Kilroy Realty Corporation (NYSE: KRC) today reported
financial results for its third quarter ended September 30,
2024.
Financial Results
- Revenues grew 2.2% to $289.9 million for the quarter ended
September 30, 2024, as compared to $283.6 million for the quarter
ended September 30, 2023
- Net income available to common stockholders of $0.44 per
diluted share, as compared to $0.45 per diluted share for the
quarter ended September 30, 2023
- Funds from operations available to common stockholders and
unitholders (“FFO”) of $140.4 million, or $1.17 per diluted share,
an increase of 4.5% as compared to $134.0 million, or $1.12 per
diluted share, for the quarter ended September 30, 2023
“I’m pleased to report on a strong quarter of execution across
our platform as we continue to navigate the recovery that is taking
hold in our markets,” commented Angela Aman, CEO. “In addition to
solid third quarter leasing activity, we have also been active on
the capital allocation front, acquiring a small office campus
located strategically adjacent to our One Paseo mixed-use project
in San Diego.”
Leasing and Occupancy
- Stabilized portfolio was 84.3% occupied and 85.8% leased at
September 30, 2024
- During the quarter ended September 30, 2024, signed
approximately 436,000 square feet of leases, comprised of 48,000
square feet of new leasing on previously vacant space, 38,000
square feet of new leasing on currently occupied space, and 350,000
square feet of renewal leasing
- Includes 209,000 square feet of short-term leasing, primarily
comprised of 198,000 square feet of short-term renewal leasing
- During the quarter ended September 30, 2024, DermTech, which
filed for bankruptcy during the quarter ended June 30, 2024,
rejected its lease and Kilroy executed a 110,000 square foot
short-term lease with the successor entity to facilitate DermTech’s
interim operations. This lease has been excluded from the leasing
productivity statistics above
- During the quarter ended September 30, 2024, GAAP rents on
signed leases increased 26.0% and cash rents increased 7.1% from
prior levels on second generation leasing, excluding short-term
leasing
Acquisition Activity
- In September, completed the acquisition of Junction at Del Mar,
an approximately 104,000 square foot office property, comprised of
two buildings in the Del Mar submarket of San Diego, for $35.0
million. The buildings, which are located adjacent to the Company’s
One Paseo mixed-use project, are 96% leased with a weighted average
lease term of 4.7 years
Balance Sheet /
Liquidity
- In September, repaid the full amount outstanding on the $120.0
million term loan, which had an initial maturity date of October 3,
2024
- As of September 30, 2024, the Company had approximately $1.7
billion of total liquidity comprised of approximately $0.6 billion
of cash and approximately $1.1 billion available under the fully
undrawn unsecured revolving credit facility
Dividend
- The Board 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
- The dividend was paid on October 9, 2024 to stockholders of
record on September 30, 2024 (the ex-dividend date)
Net Income Available to Common Stockholders / FFO Guidance
and Outlook
The Company is providing an updated Nareit-defined FFO per
diluted share guidance for the full year 2024 of $4.38 to $4.44 per
share, with a midpoint of $4.41 per share.
Full Year 2024 Range as
of July 2024
Full Year 2024 Range as
of October 2024
Low End
High End
Low End
High End
$ and shares/units in
thousands, except per share/unit amounts
Net income available to common
stockholders per share - diluted
$
1.50
$
1.59
$
1.61
$
1.66
Weighted average common shares outstanding
- diluted (1)
118,000
118,000
118,150
118,150
Net income available to common
stockholders
$
177,000
$
188,000
$
190,000
$
196,000
Adjustments:
Net income attributable to noncontrolling
common units of the Operating Partnership
1,800
1,900
1,900
2,000
Net income attributable to noncontrolling
interests in consolidated property partnerships
20,500
21,000
20,250
20,750
Depreciation and amortization of real
estate assets
338,000
339,000
346,000
347,000
Gains on sales of depreciable real
estate
—
—
—
—
Funds From Operations attributable to
noncontrolling interests in consolidated property partnerships
(31,500
)
(32,000
)
(31,500
)
(32,000
)
Funds From Operations (2)
$
505,800
$
517,900
$
526,650
$
533,750
Weighted average common shares/units
outstanding – diluted (3)
120,200
120,200
120,250
120,250
Funds From Operations per common
share/unit – diluted (3)
$
4.21
$
4.31
$
4.38
$
4.44
Key Assumptions
July 2024 Assumptions
October 2024
Assumptions
Change in same store cash NOI (4)
(3.0%) to (4.0%)
(1.5%) to (2.0%)
Average full year occupancy
82.75% to 83.75%
83.75% to 84.25%
General and administrative expenses
$72 million to $80 million
$74 million to $76 million
Total development spending (5)
$225 million to $275 million
$250 million to $275 million
Weighted average common shares/units
outstanding – diluted (in thousands) (3)
120,200
120,225
________________________
(1)
Calculated based on estimated weighted
average shares outstanding, including non-participating share-based
awards and the dilutive impact of contingently issuable shares.
(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, and the 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 2024 development spending is $50
million to $75 million.
