Kilroy Realty Corporation Reports Second Quarter Financial Results
Kilroy Realty Corporation (NYSE:KRC) today reported financial results for its second quarter ended June 30, 2024.
Second Quarter Highlights
Financial Results
- Revenues of $280.7 million
- Net income available to common stockholders of $0.41 per diluted share
- Funds from operations available to common stockholders and unitholders ("FFO") of $132.6 million, or $1.10 per diluted share
Leasing and Occupancy
- Stabilized portfolio was 83.7% occupied and 85.4% leased at June 30, 2024
-
Signed approximately 235,000 square feet of leases, comprised of 122,000 square feet of new leasing on previously vacant space, 55,000 square feet of new leasing on currently occupied space, and 58,000 square feet of renewal leasing
- Includes 16,000 square feet of short-term leasing, comprised of 11,000 square feet of short-term new leasing and 5,000 square feet of short-term renewal leasing
- GAAP rents increased 7.2% and cash rents decreased 4.6% from prior levels on second generation leasing, excluding short-term leasing
Balance Sheet / Liquidity
- As of June 30, 2024, the Company had approximately $1.9 billion of total liquidity comprised of approximately $0.8 billion of cash and approximately $1.1 billion available under the 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
Recent Developments
- In July, signed approximately 184,000 square feet of leases, inclusive of 46,000 square feet of short-term renewal leases
Personnel Updates
- Eliott Trencher who currently serves as EVP, Chief Financial Officer and Chief Investment Officer, will remain as Chief Financial Officer through August 18, 2024 after which he will continue as EVP, Chief Investment Officer. In addition to his investment responsibilities, Mr. Trencher will also oversee asset level strategic planning across the portfolio
- Jeffrey Kuehling has been appointed EVP, Chief Financial Officer effective August 19, 2024. Mr. Kuehling joins the Company from Brixmor Property Group (("Brixmor", NYSE:BRX) where he has worked since 2018 holding a variety of roles, most recently SVP, Corporate Strategy & Finance. Prior to Brixmor, Mr. Kuehling held various finance and capital markets positions at two publicly-traded REITs
- Lauren Stadler has been promoted to EVP, General Counsel and Secretary effective immediately. Ms. Stadler has been with the Company for over 10 years most recently serving as SVP, Corporate Counsel and Assistant Secretary. Prior to joining Kilroy, Ms. Stadler was an Associate at Latham & Watkins LLP
- Michael Schmidt has been hired as SVP, Leasing - Northern California Region effective August 19, 2024. Mr. Schmidt brings over 23 years of office experience across various West Coast markets. Prior to joining Kilroy, Mr. Schmidt worked at Lake Washington Partners and Columbia Property Trust where he led Leasing and Asset Management across the West Coast
"I am thrilled to welcome Jeffrey and Lauren to Kilroy's executive team. They are both talented and collaborative leaders who will work closely with their counterparts across the Company to deliver value for our shareholders. In addition, I want to thank Eliott for his leadership in his combined CIO and CFO roles. I am excited to continue to partner with Eliott on all of our capital allocation initiatives going forward," said Angela Aman, CEO. "I would also like to welcome Michael to the Kilroy leasing team. His expertise, relationships, and track record of execution across the West Coast will optimally position Kilroy to capitalize on the recovery we see taking hold across our markets."
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 $4.21 to $4.31 per share, with a midpoint of $4.26 per share.
