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0001025996false00010259962023-04-262023-04-26

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2023
KILROY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 001-12675 95-4598246
(State or other jurisdiction of
incorporation or organization)		 (Commission File No.) (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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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. ☐










Item 2.02    Results of Operations and Financial Condition.

On April 26, 2023, Kilroy Realty Corporation issued a press release announcing its earnings for the quarter ended March 31, 2023 and distributed certain supplemental financial information. On April 26, 2023, Kilroy Realty Corporation also posted the supplemental information on its website located at www.kilroyrealty.com. The text of the supplemental information and the related press release are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference herein.

Exhibits 99.1 and 99.2 are being furnished pursuant to Item 2.02 and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act regardless of any general incorporation language in such filing.

Item 7.01    Regulation FD Disclosure.

As discussed in Item 2.02 above, Kilroy Realty Corporation issued a press release announcing its earnings for the quarter ended March 31, 2023 and distributed certain supplemental information. On April 26, 2023, Kilroy Realty Corporation also posted the supplemental information on its website located at www.kilroyrealty.com.

The information being furnished pursuant to Item 7.01 shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act regardless of any general incorporation language in such filing.

Item 9.01    Financial Statements and Exhibits.

(a) Financial statements of businesses acquired: None.
(b) Pro forma financial information: None.
(c) Shell company transactions: None.
(d) Exhibits:

The following exhibits are furnished with this Current Report on Form 8-K:
Exhibit No. Description
99.1**
99.2**
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
_______________
**    Furnished herewith.



SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



Kilroy Realty Corporation
Date: April 26, 2023
By: /s/ Merryl E. Werber
Merryl E. Werber
Senior Vice President,
Chief Accounting Officer and Controller




EX-99.1 2 exhibit991.htm EX-99.1 Document

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Q1 2023 Supplemental Financial Report
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Table of Contents
Page
4
5
6
7-8
9
11
19
22
23
25
26
28
29
31-33
35-38
This Supplemental Financial Report 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. These statements include, among other things, information concerning lease expirations, debt maturities, potential investments, development and redevelopment activity, projected construction costs, dispositions and other forward-looking financial data. In some instances, forward-looking statements can be identified by the use of forward-looking terminology such as “expect,” “future,” “will,” “would,” “pursue,” or “project” and variations of such words and similar expressions that do not relate to historical matters. Forward-looking statements are based on Kilroy Realty Corporation’s 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 Kilroy Realty Corporation’s 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; our ability to re-lease property at or above current market rates; reduced demand for office space, including as a result of remote work 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; 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 Kilroy Realty Corporation’s business and financial performance, see the factors included under the caption “Risk Factors” in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2022, and its 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. Kilroy Realty Corporation assumes no obligation to update any forward-looking statement made in this Supplemental Financial Report 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.
Pictured on cover page, in order of appearance: 2100 Kettner, San Diego, CA | Indeed Tower, Austin, TX | One Paseo Living, San Diego, CA –Net Income Available to Common Stockholders / FFO Guidance and Outlook


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01
Corporate Data and Financial Highlights

–Company Background
–Executive Summary
–Financial Highlights
–Consolidated Balance Sheets
–Consolidated Statements of Operations
–Net Operating Income


Q1 2023 Supplemental Financial Report
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Company Background

–Funds From Operations and Funds Available for Distribution Kilroy Realty Corporation (NYSE: KRC), a publicly traded real estate investment trust and member of the S&P MidCap 400 Index, is a leading U.S. landlord and developer, with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, Greater Seattle and Austin, Texas. The Company has over seven decades of experience developing, acquiring and managing office, life science and mixed-use real estate assets. At March 31, 2023, the Company’s stabilized portfolio totaled approximately 16.2 million square feet of primarily office and life science space that was 89.6% occupied and 91.6% leased. The Company also has 1,001 residential units in the Los Angeles and San Diego regions, which had an average occupancy of 93.4% for the quarter ended March 31, 2023.
Board of Directors Executive and Senior Management Team Investor Relations
John Kilroy Chairman John Kilroy Chief Executive Officer 12200 W. Olympic Blvd., Suite 200
Los Angeles, CA 90064
(310) 481-8400
Web: www.kilroyrealty.com
E-mail: investorrelations@kilroyrealty.com
Edward F. Brennan, PhD Lead Independent Justin W. Smart President
Jolie Hunt Eliott Trencher Executive VP, Chief Financial Officer and Chief Investment Officer
Scott S. Ingraham
Louisa G. Ritter Robert Paratte Executive VP, Chief Leasing Officer and Senior Advisor to the Chairman
Gary R. Stevenson
Peter B. Stoneberg Heidi R. Roth Executive VP, Chief Administrative Officer
Bill Hutcheson
John Osmond Executive VP, Head of Asset Management Senior VP, Investor Relations & Capital Markets
Merryl Werber Senior VP, Chief Accounting Officer and Controller
Equity Research Coverage
BofA Securities Green Street Advisors
Camille Bonnel (416) 369-2140 Dylan Burzinski (949) 640-8780
BMO Capital Markets Corp. Jefferies LLC
John P. Kim (212) 885-4115 Peter Abramowitz (212) 336-7241
BTIG J.P. Morgan
Thomas Catherwood (212) 738-6140 Anthony Paolone (212) 622-6682
Citigroup Investment Research Mizuho Securities USA LLC
Michael Griffin (212) 816-5871 Vikram Malhotra (212) 282-3827
Credit Suisse RBC Capital Markets
Tayo Okusanya (212) 325-1402 Mike Carroll (440) 715-2649
Deutsche Bank Securities, Inc. Scotiabank
Derek Johnston (210) 250-5683 Nicholas Yulico (212) 225-6904
Evercore ISI Wells Fargo
Steve Sakwa (212) 446-9462 Blaine Heck (443) 263-6529
Goldman Sachs & Co. LLC Wolfe Research
Caitlin Burrows (212) 902-4736 Andrew Rosivach (646) 582-9250
Kilroy Realty Corporation is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Kilroy Realty Corporation’s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Kilroy Realty Corporation or its management. Kilroy Realty Corporation does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.
1
Q1 2023 Supplemental Financial Report
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Executive Summary
Quarterly Financial Highlights Quarterly Operating Highlights
• Revenues grew approximately 10.3% to $292.8 million compared to the prior year
• Stabilized portfolio was 89.6% occupied and 91.6% leased at quarter-end
• Net income available to common stockholders per diluted share of $0.48, an
• Approximately 151,000 square feet of leases commenced in the stabilized
   increase of approximately 6.7% compared to the prior year
    portfolio
• FFO per diluted share of $1.22, an increase of approximately 5.2% compared
• Approximately 286,000 square feet of leases executed in the stabilized portfolio
   to the prior year
◦GAAP rents increased approximately 4.2% from prior levels
• Same Store NOI and Same Store Cash NOI increased 3.6% and 16.3%,
   respectively, compared to the prior year
◦Cash rents decreased approximately 4.4% from prior levels
◦Same Store NOI and Same Store Cash NOI includes $5.8 million and $12.1
 • In April, signed approximately 52,000 square feet of leases, including an
           million of non-recurring restoration fees, respectively. Prior year Same    approximately 20,000 square foot lease at Indeed Tower
           Store NOI and Same Store Cash NOI includes $2.5 and $0.8 million of
           non-recurring income, respectively
Capital Markets Highlights Strategic Highlights
• As of the date of this report, approximately $1.6 billion of total liquidity comprised • In April, completed construction of the core and shell of an approximately 71,000
   of approximately $330.0 million of cash and cash equivalents, $170.0 million    square foot office building in the University Towne Center submarket of San Diego
   available under the unsecured term loan facility and full availability under the $1.1    and moved the property into the tenant improvement phase. The building is 100%
   billion unsecured revolving credit facility    leased
• During the quarter, amended the unsecured term loan facility to increase the
   capacity to $520.0 million. The Company has drawn a total of $350.0 million to
   date, including $150.0 million towards the end of March as per the terms of the
   agreement
 
________________________
Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 35-36 “Definitions Included in Supplemental.”
2
Q1 2023 Supplemental Financial Report
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Financial Highlights
(unaudited, $ in thousands, except per share amounts)
Three Months Ended
  3/31/2022 6/30/2022
9/30/2022 (1)
 12/31/2022 3/31/2023
INCOME ITEMS AND DIVIDENDS:
Capitalized Interest and Debt Costs $ 19,098  $ 19,491  $ 19,677  $ 19,216  $ 17,731 
Cash Lease Termination Fees (2)
 $ 637  $ 374  $ 165  $ 503  $ — 
Net Income Available to Common Stockholders per common share – diluted (3)
 $ 0.45  $ 0.40  $ 0.68  $ 0.45  $ 0.48 
Funds From Operations per common share – diluted (4)
 $ 1.16  $ 1.17  $ 1.17  $ 1.17  $ 1.22 
Dividends per common share (3)
 $ 0.52  $ 0.52  $ 0.54  $ 0.54  $ 0.54 
EBITDA, as adjusted (5)
 $ 168,668  $ 170,511  $ 170,453  $ 174,421  $ 184,577 
RATIOS:
Net Operating Income Margins 72.5  % 71.5  % 70.6  % 70.3  % 71.2  %
Fixed Charge Coverage Ratio - Net Income 1.6x 1.4x 2.3x 1.5x 1.6x
Fixed Charge Coverage Ratio - EBITDA 4.5x 4.6x 4.5x 4.4x 4.6x
Net Income Payout Ratio 103.2  % 113.7  % 73.5  % 107.2  % 97.9  %
FFO Payout Ratio 44.5  % 44.0  % 45.6  % 45.6  % 43.8  %
FAD Payout Ratio 55.3  % 54.4  % 54.7  % 60.9  % 48.2  %

