Toggle SGML Header (+)


Section 1: 10-Q (10-Q)

Document
false--12-31Q32019000102599600014939760.4250.4550.4550.4550.4850.4850.011500000001500000001007469881060119161007469881060119160.0110.010.4250.4550.4550.4550.4850.4851007469881060119164676100046761000583370005833700020252872023287202528720232870.0020.002 0001025996 krc:KilroyRealtyL.P.Member 2019-01-01 2019-09-30 0001025996 2019-01-01 2019-09-30 0001025996 2019-10-18 0001025996 2019-09-30 0001025996 2018-12-31 0001025996 2018-07-01 2018-09-30 0001025996 2018-01-01 2018-09-30 0001025996 2019-07-01 2019-09-30 0001025996 krc:TenantReimbursementsMember 2018-01-01 2018-09-30 0001025996 us-gaap:RealEstateOtherMember 2018-07-01 2018-09-30 0001025996 krc:TenantReimbursementsMember 2018-07-01 2018-09-30 0001025996 us-gaap:RealEstateMember 2018-01-01 2018-09-30 0001025996 us-gaap:RealEstateMember 2018-07-01 2018-09-30 0001025996 us-gaap:RealEstateOtherMember 2018-01-01 2018-09-30 0001025996 krc:RentalMember 2019-01-01 2019-09-30 0001025996 us-gaap:RealEstateMember 2019-07-01 2019-09-30 0001025996 us-gaap:RealEstateMember 2019-01-01 2019-09-30 0001025996 krc:RentalMember 2018-07-01 2018-09-30 0001025996 us-gaap:RealEstateOtherMember 2019-01-01 2019-09-30 0001025996 krc:RentalMember 2018-01-01 2018-09-30 0001025996 us-gaap:RealEstateOtherMember 2019-07-01 2019-09-30 0001025996 krc:RentalMember 2019-07-01 2019-09-30 0001025996 krc:TenantReimbursementsMember 2019-07-01 2019-09-30 0001025996 krc:TenantReimbursementsMember 2019-01-01 2019-09-30 0001025996 2017-12-31 0001025996 us-gaap:NoncontrollingInterestMember 2018-01-01 2018-03-31 0001025996 us-gaap:NoncontrollingInterestMember 2017-12-31 0001025996 us-gaap:ParentMember 2018-04-01 2018-06-30 0001025996 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0001025996 us-gaap:ParentMember 2018-01-01 2018-03-31 0001025996 us-gaap:NoncontrollingInterestMember 2018-07-01 2018-09-30 0001025996 us-gaap:CommonStockMember 2018-06-30 0001025996 us-gaap:CommonStockMember 2018-03-31 0001025996 us-gaap:ParentMember 2018-07-01 2018-09-30 0001025996 us-gaap:ParentMember 2018-03-31 0001025996 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0001025996 us-gaap:NoncontrollingInterestMember 2018-04-01 2018-06-30 0001025996 2018-04-01 2018-06-30 0001025996 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0001025996 us-gaap:CommonStockMember 2018-07-01 2018-09-30 0001025996 2018-06-30 0001025996 2018-01-01 2018-03-31 0001025996 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001025996 2018-03-31 0001025996 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0001025996 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0001025996 us-gaap:CommonStockMember 2017-12-31 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2018-07-01 2018-09-30 0001025996 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2018-06-30 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2018-03-31 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2018-04-01 2018-06-30 0001025996 us-gaap:ParentMember 2018-06-30 0001025996 us-gaap:NoncontrollingInterestMember 2018-06-30 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2018-01-01 2018-03-31 0001025996 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001025996 us-gaap:CommonStockMember 2018-09-30 0001025996 us-gaap:NoncontrollingInterestMember 2018-03-31 0001025996 us-gaap:ParentMember 2017-12-31 0001025996 2018-09-30 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2017-12-31 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2018-09-30 0001025996 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001025996 us-gaap:ParentMember 2018-09-30 0001025996 us-gaap:NoncontrollingInterestMember 2018-09-30 0001025996 2019-06-30 0001025996 us-gaap:ParentMember 2019-04-01 2019-06-30 0001025996 us-gaap:NoncontrollingInterestMember 2019-04-01 2019-06-30 0001025996 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001025996 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0001025996 us-gaap:NoncontrollingInterestMember 2019-07-01 2019-09-30 0001025996 us-gaap:ParentMember 2019-07-01 2019-09-30 0001025996 2019-01-01 2019-03-31 0001025996 us-gaap:NoncontrollingInterestMember 2019-03-31 0001025996 us-gaap:CommonStockMember 2019-09-30 0001025996 us-gaap:ParentMember 2019-01-01 2019-03-31 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2019-04-01 2019-06-30 0001025996 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001025996 us-gaap:CommonStockMember 2019-03-31 0001025996 2019-04-01 2019-06-30 0001025996 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0001025996 us-gaap:NoncontrollingInterestMember 2018-12-31 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2019-09-30 0001025996 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001025996 us-gaap:ParentMember 2019-09-30 0001025996 us-gaap:CommonStockMember 2018-12-31 0001025996 us-gaap:NoncontrollingInterestMember 2019-09-30 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2019-07-01 2019-09-30 0001025996 us-gaap:NoncontrollingInterestMember 2019-06-30 0001025996 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0001025996 us-gaap:ParentMember 2018-12-31 0001025996 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001025996 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2019-01-01 2019-03-31 0001025996 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0001025996 us-gaap:AccountingStandardsUpdate201602Member us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2019-01-01 0001025996 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001025996 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0001025996 2019-03-31 0001025996 us-gaap:CommonStockMember 2019-06-30 0001025996 us-gaap:ParentMember 2019-06-30 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2019-03-31 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2019-06-30 0001025996 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0001025996 us-gaap:AccountingStandardsUpdate201602Member us-gaap:ParentMember 2019-01-01 0001025996 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2018-12-31 0001025996 us-gaap:ParentMember 2019-03-31 0001025996 krc:KilroyRealtyL.P.Member 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:CapitalUnitsMember 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:CapitalUnitsMember 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member 2019-07-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member 2018-07-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member 