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Full Year 2024 Range as of May 2024 |
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Full Year 2024 Range as of July 2024 |
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Low End |
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High End |
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Low End |
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High End |
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$ and shares/units in thousands, except per share/unit amounts |
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Net income available to common stockholders per share - diluted |
$ |
1.46 |
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$ |
1.61 |
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$ |
1.50 |
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$ |
1.59 |
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Weighted average common shares outstanding - diluted (1) |
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118,000 |
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118,000 |
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118,000 |
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118,000 |
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Net income available to common stockholders |
$ |
172,500 |
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$ |
190,000 |
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$ |
177,000 |
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$ |
188,000 |
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Adjustments: |
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Net income attributable to noncontrolling common units of the Operating Partnership |
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1,900 |
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2,000 |
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1,800 |
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1,900 |
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Net income attributable to noncontrolling interests in consolidated property partnerships |
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20,500 |
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21,000 |
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20,500 |
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21,000 |
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Depreciation and amortization of real estate assets |
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335,000 |
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336,000 |
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338,000 |
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339,000 |
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Gains on sales of depreciable real estate |
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— |
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— |
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— |
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— |
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Funds From Operations attributable to noncontrolling interests in consolidated property partnerships |
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(31,000 |
) |
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(32,000 |
) |
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(31,500 |
) |
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(32,000 |
) |
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Funds From Operations (2) |
$ |
498,900 |
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$ |
517,000 |
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$ |
505,800 |
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$ |
517,900 |
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Weighted average common shares/units outstanding – diluted (3) |
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120,250 |
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120,250 |
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120,200 |
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120,200 |
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Funds From Operations per common share/unit – diluted (3) |
$ |
4.15 |
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$ |
4.30 |
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$ |
4.21 |
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$ |
4.31 |
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Key Assumptions |
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May 2024 Assumptions |
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July 2024 Assumptions |
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Change in same store cash NOI (4) |
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(3.5%) to (5.5%) |
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(3.0%) to (4.0%) |
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Average full year occupancy |
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82.50% to 84.00% |
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82.75% to 83.75% |
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General and administrative expenses |
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$72 million to $80 million |
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$72 million to $80 million |
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Total development spending (5) |
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$200 million to $300 million |
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$225 million to $275 million |
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Weighted average common shares/units outstanding – diluted (in thousands) (3) |
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120,250 |
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120,200 |
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________________________ |
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(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, 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 $100 million to $150 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 second quarter results and the current business environment during the Company's August 1, 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=f15f60b2&confId=58185. Those interested in listening via the Internet can access the conference call at https://events.q4inc.com/attendee/326412379. 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 June 30, 2024, Kilroy's stabilized portfolio totaled approximately 17.0 million square feet of primarily office and life science space that was 83.7% occupied and 85.4% leased. The Company also had approximately 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 92.8%. In addition, the Company had two in-process life science redevelopment projects 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) |
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues |
$ |
280,731 |
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$ |
284,282 |
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$ |
559,312 |
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$ |
577,084 |
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Net income available to common stockholders |