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________________________
Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 35-36 “Definitions Included in Supplemental.”
(1)Net Income Available to Common Stockholders includes a $17.3 million of gain on sale of a depreciable operating property for the three months ended September 30, 2022.
(2)Represents cash receipts of lease termination fees in the period they are received, which may not correspond to the timing of GAAP revenue recognition of the lease termination fee over the remaining term of the lease.
(3)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(4)Please refer to page 7 for reconciliations of GAAP Net Income Available to Common Stockholders to Funds From Operations available to common stockholders and unitholders and Funds Available for Distribution to common stockholders and unitholders and page 8 for a reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution to common stockholders and unitholders.
(5)Please refer to pages 37-38 for reconciliations of GAAP Net Income Available to Common Stockholders to Net Operating Income and EBITDA, as adjusted. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by Nareit, as the Company does not have any unconsolidated joint ventures.
3
Q1 2023 Supplemental Financial Report
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Net Income Available to Common Stockholders / FFO Guidance and Outlook
(unaudited, $ and shares/units in thousands, except per share amounts)
The Company is providing an updated guidance range of Nareit-defined FFO per diluted share for its fiscal year 2023 of $4.30 to $4.50 per share with a midpoint of $4.40 per share. Excluding the non-recurring executive retirement costs referenced below, FFO guidance is unchanged.
Full Year 2023 Range
Low End High End
Net income available to common stockholders per share - diluted $ 1.60  $ 1.79 
Weighted average common shares outstanding - diluted (1)
 117,500  117,500 
Net income available to common stockholders $ 188,000  $ 210,000 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 1,800  2,300 
Net income attributable to noncontrolling interests in consolidated property partnerships 23,500  25,500 
Depreciation and amortization of real estate assets 335,000  335,000 
Gains on sales of depreciable real estate —  — 
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (35,000) (36,000)
Funds From Operations (2)
 $ 513,300  $ 536,800 
Weighted average common shares and units outstanding - diluted (3)
 119,400  119,400 
FFO per common share/unit - diluted (3)
 $ 4.30  $ 4.50 
Key Assumptions February 2023 Assumptions Updated 2023 Assumptions
Same Store Cash NOI growth (2)
 0.0% to 2.0% 0.0% to 2.0%
Average occupancy 86.5% to 88.0% 86.5% to 88.0%
General & administrative expenses $82 million to $90 million $82 million to $90 million
Executive retirement costs (4)
 — $8 million to $14 million
Total development spending (5)
 $450 million to $550 million $400 million to $500 million
Dispositions $0 to $200 million $0 to $200 million
________________________
(1)Calculated based on estimated weighted average shares outstanding including non-participating share-based awards.
(2)See pages 32-33 for Management Statements on Funds From Operations and Same Store Cash Net Operating Income.
(3)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(4)Excluded from the general and administrative expenses line item, above.
(5)Remaining 2023 development spending is $325 million to $425 million.

The Company’s guidance estimates for the full year 2023, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this report, 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 report. Although these guidance estimates reflect the impact on the Company’s operating results of an assumed range of future disposition activity, these guidance estimates do not include any estimates of possible future gains or losses from possible future dispositions because the magnitude of gains or losses on sales of depreciable operating properties, if any, will depend on the sales price and depreciated cost basis of the disposed assets at the time of disposition, information that is not known at the time the Company provides guidance, and the timing of any gain recognition will depend on the closing of the dispositions, information that is also not known at the time the Company provides guidance and may occur after the relevant guidance period. We caution you not to place undue reliance on our assumed range of future disposition activity because any potential future disposition transactions will ultimately depend on the market conditions and other factors, including but not limited to the Company’s capital needs, the particular assets being sold and the Company’s ability to defer some or all of the taxable gain on the sales. These guidance estimates also do not include the impact on operating results from potential future acquisitions, possible capital markets activity, possible future impairment charges or any events outside of the Company’s control. There can be no assurance that the Company’s actual results will not differ materially from these estimates.
4
Q1 2023 Supplemental Financial Report
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Consolidated Balance Sheets
(unaudited, $ in thousands)
3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022
ASSETS:
Land and improvements $ 1,738,242  $ 1,738,242  $ 1,743,194  $ 1,713,152  $ 1,715,192 
Buildings and improvements 8,335,285  8,302,081  7,693,247  7,530,547  7,509,311 
Undeveloped land and construction in progress 1,788,542  1,691,860  2,183,071  2,272,508  2,158,279 
Total real estate assets held for investment 11,862,069  11,732,183  11,619,512  11,516,207  11,382,782 
Accumulated depreciation and amortization (2,294,202) (2,218,710) (2,150,060) (2,104,990) (2,034,193)
Total real estate assets held for investment, net 9,567,867  9,513,473  9,469,452  9,411,217  9,348,589 
Cash and cash equivalents 476,358  347,379  249,981  210,044  331,685 
Restricted cash —  —  13,009  13,008  13,007 
Marketable securities 23,288  23,547  22,390  22,988  25,829 
Current receivables, net 15,926  20,583  15,885  13,268  12,107 
Deferred rent receivables, net 457,870  452,200  442,987  435,549  420,895 
Deferred leasing costs and acquisition-related intangible assets, net 238,184  250,846  214,484  217,026  228,426 
Right of use ground lease assets 126,277  126,530  126,708  126,587  126,946 
Prepaid expenses and other assets, net 63,622  62,429  65,096  65,554  57,338 
TOTAL ASSETS $ 10,969,392  $ 10,796,987  $ 10,619,992  $ 10,515,241  $ 10,564,822 
LIABILITIES AND EQUITY:
Liabilities:
Secured debt, net $ 241,547  $ 242,938  $ 244,316  $ 245,680  $ 247,030 
Unsecured debt, net 4,171,029  4,020,058  3,823,532  3,822,482  3,821,433 
Accounts payable, accrued expenses and other liabilities 418,902  392,360  424,087  357,253  391,920 
Ground lease liabilities 124,837  124,994  125,065  125,277  125,414 
Accrued dividends and distributions 64,461  64,285  64,271  61,880  61,951 
Deferred revenue and acquisition-related intangible liabilities, net 195,629  195,959  176,105  176,845  171,121 
Rents received in advance and tenant security deposits 80,565  81,432  82,839  73,273  80,192 
Total liabilities 5,296,970  5,122,026  4,940,215  4,862,690  4,899,061 
Equity:
Stockholders’ Equity
Common stock 1,171  1,169  1,169  1,169  1,167 
Additional paid-in capital 5,175,402  5,170,760  5,162,088  5,151,705  5,149,968 
Retained earnings 257,079  265,118  276,138  260,020  274,193 
Total stockholders’ equity 5,433,652  5,437,047  5,439,395  5,412,894  5,425,328 
Noncontrolling Interests
Common units of the Operating Partnership 53,386  53,524  53,475  53,289  53,472 
Noncontrolling interests in consolidated property partnerships 185,384  184,390  186,907  186,368  186,961 
Total noncontrolling interests 238,770  237,914  240,382  239,657  240,433 
Total equity 5,672,422  5,674,961  5,679,777  5,652,551  5,665,761 
TOTAL LIABILITIES AND EQUITY $ 10,969,392  $ 10,796,987  $ 10,619,992  $ 10,515,241  $ 10,564,822 
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Q1 2023 Supplemental Financial Report
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Consolidated Statements of Operations
(unaudited, $ and shares in thousands, except per share amounts)
Three Months Ended March 31,
2023 2022
REVENUES
Rental income $ 290,104  $ 263,208 
Other property income 2,698  2,293 
Total revenues 292,802  265,501 
EXPENSES
Property expenses 53,780  45,424 
Real estate taxes 28,228  25,870 
Ground leases 2,369  1,826 
General and administrative expenses 23,936  22,781 
Leasing costs 1,372  1,013 
Depreciation and amortization 93,676  88,660 
Total expenses 203,361  185,574 
OTHER INCOME (EXPENSES)
Interest and other income, net 1,460  81 
Interest expense (25,671) (20,625)
Total other expenses (24,211) (20,544)
NET INCOME 65,230  59,383 
Net income attributable to noncontrolling common units of the Operating Partnership (560) (516)
Net income attributable to noncontrolling interests in consolidated property partnerships (8,062) (5,739)
Total income attributable to noncontrolling interests (8,622) (6,255)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 56,608  $ 53,128 
Weighted average common shares outstanding – basic 117,059  116,650 
Weighted average common shares outstanding – diluted 117,407  117,060 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE
Net income available to common stockholders per share – basic $ 0.48  $ 0.45 
Net income available to common stockholders per share – diluted $ 0.48  $ 0.45 