2018-01-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RealEstateMember 2019-01-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RealEstateOtherMember 2018-01-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RealEstateOtherMember 2018-07-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:RentalMember 2019-07-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:TenantReimbursementsMember 2018-01-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RealEstateOtherMember 2019-01-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:TenantReimbursementsMember 2019-07-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RealEstateMember 2018-07-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:TenantReimbursementsMember 2018-07-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:RentalMember 2018-01-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:RentalMember 2018-07-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RealEstateMember 2018-01-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RealEstateOtherMember 2019-07-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:TenantReimbursementsMember 2019-01-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RealEstateMember 2019-07-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:RentalMember 2019-01-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2019-07-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2019-04-01 2019-06-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2019-04-01 2019-06-30 0001025996 krc:KilroyRealtyL.P.Member 2019-04-01 2019-06-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2019-01-01 2019-03-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2019-07-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2019-06-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2019-06-30 0001025996 krc:KilroyRealtyL.P.Member 2019-01-01 2019-03-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2019-03-31 0001025996 krc:KilroyRealtyL.P.Member 2019-06-30 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member 2019-03-31 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2019-03-31 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:AccountingStandardsUpdate201602Member krc:PartnersCapitalCommonUnitMember 2019-01-01 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2018-01-01 2018-03-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2018-07-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2018-06-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2018-04-01 2018-06-30 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2018-07-01 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2018-06-30 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2018-03-31 0001025996 krc:KilroyRealtyL.P.Member 2018-04-01 2018-06-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2018-01-01 2018-03-31 0001025996 krc:KilroyRealtyL.P.Member 2018-01-01 2018-03-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2018-04-01 2018-06-30 0001025996 krc:KilroyRealtyL.P.Member 2018-03-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2018-03-31 0001025996 krc:KilroyRealtyL.P.Member 2018-09-30 0001025996 krc:KilroyRealtyL.P.Member 2017-12-31 0001025996 krc:KilroyRealtyL.P.Member krc:PartnersCapitalCommonUnitMember 2017-12-31 0001025996 krc:KilroyRealtyL.P.Member 2018-06-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:NoncontrollingInterestMember 2017-12-31 0001025996 krc:OfficePropertiesMember 2019-09-30 0001025996 krc:ResidentialdevelopmentprojectMember 2019-09-30 0001025996 krc:DevelopmentProjectsTenantImprovementMember 2019-09-30 0001025996 krc:PropertiesHeldforSaleMember 2019-09-30 0001025996 krc:DevelopmentProjectsUnderConstructionMember 2019-09-30 0001025996 us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember krc:A2211MichelsonDriveIrvineCAMember krc:PropertiesHeldforSaleMember us-gaap:BuildingMember 2019-09-30 0001025996 krc:StabilizedResidentialPropertiesMember 2019-09-30 0001025996 krc:DevelopmentProjectinSanFranciscoMember krc:SanFranciscoCaliforniaMember krc:DevelopmentPropertiesMember 2019-09-30 0001025996 stpr:WA krc:OfficePropertiesMember 2019-09-30 0001025996 krc:RedwoodLLCMember 2019-09-30 0001025996 krc:A101FirstLLCand303SecondLLCMember krc:DevelopmentPropertiesMember 2019-09-30 0001025996 krc:A101FirstLLCand303SecondLLCMember 2019-09-30 0001025996 krc:NonAffiliatedInvestorsMember krc:OperatingPartnershipMember 2019-01-01 2019-09-30 0001025996 us-gaap:AccountingStandardsUpdate201602Member 2018-01-01 2018-09-30 0001025996 stpr:WA krc:DevelopmentPropertiesMember 2019-09-30 0001025996 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 2019-09-30 0001025996 krc:PropertyExpenseReimbursementMember us-gaap:AccountingStandardsUpdate201602Member 2019-07-01 2019-09-30 0001025996 krc:OperatingPartnershipMember krc:FinancePartnershipMember 2019-01-01 2019-09-30 0001025996 2019-01-01 0001025996 us-gaap:AccountingStandardsUpdate201602Member 2019-07-01 2019-09-30 0001025996 krc:DevelopmentPropertiesMember 2019-09-30 0001025996 krc:DevelopmentProjectsUnderConstructionMember srt:RetailSiteMember 2019-09-30 0001025996 krc:PropertyExpenseReimbursementMember us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 2019-09-30 0001025996 us-gaap:AccountingStandardsUpdate201602Member 2018-07-01 2018-09-30 0001025996 krc:OperatingPartnershipMember 2019-01-01 2019-09-30 0001025996 us-gaap:RealEstateInvestmentMember 2019-09-30 0001025996 krc:DevelopmentSitesMember 2019-09-30 0001025996 krc:A101FirstLLCand303SecondLLCMember 2018-12-31 0001025996 krc:SanFranciscoCaliforniaMember 2019-09-30 0001025996 krc:KilroyRealtyFinanceInc.Member krc:FinancePartnershipMember 2019-01-01 2019-09-30 0001025996 us-gaap:RealEstateInvestmentMember 2018-12-31 0001025996 krc:PropertiesandDevelopmentProjectsMember 2019-01-01 2019-09-30 0001025996 krc:DevelopmentProjectinSanFranciscoMember krc:SanFranciscoCaliforniaMember krc:OfficePropertiesMember 2019-09-30 0001025996 krc:A1135Broadway901ParkBoulevardSanDiegoCAMember 2019-08-19 2019-08-19 0001025996 krc:A2829TownsgateRoadThousandOaksCAMember us-gaap:BuildingMember 2019-09-30 0001025996 krc:A2829TownsgateRoadThousandOaksCAMember us-gaap:BuildingMember 2019-01-01 2019-09-30 0001025996 us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember 2019-09-30 0001025996 us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember us-gaap:LandAndLandImprovementsMember 2019-09-30 0001025996 us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember us-gaap:BuildingAndBuildingImprovementsMember 