$ |
49,211 |
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$ |
55,587 |
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$ |
99,131 |
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$ |
112,195 |
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Weighted average common shares outstanding – basic |
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117,375 |
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117,155 |
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|
117,356 |
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|
|
117,107 |
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Weighted average common shares outstanding – diluted |
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117,663 |
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|
117,360 |
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|
117,810 |
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|
117,383 |
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Net income available to common stockholders per share – basic |
$ |
0.41 |
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$ |
0.47 |
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$ |
0.83 |
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$ |
0.95 |
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Net income available to common stockholders per share – diluted |
$ |
0.41 |
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$ |
0.47 |
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$ |
0.83 |
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$ |
0.95 |
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Funds From Operations (1)(2) |
$ |
132,587 |
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$ |
141,853 |
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$ |
266,310 |
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$ |
287,812 |
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Weighted average common shares/units outstanding – basic (3) |
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120,034 |
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|
118,930 |
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|
119,847 |
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118,874 |
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Weighted average common shares/units outstanding – diluted (4) |
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120,322 |
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|
119,134 |
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|
120,301 |
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|
119,149 |
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Funds From Operations per common share/unit – basic (2) |
$ |
1.10 |
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$ |
1.19 |
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$ |
2.22 |
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$ |
2.42 |
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Funds From Operations per common share/unit – diluted (2) |
$ |
1.10 |
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$ |
1.19 |
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$ |
2.21 |
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$ |
2.42 |
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Common shares outstanding at end of period |
|
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|
117,385 |
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|
117,178 |
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Common partnership units outstanding at end of period |
|
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|
1,151 |
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|
1,151 |
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Total common shares and units outstanding at end of period |
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118,536 |
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|
118,329 |
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June 30, 2024 |
|
June 30, 2023 |
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Stabilized office portfolio occupancy rates: (5) |
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Los Angeles |
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73.9 |
% |
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81.5 |
% |
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San Diego |
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88.5 |
% |
|
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85.4 |
% |
||
San Francisco Bay Area |
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90.1 |
% |
|
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92.3 |
% |
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Seattle |
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83.1 |
% |
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83.4 |
% |
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Austin |
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72.3 |
% |
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— |
% |
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Weighted average total |
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83.7 |
% |
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86.6 |
% |
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Total square feet of stabilized office properties owned at end of period: (5) |
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Los Angeles |
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4,338 |
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4,344 |
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San Diego |
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2,776 |
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2,700 |
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San Francisco Bay Area |
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6,171 |
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6,170 |
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Seattle |
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2,996 |
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3,000 |
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Austin |
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|
759 |
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— |
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Total |
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|
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17,040 |
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|
16,214 |
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| ________________________ | ||
(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) |
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June 30, 2024 |
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December 31, 2023 |
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ASSETS |
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REAL ESTATE ASSETS: |
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Land and improvements |
$ |
1,743,170 |
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$ |
1,743,170 |
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Buildings and improvements |
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8,501,976 |
