross proceeds of $373.0 million and total gains on sales of $154.8
million. The 11 properties total approximately 772,000 square feet of
space and are located in the Sunnyvale submarket of San Francisco,
Kirkland submarket of Seattle, and the 101 Corridor of Los Angeles
Finance
-
In October, drew the entire $200.0 million of eight-year, 4.35%
unsecured senior notes privately offered in May 2018
-
In November, completed a public offering of $400.0 million of 10-year
senior unsecured notes at 4.750% due December 2028
-
In December, completed the early redemption of all $250.0 million of
6.625% unsecured senior notes due June 2020 for a make whole cash
redemption price of approximately $261.8 million
Full Year 2018 Highlights
-
Achieved a company record in annual leasing, signing 3.4 million
square feet of leases, including just over 2.8 million square feet of
new or renewal leases in the stabilized portfolio and 560,000 square
feet in the in-process development pipeline
-
Commenced tenant improvements on 1.2 million square feet of newly
developed, fully leased office space in San Francisco with a total
estimated investment of $855.0 million
-
Acquired a 39-acre waterfront development site in South San Francisco
for approximately $308.2 million; the site is fully entitled for 2.5
million square feet of office and laboratory space
-
Acquired operating properties in San Francisco and South San Francisco
totaling just over 255,000 square feet of office and laboratory space
for an aggregate cost of $257.0 million
-
Generated gross proceeds of approximately $373.0 million from the
company’s capital recycling program through the disposition of
non-core assets
-
Raised gross proceeds of $650.0 million through the public offering
and private placement of debt at a weighted average rate of 4.592%,
including $400.0 million of green bonds
-
Completed a public offering of 5,000,000 shares of common stock priced
at $72.10 per share structured as a forward sale with a final
settlement date of August 1, 2019
-
Established a new $500.0 million ATM offering program and issued an
aggregate of $132.1 million in net proceeds of common stock at a
weighted average price of $73.64, under both the old and new ATM
programs
-
Increased the annual dividend on the company’s common stock by 7.1% to
$1.82 per share
-
Received continued recognition for industry leadership in
sustainability, including repeat awards from GRESB, NAREIT, the U.S.
Department of Energy and the EPA
Results for the Quarter Ended December 31, 2018
For the fourth quarter ended December 31, 2018, KRC reported net income
available to common stockholders of $160.2 million, or $1.58 per share,
compared to $28.5 million, or $0.28 per share, in the fourth quarter of
2017. FFO in the fourth quarter of 2018 was $81.3 million, or $0.78 per
share, compared to $86.5 million, or $0.85 per share, in the
year-earlier quarter. Net income per share in the 2018 fourth quarter
included a $0.13 per share charge from the early extinguishment of debt
related to the redemption of the 6.625% unsecured senior notes, a $0.12
per share non-cash charge related to accrued potential future executive
retirement benefits, a $0.12 per share gain on the sale of land, and a
$1.41 per share gain on the sale of operating properties. FFO per share
in the 2018 fourth quarter included a $0.12 per share charge from the
early extinguishment of debt related to the redemption of notes, a $0.12
per share non-cash charge related to accrued potential future executive
retirement benefits, and an $0.11 per share gain on the sale of land. In
the prior year’s fourth quarter, net income and FFO per share both
included a $0.06 per share charge related to the early extinguishment of
debt. Revenues in the fourth quarter totaled $190.8 million, up from
$177.6 million in the prior year’s period.
All per share amounts in this report are presented on a diluted basis.
Net Income Available to Common Stockholders / FFO Guidance and
Outlook
The company is providing an initial guidance range of NAREIT-defined FFO
per diluted share for its fiscal year 2019 of $3.58 to $3.78 per share,
with a midpoint of $3.68 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 2019 Range |
| | Low End |
| High End |
|
Net income available to common stockholders per share - diluted
| |
$
|
1.51
| | |
$
|
1.71
| |
| | | |
|
|
Weighted average common shares outstanding - diluted (1) | | |
106,000
| | | |
106,000
| |
| | | |
|
|
Net income available to common stockholders
| |
$
|
160,000
| | |
$
|
181,000
| |
|
Adjustments:
| | | | |
|
Net income attributable to noncontrolling common units of the
Operating Partnership | | |
3,400
| | | |
3,800
| |
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
| | |
20,000
| | | |
23,000
| |
|
Depreciation and amortization of real estate assets
| | |
232,500
| | | |
232,500
| |
|
Gains on sales of depreciable real estate
| | |
—
| | | |
—
| |
|
Funds From Operations attributable to noncontrolling interests in
consolidated property partnerships
| |
|
(29,500
|
)
| |
|
(32,500
|
)
|
|
Funds From Operations (2) | |
$
|
386,400
|
| |
$
|
407,800
|
|
| | | |
|
|
Weighted average common shares/units outstanding – diluted (3) | | |
108,000
| | | |
108,000
| |
| | | |
|
|
Funds From Operations per common share/unit – diluted (2)(3) | |
$
|
3.58
|
| |
$
|
3.78
|
|
|
|
Key 2019 assumptions include:
-
Dispositions of approximately $150.0 million to $350.0 million
-
Flat same store cash net operating income
-
Year-end occupancy of 94.0% to 95.0%
-
Total development spending of approximately $500.0 million to $600.0
million
|
________________________
|
|
(1)
|
|
Calculated based on estimated weighted average shares outstanding
including non-participating share-based awards.