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:OneHundredFiftyMillionTermLoanFacilityMember us-gaap:LineOfCreditMember 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:OneHundredFiftyMillionTermLoanFacilityMember us-gaap:LineOfCreditMember 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member krc:OneHundredFiftyMillionTermLoanFacilityMember us-gaap:LineOfCreditMember 2019-01-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RevolvingCreditFacilityMember 2019-01-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RevolvingCreditFacilityMember 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RevolvingCreditFacilityMember 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:UnsecuredNotesMember us-gaap:UnsecuredDebtMember 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:UnsecuredNotesMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:OneHundredFiftyMillionTermLoanFacilityMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member krc:A605MortgagePayableDueJune12019Member us-gaap:SecuredDebtMember 2019-02-11 2019-02-11 0001025996 krc:KilroyRealtyL.P.Member us-gaap:SeniorNotesMember 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-01 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:RevolvingCreditFacilityMember 2018-01-01 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member krc:OneHundredFiftyMillionTermLoanFacilityMember us-gaap:LineOfCreditMember 2018-01-01 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member krc:OneHundredFiftyMillionTermLoanFacilityMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-01 2018-12-31 0001025996 us-gaap:CommonStockMember krc:A2018AtTheMarketProgramMember krc:ForwardEquitySaleMember 2019-09-30 0001025996 krc:ForwardEquitySaleMember 2018-08-31 0001025996 us-gaap:CommonStockMember krc:ForwardEquitySaleMember 2018-08-01 2018-08-31 0001025996 krc:ForwardEquitySaleMember 2018-08-01 2018-08-31 0001025996 krc:A2018AtTheMarketProgramMember 2018-06-30 0001025996 krc:OperatingPartnershipMember 2018-10-01 2018-12-31 0001025996 krc:NonAffiliatedInvestorsMember krc:OperatingPartnershipMember 2018-10-01 2018-12-31 0001025996 krc:NonAffiliatedInvestorsMember krc:OperatingPartnershipMember 2018-07-01 2018-09-30 0001025996 krc:OperatingPartnershipMember 2018-07-01 2018-09-30 0001025996 krc:NonAffiliatedInvestorsMember us-gaap:CapitalUnitsMember 2019-09-30 0001025996 krc:NonAffiliatedInvestorsMember us-gaap:CapitalUnitsMember 2018-09-30 0001025996 krc:NonAffiliatedInvestorsMember us-gaap:CapitalUnitsMember 2018-12-31 0001025996 krc:KilroyRealtyL.P.Member us-gaap:CapitalUnitsMember 2018-09-30 0001025996 krc:A2018PerformanceBasedRSUsMember 2019-02-01 2019-02-01 0001025996 krc:A2019PerformanceBasedRSUsMember 2019-02-01 2019-02-01 0001025996 krc:A2019PerformanceBasedRSUsMember 2019-02-01 2019-02-28 0001025996 krc:TimeBasedRSUsAndPerformanceBasedRSUsGrantedInPriorYearsMember krc:ExecutiveOfficerShareBasedCompensationProgramsMember 2019-07-01 2019-09-30 0001025996 krc:KilroyRealty2006IncentiveAwardPlanMember 2019-09-30 0001025996 krc:A2019PerformanceBasedRSUsMember 2019-01-01 2019-09-30 0001025996 krc:A2019PerformanceBasedRSUsMember 2019-09-30 0001025996 krc:TimeBasedRestrictedStockUnitsRsusMember krc:ExecutiveOfficerShareBasedCompensationProgramsMember 2019-02-01 2019-02-28 0001025996 krc:A2019TimeBasedRSUsMember 2019-02-01 2019-02-01 0001025996 krc:A2019TimeBasedRSUsMember 2019-02-01 2019-02-28 0001025996 krc:MarketMeasureBasedRestrictedStockUnitsRsusMember krc:MarketMeasureBasedRSUEstimateofProbableMember 2019-09-30 0001025996 krc:MarketMeasureBasedRestrictedStockUnitsRsusMember krc:ExecutiveOfficerShareBasedCompensationProgramsMember 2019-02-01 2019-02-28 0001025996 us-gaap:RestrictedStockUnitsRSUMember krc:ExecutiveOfficerShareBasedCompensationProgramsMember 2019-02-01 2019-02-28 0001025996 krc:A2019PerformanceBasedRSUsMember krc:ExecutiveOfficerShareBasedCompensationProgramsMember 2019-07-01 2019-09-30 0001025996 krc:TimeBasedRestrictedStockUnitsRSUs2019TimeBasedRSUGrantMember 2019-02-01 2019-02-01 0001025996 krc:A2019TimeBasedRSUsMember krc:ExecutiveOfficerShareBasedCompensationProgramsMember 2019-07-01 2019-09-30 0001025996 krc:A2019PerformanceBasedRSUsMember 2019-02-01 0001025996 krc:EnvironmentalMattersMember 2019-09-30 0001025996 krc:FortyFiveYearGroundLeaseExtensionOptionMember 2019-01-01 2019-09-30 0001025996 2018-01-01 2018-12-31 0001025996 krc:TenYearGroundLeaseExtensionOptionMember 2018-01-01 2018-12-31 0001025996 krc:TenYearGroundLeaseExtensionOptionMember 2019-01-01 2019-09-30 0001025996 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-09-30 0001025996 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0001025996 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:UnsecuredDebtMember 2019-09-30 0001025996 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:LineOfCreditMember 2019-09-30 0001025996 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0001025996 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:LineOfCreditMember 2019-09-30 0001025996 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:UnsecuredDebtMember 2018-12-31 0001025996 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:UnsecuredDebtMember 2018-12-31 0001025996 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:LineOfCreditMember 2018-12-31 0001025996 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:LineOfCreditMember 2018-12-31 0001025996 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-09-30 0001025996 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:UnsecuredDebtMember 2019-09-30 0001025996 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001025996 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0001025996 krc:KilroyRealtyL.P.Member 2019-01-01 0001025996 krc:A31013243LaCienegaBoulevardMember us-gaap:SubsequentEventMember 2019-10-15 0001025996 krc:A31013243LaCienegaBoulevardMember us-gaap:SubsequentEventMember 2019-10-15 2019-10-15 0001025996 us-gaap:SubsequentEventMember 2019-10-16 2019-10-16 iso4217:USD xbrli:shares iso4217:USD xbrli:shares krc:VIE krc:installment krc:compensation_plan krc:building krc:property krc:ground_lease utreg:sqft krc:trading_day krc:tenant utreg:acre krc:entity krc:property_partnership krc:project krc:residential_unit xbrli:pure
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission File Number: 1-12675 (Kilroy Realty Corporation)
Commission File Number: 000-54005 (Kilroy Realty, L.P.)
KILROY REALTY CORPORATION
KILROY REALTY, L.P.
(Exact name of registrant as specified in its charter)
 