6
Q1 2023 Supplemental Financial Report
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Funds From Operations and Funds Available for Distribution
(unaudited, $ in thousands, except per share amounts)
Three Months Ended March 31,
2023 2022
FUNDS FROM OPERATIONS: (1)
Net income available to common stockholders $ 56,608  $ 53,128 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 560  516 
Net income attributable to noncontrolling interests in consolidated property partnerships 8,062  5,739 
Depreciation and amortization of real estate assets 91,671  87,001 
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (10,942) (8,618)
Funds From Operations (1)(2)
 $ 145,959  $ 137,766 
Weighted average common shares/units outstanding – basic (3)
 118,818  118,628 
Weighted average common shares/units outstanding – diluted (4)
 119,165  119,038 
FFO per common share/unit – basic (1)
 $ 1.23  $ 1.16 
FFO per common share/unit – diluted (1)
 $ 1.22  $ 1.16 
FUNDS AVAILABLE FOR DISTRIBUTION: (1)
Funds From Operations (1)(2)
 $ 145,959  $ 137,766 
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures (17,766) (13,285)
Amortization of deferred revenue related to tenant-funded tenant improvements (2)(5)
 (5,185) (4,261)
Net effect of straight-line rents (5,619) (15,230)
Amortization of net below market rents (6)
 (3,033) (2,892)
Amortization of deferred financing costs and net debt discount/premium 1,355  821 
Non-cash amortization of share-based compensation awards 10,043  5,256 
Lease related adjustments, leasing costs and other (7)
 5,462  1,264 
Adjustments attributable to noncontrolling interests in consolidated property partnerships 1,317  1,455 
Funds Available for Distribution (1)
 $ 132,533  $ 110,894 
________________________
(1)See page 33 for Management Statements on Funds From Operations and Funds Available for Distribution. Reported per common share/unit amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(2)FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $5.2 million and $4.3 million for the three months ended March 31, 2023 and 2022, respectively. These amounts are adjusted out of FFO in our calculation of FAD.
(3)Calculated based on weighted average shares outstanding including participating share-based awards 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)Represents revenue recognized during the period as a result of the amortization of deferred revenue recorded for tenant-funded tenant improvements.
(6)Represents the non-cash adjustment related to the acquisition of buildings with above and/or below market rents.
(7)Includes other cash and non-cash adjustments attributable to lease-related matters including GAAP revenue recognition timing differences, leasing costs and other.
7
Q1 2023 Supplemental Financial Report
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Reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution
(unaudited, $ in thousands)
  Three Months Ended March 31,
  2023 2022
GAAP Net Cash Provided by Operating Activities
$ 182,136  $ 178,659 
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures (17,766) (13,285)
Depreciation of non-real estate furniture, fixtures and equipment (2,005) (1,659)
Net changes in operating assets and liabilities (1)
 (20,525) (40,821)
Noncontrolling interests in consolidated property partnerships’ share of FFO and FAD
 (9,625) (7,163)
Cash adjustments related to investing and financing activities 318  (4,837)
Funds Available for Distribution (2)
 $ 132,533  $ 110,894 
_______________________
(1)Primarily includes changes in the following assets and liabilities: marketable securities; current receivables; prepaid expenses and other assets; accounts payable, accrued expenses and other liabilities; and rents received in advance and tenant security deposits. 
(2)Please refer to page 33 for a Management Statement on Funds Available for Distribution.

8
Q1 2023 Supplemental Financial Report
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Net Operating Income (1)
(unaudited, $ in thousands)
Three Months Ended March 31,
2023 2022 % Change
Operating Revenues:
Rental income (2)
 $ 243,507  $ 226,272  7.6  %
Tenant reimbursements (2)
 46,597  36,936  26.2  %
Other property income 2,698  2,293  17.7  %
Total operating revenues 292,802  265,501  10.3  %
Operating Expenses:
Property expenses 53,780  45,424  18.4  %
Real estate taxes 28,228  25,870  9.1  %
Ground leases 2,369  1,826  29.7  %
Total operating expenses 84,377  73,120  15.4  %
Net Operating Income $ 208,425  $ 192,381  8.3  %

chart-f01b814d87aa411195da.jpgchart-603656cf8f4546e6908a.jpg
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________________________
(1)Please refer to page 31 for Management Statements on Net Operating Income and page 37 for a reconciliation of GAAP Net Income Available to Common Stockholders to Net Operating Income.
(2)Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations.
9

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02
Portfolio Data

–Same Store Analysis
–Stabilized Portfolio Occupancy Overview by Region
–Information on Leases Commenced & Leases Executed
–Stabilized Portfolio Capital Expenditures
–Stabilized Portfolio Lease Expirations
–Top Fifteen Tenants
–Consolidated Ventures (Noncontrolling Property Partnerships)

Q1 2023 Supplemental Financial Report
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Same Store Analysis (1)
(unaudited, $ in thousands)
Three Months Ended March 31,
2023 2022 % Change
Total Same Store Portfolio
Office Portfolio
Number of properties 115  115 
Square Feet 15,056,915  15,056,915 
Percent of Stabilized Portfolio 92.9  % 98.9  %
Average Occupancy 90.5  % 91.6  %
Operating Revenues:
Rental income (2)
 $ 221,363  $ 214,438  3.2  %
Tenant reimbursements (2)
 41,892  35,282  18.7  %
Other property income 2,409  2,015  19.6  %
Total operating revenues (3)
 265,664  251,735  5.5  %
Operating Expenses:
Property expenses 50,717  43,559  16.4  %
Real estate taxes 24,577  24,497  0.3  %
Ground leases 1,854  1,738  6.7  %
Total operating expenses 77,148  69,794  10.5  %
Net Operating Income (4)
 $ 188,516  $ 181,941  3.6  %
Same Store Analysis (Cash Basis)
  Three Months Ended March 31,
  2023 2022 % Change
Total operating revenues (5)
 $ 263,386  $ 229,870  14.6  %
Total operating expenses 77,048  69,683  10.6  %
Cash Net Operating Income (4)
 $ 186,338  $ 160,187  16.3  %
________________________
(1)Same Store is defined as all properties owned and included in our stabilized portfolio as of January 1, 2022 and still owned and included in the stabilized portfolio as of March 31, 2023. Same Store includes 100% of consolidated property partnerships as well as our three residential properties.
(2)Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations.
(3)For the three months ended March 31, 2023 and 2022, includes $5.8 million and $2.5 million of non-recurring income, respectively.
(4)Please refer to page 37 for a reconciliation of GAAP Net Income Available to Common Stockholders to Same Store Net Operating Income and Same Store Cash Net Operating Income. Adjustments to GAAP operating revenues include the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles and revenue reversals (recoveries) related to tenant creditworthiness.
(5)For the three months ended March 31, 2023 and 2022, includes $12.1 million and $0.8 million of non-recurring income, respectively.
11
Q1 2023 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region

Portfolio Breakdown Occupied at Leased at
STABILIZED PORTFOLIO (1)
 Buildings YTD NOI % SF % Total SF 3/31/2023 12/31/2022 3/31/2023
Greater Los Angeles
Culver City 19 0.7  % 1.0  % 166,207  78.9  % 78.8  % 78.9  %
El Segundo 5 2.5  % 6.8  % 1,103,595  76.0  % 91.2  % 76.0  %
Hollywood 10 6.9  % 7.4  % 1,200,419  89.7  % 90.0  % 89.9  %
Long Beach 7 1.7  % 5.9  % 957,706  75.2  % 75.3  % 87.0  %
West Hollywood 4 0.9  % 1.2  % 189,459  80.0  % 80.0  % 84.1  %
West Los Angeles 8 4.4  % 4.5  % 726,975  80.9  % 83.8  % 80.9  %
Total Greater Los Angeles 53 17.1  % 26.8  % 4,344,361  80.8  % 85.2  % 83.6  %
San Diego County
Del Mar 17 12.8  % 11.1  % 1,791,487  98.5  % 98.7  % 99.2  %
I-15 Corridor 3 0.7  % 2.7  % 433,851  67.3  % 68.2  % 83.6  %
Little Italy / Point Loma 2 —  % 2.0  % 312,249  32.3  % 32.3  % 42.2  %
University Towne Center 1 1.0  % 1.0  % 160,444  100.0  % 100.0  % 100.0  %
Total San Diego County 23 14.5  % 16.8  % 2,698,031  85.9  % 86.2  % 90.2  %
San Francisco Bay Area
Menlo Park 6 2.0  % 2.0  % 330,212  84.5  % 84.5  % 91.4  %
Mountain View 3 3.0  % 2.8  % 457,066  100.0  % 100.0  % 100.0  %
Palo Alto 2 1.2  % 1.0  % 165,574  100.0  % 100.0  % 100.0  %
Redwood City 2 2.7  % 2.1  % 347,269  100.0  % 100.0  % 100.0  %
San Francisco 10 29.3  % 20.9  % 3,394,039  91.9  % 93.3  % 93.9  %
South San Francisco 6 8.3  % 5.0  % 806,109  100.0  % 100.0  % 100.0  %
Sunnyvale 4 3.9  % 4.1  % 663,460  100.0  % 100.0  % 100.0  %
Total San Francisco Bay Area 33 50.4  % 37.9  % 6,163,729  94.7  % 95.5  % 96.2  %
Greater Seattle
Bellevue 2 5.2  % 5.7  % 919,295  91.5  % 99.3  % 91.5  %
Lake Union / Denny Regrade 8 12.8  % 12.8  % 2,080,883  97.0  % 97.1  % 97.0  %
Total Greater Seattle 10 18.0  % 18.5  % 3,000,178  95.3  % 97.7  % 95.3  %
TOTAL STABILIZED PORTFOLIO 119 100.0  % 100.0  % 16,206,299  89.6  % 91.6  % 91.6  %

Average Occupancy
Quarter-to-Date
89.9%
________________________
(1)Excludes residential properties.


12
Q1 2023 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region, continued
  Submarket Square Feet Occupied Leased
Greater Los Angeles, California
3101-3243 La Cienega Boulevard Culver City 166,207  78.9  % 78.9  %
2240 E. Imperial Highway El Segundo 122,870  100.0  % 100.0  %
2250 E. Imperial Highway (1)
 El Segundo 298,728  46.2  % 46.2  %
2260 E. Imperial Highway El Segundo 298,728  100.0  % 100.0  %
909 N. Pacific Coast Highway El Segundo 244,880  81.3  % 81.3  %
999 N. Pacific Coast Highway El Segundo 138,389  58.1  % 58.1  %
1350 Ivar Avenue Hollywood 16,448  100.0  % 100.0  %
1355 Vine Street Hollywood 183,129  100.0  % 100.0  %
1375 Vine Street Hollywood 159,236  100.0  % 100.0  %
1395 Vine Street Hollywood 2,575  100.0  % 100.0  %
1500 N. El Centro Avenue (1)
 Hollywood 113,447  28.8  % 28.8  %
1525 N. Gower Street Hollywood 9,610  100.0  % 100.0  %
1575 N. Gower Street Hollywood 264,430  100.0  % 100.0  %
6115 W. Sunset Boulevard Hollywood 26,238  80.0  % 80.0  %
6121 W. Sunset Boulevard Hollywood 93,418  100.0  % 100.0  %
6255 W. Sunset Boulevard Hollywood 331,888  88.8  % 89.2  %
3750 Kilroy Airport Way Long Beach 10,718  100.0  % 100.0  %
3760 Kilroy Airport Way Long Beach 166,761  96.4  % 100.0  %
3780 Kilroy Airport Way Long Beach 221,452  84.3  % 93.2  %
3800 Kilroy Airport Way Long Beach 192,476  87.7  % 87.7  %
3840 Kilroy Airport Way Long Beach 138,441  0.0  % 58.5  %
3880 Kilroy Airport Way Long Beach 96,923  100.0  % 100.0  %
3900 Kilroy Airport Way Long Beach 130,935  73.9  % 78.7  %
8560 W. Sunset Boulevard West Hollywood 76,558  59.0  % 69.2  %
8570 W. Sunset Boulevard West Hollywood 49,276  95.6  % 95.6  %
8580 W. Sunset Boulevard West Hollywood 6,875  59.0  % 59.0  %
8590 W. Sunset Boulevard West Hollywood 56,750  97.4  % 97.4  %
12100 W. Olympic Boulevard West Los Angeles 155,679  100.0  % 100.0  %
12200 W. Olympic Boulevard West Los Angeles 154,544  90.3  % 90.3  %
12233 W. Olympic Boulevard West Los Angeles 156,746  67.1  % 67.1  %
12312 W. Olympic Boulevard West Los Angeles 76,644  100.0  % 100.0  %
2100/2110 Colorado Avenue West Los Angeles 104,853  55.4  % 55.4  %
501 Santa Monica Boulevard West Los Angeles 78,509  67.8  % 67.8  %
Total Greater Los Angeles 4,344,361  80.8  % 83.6  %
 