|
|
(2)
| |
See management statement for FFO at end of release.
|
|
(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 2019, 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 initial earnings guidance for fiscal year
2019 during the company’s February 5, 2019 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/krc190205.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/10121412.
A replay of the conference call will be available via telephone on
February 5, 2019 through February 12, 2019 by dialing (877) 344-7529 and
entering passcode 10121412. 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 December 31, 2018, the company’s stabilized portfolio totaled
approximately 13.2 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. The stabilized portfolio was
94.4% occupied and 96.6% leased. In addition, KRC had three projects
under construction totaling approximately 1.3 million square feet of
office space that was 37% leased, 801 residential units and 96,000
square feet of retail space that was 91% leased, 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 a global leader among all
publicly traded real estate companies. Other sustainability accolades
include NAREIT’s Leader in the Light award for the past five 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 fourth
quarter, the company’s stabilized portfolio was 63% LEED certified and
79% 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 or implied 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 enactment or
implementations of, tax laws or other 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 December 31, |
| Twelve Months Ended December 31, |
| | 2018 |
| 2017 | |
| 2018 |
|
|
| 2017 |
|
|
Revenues
| |
$
|
190,842
| |
$
|
177,561
| |
$
|
747,298
| | |
$
|
719,001
| |
| | | | | | | |
|
|
Net income available to common stockholders (1) | |
$
|
160,220
| |
$
|
28,529
| |
$
|
258,415
| | |
$
|
151,249
| |
| | | | | | | |
|
|
Weighted average common shares outstanding – basic
| | |
100,747
| | |
98,424
| | |
99,972
| | | |
98,114
| |
|
Weighted average common shares outstanding – diluted
| | |
101,380
| | |
99,128
| | |
100,482
| | | |
98,727
| |
| | | | | | | |
|
|
Net income available to common stockholders per share – basic (1) | |
$
|
1.59
| |
$
|
0.28
| |
$
|
2.56
| | |
$
|
1.52
| |
|
Net income available to common stockholders per share – diluted (1) | |
$
|
1.58
| |
$
|
0.28
| |
$
|
2.55
| | |
$
|
1.51
| |
| | | | | | | |
|
|
Funds From Operations (1)(2)(3) | |
$
|
81,330
| |
$
|
86,539
| |
$
|
360,491
| | |
$
|
346,787
| |
| | | | | | | |
|
|
Weighted average common shares/units outstanding – basic (4) | | |
103,892
| | |
101,707
| | |
103,167
| | | |
101,443
| |
|
Weighted average common shares/units outstanding – diluted (5) | | |
104,524
| | |
102,411
| | |
103,677
| | | |
102,056
| |
| | | | | | | |
|
|
Funds From Operations per common share/unit – basic (3) | |
$
|
0.78
| |
$
|
0.85
| |
$
|
3.49
| | |
$
|
3.42
| |
|
Funds From Operations per common share/unit – diluted (3) | |
$
|
0.78
| |
$
|
0.85
| |
$
|
3.48
| | |
$
|
3.40
| |
| | | | | | | |
|
|
Common shares outstanding at end of period
| | | | | | |
100,747
| | | |
98,620
| |
|
Common partnership units outstanding at end of period
| | | | | |
|
2,025
|
| |
|
2,077
|
|
|
Total common shares and units outstanding at end of period
| | | | | | |
102,772
| | | |
100,697
| |
| | | | | | | |
|
| | | | | | December 31, 2018 | | December 31, 2017 |
|
Stabilized office portfolio occupancy rates: (6) | | | | | | | | |
