Kilroy Realty Corporation (NYSE: KRC) today reported
financial results for its second quarter ended June 30, 2023.
Second Quarter
Highlights
Financial Results
- Revenues grew 4.8% to $284.3 million for the quarter ended June
30, 2023, as compared to $271.2 million for the quarter ended June
30, 2022
- Net income available to common stockholders of $0.47 per
diluted share, an increase of 17.5% as compared to $0.40 per
diluted share for the quarter ended June 30, 2022
- Funds from operations available to common stockholders and
unitholders (“FFO”) of $141.9 million, or $1.19 per diluted share,
an increase of 1.7% as compared to $139.4 million, or $1.17 per
diluted share for the quarter ended June 30, 2022
- Both net income available to common stockholders per diluted
share and FFO per diluted share for the current quarter include
$0.03 of non-recurring items
Leasing and Occupancy
- Stabilized portfolio was 86.6% occupied and 88.6% leased at
June 30, 2023
- Signed approximately 285,000 square feet of new and renewing
leases
- GAAP and cash rents increased 15.3% and 2.5%, respectively,
from prior levels in the stabilized portfolio
Balance Sheet / Liquidity
- As of the date of this release, the company had approximately
$1.9 billion of total liquidity comprised of approximately $660.0
million of cash and short term investments, including the proceeds
from the mortgage note referenced below, $170.0 million available
under the unsecured term loan facility and approximately $1.1
billion available under the unsecured revolving credit
facility
Dividend
- The company’s Board of Directors declared and paid a regular
quarterly cash dividend on its common stock of $0.54 per share,
equivalent to an annual rate of $2.16
Recent Developments
Development and Redevelopment
- In July, commenced GAAP revenue recognition at 9514 Towne
Centre Drive, an approximately 71,000 square foot office building
in the University Towne Center submarket of San Diego, and added
the building to the stabilized portfolio. The building was moved to
the tenant improvement phase upon completion of the core and shell
in April and is 100% leased to a global technology company
Secured Debt
- In July, entered into an eleven-year, non-recourse mortgage
note for $375.0 million. The mortgage note bears interest at a
fixed rate of 5.90% and matures on August 10, 2034
Net Income Available to Common Stockholders / FFO Guidance
and Outlook
The company is providing an updated guidance range of
Nareit-defined FFO per diluted share for the full year 2023 of
$4.43 to $4.53 per share, with a midpoint of $4.48 per share.
Full Year 2023 Range
Low End
High End
Net income available to common
stockholders per share - diluted
$
1.67
$
1.77
Weighted average common shares outstanding
- diluted (1)
117,500
117,500
Net income available to common
stockholders
$
196,000
$
208,000
Adjustments:
Net income attributable to noncontrolling
common units of the Operating Partnership
2,000
2,300
Net income attributable to noncontrolling
interests in consolidated property partnerships
24,500
25,500
Depreciation and amortization of real
estate assets
340,000
340,000
Gains on sales of depreciable real
estate
—
—
Funds From Operations attributable to
noncontrolling interests in consolidated property partnerships
(34,500
)
(35,500
)
Funds From Operations (2)
$
528,000
$
540,300
Weighted average common shares/units
outstanding – diluted (3)
119,200
119,200
Funds From Operations per common
share/unit – diluted (3)
$
4.43
$
4.53
Key Assumptions
April 2023 Assumptions
Updated 2023
Assumptions
Same Store Cash NOI growth (4)
0.0% to 2.0%
1.5% to 2.5%
Average occupancy
86.50% to 88.00%
86.75% to 87.75%
Total development spending (5)
$400 million to $500 million
$425 million to $475 million
Dispositions
$0 to $200 million
$0 to $200 million
________________________
(1)
Calculated based on estimated weighted
average shares outstanding including non-participating share-based
awards.
(2)
See management statement for Funds From
Operations at end of release.
(3)
Calculated based on weighted average
shares outstanding including participating and non-participating
share-based awards, dilutive impact of contingently issuable
shares, and assuming the exchange of all common limited partnership
units outstanding. Reported amounts are attributable to common
stockholders, common unitholders and restricted stock
unitholders.
(4)
See management statement for Same Store
Cash Net Operating Income on page 32 of our Supplemental Financial
Report furnished on Form 8-K with this press release.
(5)
Remaining 2023 development spending is
$250 million to $300 million.