 
 
 
Kilroy Realty Corporation
Maryland
95-4598246
 
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
 
 
Kilroy Realty, L.P.
Delaware
95-4612685
 
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

12200 W. Olympic Boulevard, Suite 200, Los Angeles, California, 90064
(Address of principal executive offices) (Zip Code)

(310) 481-8400
(Registrant's telephone number, including area code)
 
 
 
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Registrant
Title of each class
Name of each exchange on which registered
Ticker Symbol
Kilroy Realty Corporation
Common Stock, $.01 par value
New York Stock Exchange
KRC
Securities registered pursuant to Section 12(g) of the Act:
Registrant
Title of each class
Kilroy Realty, L.P.
Common Units Representing Limited Partnership Interests
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Kilroy Realty Corporation    Yes      No  
Kilroy Realty, L.P.         Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    
Kilroy Realty Corporation     Yes      No  
Kilroy Realty, L.P.         Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Kilroy Realty Corporation
Large accelerated filer ☑    Accelerated filer 
Non-accelerated filer ☐    Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Kilroy Realty, L.P.
Large accelerated filer ☐    Accelerated filer 
Non-accelerated filer ☑    Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Kilroy Realty Corporation Yes       No  
Kilroy Realty, L.P. Yes       No  
As of October 18, 2019, 106,011,916 shares of Kilroy Realty Corporation common stock, par value $.01 per share, were outstanding.
 



EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2019 of Kilroy Realty Corporation and Kilroy Realty, L.P. Unless stated otherwise or the context otherwise requires, references to “Kilroy Realty Corporation” or the “Company,” “we,” “our,” and “us” mean Kilroy Realty Corporation, a Maryland corporation, and its controlled and consolidated subsidiaries, and references to “Kilroy Realty, L.P.” or the “Operating Partnership” mean Kilroy Realty, L.P., a Delaware limited partnership and its controlled and consolidated subsidiaries.
The Company is a real estate investment trust, or REIT, and the general partner of the Operating Partnership. As of September 30, 2019, the Company owned an approximate 98.1% common general partnership interest in the Operating Partnership. The remaining approximate 1.9% common limited partnership interests are owned by non-affiliated investors and certain directors and officers of the Company. As the sole general partner of the Operating Partnership, the Company exercises exclusive and complete discretion over the Operating Partnership’s day-to-day management and control and can cause it to enter into certain major transactions, including acquisitions, dispositions, and refinancings and cause changes in its line of business, capital structure and distribution policies.
There are a few differences between the Company and the Operating Partnership that are reflected in the disclosures in this Form 10-Q. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated, consolidated company. The Company is a REIT, the only material asset of which is the partnership interests it holds in the Operating Partnership. As a result, the Company generally does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time and guaranteeing certain debt of the Operating Partnership. The Company itself is not directly obligated under any indebtedness, but generally guarantees all of the debt of the Operating Partnership. The Operating Partnership owns substantially all of the assets of the Company either directly or through its subsidiaries, conducts the operations of the Company’s business and is structured as a limited partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Company, which the Company generally contributes to the Operating Partnership in exchange for units of partnership interest, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness or through the issuance of units of partnership interest.
Noncontrolling interests, stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and, to the extent not held by the Company, as noncontrolling interests in the Company’s financial statements. The Operating Partnership’s financial statements reflect the noncontrolling interest in Kilroy Realty Finance Partnership, L.P., a Delaware limited partnership (the “Finance Partnership”). This noncontrolling interest represents the Company’s 1% indirect general partnership interest in the Finance Partnership, which is directly held by Kilroy Realty Finance, Inc., a wholly owned subsidiary of the Company. The differences between stockholders’ equity, partners’ capital and noncontrolling interest result from the differences in the equity issued by the Company and the Operating Partnership, and in the Operating Partnership’s noncontrolling interest in the Finance Partnership.
We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:
Combined reports better reflect how management and the analyst community view the business as a single operating unit;
Combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;
Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and
Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.
To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:
consolidated financial statements;
the following notes to the consolidated financial statements:
Note 6, Stockholders’ Equity of the Company;
Note 8, Partners’ Capital of the Operating Partnership;

i


Note 13, Net Income Available to Common Stockholders Per Share of the Company;
Note 14, Net Income Available to Common Unitholders Per Unit of the Operating Partnership;
Note 15, Supplemental Cash Flow Information of the Company; and
Note 16, Supplemental Cash Flow Information of the Operating Partnership;
“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
—Liquidity and Capital Resources of the Company;” and
—Liquidity and Capital Resources of the Operating Partnership.”
This report also includes separate sections under Part I, Item 4. Controls and Procedures and separate Exhibit 31 and Exhibit 32 certifications for the Company and the Operating Partnership to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.


ii


KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
QUARTERLY REPORT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019
TABLE OF CONTENTS
 
 
 
 
Page
 
 
PART I – FINANCIAL INFORMATION
 
Item 1.
 