| Greater Los Angeles | | | | | | |
95.1
|
%
| | |
93.3
|
%
|
| Orange County | | | | | | |
89.6
|
%
| | |
86.6
|
%
|
| San Diego County | | | | | | |
89.3
|
%
| | |
97.4
|
%
|
| San Francisco Bay Area | | | | | | |
96.4
|
%
| | |
96.1
|
%
|
| Greater Seattle | | | | | |
|
93.6
|
%
| |
|
95.4
|
%
|
|
Weighted average total
| | | | | | |
94.4
|
%
| | |
95.2
|
%
|
| | | | | | | |
|
|
Total square feet of stabilized office properties owned at end of
period: (6) | | | | | | | | |
| Greater Los Angeles | | | | | | |
3,956
| | | |
4,182
| |
| Orange County | | | | | | |
272
| | | |
272
| |
| San Diego County | | | | | | |
2,046
| | | |
2,044
| |
| San Francisco Bay Area | | | | | | |
5,161
| | | |
5,157
| |
| Greater Seattle | | | | | |
|
1,798
|
| |
|
2,066
|
|
|
Total
| | | | | | |
13,233
| | | |
13,721
| |
|
________________________
|
(1)
|
|
Net income available to common stockholders includes gains on sales
of depreciable operating properties of $142.9 million for the three
months and year ended December 31, 2018. Net income available to
common stockholders and funds from operations include a loss on
early extinguishment of debt of $12.6 million, a non-cash charge of
$12.1 million related to accrued potential executive retirement
benefits and a gain on sale of land of $11.8 million for the three
months and year ended December 31, 2018 and a provision for bad
debts of $5.7 million for the year ended December 31, 2018. Net
income available to common stockholders includes gains on sales of
depreciable operating properties of $39.5 million for the year ended
December 31, 2017. Net income available to common stockholders and
funds from operations include a loss on early extinguishment of debt
of $5.3 million for the three months and year ended December 31,
2017 and a gain on sale of land of $0.4 million and a non-cash
charge for the original issuance costs of redeemed preferred stock
of $7.6 million for the year ended December 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, 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 December 31,
2017 include the office properties that were sold subsequent to
December 31, 2017.
|
|
|
KILROY REALTY CORPORATION |
CONSOLIDATED BALANCE SHEETS |
(in thousands)
|
|
|
|
| December 31, 2018 |
| December 31, 2017 |
| | (unaudited) | | |
ASSETS | | | | |
|
REAL ESTATE ASSETS:
| | | | |
|
Land and improvements
| |
$
|
1,160,138
| | |
$
|
1,076,172
| |
|
Buildings and improvements
| | |
5,207,984
| | | |
4,908,797
| |
|
Undeveloped land and construction in progress
| |
|
2,058,510
|
| |
|
1,432,808
|
|
|
Total real estate assets held for investment
| | |
8,426,632
| | | |
7,417,777
| |
|
Accumulated depreciation and amortization
| |
|
(1,391,368
|
)
| |
|
(1,264,162
|
)
|
|
Total real estate assets held for investment, net
| | |
7,035,264
| | | |
6,153,615
| |
| | | |
|
|
Cash and cash equivalents
| | |
51,604
| | | |
57,649
| |
|
Restricted cash
| | |
119,430
| | | |
9,149
| |
|
Marketable securities
| | |
21,779
| | | |
20,674
| |
|
Current receivables, net
| | |
20,176
| | | |
16,926
| |
|
Deferred rent receivables, net
| | |
267,007
| | | |
246,391
| |
|
Deferred leasing costs and acquisition-related intangible assets, net
| | |
197,574
| | | |
183,728
| |
|
Prepaid expenses and other assets, net
| |
|
52,873
|
| |
|
114,706
|
|
|
TOTAL ASSETS
| |
$
|
7,765,707
|
| |
$
|
6,802,838
|
|
| | | |
|
LIABILITIES AND EQUITY | | | | |
|
LIABILITIES:
| | | | |
|
Secured debt, net
| |
$