________________________
(1)This property is part of a complex of properties and is analyzed at the complex level.
13
Q1 2023 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region, continued
Submarket Square Feet Occupied Leased
San Diego County, California
12225 El Camino Real Del Mar 58,401  100.0  % 100.0  %
12235 El Camino Real Del Mar 53,751  100.0  % 100.0  %
12340 El Camino Real * Del Mar 109,307  100.0  % 100.0  %
12390 El Camino Real Del Mar 73,238  100.0  % 100.0  %
12770 El Camino Real Del Mar 75,035  100.0  % 100.0  %
12780 El Camino Real Del Mar 140,591  100.0  % 100.0  %
12790 El Camino Real Del Mar 87,944  100.0  % 100.0  %
12830 El Camino Real Del Mar 196,444  100.0  % 100.0  %
12860 El Camino Real Del Mar 92,042  100.0  % 100.0  %
12348 High Bluff Drive Del Mar 39,193  100.0  % 100.0  %
12400 High Bluff Drive * Del Mar 216,518  100.0  % 100.0  %
3579 Valley Centre Drive
Del Mar 54,960  94.7  % 94.7  %
3611 Valley Centre Drive Del Mar 132,425  96.4  % 96.4  %
3661 Valley Centre Drive Del Mar 131,662  100.0  % 100.0  %
3721 Valley Centre Drive Del Mar 115,193  100.0  % 100.0  %
3811 Valley Centre Drive Del Mar 118,912  100.0  % 100.0  %
3745 Paseo Place Del Mar 95,871  80.5  % 93.8  %
 13480 Evening Creek Drive North I-15 Corridor 143,401  6.4  % 55.7  %
13500 Evening Creek Drive North I-15 Corridor 143,749  100.0  % 100.0  %
13520 Evening Creek Drive North I-15 Corridor 146,701  94.8  % 94.8  %
2100 Kettner Boulevard * Little Italy 204,793  0.0  % 15.1  %
2305 Historic Decatur Road Point Loma 107,456  93.9  % 93.9  %
9455 Towne Centre Drive University Towne Center 160,444  100.0  % 100.0  %
Total San Diego County 2,698,031  85.9  % 90.2  %
________________________
* Excluded from our Same Store portfolio.













14
Q1 2023 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region, continued
  Submarket Square Feet Occupied Leased
San Francisco Bay Area, California
4100 Bohannon Drive Menlo Park 47,379  100.0  % 100.0  %
4200 Bohannon Drive Menlo Park 45,451  65.8  % 65.8  %
4300 Bohannon Drive Menlo Park 63,079  48.7  % 85.3  %
4500 Bohannon Drive Menlo Park 63,078  100.0  % 100.0  %
4600 Bohannon Drive Menlo Park 48,147  93.0  % 93.0  %
4700 Bohannon Drive Menlo Park 63,078  100.0  % 100.0  %
1290-1300 Terra Bella Avenue Mountain View 114,175  100.0  % 100.0  %
680 E. Middlefield Road Mountain View 171,676  100.0  % 100.0  %
690 E. Middlefield Road Mountain View 171,215  100.0  % 100.0  %
1701 Page Mill Road Palo Alto 128,688  100.0  % 100.0  %
3150 Porter Drive Palo Alto 36,886  100.0  % 100.0  %
900 Jefferson Avenue Redwood City 228,505  100.0  % 100.0  %
900 Middlefield Road Redwood City 118,764  100.0  % 100.0  %
100 Hooper Street San Francisco 417,914  95.5  % 95.5  %
100 First Street San Francisco 480,457  94.8  % 98.8  %
303 Second Street San Francisco 784,658  84.9  % 91.0  %
201 Third Street San Francisco 346,538  74.6  % 74.6  %
360 Third Street San Francisco 429,796  94.8  % 94.8  %
250 Brannan Street San Francisco 100,850  100.0  % 100.0  %
301 Brannan Street San Francisco 82,834  100.0  % 100.0  %
333 Brannan Street San Francisco 185,602  100.0  % 100.0  %
345 Brannan Street San Francisco 110,050  99.7  % 99.7  %
350 Mission Street San Francisco 455,340  99.7  % 99.7  %
345 Oyster Point Boulevard South San Francisco 40,410  100.0  % 100.0  %
347 Oyster Point Boulevard South San Francisco 39,780  100.0  % 100.0  %
349 Oyster Point Boulevard South San Francisco 65,340  100.0  % 100.0  %
350 Oyster Point Boulevard South San Francisco 234,892  100.0  % 100.0  %
352 Oyster Point Boulevard South San Francisco 232,215  100.0  % 100.0  %
354 Oyster Point Boulevard South San Francisco 193,472  100.0  % 100.0  %
505 Mathilda Avenue Sunnyvale 212,322  100.0  % 100.0  %
555 Mathilda Avenue Sunnyvale 212,322  100.0  % 100.0  %
599 Mathilda Avenue Sunnyvale 76,031  100.0  % 100.0  %
605 Mathilda Avenue Sunnyvale 162,785  100.0  % 100.0  %
Total San Francisco Bay Area 6,163,729  94.7  % 96.2  %


15
Q1 2023 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region, continued
Submarket Square Feet Occupied Leased
Greater Seattle, Washington
601 108th Avenue NE Bellevue 490,738  99.8  % 99.8  %
10900 NE 4th Street Bellevue 428,557  82.1  % 82.1  %
2001 West 8th Avenue Denny Regrade 539,226  89.6  % 89.6  %
333 Dexter Avenue North * Lake Union 618,766  100.0  % 100.0  %
701 N. 34th Street Lake Union 141,860  100.0  % 100.0  %
801 N. 34th Street Lake Union 173,615  100.0  % 100.0  %
837 N. 34th Street Lake Union 112,487  100.0  % 100.0  %
320 Westlake Avenue North Lake Union 184,644  96.1  % 96.1  %
321 Terry Avenue North Lake Union 135,755  100.0  % 100.0  %
401 Terry Avenue North Lake Union 174,530  100.0  % 100.0  %
Total Greater Seattle 3,000,178  95.3  % 95.3  %
TOTAL STABILIZED OFFICE PORTFOLIO 16,206,299  89.6  % 91.6  %
________________________
* Excluded from our Same Store portfolio.

Average Residential Occupancy
RESIDENTIAL PROPERTIES Submarket Total No. of Units Quarter-to-Date
Greater Los Angeles
1550 N. El Centro Avenue Hollywood 200 94.0%
6390 De Longpre Avenue Hollywood 193 93.4%
San Diego County
3200 Paseo Village Way Del Mar 608 93.1%
TOTAL RESIDENTIAL PROPERTIES 1,001 93.4%
16
Q1 2023 Supplemental Financial Report
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Information on Leases Commenced (1)
Quarter to Date
# of Leases (2)
Square Feet (2)
 Weighted
Average Lease
Term (Mo.)
TI/LC
Per Sq.Ft. (3)
TI/LC
Per Sq.Ft. /Year (3)
 Changes in
GAAP Rents		 Changes in
Cash Rents
New Renewal New Renewal Total
2nd Generation (4)
 6  9  34,634  116,595  151,229  42  $ 23.33  $ 6.66  19.1  % 5.4  %
________________________
(1)Includes 100% of consolidated property partnerships.
(2)Represents leasing activity for leases that commenced at properties in the stabilized portfolio during the period, net of month-to-month leases.
(3)Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs.
(4)Includes leases for which re-leasing timing was impacted by the COVID-19 pandemic.

17
Q1 2023 Supplemental Financial Report
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Information on Leases Executed (1)
Quarter to Date (2)
# of Leases (3)
Square Feet (3)
 Weighted
Average Lease
Term (Mo.)
TI/LC
Per Sq.Ft. (4)
TI/LC
Per Sq.Ft. /Year (4)
 Changes in
GAAP Rents		 Changes in
Cash Rents		 Retention
Rates
New Renewal New Renewal Total
2nd Generation 12  8  169,861  116,595  286,456  53  $ 58.09  $ 13.15  4.2  % (4.4) % 25.1  %
________________________
(1)Includes 100% of consolidated property partnerships.
(2)During the three months ended March 31, 2023, 9 new leases totaling 157,317 square feet were signed but not commenced as of March 31, 2023.
(3)Represents leasing activity for leases signed at properties in the stabilized portfolio during the period, net of month-to-month leases.
(4)Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs.