The company’s guidance estimates for the full year 2023, 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
The company’s management will discuss second quarter results and
the current business environment during the company’s August 1,
2023 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://events.q4inc.com/attendee/353799978. 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 (844) 200-6205 and enter access code 797620 five to 10
minutes prior to the start time to allow time for registration.
International callers should dial (929) 526-1599 and enter the same
passcode. In order to bypass speaking to the operator on the day of
the call, please pre-register anytime at
https://www.netroadshow.com/events/login?show=cc0cf787&confId=44981.
A replay of the conference call will be available via telephone on
August 1, 2023 through August 8, 2023 by dialing (866) 813-9403 and
entering passcode 365683. International callers should dial (929)
458-6194 and enter the same passcode. The replay will also be
available on our website at
https://investors.kilroyrealty.com/shareholders/investor-events/default.aspx.
About Kilroy Realty Corporation
Kilroy Realty Corporation (NYSE: KRC, the “company”, “Kilroy”)
is a leading U.S. landlord and developer, with operations in San
Diego, Greater Los Angeles, the San Francisco Bay Area, the Pacific
Northwest and Austin, Texas. The company has earned global
recognition for sustainability, building operations, innovation and
design. As pioneers and innovators in the creation of a more
sustainable real estate industry, the company’s approach to modern
business environments helps drive creativity and productivity for
some of the world’s leading technology, entertainment, life science
and business services companies.
The company is a publicly traded real estate investment trust
(“REIT”) and member of the S&P MidCap 400 Index with more than
seven decades of experience developing, acquiring and managing
office, life science and mixed-use projects.
As of June 30, 2023, Kilroy’s stabilized portfolio totaled
approximately 16.2 million square feet of primarily office and life
science space that was 86.6% occupied and 88.6% leased. The company
also had more than 1,000 residential units in Hollywood and San
Diego, which had a quarterly average occupancy of 92.7%. In
addition, the company had two in-process life science redevelopment
projects with total estimated redevelopment costs of $80.0 million,
totaling approximately 100,000 square feet, and three in-process
development projects with an estimated total investment of $1.7
billion, totaling approximately 1.7 million square feet of office
and life science space. The in-process development and
redevelopment office and life science space is 35% leased.
A Leader in Sustainability and Commitment to Corporate Social
Responsibility
Kilroy has a longstanding commitment to sustainability and
continues to be a recognized leader in our sector. For over a
decade, the company and its sustainability initiatives have been
recognized with numerous honors, including being listed on the Dow
Jones Sustainability World Index, earning the GRESB five star
rating and being named a sector and regional leader in the
Americas. Other honors have included the Nareit Leader in the Light
Award, being named ENERGY STAR Partner of the Year and receiving
the ENERGY STAR highest honor of Sustained Excellence.
Kilroy is proud to have achieved carbon neutral operations
across our portfolio since 2020. The company’s portfolio was 64%
LEED certified and 44% Fitwel certified, and 67% of eligible
properties were ENERGY STAR certified as of June 30, 2023.
A significant part of the company’s foundation is its commitment
to enhancing employee growth, satisfaction and wellness while
maintaining a diverse and thriving culture. For the fourth year in
a row, the company has been named to Bloomberg’s Gender Equality
Index, which recognizes companies committed to supporting gender
equality through policy development, representation, and
transparency.