 
 
 
  
 
  
 
  
Item 1.
 
 
 
 
 
 
 
 
 
 
 
Item 2.
  
Item 3.
 
Item 4.
 
 
 
PART II – OTHER INFORMATION
 
Item 1.
 
Item 1A.
 
Item 2.
 
Item 3.
 
Item 4.
 
Item 5.
 
Item 6.
 
 




PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY CORPORATION

KILROY REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except share data)
 
September 30, 2019
 
December 31, 2018
ASSETS
 
 
 
REAL ESTATE ASSETS:
 
 
 
Land and improvements
$
1,315,448

 
$
1,160,138

Buildings and improvements
5,770,226

 
5,207,984

Undeveloped land and construction in progress
1,892,169

 
2,058,510

Total real estate assets held for investment
8,977,843

 
8,426,632

Accumulated depreciation and amortization
(1,505,785
)
 
(1,391,368
)
Total real estate assets held for investment, net
7,472,058

 
7,035,264

REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 3)
77,751

 

CASH AND CASH EQUIVALENTS
297,620

 
51,604

RESTRICTED CASH
6,300

 
119,430

MARKETABLE SECURITIES (Note 12)
26,188

 
21,779

CURRENT RECEIVABLES, NET (Note 1)
34,116

 
20,176

DEFERRED RENT RECEIVABLES, NET (Note 1)
314,812

 
267,007

DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Note 1)
202,063

 
197,574

RIGHT OF USE GROUND LEASE ASSETS (Notes 1 and 11)
83,200

 

PREPAID EXPENSES AND OTHER ASSETS, NET (Note 4)
109,707

 
52,873

TOTAL ASSETS
$
8,623,815

 
$
7,765,707

LIABILITIES AND EQUITY
 
 
 
LIABILITIES:
 
 
 
Secured debt, net (Notes 5 and 12)
$
259,027

 
$
335,531

Unsecured debt, net (Notes 5 and 12)
3,048,209

 
2,552,070

Unsecured line of credit (Notes 5 and 12)

 
45,000

Accounts payable, accrued expenses and other liabilities
439,081

 
374,415

Ground lease liabilities (Notes 1 and 11)
87,617

 

Accrued dividends and distributions (Note 17)
53,205

 
47,559

Deferred revenue and acquisition-related intangible liabilities, net
134,828

 
149,646

Rents received in advance and tenant security deposits
57,428

 
60,225

Liabilities and deferred revenue of real estate assets held for sale (Note 3)
4,911

 

Total liabilities
4,084,306

 
3,564,446

COMMITMENTS AND CONTINGENCIES (Note 11)

 

EQUITY:
 
 
 
Stockholders’ Equity (Note 6):
 
 
 
Common stock, $.01 par value, 150,000,000 shares authorized, 106,011,916 and 100,746,988 shares issued and outstanding, respectively
1,060

 
1,007

Additional paid-in capital
4,342,296

 
3,976,953

Distributions in excess of earnings (Note 1)
(78,707
)
 
(48,053
)
Total stockholders’ equity
4,264,649

 
3,929,907

Noncontrolling Interests (Notes 1 and 7):
 
 
 
Common units of the Operating Partnership
81,393

 
78,991

Noncontrolling interests in consolidated property partnerships
193,467

 
192,363

Total noncontrolling interests
274,860

 
271,354

Total equity
4,539,509

 
4,201,261

TOTAL LIABILITIES AND EQUITY
$
8,623,815

 
$
7,765,707



See accompanying notes to consolidated financial statements.

1


KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except share and per share data)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
REVENUES (Note 1)
 
 
 
 
 
 
 
Rental income
$
212,321

 
$
162,288

 
$
609,332

 
$
489,674

Tenant reimbursements

 
21,754

 

 
60,471

Other property income
3,204

 
2,520

 
7,887

 
6,311

Total revenues
215,525

 
186,562

 
617,219

 
556,456

EXPENSES
 
 
 
 
 
 
 
Property expenses (Note 1)
41,308

 
35,163

 
117,993

 
99,401

Real estate taxes
19,998

 
17,462

 
56,563

 
52,421

Provision for bad debts (Note 1)

 
1,338

 

 
6,714

Ground leases (Notes 1 and 11)
2,049

 
1,579

 
6,135

 
4,726

General and administrative expenses
22,576

 
19,277

 
65,774

 
56,599

Leasing costs (Note 1)
1,192

 

 
5,599

 

Depreciation and amortization
69,230

 
62,700

 
203,617

 
189,421

Total expenses
156,353

 
137,519

 
455,681

 
409,282

OTHER (EXPENSES) INCOME
 
 
 
 
 
 
 
Interest income and other net investment gain (Note 12)
761

 
342

 
3,205

 
1,147

Interest expense (Note 5)
(11,635
)
 
(11,075
)
 
(34,605
)
 
(37,285
)
Gains on sales of depreciable operating properties (Note 3)

 

 
7,169

 