|
335,531
| | |
$
|
340,800
| |
|
Unsecured debt, net
| | |
2,552,070
| | | |
2,006,263
| |
|
Unsecured line of credit
| | |
45,000
| | | |
—
| |
|
Accounts payable, accrued expenses and other liabilities
| | |
374,415
| | | |
249,637
| |
|
Accrued dividends and distributions
| | |
47,559
| | | |
43,448
| |
|
Deferred revenue and acquisition-related intangible liabilities, net
| | |
149,646
| | | |
145,890
| |
|
Rents received in advance and tenant security deposits
| |
|
60,225
|
| |
|
56,484
|
|
|
Total liabilities
| |
|
3,564,446
|
| |
|
2,842,522
|
|
| | | |
|
|
EQUITY:
| | | | |
|
Stockholders’ Equity
| | | | |
|
Common stock
| | |
1,007
| | | |
986
| |
|
Additional paid-in capital
| | |
3,976,953
| | | |
3,822,492
| |
|
Distributions in excess of earnings
| |
|
(48,053
|
)
| |
|
(122,685
|
)
|
|
Total stockholders’ equity
| | |
3,929,907
| | | |
3,700,793
| |
|
Noncontrolling Interests
| | | | |
|
Common units of the Operating Partnership | | |
78,991
| | | |
77,948
| |
|
Noncontrolling interests in consolidated property partnerships
| |
|
192,363
|
| |
|
181,575
|
|
|
Total noncontrolling interests
| |
|
271,354
|
| |
|
259,523
|
|
|
Total equity
| |
|
4,201,261
|
| |
|
3,960,316
|
|
|
TOTAL LIABILITIES AND EQUITY
| |
$
|
7,765,707
|
| |
$
|
6,802,838
|
|
|
|
KILROY REALTY CORPORATION |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(unaudited, in thousands, except per share data)
|
|
|
|
| Three Months Ended December 31, |
| Twelve Months Ended December 31, |
| |
| 2018 |
|
|
| 2017 |
| |
| 2018 |
|
|
| 2017 |
|
|
REVENUES
| | | | | | | | |
|
Rental income
| |
$
|
166,957
| | |
$
|
158,369
| | |
$
|
656,631
| | |
$
|
633,896
| |
|
Tenant reimbursements
| | |
20,511
| | | |
18,331
| | | |
80,982
| | | |
76,559
| |
|
Other property income
| |
|
3,374
|
| |
|
861
|
| |
|
9,685
|
| |
|
8,546
|
|
|
Total revenues
| |
|
190,842
|
| |
|
177,561
|
| |
|
747,298
|
| |
|
719,001
|
|
| | | | | | | |
|
|
EXPENSES
| | | | | | | | |
|
Property expenses
| | |
34,386
| | | |
32,356
| | | |
133,787
| | | |
129,971
| |
|
Real estate taxes
| | |
18,399
| | | |
15,571
| | | |
70,820
| | | |
66,449
| |
|
Provision for bad debts
| | |
(1,029
|
)
| | |
526
| | | |
5,685
| | | |
3,269
| |
|
Ground leases
| | |
1,450
| | | |
1,586
| | | |
6,176
| | | |
6,337
| |
|
General and administrative expenses
| | |
33,872
| | | |
16,831
| | | |
90,471
| | | |
60,581
| |
|
Depreciation and amortization
| |
|
64,860
|
| |
|
60,149
|
| |
|
254,281
|
| |
|
245,886
|
|
|
Total expenses
| |
|
151,938
|
| |
|
127,019
|
| |
|
561,220
|
| |
|
512,493
|
|
| | | | | | | |
|
|
OTHER (EXPENSES) INCOME
| | | | | | | | |
|
Interest income and other net investment (loss) gain
| | |
(1,706
|
)
| | |
1,874
| | | |
(559
|
)
| | |
5,503
| |
|
Interest expense
| | |
(12,436
|
)
| | |
(14,564
|
)
| | |
(49,721
|
)
| | |
(66,040
|
)
|
|
Loss on early extinguishment of debt
| | |
(12,623
|
)
| | |
(5,312
|
)
| | |
(12,623
|
)
| | |
(5,312
|
)
|
|
Gain on sales of land
| | |
11,825
| | | |
—
| | | |
11,825
| | | |
449
| |
|
Gains on sales of depreciable operating properties
| |
|
142,926
|
| |
|
—
|
| |
|
142,926
|
| |
|
39,507
|
|
|
Total other (expenses) income
| |
|
127,986
|
| |
|
(18,002
|
)
| |
|
91,848
|
| |
|
(25,893
|
)
|
| | | | | | | |
|
|
NET INCOME
| |
|
166,890
|
| |
|
32,540
|
| |
|
277,926
|
| |
|
180,615
|
|
| | | | | | | |
|
|
Net income attributable to noncontrolling common units of the
Operating Partnership | | |
(3,185
|
)
| | |
(590
|
)
| | |
(5,193
|
)
| | |