18
Q1 2023 Supplemental Financial Report
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Stabilized Portfolio Capital Expenditures
($ in thousands)
Q1 2023
1st Generation (Nonrecurring) Capital Expenditures: (1)
Capital Improvements $ 347 
Tenant Improvements & Leasing Commissions (2)
 — 
Total $ 347 
Q1 2023
2nd Generation (Recurring) Capital Expenditures: (1)
Capital Improvements $ 7,297 
Tenant Improvements & Leasing Commissions (2)
 10,469 
Total $ 17,766 
________________________
(1)Includes 100% of capital expenditures of consolidated property partnerships.
(2)Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements.

19
Q1 2023 Supplemental Financial Report
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Stabilized Portfolio Lease Expiration Summary (1)(2)
($ in thousands, except for annualized rent per sq. ft.)

chart-47086894289a403c847a.jpg
# of Expiring Leases 11 15 20 28 14 17 17 63 59 63 40 22 37 31 14 14
% of Total Leased Sq. Ft. 4.0  % 2.0  % 2.1  % 2.0  % 1.0  % 2.1  % 2.7  % 4.8  % 13.7  % 7.8  % 7.6  % 6.7  % 10.7  % 13.4  % 7.4  % 12.0  %
Annualized Base Rent $29,539 $13,450 $16,415 $13,585 $5,924 $11,749 $23,297 $33,148 $91,545 $46,177 $67,752 $53,105 $91,142 $129,460 $71,560 $112,783
% of Total Annualized Base Rent (3)
 3.6  % 1.7  % 2.0  % 1.7  % 0.7  % 1.4  % 2.9  % 4.1  % 11.3  % 5.7  % 8.4  % 6.6  % 11.2  % 16.0  % 8.8  % 13.9  %
Annualized Rent per Sq. Ft. $51.63 $44.83 $55.13 $47.00 $42.39 $37.45 $59.97 $48.22 $46.77 $41.42 $62.66 $55.17 $59.74 $67.71 $67.85 $66.00
________________________
(1)For leases that have been renewed early with existing tenants, the expiration date and annualized base rent information presented takes into consideration the renewed lease terms. Excludes leases not commenced as of March 31, 2023, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of March 31, 2023.
(2)Adjusting for leasing transactions executed as of March 31, 2023 but not yet commenced, the 2023 and 2024 expirations would be reduced by 71,920 and 6,253 square feet, respectively.
(3)Includes 100% of annualized base rent of consolidated property partnerships.
20
Q1 2023 Supplemental Financial Report
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Stabilized Portfolio Lease Expiration Schedule by Region
($ in thousands, except for annualized rent per sq. ft.)
Year
Region # of
Expiring Leases		 Total
Square Feet		 % of Total
Leased Sq. Ft.
Annualized
Base Rent (1)
 % of Total
Annualized
Base Rent		 Annualized Rent
per Sq. Ft.
2023 Greater Los Angeles 31  352,000  2.5  % $ 18,810  2.3  % $ 53.44 
San Diego 5  134,366  0.9  % 5,798  0.7  % 43.15 
San Francisco Bay Area 7  296,300  2.1  % 17,423  2.1  % 58.80 
Greater Seattle 3  387,141  2.6  % 17,373  2.2  % 44.88 
Total 46  1,169,807  8.1  % $ 59,404  7.3  % $ 50.78 
2024 Greater Los Angeles 46  573,413  4.0  % $ 25,110  3.1  % $ 43.79 
San Diego 9  57,303  0.3  % 3,199  0.4  % 55.83 
San Francisco Bay Area 11  269,858  1.9  % 18,040  2.2  % 66.85 
Greater Seattle 10  230,393  1.6  % 8,206  1.0  % 35.62 
Total 76  1,130,967  7.8  % $ 54,555  6.7  % $ 48.24 
2025 Greater Los Angeles 25  192,663  1.3  % $ 8,467  1.0  % $ 43.95 
San Diego 18  217,300  1.5  % 10,392  1.3  % 47.82 
San Francisco Bay Area 9  120,942  0.9  % 8,501  1.1  % 70.29 
Greater Seattle 11  156,575  1.1  % 5,788  0.7  % 36.97 
Total 63  687,480  4.8  % $ 33,148  4.1  % $ 48.22 
2026 Greater Los Angeles 20  386,767  2.7  % $ 14,982  1.8  % $ 38.74 
San Diego 13  234,893  1.6  % 10,971  1.4  % 46.71 
San Francisco Bay Area 15  940,216  6.6  % 49,396  6.1  % 52.54 
Greater Seattle 11  395,359  2.8  % 16,196  2.0  % 40.97 
Total 59  1,957,235  13.7  % $ 91,545  11.3  % $ 46.77 
2027 Greater Los Angeles 33  718,971  5.0  % $ 26,463  3.2  % $ 36.81 
San Diego 16  239,005  1.7  % 11,926  1.5  % 49.90 
San Francisco Bay Area 4  70,381  0.5  % 4,523  0.6  % 64.26 
Greater Seattle 10  86,543  0.6  % 3,265  0.4  % 37.73 
Total 63  1,114,900  7.8  % $ 46,177  5.7  % $ 41.42 
2028
and
Beyond		 Greater Los Angeles 41  1,164,356  8.3  % $ 68,198  8.4  % $ 58.57 
San Diego 49  1,415,704  9.9  % 87,885  10.8  % 62.08 
San Francisco Bay Area 44  4,085,604  28.6  % 296,822  36.6  % 72.65 
Greater Seattle 24  1,579,219  11.0  % 72,897  9.1  % 46.16 
Total 158  8,244,883  57.8  % $ 525,802  64.9  % $ 63.77 
________________________
(1)Includes 100% of annualized base rent of consolidated property partnerships.
21
Q1 2023 Supplemental Financial Report
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Top Fifteen Tenants (1)
($ in thousands)  
Tenant Name Region
Annualized Base Rental Revenue (2)
 Rentable
Square Feet		 Percentage of
Total Annualized Base Rental Revenue		 Percentage of
Total Rentable
Square Feet		 Year(s) of Lease Expiration
Global technology company Greater Seattle /
San Diego County		 $ 39,631  779,210  4.9  % 4.8  % 2032 - 2033
Cruise LLC San Francisco Bay Area 35,449  374,618  4.4  % 2.3  % 2031
Stripe, Inc. San Francisco Bay Area 33,110  425,687  4.1  % 2.6  % 2034
Amazon.com (3)
 Greater Seattle 31,437  709,276  3.9  % 4.4  % 2023 / 2029 - 2030
Salesforce, Inc. / Tableau Software, LLC San Francisco Bay Area /
Greater Seattle		 30,100  613,497  3.7  % 3.8  % 2024 / 2029 - 2032
LinkedIn Corporation / Microsoft Corporation San Francisco Bay Area 29,752  663,460  3.7  % 4.1  % 2024 / 2026
Adobe Systems, Inc. San Francisco Bay Area /
Greater Seattle		 27,897  523,416  3.4  % 3.2  % 2027 / 2031
DoorDash, Inc. San Francisco Bay Area 23,842  236,759  2.9  % 1.5  % 2032
Riot Games, Inc. (4)
 Greater Los Angeles 22,967  340,584  2.8  % 2.1  % 2023 - 2024 / 2031
Okta, Inc. San Francisco Bay Area 22,387  273,371  2.8  % 1.7  % 2028
Netflix, Inc. Greater Los Angeles 21,854  361,388  2.7  % 2.2  % 2032
Box, Inc. San Francisco Bay Area 20,390  341,441  2.5  % 2.1  % 2028
Cytokinetics, Inc. San Francisco Bay Area 18,167  234,892  2.2  % 1.4  % 2033
DIRECTV, LLC Greater Los Angeles 16,085  532,956  2.0  % 3.3  % 2026 - 2027
Synopsys, Inc. San Francisco Bay Area 15,492  342,891  1.9  % 2.1  % 2030
Total Top Fifteen Tenants $ 388,560  6,753,446  47.9  % 41.6  %
       
________________________
(1)The information presented is as of the date of the report.
(2)Includes 100% of annualized base rental revenues of consolidated property partnerships.
(3)The 2023 lease expiration represents 375,479 rentable square feet expiring on April 30, 2023.
(4)The 2023 lease expiration represents 6,416 rentable square feet expiring on July 31, 2023 and 158,371 rentable square feet expiring on November 30, 2023.
22
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Consolidated Ventures (Noncontrolling Property Partnerships)

Property (1)
 Venture Partner Submarket Rentable Square Feet KRC Ownership %
100 First Street, San Francisco, CA Norges Bank Real Estate Management San Francisco 480,457 56%
303 Second Street, San Francisco, CA Norges Bank Real Estate Management San Francisco 784,658 56%
900 Jefferson Avenue and 900 Middlefield Road, Redwood City, CA (2)
 Local developer Redwood City 347,269 93%
____________________
(1)For breakout of Net Operating Income by partnership, refer to page 37, Reconciliation of Net Income Available to Common Stockholders to Same Store Net Operating Income.
(2)Reflects the KRC ownership percentage at time of agreement. Actual percentage may vary depending on cash flows or promote structure.
23

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03
Development


–In-Process Development & Redevelopment
–Future Development Pipeline

Q1 2023 Supplemental Financial Report
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In-Process Development & Redevelopment
($ in millions)
Location Construction Start Date
Estimated Stabilization Date (2)
Estimated Rentable Square Feet (3)
Total Estimated Investment
Total Cash Costs Incurred as of
3/31/2023 (4)
 % Leased Total Project % Occupied
TENANT IMPROVEMENT (1)
Office
Austin
Indeed Tower Austin CBD 2Q 2021 4Q 2023 734,000  $ 690.0  $ 614.8  74% 60%
TOTAL: 734,000  $ 690.0  $ 614.8  74% 60%