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, including
periods of heightened inflation, 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, Texas 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,
including bankruptcy, lack of liquidity or lack of funding and the
impact labor disruptions or strikes, such as episodic strikes in
the entertainment industry, may have on our tenants’ businesses;
our ability to re-lease property at or above current market rates;
reduced demand for office space, including as a result of remote
working and flexible working arrangements that allow work from
remote locations other than the employer's office premises; 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; changes in interest rates and 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, 2022 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 dates 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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues
$
284,282
$
271,184
$
577,084
$
536,685
Net income available to common
stockholders
$
55,587
$
47,105
$
112,195
$
100,233
Weighted average common shares outstanding
– basic
117,155
116,822
117,107
116,737
Weighted average common shares outstanding
– diluted
117,360
117,185
117,383
117,123
Net income available to common
stockholders per share – basic
$
0.47
$
0.40
$
0.95
$
0.85
Net income available to common
stockholders per share – diluted
$
0.47
$
0.40
$
0.95
$
0.85
Funds From Operations (1)(2)
$
141,853
$
139,353
$
287,812
$
277,119
Weighted average common shares/units
outstanding – basic (3)
118,930
118,584
118,874
118,606
Weighted average common shares/units
outstanding – diluted (4)
119,134
118,946
119,149
118,992
Funds From Operations per common
share/unit – basic (2)
$
1.19
$
1.18
$
2.42
$
2.34
Funds From Operations per common
share/unit – diluted (2)
$
1.19
$
1.17
$
2.42
$
2.33
Common shares outstanding at end of
period
117,178
116,871
Common partnership units outstanding at
end of period
1,151
1,151
Total common shares and units outstanding
at end of period
118,329
118,022
June 30, 2023
June 30, 2022
Stabilized office portfolio occupancy
rates: (5)
Greater Los Angeles
81.5
%
84.9
%
San Diego County
85.4
%
90.9
%
San Francisco Bay Area
92.3
%
93.1
%
Greater Seattle
83.4
%
97.8
%
Weighted average total
86.6
%
91.4
%
Total square feet of stabilized office
properties owned at end of period: (5)
Greater Los Angeles
4,344
4,422
San Diego County
2,700
2,174
San Francisco Bay Area
6,170
6,212
Greater Seattle
3,000
3,000
Total
16,214
15,808
________________________
(1)
Reconciliation of Net income available to
common stockholders to Funds From Operations available to common
stockholders and unitholders and management statement on Funds From
Operations are included after the Consolidated Statements of
Operations.
(2)
Reported amounts are attributable to
common stockholders, common unitholders and restricted stock
unitholders.
(3)
Calculated based on weighted average
shares outstanding including participating share-based awards (i.e.
nonvested stock and certain time based restricted stock units) and
assuming the exchange of all common limited partnership units
outstanding.
(4)
Calculated based on weighted average
shares outstanding including participating and non-participating
share-based awards, dilutive impact of contingently issuable
shares, and assuming the exchange of all common limited partnership
units outstanding.
(5)
Occupancy percentages and total square
feet reported are based on the company’s stabilized office
portfolio for the periods presented. Occupancy percentages
and total square feet shown for June 30, 2022 include the office
properties that were sold subsequent to June 30, 2022.
KILROY
REALTY CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited;
in thousands)
June 30, 2023
December 31, 2022
ASSETS
REAL ESTATE ASSETS:
Land and improvements
$
1,738,242
$
1,738,242
Buildings and improvements
8,353,596
8,302,081
Undeveloped land and construction in
progress
1,894,545
1,691,860
Total real estate assets held for
investment
11,986,383
11,732,183
Accumulated depreciation and
amortization
(2,369,515
)
(2,218,710
)
Total real estate assets held for
investment, net
9,616,868
9,513,473
Cash and cash equivalents
361,885
347,379
Marketable securities
25,786
23,547
Current receivables, net
10,686
20,583
Deferred rent receivables, net
463,640
452,200
Deferred leasing costs and
acquisition-related intangible assets, net
230,559
250,846
Right of use ground lease assets
126,022
126,530
Prepaid expenses and other assets, net
75,588
62,429
TOTAL ASSETS
$
10,911,034
$
10,796,987
LIABILITIES AND
EQUITY
LIABILITIES:
Secured debt, net
$
240,142
$
242,938
Unsecured debt, net
4,172,833
4,020,058
Accounts payable, accrued expenses and
other liabilities
377,733
392,360
Ground lease liabilities
124,678
124,994
Accrued dividends and distributions
64,438
64,285
Deferred revenue and acquisition-related
intangible liabilities, net
185,429
195,959
Rents received in advance and tenant
security deposits
78,187
81,432
Total liabilities
5,243,440