      Total other (expenses) income
(10,874
)
 
(10,733
)
 
(24,231
)
 
(36,138
)
NET INCOME
48,298

 
38,310

 
137,307

 
111,036

Net income attributable to noncontrolling common units of the Operating Partnership
(852
)
 
(691
)
 
(2,423
)
 
(2,008
)
Net income attributable to noncontrolling interests in consolidated property partnerships
(3,600
)
 
(3,219
)
 
(11,941
)
 
(10,833
)
Total income attributable to noncontrolling interests
(4,452
)
 
(3,910
)
 
(14,364
)
 
(12,841
)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
43,846

 
$
34,400

 
$
122,943

 
$
98,195

Net income available to common stockholders per share – basic (Note 13)
$
0.41

 
$
0.34

 
$
1.19

 
$
0.97

Net income available to common stockholders per share – diluted (Note 13)
$
0.41

 
$
0.33

 
$
1.18

 
$
0.97

Weighted average common shares outstanding – basic (Note 13)
104,841,176

 
100,676,778

 
102,252,739

 
99,711,312

Weighted average common shares outstanding – diluted (Note 13)
105,359,904

 
101,228,334

 
102,872,436

 
100,208,645






















See accompanying notes to consolidated financial statements.

2


KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in thousands, except share and per share/unit data)

 
Common Stock
 
Total
Stock-
holders’
Equity
 
Noncontrolling Interests
 
Total
Equity
 
Number of
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Distributions
in Excess of
Earnings
BALANCE AS OF DECEMBER 31, 2018
100,746,988

 
$
1,007

 
$
3,976,953

 
$
(48,053
)
 
$
3,929,907

 
$
271,354

 
$
4,201,261

Net income
 
 
 
 
 
 
36,903

 
36,903

 
4,891

 
41,794

Opening adjustment to Distributions in Excess of Earnings upon adoption of ASC 842 (Note 1)
 
 
 
 
 
 
(3,146
)
 
(3,146
)
 
 
 
(3,146
)
Issuance of share-based compensation awards
 
 
 
 
2,210

 
 
 
2,210

 
 
 
2,210

Non-cash amortization of share-based compensation (Note 9)
 
 
 
 
8,817

 
 
 
8,817

 
 
 
8,817

Settlement of restricted stock units for shares of common stock
393,240

 
4

 
(4
)
 
 
 

 
 
 

Repurchase of common stock, stock options and restricted stock units
(175,204
)
 
(1
)
 
(12,129
)
 
 
 
(12,130
)
 
 
 
(12,130
)
Exchange of common units of the Operating Partnership
2,000

 

 
78

 
 
 
78

 
(78
)
 

Distributions to noncontrolling interests in consolidated property partnerships
 
 
 
 
 
 
 
 

 
(6,309
)
 
(6,309
)
Adjustment for noncontrolling interest
 
 
 
 
279

 
 
 
279

 
(279
)
 

Dividends declared per common share and common unit ($0.455 per share/unit)
 
 
 
 
 
 
(48,394
)
 
(48,394
)
 
(921
)
 
(49,315
)
BALANCE AS OF MARCH 31, 2019
100,967,024

 
1,010

 
3,976,204

 
(62,690
)
 
3,914,524

 
268,658

 
4,183,182

Net income
 
 
 
 
 
 
42,194

 
42,194

 
5,021

 
47,215

Issuance of share-based compensation awards

 
 
 
820

 
 
 
820

 
 
 
820

Non-cash amortization of share-based compensation (Note 9)
 
 
 
 
8,732

 
 
 
8,732

 
 
 
8,732

Exercise of stock options
1,500

 

 
64

 
 
 
64

 
 
 
64

Settlement of restricted stock units for shares of common stock
16,270

 

 

 
 
 

 
 
 

Repurchase and cancellation of common stock, stock options, and restricted stock units
(12,759
)
 

 
(793
)
 
 
 
(793
)
 
 
 
(793
)
Distributions to noncontrolling interests in consolidated property partnerships
 
 
 
 
 
 
 
 

 
(1,487
)
 
(1,487
)
Adjustment for noncontrolling interest
 
 
 
 
(160
)
 
 
 
(160
)
 
160

 

Dividends declared per common share and common unit ($0.485 per share/unit)
 
 
 
 
 
 
(49,849
)
 
(49,849
)
 
(981
)
 
(50,830
)
BALANCE AS OF JUNE 30, 2019
100,972,035

 
1,010

 
3,984,867

 
(70,345
)
 
3,915,532

 
271,371

 
4,186,903

Net income
 
 
 
 
 
 
43,846

 
43,846

 
4,452

 
48,298

Issuance of common stock (Note 6)
5,000,000

 
50

 
353,854

 
 
 
353,904

 
 
 
353,904

Issuance of share-based compensation awards
 
 
 
 
839

 
 
 
839

 
 
 
839

Non-cash amortization of share-based compensation (Note 9)
 
 
 
 
6,808

 
 
 
6,808

 
 
 
6,808

Exercise of stock options
15,000

 

 
639

 
 
 
639

 
 
 
639

Settlement of restricted stock units for shares of common stock
46,149

 
1

 
(1
)
 
 
 

 
 
 

Repurchase and cancellation of common stock, stock options, and restricted stock units
(21,268
)
 
(1
)
 
(1,651
)
 
 
 
(1,652
)
 
 
 
(1,652
)
Distributions to noncontrolling interests in consolidated property partnerships
 
 
 
 
 
 
 
 

 
(3,041
)
 
(3,041
)
Adjustment for noncontrolling interest
 
 
 
 
(3,059
)
 
 
 
(3,059
)
 
3,059

 

Dividends declared per common share and common unit ($0.485 per share/unit)
 
 
 
 
 
 
(52,208
)
 
(52,208
)
 
(981
)
 
(53,189
)
BALANCE AS OF SEPTEMBER 30, 2019
106,011,916

 
$
1,060

 
$
4,342,296

 
$
(78,707
)
 
$
4,264,649

 
$
274,860

 
$
4,539,509





See accompanying notes to consolidated financial statements.