UNDER CONSTRUCTION Location Construction Start Date
Estimated Stabilization Date (2)
Estimated Rentable Square Feet (3)
 Total Estimated Investment
Total Cash Costs Incurred as of
3/31/2023 (4)(5)
 % Leased
Office / Life Science
San Francisco Bay Area
Kilroy Oyster Point - Phase 2 South San Francisco 2Q 2021 2Q 2025 875,000  $ 940.0  $ 394.2  —%
4400 Bohannon Drive (6)
 Menlo Park 4Q 2022 3Q 2025 48,000  55.0  17.4  —%
San Diego County
9514 Towne Centre Drive University Towne Center 3Q 2021 4Q 2023 71,000  60.0  38.4  100%
4690 Executive Drive (6)(7)
 University Towne Center 1Q 2022 3Q 2024 52,000  25.0  16.8  —%
TOTAL: 1,046,000  $ 1,080.0  $ 466.8  7%
________________________
(1)Represents projects that have reached cold shell condition and are ready for tenant improvements, which may require additional major base building construction before being placed in service.
(2)For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components. For multi-phase projects, interest and carry cost capitalization may cease and recommence driven by various factors, including tenant improvement construction and other tenant related timing or project scope. For projects being redeveloped, redevelopment will occur in phases based on existing lease expiration dates and timing of the tenant improvement build-out.
(3)For projects being redeveloped, represents the total square footage leased.
(4)Represents costs incurred as of March 31, 2023, excluding GAAP accrued liabilities and leasing overhead.
(5)For redevelopment projects, includes the existing depreciated basis for the buildings to be redeveloped.
(6)Redevelopment project.
(7)The building was previously 100% leased to Sorrento Therapeutics, which declared Chapter 11 bankruptcy in February 2023. Subsequent to March 31, 2023, they rejected this lease.
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Future Development Pipeline
($ in millions)
FUTURE DEVELOPMENT PIPELINE Location
Approx. Developable
Square Feet (1)
Total Cash Costs Incurred as of 3/31/2023 (2)
Greater Los Angeles
1633 26th Street West Los Angeles 190,000 $ 14.7 
San Diego County
Santa Fe Summit South / North 56 Corridor 600,000 - 650,000 109.5 
2045 Pacific Highway Little Italy 275,000 52.5 
Kilroy East Village East Village TBD 67.1 
San Francisco Bay Area
Kilroy Oyster Point - Phases 3 and 4 South San Francisco 875,000 - 1,000,000 207.9 
Flower Mart SOMA 2,300,000 495.6 
Greater Seattle
SIX0 - Office & Residential Denny Regrade 925,000 176.1 
Austin
Stadium Tower Stadium District / Domain 493,000 62.2 
TOTAL: $ 1,185.6 
________________________
(1)The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes or project design.
(2)Represents costs incurred as of March 31, 2023, excluding accrued liabilities recorded in accordance with GAAP.




26

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04
Debt and
Capitalization Data

–Capital Structure
–Debt Analysis

Q1 2023 Supplemental Financial Report
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Capital Structure
As of March 31, 2023 ($ in thousands)
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Debt Balance (3)
 Stated Rate Maturity Date
Unsecured Debt (4)
$ 425,000  3.45  % 12/15/2024
$ 400,000  4.38  % 10/1/2025
$ 50,000  4.30  % 7/18/2026
$ 350,000  5.77  %
10/3/2026 (5)
$ 200,000  4.35  % 10/18/2026
$ 175,000  3.35  % 2/17/2027
$ 400,000  4.75  % 12/15/2028
$ 75,000  3.45  % 2/17/2029
$ 400,000  4.25  % 8/15/2029
$ 500,000  3.05  % 2/15/2030
$ 350,000  4.27  % 1/31/2031
$ 425,000  2.50  % 11/15/2032
$ 450,000  2.65  % 11/15/2033
$ 4,200,000  3.82  %
Secured Debt
$ 159,088  3.57  % 12/1/2026
$ 82,958  4.48  % 7/1/2027
$ 242,046  3.88  %
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________________________
(1)Value based on closing share price of $32.40 as of March 31, 2023.
(2)Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships.
(3)Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts.
(4)As of March 31, 2023, there was no outstanding balance on the unsecured revolving credit facility.
(5)The maturity date of the unsecured term loan assumes the exercise of the two twelve-month extensions at the Company’s option.
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Debt Analysis
As of March 31, 2023
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TOTAL DEBT COMPOSITION (1)
Weighted Average
Interest Rate
Years to Maturity (2)
Secured vs. Unsecured Debt
Unsecured Debt 3.8% 5.9
Secured Debt 3.9% 3.9
Floating vs. Fixed-Rate Debt
Floating-Rate Debt 5.8% 3.5
Fixed-Rate Debt 3.7% 6.0
   
Stated Interest Rate 3.8% 5.8
GAAP Effective Rate 3.9%
GAAP Effective Rate Including Debt Issuance Costs 4.1%
 
KEY DEBT COVENANTS (3)
Covenant Actual Performance
as of March 31, 2023
Unsecured Credit and Term Loan Facility and Private Placement Notes:
Total debt to total asset value less than 60% 28%
Fixed charge coverage ratio greater than 1.5x 3.9x
Unsecured debt ratio greater than 1.67x 3.47x
Unencumbered asset pool debt service coverage greater than 1.75x 4.59x
Unsecured Senior Notes due 2024, 2025, 2028, 2029, 2030, 2032 and 2033:
Total debt to total asset value less than 60% 37%
Interest coverage greater than 1.5x 8.2x
Secured debt to total asset value less than 40% 2%
Unencumbered asset pool value to unsecured debt greater than 150% 278%
________________________
(1)As of March 31, 2023, there was no outstanding balance on the unsecured revolving credit facility.
(2)The maturity date of the unsecured term loan assumes the exercise of the two twelve-month extensions at the Company’s option.
(3)All covenant ratio titles utilize terms and are calculated as defined in the respective debt and credit agreements.
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05
Non-GAAP Supplemental
Measures

Q1 2023 Supplemental Financial Report
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Management Statements on Non-GAAP Supplemental Measures
Included in this section are management’s statements regarding certain non-GAAP financial measures provided in this supplemental financial report and, with respect to Funds From Operations available to common stockholders and common unitholders (“FFO”), in the Company’s earnings release on April 26, 2023 and the reasons why management believes that these measures provide useful information to investors about the Company’s financial condition and results of operations.

Net Operating Income:

Management believes that Net Operating Income (“NOI”) is a useful supplemental measure of the Company’s operating performance. The Company defines NOI as follows: consolidated operating revenues (rental income and other property income) less consolidated property and related expenses (property expenses, real estate taxes and ground leases). Other real estate investment trusts (“REITs”) may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to other REITs.

Because NOI excludes leasing costs, general and administrative expenses, interest expense, depreciation and amortization, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the consolidated revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. The Company uses NOI to evaluate its operating performance on a portfolio basis since NOI allows the Company to evaluate the impact that factors such as occupancy levels, lease structure, rental rates, and tenant base have on the Company’s results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company’s financial and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of performance in the real estate industry.

However, NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect general and administrative expenses, leasing costs, interest expense, depreciation and amortization costs, other nonproperty income and losses and the level of capital expenditures necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.

Same Store Net Operating Income:

Management believes that Same Store NOI is a useful supplemental measure of the Company’s operating performance. Same Store NOI represents the consolidated NOI for all of the properties that were owned and included in the Company's stabilized portfolio for two comparable reporting periods. Because Same Store NOI excludes the change in NOI from developed, redeveloped, acquired and disposed of and held for sale properties, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating Same Store NOI, and accordingly, the Company’s Same Store NOI may not be comparable to other REITs.

However, Same Store NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect the operations of the Company’s entire portfolio, nor does it reflect the impact of general and administrative expenses, leasing costs, interest expense, depreciation and amortization costs, other nonproperty income and losses and the level of capital expenditures necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.
31
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Management Statements on Non-GAAP Supplemental Measures, continued
Same Store Cash Net Operating Income:

Management believes that Same Store Cash NOI is a useful supplemental measure of the Company’s operating performance. Same Store Cash NOI represents the consolidated NOI for all of the properties that were owned and included in the Company’s stabilized portfolio for two comparable reporting periods, adjusted for the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles, and the provision for bad debts. Because Same Store Cash NOI excludes the change in NOI from developed, redeveloped, acquired and disposed of and held for sale properties, it highlights operating trends on a cash basis such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating Same Store Cash NOI, and accordingly, our Same Store Cash NOI may not be comparable to other REITs.

However, Same Store Cash NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect the operations of the Company's entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company's results from operations.

EBITDA, as adjusted:

Management believes that consolidated earnings before interest expense, depreciation and amortization, gain/loss on early extinguishment of debt, gains and losses on depreciable real estate, net income attributable to noncontrolling interests, preferred dividends and distributions, original issuance costs of redeemed preferred stock and preferred units, and impairment losses (“EBITDA, as adjusted”) is a useful supplemental measure of the Company’s operating performance. When considered with other GAAP measures and FFO, management believes EBITDA, as adjusted, gives the investment community a more complete understanding of the Company’s consolidated operating results, including the impact of general and administrative expenses and acquisition-related expenses, before the impact of investing and financing transactions and facilitates comparisons with competitors. Management also believes it is appropriate to present EBITDA, as adjusted, as it is used in several of the Company’s financial covenants for both its secured and unsecured debt. However, EBITDA, as adjusted, should not be viewed as an alternative measure of the Company’s operating performance since it excludes financing costs as well as depreciation and amortization costs which are significant economic costs that could materially impact the Company’s results of operations and liquidity. Other REITs may use different methodologies for calculating EBITDA, as adjusted, and, accordingly, the Company’s EBITDA, as adjusted, may not be comparable to other REITs. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by Nareit, as the Company does not have any unconsolidated joint ventures.

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Management Statements on Non-GAAP Supplemental Measures, continued
Funds From Operations:

The Company calculates Funds From Operations available to common stockholders and common unitholders (“FFO”) in accordance with the 2018 Restated White Paper on FFO approved by the Board of Governors of Nareit. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders.