The Company’s guidance estimates for the full year 2024, 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. These guidance estimates
do not include the impact on the Company’s operating results from
potential future acquisitions, dispositions (including any
associated gains or losses), capital markets activity, impairment
charges, or any events outside of the Company’s control, as the
timing and magnitude of any such events are not known at the time
the Company provides guidance. 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 third quarter results and
the current business environment during the Company’s October 29,
2024 earnings conference call. The call will begin at 10:00 a.m.
Pacific Time and last approximately one hour. To participate and
obtain conference call dial-in details, register by using the
following link,
https://www.netroadshow.com/events/login?show=f1c41247&confId=58186.
Those interested in listening via the Internet can access the
conference call at https://events.q4inc.com/attendee/193901324. It
may be necessary to download audio software to hear the conference
call.
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, Los Angeles, the San Francisco Bay Area, Seattle, and
Austin. The Company has earned global recognition for
sustainability, building operations, innovation, and design. As a
pioneer and innovator 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 September 30, 2024, Kilroy’s stabilized portfolio totaled
approximately 17.1 million square feet of primarily office and life
science space that was 84.3% occupied and 85.8% leased. The Company
also had approximately 1,000 residential units in Hollywood and San
Diego, which had a quarterly average occupancy of 92.0%. In
addition, the Company had two life science redevelopment projects
in the tenant improvement phase totaling approximately 100,000
square feet with total estimated redevelopment costs of $80.0
million and one approximately 875,000 square foot in-process
development project with a total estimated investment of $1.0
billion.
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 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 listed on the Dow Jones Sustainability World Index,
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 also has a
longstanding commitment to maintain high levels of LEED, Fitwel,
and ENERGY STAR certifications across the portfolio.
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 four consecutive
years, 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 an 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; risks associated with climate change and our
sustainability strategies, and our ability to achieve our
sustainability goals; 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, 2023, 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 September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Revenues
$
289,938
$
283,594
$
849,250
$
860,678
Net income available to common
stockholders
$
52,378
$
52,762
$
151,509
$
164,957
Weighted average common shares outstanding
– basic
117,830
117,185
117,516
117,133
Weighted average common shares outstanding
– diluted
118,244
117,495
117,955
117,411
Net income available to common
stockholders per share – basic
$
0.44
$
0.45
$
1.27
$
1.40
Net income available to common
stockholders per share – diluted
$
0.44
$
0.45
$
1.27
$
1.40
Funds From Operations (1)(2)
$
140,448
$
134,047
$
406,758
$
421,859
Weighted average common shares/units
outstanding – basic (3)
119,702
118,934
119,798
118,894
Weighted average common shares/units
outstanding – diluted (4)
120,115
119,245
120,237
119,172
Funds From Operations per common
share/unit – basic (2)
$
1.17
$
1.13
$
3.40
$
3.55
Funds From Operations per common
share/unit – diluted (2)
$
1.17
$
1.12
$
3.38
$
3.54
Common shares outstanding at end of
period
118,047
117,240
Common partnership units outstanding at
end of period
1,151
1,151
Total common shares and units outstanding
at end of period
119,198
118,391
September 30, 2024
September 30, 2023
Stabilized office portfolio occupancy
rates: (5)
Los Angeles
76.7
%
81.2
%
San Diego
87.9
%
86.1
%
San Francisco Bay Area
91.1
%
91.1
%
Seattle
80.4
%
83.5
%
Austin
74.2
%
—
%
Weighted average total
84.3
%
86.2
%
Total square feet of stabilized office
properties owned at end of period: (5)
Los Angeles
4,338
4,345
San Diego
2,877
2,770
San Francisco Bay Area
6,171
6,170
Seattle
2,996
3,000
Austin
759
—
Total
17,141
16,285
________________________
(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.