3


KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in thousands, except share and per share/unit data)

 
Common Stock
 
Total
Stock-
holders’
Equity
 
Noncontrolling Interests
 
Total
Equity
 
Number of
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Distributions
in Excess of
Earnings
 
BALANCE AS OF DECEMBER 31, 2017
98,620,333

 
$
986

 
$
3,822,492

 
$
(122,685
)
 
$
3,700,793

 
$
259,523

 
$
3,960,316

Net income
 
 
 
 
 
 
36,246

 
36,246

 
4,725

 
40,971

Issuance of share-based compensation awards
 
 
 
 
1,864

 
 
 
1,864

 
 
 
1,864

Non-cash amortization of share-based compensation
 
 
 
 
5,094

 
 
 
5,094

 
 
 
5,094

Settlement of restricted stock units for shares of common stock
405,067

 
4

 
(4
)
 
 
 

 
 
 

Repurchase of common stock, stock options and restricted stock units
(192,195
)
 
(2
)
 
(13,640
)
 
 
 
(13,642
)
 
 
 
(13,642
)
Exchange of common units of the Operating Partnership
6,503

 

 
244

 
 
 
244

 
(244
)
 

Distributions to noncontrolling interests in consolidated property partnerships
 
 
 
 
 
 
 
 

 
(2,177
)
 
(2,177
)
Adjustment for noncontrolling interest
 
 
 
 
335

 
 
 
335

 
(335
)
 

Dividends declared per common share and common unit ($0.425 per share/unit)
 
 
 
 
 
 
(44,075
)
 
(44,075
)
 
(879
)
 
(44,954
)
BALANCE AS OF MARCH 31, 2018
98,839,708

 
988

 
3,816,385

 
(130,514
)
 
3,686,859

 
260,613

 
3,947,472

Net income
 
 
 
 
 
 
27,549

 
27,549

 
4,206

 
31,755

Issuance of common stock
1,719,195

 
17

 
124,130

 
 
 
124,147

 
 
 
124,147

Issuance of share-based compensation awards
 
 
 
 
589

 
 
 
589

 
 
 
589

Non-cash amortization of share-based compensation
 
 
 
 
11,503

 
 
 
11,503

 
 
 
11,503

Exercise of stock options
1,000

 

 
41

 
 
 
41

 
 
 
41

Exchange of common units of the Operating Partnership

 
1

 

 
 
 
1

 
(1
)
 

Distributions to noncontrolling interests in consolidated property partnerships
 
 
 
 
 
 
 
 

 
(4,288
)
 
(4,288
)
Adjustment for noncontrolling interest
 
 
 
 
(1,359
)
 
 
 
(1,359
)
 
1,359

 

Dividends declared per common share and common unit ($0.455 per share/unit)
 
 
 
 
 
 
(46,403
)
 
(46,403
)
 
(943
)
 
(47,346
)
BALANCE AS OF JUNE 30, 2018
100,559,903

 
1,006

 
3,951,289

 
(149,368
)
 
3,802,927

 
260,946

 
4,063,873

Net income
 
 
 
 
 
 
34,400

 
34,400

 
3,910

 
38,310

Issuance of common stock
98,000

 
1

 
6,596

 
 
 
6,597

 
 
 
6,597

Issuance of share-based compensation awards
 
 
 
 
845

 
 
 
845

 
 
 
845

Non-cash amortization of share-based compensation
 
 
 
 
8,081

 
 
 
8,081

 
 
 
8,081

Settlement of restricted stock units for shares of common stock
83,287

 
 
 
 
 
 
 

 
 
 

Repurchase of common stock, stock options and restricted stock units
(39,605
)
 
 
 
(2,911
)
 
 
 
(2,911
)
 
 
 
(2,911
)
Exchange of common units of the Operating Partnership
45,403

 
 
 
1,717

 
 
 
1,717

 
(1,717
)
 

Contributions from noncontrolling interests in consolidated property partnerships
 
 
 
 
 
 
 
 

 
8,273

 
8,273

Distributions to noncontrolling interests in consolidated property partnerships
 
 
 
 
 
 
 
 

 
(541
)
 
(541
)
Adjustment for noncontrolling interest
 
 
 
 
(212
)
 
 
 
(212
)
 
212

 

Dividends declared per common share and common unit ($0.455 per share/unit)
 
 
 
 
 
 
(46,686
)
 
(46,686
)
 
(922
)
 
(47,608
)
BALANCE AS OF SEPTEMBER 30, 2018
100,746,988

 
$
1,007

 
$
3,965,405

 
$
(161,654
)
 
$
3,804,758

 
$
270,161

 
$
4,074,919

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




See accompanying notes to consolidated financial statements.