(3,223
|
)
|
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
| |
|
(3,485
|
)
| |
|
(3,421
|
)
| |
|
(14,318
|
)
| |
|
(12,780
|
)
|
|
Total income attributable to noncontrolling interests
| |
|
(6,670
|
)
| |
|
(4,011
|
)
| |
|
(19,511
|
)
| |
|
(16,003
|
)
|
| | | | | | | |
|
|
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
| |
|
160,220
|
| |
|
28,529
|
| |
|
258,415
|
| |
|
164,612
|
|
| | | | | | | |
|
|
Preferred dividends
| | |
—
| | | |
—
| | | |
—
| | | |
(5,774
|
)
|
|
Original issuance costs of redeemed preferred stock
| |
|
—
|
| |
|
—
|
| |
|
—
|
| |
|
(7,589
|
)
|
|
Total preferred dividends
| |
|
—
|
| |
|
—
|
| |
|
—
|
| |
|
(13,363
|
)
|
|
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
| |
$
|
160,220
|
| |
$
|
28,529
|
| |
$
|
258,415
|
| |
$
|
151,249
|
|
| | | | | | | |
|
|
Weighted average common shares outstanding – basic
| | |
100,747
| | | |
98,424
| | | |
99,972
| | | |
98,114
| |
|
Weighted average common shares outstanding – diluted
| | |
101,380
| | | |
99,128
| | | |
100,482
| | | |
98,727
| |
| | | | | | | |
|
|
Net income available to common stockholders per share – basic
| |
$
|
1.59
|
| |
$
|
0.28
|
| |
$
|
2.56
|
| |
$
|
1.52
|
|
|
Net income available to common stockholders per share – diluted
| |
$
|
1.58
|
| |
$
|
0.28
|
| |
$
|
2.55
|
| |
$
|
1.51
|
|
|
|
KILROY REALTY CORPORATION |
FUNDS FROM OPERATIONS |
(unaudited, in thousands, except per share data)
|
|
|
|
| Three Months Ended December 31, |
| Twelve Months Ended December 31, |
| |
| 2018 |
|
|
| 2017 |
| |
| 2018 |
|
|
| 2017 |
|
|
Net income available to common stockholders
| |
$
|
160,220
| | |
$
|
28,529
| | |
$
|
258,415
| | |
$
|
151,249
| |
|
Adjustments:
| | | | | | | | |
|
Net income attributable to noncontrolling common units of the
Operating Partnership | | |
3,185
| | | |
590
| | | |
5,193
| | | |
3,223
| |
|
Net income attributable to noncontrolling interests in consolidated
property partnerships
| | |
3,485
| | | |
3,421
| | | |
14,318
| | | |
12,780
| |
|
Depreciation and amortization of real estate assets
| | |
63,640
| | | |
59,987
| | | |
249,882
| | | |
241,862
| |
|
Gains on sales of depreciable real estate
| | |
(142,926
|
)
| | |
—
| | | |
(142,926
|
)
| | |
(39,507
|
)
|
|
Funds From Operations attributable to noncontrolling interests in
consolidated property partnerships
| |
|
(6,274
|
)
| |
|
(5,988
|
)
| |
|
(24,391
|
)
| |
|
(22,820
|
)
|
|
Funds From Operations(1)(2)(3) | |
$
|
81,330
|
| |
$
|
86,539
|
| |
$
|
360,491
|
| |
$
|
346,787
|
|
| | | | | | | |
|
|
Weighted average common shares/units outstanding – basic (4) | | |
103,892
| | | |
101,707
| | | |
103,167
| | | |
101,443
| |
|
Weighted average common shares/units outstanding – diluted (5) | | |
104,524
| | | |
102,411
| | | |
103,677
| | | |
102,056
| |
| | | | | | | |
|
|
Funds From Operations per common share/unit – basic (2) | |
$
|
0.78
|
| |
$
|
0.85
|
| |
$
|
3.49
|
| |
$
|
3.42
|
|
|
Funds From Operations per common share/unit – diluted (2) | |
$
|
0.78
|
| |
$
|
0.85
|
| |
$
|
3.48
|
| |
$
|
3.40
|
|
|
________________________
|
|
(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 $4.7 million and $4.4 million for the three months
ended December 31, 2018 and 2017, respectively, and $18.4 million
and $16.8 million for the twelve months ended December 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, 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/20190204005815/en/
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