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|
8,463,674 |
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Undeveloped land and construction in progress |
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2,207,180 |
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|
2,034,804 |
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Total real estate assets held for investment |
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12,452,326 |
|
|
|
12,241,648 |
|
Accumulated depreciation and amortization |
|
(2,671,141 |
) |
|
|
(2,518,304 |
) |
Total real estate assets held for investment, net |
|
9,781,185 |
|
|
|
9,723,344 |
|
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|
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||||
Cash and cash equivalents |
|
835,893 |
|
|
|
510,163 |
|
Marketable securities |
|
32,648 |
|
|
|
284,670 |
|
Current receivables, net |
|
10,229 |
|
|
|
13,609 |
|
Deferred rent receivables, net |
|
458,177 |
|
|
|
460,979 |
|
Deferred leasing costs and acquisition-related intangible assets, net |
|
220,485 |
|
|
|
229,705 |
|
Right of use ground lease assets |
|
129,760 |
|
|
|
125,506 |
|
Prepaid expenses and other assets, net |
|
75,379 |
|
|
|
53,069 |
|
TOTAL ASSETS |
$ |
11,543,756 |
|
|
$ |
11,401,045 |
|
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|
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|
||||
LIABILITIES AND EQUITY |
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||||
LIABILITIES: |
|
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|
||||
Secured debt, net |
$ |
600,741 |
|
|
$ |
603,225 |
|
Unsecured debt, net |
|
4,519,796 |
|
|
|
4,325,153 |
|
Accounts payable, accrued expenses and other liabilities |
|
361,759 |
|
|
|
371,179 |
|
Ground lease liabilities |
|
128,787 |
|
|
|
124,353 |
|
Accrued dividends and distributions |
|
65,118 |
|
|
|
64,440 |
|
Deferred revenue and acquisition-related intangible liabilities, net |
|
160,284 |
|
|
|
173,638 |
|
Rents received in advance and tenant security deposits |
|
73,013 |
|
|
|
79,364 |
|
Total liabilities |
|
5,909,498 |
|
|
|
5,741,352 |
|
|
|
|
|
||||
EQUITY: |
|
|
|
||||
Stockholders' Equity |
|
|
|
||||
Common stock |
|
1,174 |
|
|
|
1,173 |
|
Additional paid-in capital |
|
5,216,699 |
|
|
|
5,205,839 |
|
Retained earnings |
|
187,796 |
|
|
|
221,149 |
|
Total stockholders' equity |
|
5,405,669 |
|
|
|
5,428,161 |
|
Noncontrolling Interests |
|
|
|
||||
Common units of the Operating Partnership |
|
52,985 |
|
|
|
53,275 |
|
Noncontrolling interests in consolidated property partnerships |
|
175,604 |
|
|
|
178,257 |
|
Total noncontrolling interests |
|
228,589 |
|
|
|
231,532 |
|
Total equity |
|
5,634,258 |
|
|
|
5,659,693 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
11,543,756 |
|
|
$ |
11,401,045 |
|
KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; in thousands, except per share data) |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
REVENUES |
|
|
|
|
|
|
|
||||||||
Rental income |
$ |
275,919 |
|
|
$ |
281,309 |
|
|
$ |
550,809 |
|
|
$ |
571,413 |
|
Other property income |
|
4,812 |
|
|
|
2,973 |
|
|
|
8,503 |
|
|
|
5,671 |
|
Total revenues |
|
280,731 |
|
|
|
284,282 |
|
|
|
559,312 |
|
|
|
577,084 |
|
|
|
|
|
|
|
|
|
||||||||
EXPENSES |
|
|
|
|
|
|
|
||||||||
Property expenses |
|
59,279 |
|
|
|
55,008 |
|
|
|
116,599 |
|
|
|
108,788 |
|
Real estate taxes |
|
29,009 |
|
|
|
28,277 |
|
|
|
58,248 |
|
|
|
56,505 |
|
Ground leases |
|
2,996 |
|
|
|
2,413 |
|
|
|
5,748 |
|
|
|
4,782 |
|
General and administrative expenses (1) |
|
18,951 |
|
|
|
22,659 |
|
|
|
36,530 |
|
|
|
46,595 |
|
Leasing costs |
|
2,119 |
|
|
|
1,326 |
|
|
|
4,398 |
|
|
|
2,698 |
|
Depreciation and amortization |
|
87,151 |
|
|
|
90,362 |
|
|
|
175,182 |
|
|
|
184,038 |
|
Total expenses |
|
199,505 |
|
|
|
200,045 |
|
|
|
396,705 |
|
|
|
403,406 |
|
|
|
|
|
|
|
|
|
||||||||
OTHER INCOME (EXPENSES) |
|
|
|
|
|
|
|
||||||||
Interest income |
|
10,084 |
|
|
|
3,421 |
|
|
|
23,274 |
|
|
|
4,881 |
|
Interest expense |
|
(36,763 |
) |
|
|
(26,383 |
) |
|
|
(75,634 |
) |
|
|
(52,054 |
) |
Total other expenses |
|
(26,679 |
) |
|
|
(22,962 |
) |
|
|
(52,360 |
) |
|
|
(47,173 |
) |
|
|
|
|
|
|
|
|
||||||||
NET INCOME |
|
54,547 |
|
|
|
61,275 |
|
|
|
110,247 |
|
|
|
126,505 |
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to noncontrolling common units of the Operating Partnership |
|
(458 |
) |
|
|
(537 |
) |
|
|
(960 |
) |
|
|
(1,097 |
) |
Net income attributable to noncontrolling interests in consolidated property partnerships |
|
(4,878 |
) |
|
|
(5,151 |
) |
|
|
(10,156 |
) |
|
|
(13,213 |
) |
Total income attributable to noncontrolling interests |
|
(5,336 |
) |
|
|
(5,688 |
) |
|
|
(11,116 |
) |
|
|
(14,310 |
) |
|
|
|
|
|
|
|
|
||||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS |
$ |
49,211 |
|
|
$ |
55,587 |
|
|
$ |
99,131 |
|
|
$ |
112,195 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of common stock outstanding – basic |
|
117,375 |
|
|
|
117,155 |
|
|
|
117,356 |
|
|
|
117,107 |
|
Weighted average shares of common stock outstanding – diluted |
|
117,663 |
|
|
|
117,360 |
|
|
|
117,810 |
|
|
|
117,383 |
|
|
|
|
|
|
|
|
|
||||||||
Net income available to common stockholders per share – basic |
$ |
0.41 |
|
|
$ |
0.47 |
|
|
$ |
0.83 |
|
|
$ |
0.95 |
|
Net income available to common stockholders per share – diluted |
$ |
0.41 |
|
|
$ |
0.47 |
|
|
$ |
0.83 |
|
|
$ |
0.95 |
|
| ________________________ | ||
(1) |
The three and six months ended June 30, 2023 includes $3.1 million and $6.3 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 June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income available to common stockholders |
$ |
49,211 |
|
|
$ |
55,587 |
|
|
$ |
99,131 |
|
|
$ |
112,195 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
Net income attributable to noncontrolling common units of the Operating Partnership |
|
458 |
|
|
|
537 |
|
|
|
960 |
|
|
|
1,097 |
|
Net income attributable to noncontrolling interests in consolidated property partnerships |
|
4,878 |
|
|
|
5,151 |
|
|
|
10,156 |
|
|
|
13,213 |
|
Depreciation and amortization of real estate assets |
|
85,589 |
|
|
|
88,473 |
|
|
|
172,049 |
|
|
|
180,144 |
|
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships |
|
(7,549 |
) |
|
|
(7,895 |
) |
|
|
(15,986 |
) |
|
|
(18,837 |
) |
Funds From Operations(1)(2)(3) |
$ |
132,587 |
|
|
$ |
141,853 |
|
|
$ |
266,310 |
|
|
$ |
287,812 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares/units outstanding – basic (4) |
|
120,034 |
|
|
|
118,930 |
|
|
|
119,847 |
|
|
|
118,874 |
|
Weighted average common shares/units outstanding – diluted (5) |
|
120,322 |
|
|
|
119,134 |
|
|
|
120,301 |
|
|
|
119,149 |
|
|
|
|
|
|
|
|
|
||||||||
Funds From Operations per common share/unit – basic (2) |
$ |
1.10 |
|
|
$ |
1.19 |
|
|
$ |
2.22 |
|
|
$ |
2.42 |
|
Funds From Operations per common share/unit – diluted (2) |
$ |
1.10 |
|
|
$ |
1.19 |
|
|
$ |
2.21 |
|
|
$ |
2.42 |
|
| ________________________ | ||
(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 $4.4 million and $4.9 million for the three months ended June 30, 2024 and 2023, respectively, and $10.9 million and $10.1 million for the six months ended June 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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