4


KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
 
 
Nine Months Ended September 30,
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
137,307

 
$
111,036

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization of real estate assets and leasing costs
199,967

 
186,242

Depreciation of non-real estate furniture, fixtures and equipment
3,650

 
3,179

(Recoveries of) provision for bad debts and write-offs (Note 1)
(3,685
)
 
6,714

Non-cash amortization of share-based compensation awards
20,200

 
18,901

Non-cash amortization of deferred financing costs and debt discounts and premiums
911

 
816

Non-cash amortization of net below market rents
(6,241
)
 
(7,647
)
Gain on sale of depreciable operating properties (Note 3)
(7,169
)
 

Non-cash amortization of deferred revenue related to tenant-funded tenant improvements
(14,947
)
 
(13,680
)
Straight-line rents
(48,725
)
 
(16,293
)
Amortization of right of use ground lease assets
453

 

Net change in other operating assets
(24,752
)
 
(9,163
)
Net change in other operating liabilities
44,421

 
37,110

Net cash provided by operating activities
301,390

 
317,215

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Expenditures for development properties and undeveloped land
(554,951
)
 
(311,347
)
Expenditures for acquisition of undeveloped land (Note 2)
(40,027
)
 
(311,299
)
Expenditures for operating properties and other capital assets
(99,479
)
 
(107,825
)
Expenditures for acquisition of operating properties

 
(111,029
)
Net proceeds received from dispositions (Note 3)
17,271

 

Net (increase) decrease in acquisition-related deposits (Note 4)
(49,998
)
 
21,000

Proceeds received from repayment of note receivable

 
15,100

Net cash used in investing activities
(727,184
)
 
(805,400
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Net proceeds from issuance of common stock
353,904

 
130,744

Proceeds from the issuance of unsecured debt (Note 5)
499,390

 
50,000

Borrowings on unsecured revolving credit facility (Note 5)
630,000

 
645,000

Repayments on unsecured revolving credit facility (Note 5)
(675,000
)
 
(285,000
)
Borrowings on unsecured debt

 
120,000

Principal payments and repayments of secured debt (Note 5)
(75,844
)
 
(2,670
)
Financing costs
(5,548
)
 
(2,278
)
Repurchase of common stock and restricted stock units
(14,269
)
 
(16,553
)
Proceeds from exercise of stock options
703

 
41

Distributions to noncontrolling interests in consolidated property partnerships
(10,844
)
 
(7,014
)
Contributions from noncontrolling interests in consolidated property partnerships

 
8,273

Dividends and distributions paid to common stockholders and common unitholders
(143,812
)
 
(132,639
)
Net cash provided by financing activities
558,680

 
507,904

Net increase in cash and cash equivalents and restricted cash
132,886

 
19,719

Cash and cash equivalents and restricted cash, beginning of period
171,034

 
66,798

Cash and cash equivalents and restricted cash, end of period
$
303,920

 
$
86,517










See accompanying notes to consolidated financial statements.

5





ITEM 1: FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY, L.P.

KILROY REALTY, L.P.
CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except unit data)
 
 
September 30, 2019
 
December 31, 2018
ASSETS 
 
 
 
REAL ESTATE ASSETS:
 
 
 
Land and improvements
$
1,315,448

 
$
1,160,138

Buildings and improvements
5,770,226

 
5,207,984

Undeveloped land and construction in progress
1,892,169

 
2,058,510

Total real estate assets held for investment
8,977,843

 
8,426,632

Accumulated depreciation and amortization
(1,505,785
)
 
(1,391,368
)
Total real estate assets held for investment, net
7,472,058

 
7,035,264

REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 3)
77,751

 

CASH AND CASH EQUIVALENTS
297,620

 
51,604

RESTRICTED CASH
6,300

 
119,430

MARKETABLE SECURITIES (Note 12)
26,188

 
21,779

CURRENT RECEIVABLES, NET (Note 1)
34,116

 
20,176

DEFERRED RENT RECEIVABLES, NET (Note 1)
314,812

 
267,007

DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Note 1)
202,063

 
197,574

RIGHT OF USE GROUND LEASE ASSETS (Notes 1 and 11)
83,200

 

PREPAID EXPENSES AND OTHER ASSETS, NET (Note 4)
109,707

 
52,873

TOTAL ASSETS
$
8,623,815

 
$
7,765,707

LIABILITIES AND CAPITAL
 
 
 
LIABILITIES:
 
 
 
Secured debt, net (Notes 5 and 12)
$
259,027

 
$
335,531

Unsecured debt, net (Notes 5 and 12)
3,048,209

 
2,552,070

Unsecured line of credit (Notes 5 and 12)

 
45,000

Accounts payable, accrued expenses and other liabilities
439,081

 
374,415

Ground lease liabilities (Notes 1 and 11)
87,617

 

Accrued distributions (Note 17)
53,205

 
47,559

Deferred revenue and acquisition-related intangible liabilities, net
134,828

 
149,646

Rents received in advance and tenant security deposits
57,428

 
60,225

Liabilities and deferred revenue of real estate assets held for sale (Note 3)
4,911

 

Total liabilities
4,084,306

 
3,564,446

COMMITMENTS AND CONTINGENCIES (Note 11)

 

CAPITAL:
 
 
 
Common units, 106,011,916 and 100,746,988 held by the general partner and 2,023,287 and 2,025,287
held by common limited partners issued and outstanding, respectively (Note 7)
4,340,476


4,003,700

Noncontrolling interests in consolidated property partnerships and subsidiaries (Note 1)
199,033


197,561

Total capital
4,539,509


4,201,261

TOTAL LIABILITIES AND CAPITAL
$
8,623,815


$
7,765,707











See accompanying notes to consolidated financial statements.

6


KILROY REALTY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except unit and per unit data)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
REVENUES (Note 1)
 
 
 
 
 
 
 
Rental income
$
212,321

 
$
162,288

 
$
609,332

 
$
489,674

Tenant reimbursements

 
21,754

 

 
60,471

Other property income
3,204

 
2,520

 
7,887

 
6,311

Total revenues
215,525

 
186,562

 
617,219

 
556,456

EXPENSES
 
 
 
 
 
 
 
Property expenses (Note 1)
41,308

 
35,163

 
117,993

 
99,401

Real estate taxes
19,998

 
17,462

 
56,563

 
52,421

Provision for bad debts (Note 1)

 
1,338

 

 
6,714

Ground leases (Note 1 and 11)
2,049

 
1,579

 
6,135

 
4,726

General and administrative expenses
22,576