Management believes that FFO is a useful supplemental measure of the Company’s 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 the Company’s 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, the Company’s 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, management believes that FFO along with the required GAAP presentations provides a more complete measurement of the Company’s performance relative to its 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 the Company’s operating performance since 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 the Company’s properties, which are significant economic costs and could materially impact the Company’s results from operations.

Funds Available for Distribution:

Management believes that Funds Available for Distribution available to common stockholders and common unitholders (“FAD”) is a useful supplemental measure of the Company’s liquidity. The Company computes FAD by adding to FFO the non-cash amortization of deferred financing costs, debt discounts and premiums and share-based compensation awards, amortization of above (below) market rents for acquisition properties and non-cash executive compensation expense then subtracting recurring tenant improvements, leasing commissions and capital expenditures and eliminating the net effect of straight-line rents, amortization of deferred revenue related to tenant improvements, adjusting for other lease related items and amounts of gain or loss on marketable securities related to the Company’s executive deferred compensation plan that are capitalized as development costs, and after adjustment for amounts attributable to noncontrolling interests in consolidated property partnerships. FAD provides an additional perspective on the Company’s ability to fund cash needs and make distributions to stockholders by adjusting FFO for the impact of certain cash and non-cash items, as well as adjusting FFO for recurring capital expenditures and leasing costs. Management also believes that FAD provides useful information to the investment community about the Company’s financial position as compared to other REITs since FAD is a liquidity measure used by other REITs. However, other REITs may use different methodologies for calculating FAD and, accordingly, the Company’s FAD may not be comparable to other REITs.
33

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06
Definitions and Reconciliations


Q1 2023 Supplemental Financial Report
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Definitions Included in Supplemental

Annualized Base Rent:
Includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net. Amounts represent percentage of total portfolio annualized contractual base rental revenue.
Change in GAAP / Cash Rents (Leases Commenced):
Calculated as the change between GAAP / cash rents for new/renewed leases and the expiring GAAP / cash rents for the same space. May include leases for which re-leasing timing was impacted by the COVID-19 pandemic and restrictions intended to prevent its spread. Excludes leases for which the space was vacant when the property was acquired by the Company.
Change in GAAP / Cash Rents (Leases Executed):
Calculated as the change between GAAP / cash rents for signed leases and the expiring GAAP / cash rents for the same space. May include leases for which re-leasing timing was impacted by the COVID-19 pandemic and restrictions intended to prevent its spread. Excludes leases for which the space was vacant when the property was acquired by the Company.
Estimated Stabilization Date (Development):
Management’s estimation of the earlier of stabilized occupancy (95%) or one year from the date of the cessation of major base building construction activities for office and retail properties and upon substantial completion for residential properties.
FAD Payout Ratio:
Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by FAD.
First Generation Capital Expenditures:
Capital expenditures for newly acquired space, newly developed, and redeveloped space, or a significant change in use or repositioning of space that result in additional revenue generated when the space is re-leased. These costs are not subtracted in our calculation of FAD.
Fixed Charge Coverage Ratio - EBITDA:
Calculated as EBITDA, as adjusted, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums) and current year accrued preferred dividends.
Fixed Charge Coverage Ratio - Net Income:
Calculated as net income, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums) and current year accrued preferred dividends.
FFO Payout Ratio:
Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by FFO attributable to common stockholders and unitholders.


35
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Definitions Included in Supplemental, continued

GAAP Effective Rate:
The rate at which interest expense is recorded for financial reporting purposes, which reflects the amortization of any discounts/premiums, excluding debt issuance costs.
Interest Coverage Ratio:
Calculated as EBITDA, as adjusted, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums).
Net Effect of Straight-Line Rents:
Represents the straight-line rent income recognized during the period offset by cash received during the period that was applied to deferred rents receivable balances for terminated leases and the provision for bad debts recorded for deferred rent receivable balances.
Net Income Payout Ratio:
Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by net income.
Net Operating Income Margins:
Calculated as net operating income divided by total revenues.
Retention Rates (Leases Executed):
Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.
Same Store Portfolio:
Our Same Store Portfolio includes all of our properties owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1, 2022 and still owned and included in the stabilized portfolio as of March 31, 2023. It does not include undeveloped land, development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, completed residential developments not yet stabilized and properties held-for-sale. We define redevelopment properties as those projects for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property.
Second Generation Capital Expenditures:
Second generation leasing includes space in the stabilized portfolio where we have made capital expenditures to maintain the current market revenue stream; generally recurring in nature or related to space previously occupied.
Stated Interest Rate:
The rate at which interest expense is recorded per the respective loan documents, excluding the impact of the amortization of any debt discounts/premiums.
Tenant Improvement Phase:
Represents projects that have reached cold shell condition and are ready for tenant improvements, which may require additional major base building construction before being placed in service.

36
Q1 2023 Supplemental Financial Report
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Reconciliation of Net Income Available to Common Stockholders to Same Store Net Operating Income
(unaudited, $ in thousands)
  Three Months Ended March 31,
  2023 2022
Net Income Available to Common Stockholders $ 56,608  $ 53,128 
Net income attributable to noncontrolling common units of the Operating Partnership 560  516 
Net income attributable to noncontrolling interests in consolidated property partnerships 8,062  5,739 
Net Income 65,230  59,383 
Adjustments:
General and administrative expenses 23,936  22,781 
Leasing costs 1,372  1,013 
Depreciation and amortization 93,676  88,660 
Interest income and other income, net (1,460) (81)
Interest expense 25,671  20,625 
Net Operating Income, as defined (1)
 208,425  192,381 
Wholly-Owned Properties 179,500  168,431 
Consolidated property partnerships: (2)
100 First Street (3)
 6,011  5,922 
303 Second Street (3)
 17,247  12,000 
Crossing/900 (4)
 5,667  6,028 
Net Operating Income, as defined (1)
 208,425  192,381 
Non-Same Store Net Operating Income (5)
 (19,909) (10,440)
Same Store Net Operating Income 188,516  181,941 
GAAP to Cash Adjustments:
GAAP Operating Revenues Adjustments, net (6)
 (2,278) (21,865)
GAAP Operating Expenses Adjustments, net 100  111 
Same Store Cash Net Operating Income $ 186,338  $ 160,187 
   
________________________
(1)Please refer to pages 31-32 for Management Statements on Net Operating Income, Same Store Net Operating Income and Same Store Cash Net Operating Income.
(2)Reflects Net Operating Income for all periods presented.
(3)For all periods presented, an unrelated third party entity owned approximately 44% common equity interests in two properties located at 100 First Street and 303 Second Street in San Francisco, CA.
(4)For all periods presented, an unrelated third party entity owned an approximate 7% common equity interest in two properties located at 900 Jefferson Avenue and 900 Middlefield Road in Redwood City, CA.
(5)Includes the results of one office operating property disposed of in the third quarter of 2022, one office development building added to the stabilized portfolio during the second quarter of 2022, one office development building and two life science redevelopment buildings added to the stabilized portfolio during the third quarter of 2022, and our in-process and future development projects.
(6)Includes the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles and revenue reversals (recoveries) related to tenant creditworthiness.
37
Q1 2023 Supplemental Financial Report
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Reconciliation of Net Income Available to Common Stockholders to EBITDA, as Adjusted
(unaudited, $ in thousands)
  Three Months Ended March 31,
  2023 2022
Net Income Available to Common Stockholders $ 56,608  $ 53,128 
Interest expense 25,671  20,625 
Depreciation and amortization 93,676  88,660 
Net income attributable to noncontrolling common units of the Operating Partnership 560  516 
Net income attributable to noncontrolling interests in consolidated property partnerships 8,062  5,739 
EBITDA, as adjusted (1)
 $ 184,577  $ 168,668 
________________________
(1)Please refer to page 32 for a Management Statement on EBITDA, as adjusted. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by Nareit, as the Company does not have any unconsolidated joint ventures.

38

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EX-99.2 3 exhibit992.htm EX-99.2 Document
Exhibit 99.2
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Contact: FOR RELEASE:
Eliott Trencher April 26, 2023
Executive Vice President,
Chief Financial Officer
and Chief Investment Officer
(310) 481-8587
Or
Bill Hutcheson
Senior Vice President,
Investor Relations & Capital Markets
(415) 778-5678
 

KILROY REALTY CORPORATION REPORTS
FIRST QUARTER FINANCIAL RESULTS
---------------

LOS ANGELES, April 26, 2023 - Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its first quarter ended March 31, 2023.

First Quarter Highlights

Financial Results
•Revenues grew approximately 10.3% to $292.8 million for the quarter ended March 31, 2023, as compared to $265.5 million for the quarter ended March 31, 2022
•Net income available to common stockholders of $0.48 per diluted share, an increase of approximately 6.7% as compared to $0.45 per diluted share for the quarter ended March 31, 2022
•Funds from operations available to common stockholders and unitholders (“FFO”) of $146.0 million, or $1.22 per diluted share, an increase of approximately 5.2% as compared to $137.8 million, or $1.16 per diluted share for the quarter ended March 31, 2022

Leasing and Occupancy
•Stabilized portfolio was 89.6% occupied and 91.6% leased at March 31, 2023
•Signed approximately 286,000 square feet of new and renewing leases
◦GAAP rents increased approximately 4.2% and cash rents decreased approximately 4.4% from prior levels in the stabilized portfolio
•In April, signed approximately 52,000 square feet of leases, including an approximately 20,000 square foot lease at Indeed Tower

Balance Sheet / Liquidity
•As of the date of this release, the company had approximately $1.6 billion of total liquidity comprised of approximately $330.0 million of cash and cash equivalents, $170.0 million available under the unsecured term loan facility and full availability under the $1.1 billion unsecured revolving credit facility
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•During the quarter, amended the unsecured term loan facility to increase the capacity to $520.0 million. The company has drawn a total of $350.0 million to date, including $150.0 million towards the end of March as per the terms of the agreement
•Investment grade credit rated with approximately 95% unsecured debt and no significant debt maturities until the fourth quarter of 2024