5,122,026
EQUITY:
Stockholders’ Equity
Common stock
1,172
1,169
Additional paid-in capital
5,184,227
5,170,760
Retained earnings
248,695
265,118
Total stockholders’ equity
5,434,094
5,437,047
Noncontrolling Interests
Common units of the Operating
Partnership
53,358
53,524
Noncontrolling interests in consolidated
property partnerships
180,142
184,390
Total noncontrolling interests
233,500
237,914
Total equity
5,667,594
5,674,961
TOTAL LIABILITIES AND EQUITY
$
10,911,034
$
10,796,987
KILROY
REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
REVENUES
Rental income
$
281,309
$
268,576
$
571,413
$
531,784
Other property income
2,973
2,608
5,671
4,901
Total revenues
284,282
271,184
577,084
536,685
EXPENSES
Property expenses
55,008
49,922
108,788
95,346
Real estate taxes
28,277
25,433
56,505
51,303
Ground leases
2,413
1,876
4,782
3,702
General and administrative expenses
22,659
22,120
46,595
44,901
Leasing costs
1,326
1,447
2,698
2,460
Depreciation and amortization
90,362
96,415
184,038
185,075
Total expenses
200,045
197,213
403,406
382,787
OTHER INCOME (EXPENSES)
Interest and other income, net
3,421
125
4,881
206
Interest expense
(26,383
)
(20,121
)
(52,054
)
(40,746
)
Total other expenses
(22,962
)
(19,996
)
(47,173
)
(40,540
)
NET INCOME
61,275
53,975
126,505
113,358
Net income attributable to noncontrolling
common units of the Operating Partnership
(537
)
(515
)
(1,097
)
(1,031
)
Net income attributable to noncontrolling
interests in consolidated property partnerships
(5,151
)
(6,355
)
(13,213
)
(12,094
)
Total income attributable to
noncontrolling interests
(5,688
)
(6,870
)
(14,310
)
(13,125
)
NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS
$
55,587
$
47,105
$
112,195
$
100,233
Weighted average common shares outstanding
– basic
117,155
116,822
117,107
116,737
Weighted average common shares outstanding
– diluted
117,360
117,185
117,383
117,123
Net income available to common
stockholders per share – basic
$
0.47
$
0.40
$
0.95
$
0.85
Net income available to common
stockholders per share – diluted
$
0.47
$
0.40
$
0.95
$
0.85
KILROY
REALTY CORPORATION FUNDS FROM OPERATIONS (unaudited; in
thousands, except per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income available to common
stockholders
$
55,587
$
47,105
$
112,195
$
100,233
Adjustments:
Net income attributable to noncontrolling
common units of the Operating Partnership
537
515
1,097
1,031
Net income attributable to noncontrolling
interests in consolidated property partnerships
5,151
6,355
13,213
12,094
Depreciation and amortization of real
estate assets
88,473
94,718
180,144
181,719
Funds From Operations attributable to
noncontrolling interests in consolidated property partnerships
(7,895
)
(9,340
)
(18,837
)
(17,958
)
Funds From Operations(1)(2)(3)
$
141,853
$
139,353
$
287,812
$
277,119
Weighted average common shares/units
outstanding – basic (4)
118,930
118,584
118,874
118,606
Weighted average common shares/units
outstanding – diluted (5)
119,134
118,946
119,149
118,992
Funds From Operations per common
share/unit – basic (2)
$
1.19
$
1.18
$
2.42
$
2.34
Funds From Operations per common
share/unit – diluted (2)
$
1.19
$
1.17
$
2.42
$
2.33
________________________
(1)
We calculate Funds From Operations
available to common stockholders and common unitholders (“FFO”) in
accordance with the 2018 Restated White Paper on FFO approved by
the Board of Governors of Nareit. The White Paper defines FFO
as net income or loss calculated in accordance with GAAP, excluding
extraordinary items, as defined by GAAP, gains and losses from
sales of depreciable real estate and impairment write-downs
associated with depreciable real estate, plus real estate-related
depreciation and amortization (excluding amortization of deferred
financing costs and depreciation of non-real estate assets) and
after adjustment for unconsolidated partnerships and joint
ventures. Our calculation of FFO includes the amortization of
deferred revenue related to tenant-funded tenant improvements and
excludes the depreciation of the related tenant improvement
assets. We also add back net income attributable to
noncontrolling common units of the Operating Partnership because we
report FFO attributable to common stockholders and common
unitholders.
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 $4.9 million for the three
months ended June 30, 2023 and 2022, and $10.1 million and
$9.2 million for the six months ended June 30, 2023 and 2022,
respectively.
(4)
Calculated based on weighted average
shares outstanding including participating share-based awards (i.e.
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 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/20230731667493/en/
Eliott Trencher Executive Vice President, Chief Financial
Officer and Chief Investment Officer (310) 481-8587 or Bill
Hutcheson Senior Vice President, Investor Relations & Capital
Markets (415) 778-5678
Kilroy Realty (NYSE:KRC)
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De Abr 2024 até Mai 2024
Kilroy Realty (NYSE:KRC)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024