KILROY
REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
September 30, 2024
December 31, 2023
ASSETS
REAL ESTATE ASSETS:
Land and improvements
$
1,750,820
$
1,743,170
Buildings and improvements
8,573,332
8,463,674
Undeveloped land and construction in
progress
2,254,628
2,034,804
Total real estate assets held for
investment
12,578,780
12,241,648
Accumulated depreciation and
amortization
(2,747,494
)
(2,518,304
)
Total real estate assets held for
investment, net
9,831,286
9,723,344
Cash and cash equivalents
625,395
510,163
Marketable securities
27,144
284,670
Current receivables, net
11,218
13,609
Deferred rent receivables, net
455,613
460,979
Deferred leasing costs and
acquisition-related intangible assets, net
226,991
229,705
Right of use ground lease assets
129,492
125,506
Prepaid expenses and other assets, net
73,495
53,069
TOTAL ASSETS
$
11,380,634
$
11,401,045
LIABILITIES AND
EQUITY
LIABILITIES:
Secured debt, net
$
599,478
$
603,225
Unsecured debt, net
4,401,678
4,325,153
Accounts payable, accrued expenses and
other liabilities
354,785
371,179
Ground lease liabilities
128,606
124,353
Accrued dividends and distributions
64,844
64,440
Deferred revenue and acquisition-related
intangible liabilities, net
151,670
173,638
Rents received in advance and tenant
security deposits
71,033
79,364
Total liabilities
5,772,094
5,741,352
EQUITY:
Stockholders’ Equity
Common stock
1,181
1,173
Additional paid-in capital
5,203,195
5,205,839
Retained earnings
175,962
221,149
Total stockholders’ equity
5,380,338
5,428,161
Noncontrolling Interests
Common units of the Operating
Partnership
52,441
53,275
Noncontrolling interests in consolidated
property partnerships
175,761
178,257
Total noncontrolling interests
228,202
231,532
Total equity
5,608,540
5,659,693
TOTAL LIABILITIES AND EQUITY
$
11,380,634
$
11,401,045
KILROY
REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except
per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
REVENUES
Rental income
$
285,951
$
280,681
$
836,760
$
852,094
Other property income
3,987
2,913
12,490
8,584
Total revenues
289,938
283,594
849,250
860,678
EXPENSES
Property expenses
63,593
59,445
180,192
168,233
Real estate taxes
26,677
28,363
84,925
84,868
Ground leases
2,977
2,390
8,725
7,172
General and administrative expenses
(1)
18,066
24,761
54,596
71,356
Leasing costs
2,353
1,852
6,751
4,550
Depreciation and amortization
91,879
85,224
267,061
269,262
Total expenses
205,545
202,035
602,250
605,441
OTHER INCOME (EXPENSES)
Interest income
9,688
7,015
32,962
11,896
Interest expense
(36,408
)
(29,837
)
(112,042
)
(81,891
)
Total other expenses
(26,720
)
(22,822
)
(79,080
)
(69,995
)
NET INCOME
57,673
58,737
167,920
185,242
Net income attributable to noncontrolling
common units of the Operating Partnership
(509
)
(515
)
(1,469
)
(1,612
)
Net income attributable to noncontrolling
interests in consolidated property partnerships
(4,786
)
(5,460
)
(14,942
)
(18,673
)
Total income attributable to
noncontrolling interests
(5,295
)
(5,975
)
(16,411
)
(20,285
)
NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS
$
52,378
$
52,762
$
151,509
$
164,957
Weighted average shares of common stock
outstanding – basic
117,830
117,185
117,516
117,133
Weighted average shares of common stock
outstanding – diluted
118,244
117,495
117,955
117,411
Net income available to common
stockholders per share – basic
$
0.44
$
0.45
$
1.27
$
1.40
Net income available to common
stockholders per share – diluted
$
0.44
$
0.45
$
1.27
$
1.40
________________________
(1)
The three and nine months ended September
30, 2023 includes $5.8 million and $12.1 million, respectively, of
retirement costs for our former CEO and former President, primarily
comprised of accelerated stock compensation expense.
KILROY
REALTY CORPORATION
FUNDS FROM
OPERATIONS
(unaudited; in thousands, except
per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net income available to common
stockholders
$
52,378
$
52,762
$
151,509
$
164,957
Adjustments:
Net income attributable to noncontrolling
common units of the Operating Partnership
509
515
1,469
1,612
Net income attributable to noncontrolling
interests in consolidated property partnerships
4,786
5,460
14,942
18,673
Depreciation and amortization of real
estate assets
90,243
83,518
262,292
263,662
Funds From Operations attributable to
noncontrolling interests in consolidated property partnerships
(7,468
)
(8,208
)
(23,454
)
(27,045
)
Funds From Operations(1)(2)(3)
$
140,448
$
134,047
$
406,758
$
421,859
Weighted average common shares/units
outstanding – basic (4)
119,702
118,934
119,798
118,894
Weighted average common shares/units
outstanding – diluted (5)
120,115
119,245
120,237
119,172
Funds From Operations per common
share/unit – basic (2)
$
1.17
$
1.13
$
3.40
$
3.55
Funds From Operations per common
share/unit – diluted (2)
$
1.17
$
1.12
$
3.38
$
3.54
________________________
(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
depreciation and amortization related to real estate, gains and
losses from the sale of certain real estate assets, gains and
losses from change in control, and impairment write-downs of
certain real estate assets and investments in entities when the
impairment is directly attributable to decreases in the value of
depreciable real estate held by the entity. The reconciling items
include amounts to adjust earnings from consolidated
partially-owned entities and equity in earnings of unconsolidated
affiliates to FFO. 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 $4.2 million and $4.9 million
for the three months ended September 30, 2024 and 2023,
respectively, and $15.1 million and $15.0 million for the nine
months ended September 30, 2024 and 2023, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20241028090358/en/
Jeffrey Kuehling Executive Vice President, Chief Financial
Officer (310) 481-8440 or Taylor Friend Senior Vice President,
Capital Markets and Treasurer (310) 481-8574
Kilroy Realty (NYSE:KRC)
過去 株価チャート
から 11 2024 まで 12 2024
Kilroy Realty (NYSE:KRC)
過去 株価チャート
から 12 2023 まで 12 2024