Dividend
•The company’s Board of Directors declared and paid a regular quarterly cash dividend on its common stock of $0.54 per share, equivalent to an annual rate of $2.16

Development and Redevelopment
•In April, completed construction of the core and shell of an approximately 71,000 square foot office building in the University Towne Center submarket of San Diego and moved the property into the tenant improvement phase. The building is 100% leased

Other Corporate Developments
•As previously reported, John Kilroy will be retiring as Chief Executive Officer (“CEO”) at the end of 2023, and the company’s Board of Directors has retained Korn Ferry to assist in a comprehensive search for the company’s next CEO, which will include internal candidates and external candidates, with a targeted start date of January 1, 2024
◦The company expects to incur costs of $8 million to $14 million in 2023 related to his retirement

Net Income Available to Common Stockholders / FFO Guidance and Outlook
The company is providing an updated guidance range of Nareit-defined FFO per diluted share for the full year 2023 of $4.30 to $4.50 per share, with a midpoint of $4.40 per share. Excluding the non-recurring executive retirement costs referenced above, FFO guidance is unchanged.
Full Year 2023 Range
Low End High End
Net income available to common stockholders per share - diluted $ 1.60  $ 1.79 
Weighted average common shares outstanding - diluted (1)
 117,500  117,500 
Net income available to common stockholders $ 188,000  $ 210,000 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 1,800  2,300 
Net income attributable to noncontrolling interests in consolidated property partnerships 23,500  25,500 
Depreciation and amortization of real estate assets 335,000  335,000 
Gains on sales of depreciable real estate —  — 
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (35,000) (36,000)
Funds From Operations (2)
 $ 513,300  $ 536,800 
Weighted average common shares/units outstanding – diluted (3)
 119,400  119,400 
Funds From Operations per common share/unit – diluted (3)
 $ 4.30  $ 4.50 

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Key Assumptions February 2023 Assumptions Updated 2023 Assumptions
Same Store Cash NOI growth (4)
 0.0% to 2.0% 0.0% to 2.0%
Average occupancy 86.5% to 88.0% 86.5% to 88.0%
General & administrative expenses $82 million to $90 million $82 million to $90 million
Executive retirement costs (5)
 — $8 million to $14 million
Total development spending (6)
 $450 million to $550 million $400 million to $500 million
Dispositions $0 to $200 million $0 to $200 million
 ________________________
(1)Calculated based on estimated weighted average shares outstanding including non-participating share-based awards.
(2)See management statement for Funds From Operations at end of release.
(3)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(4)See management statement for Same Store Cash Net Operating Income on page 32 of our Supplemental Financial Report furnished on Form 8-K with this press release.
(5)Excluded from the general and administrative expenses line item, above.
(6)Remaining 2023 development spending is $325 million to $425 million.

The company’s guidance estimates for the full year 2023, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this press release, reflect management’s views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this press release. Although these guidance estimates reflect the impact on the company’s operating results of an assumed range of future disposition activity, these guidance estimates do not include any estimates of possible future gains or losses from possible future dispositions because the magnitude of gains or losses on sales of depreciable operating properties, if any, will depend on the sales price and depreciated cost basis of the disposed assets at the time of disposition, information that is not known at the time the company provides guidance, and the timing of any gain recognition will depend on the closing of the dispositions, information that is also not known at the time the company provides guidance and may occur after the relevant guidance period. We caution you not to place undue reliance on our assumed range of future disposition activity because any potential future disposition transactions will ultimately depend on the market conditions and other factors, including but not limited to the company’s capital needs, the particular assets being sold and the company’s ability to defer some or all of the taxable gain on the sales. These guidance estimates also do not include the impact on operating results from potential future acquisitions, possible capital markets activity, possible future impairment charges or any events outside of the company’s control. There can be no assurance that the company’s actual results will not differ materially from these estimates.

Conference Call and Audio Webcast
The company’s management will discuss first quarter results and the current business environment during the company’s April 27, 2023 earnings conference call. The call will begin at 10:00 a.m. Pacific Time and last approximately one hour. Those interested in listening via the Internet can access the conference call at https://events.q4inc.com/attendee/401574804. It may be necessary to download audio software to hear the conference call. Those interested in listening via telephone can access the conference call at (844) 200-6205 and enter access code 558367 five to 10 minutes prior to the start time to allow time for registration. International callers should dial (929) 526-1599 and enter the same passcode. In order to bypass speaking to the operator on the day of the call, please pre-register anytime at https://www.netroadshow.com/events/login?show=570175e8&confId=44980. A replay of the conference call will be available via telephone on April 27, 2023 through May 4, 2023 by dialing (866) 813-9403 and entering passcode 764296. International callers should dial (929) 458-6194 and enter the same passcode. The replay will also be available on our website at https://investors.kilroyrealty.com/shareholders/investor-events/default.aspx.

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About Kilroy Realty Corporation

Kilroy Realty Corporation (NYSE: KRC, the “company”, “Kilroy”) is a leading U.S. landlord and developer, with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, the Pacific Northwest and Austin, Texas. The company has earned global recognition for sustainability, building operations, innovation and design. As pioneers and innovators in the creation of a more sustainable real estate industry, the company’s approach to modern business environments helps drive creativity and productivity for some of the world’s leading technology, entertainment, life science and business services companies.

The company is a publicly traded real estate investment trust (“REIT”) and member of the S&P MidCap 400 Index with more than seven decades of experience developing, acquiring and managing office, life science and mixed-use projects.

As of March 31, 2023, Kilroy’s stabilized portfolio totaled approximately 16.2 million square feet of primarily office and life science space that was 89.6% occupied and 91.6% leased. The company also had more than 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 93.4%. In addition, the company had two in-process life science redevelopment projects with total estimated redevelopment costs of $80.0 million, totaling approximately 100,000 square feet, and three in-process development projects with an estimated total investment of $1.7 billion, totaling approximately 1.7 million square feet of office and life science space. The in-process development and redevelopment office and life science space is 34% leased.

A Leader in Sustainability and Commitment to Corporate Social Responsibility
Kilroy has a longstanding commitment to sustainability and continues to be a recognized leader in our sector. For over a decade, the company and its sustainability initiatives have been recognized with numerous honors, including being listed on the Dow Jones Sustainability World Index, earning the GRESB five star rating and being named a sector and regional leader in the Americas. Other honors have included the Nareit Leader in the Light Award, being named ENERGY STAR Partner of the Year and receiving the ENERGY STAR highest honor of Sustained Excellence.

Kilroy is proud to have achieved carbon neutral operations across our portfolio since 2020. The company’s portfolio was 69% LEED certified and 43% Fitwel certified, and 67% of eligible properties were ENERGY STAR certified as of March 31, 2023.

A significant part of the company’s foundation is its commitment to enhancing employee growth, satisfaction and wellness while maintaining a diverse and thriving culture. For the fourth year in a row, the company has been named to Bloomberg’s Gender Equality Index, which recognizes companies committed to supporting gender equality through policy development, representation, and transparency.

More information is available at http://www.kilroyrealty.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events.
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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; our ability to re-lease property at or above current market rates; reduced demand for office space, including as a result of remote work and flexible working arrangements that allow work from remote locations other than the employer's office premises; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; changes in interest rates and the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; and our ability to maintain our status as a REIT. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors included under the caption “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2022 and our other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information and speak only as of the dates on which they are made. We assume no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.


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KILROY REALTY CORPORATION
SUMMARY OF QUARTERLY RESULTS
(unaudited; in thousands, except per share data)

Three Months Ended March 31,
  2023 2022
Revenues $ 292,802  $ 265,501 
Net income available to common stockholders $ 56,608  $ 53,128 
Weighted average common shares outstanding – basic 117,059  116,650 
Weighted average common shares outstanding – diluted 117,407  117,060 
Net income available to common stockholders per share – basic $ 0.48  $ 0.45 
Net income available to common stockholders per share – diluted $ 0.48  $ 0.45 
Funds From Operations (1)(2)
 $ 145,959  $ 137,766 
Weighted average common shares/units outstanding – basic (3)
 118,818  118,628 
Weighted average common shares/units outstanding – diluted (4)
 119,165  119,038 
Funds From Operations per common share/unit – basic (2)
 $ 1.23  $ 1.16 
Funds From Operations per common share/unit – diluted (2)
 $ 1.22  $ 1.16 
Common shares outstanding at end of period 117,121 116,716
Common partnership units outstanding at end of period 1,151 1,151
Total common shares and units outstanding at end of period 118,272 117,867
  March 31, 2023 March 31, 2022
Stabilized office portfolio occupancy rates: (5)
Greater Los Angeles 80.8  % 85.7  %
San Diego County 85.9  % 89.4  %
San Francisco Bay Area 94.7  % 92.9  %
Greater Seattle 95.3  % 99.2  %
Weighted average total 89.6  % 91.3  %
Total square feet of stabilized office properties owned at end of period: (5)
Greater Los Angeles 4,344 4,457
San Diego County 2,698 2,171
San Francisco Bay Area 6,164 6,212
Greater Seattle 3,000 2,381
Total 16,206 15,221
________________________
(1)Reconciliation of Net income available to common stockholders to Funds From Operations available to common stockholders and unitholders and management statement on Funds From Operations are included after the Consolidated Statements of Operations.
(2)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(3)Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding.
(4)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.
(5)Occupancy percentages and total square feet reported are based on the company’s stabilized office portfolio for the periods presented. Occupancy percentages and total square feet shown for March 31, 2022 include the office properties that were sold subsequent to March 31, 2022.
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KILROY REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
  March 31, 2023 December 31, 2022
ASSETS
REAL ESTATE ASSETS:
Land and improvements $ 1,738,242  $ 1,738,242 
Buildings and improvements 8,335,285  8,302,081 
Undeveloped land and construction in progress 1,788,542  1,691,860 
Total real estate assets held for investment 11,862,069  11,732,183 
Accumulated depreciation and amortization (2,294,202) (2,218,710)
Total real estate assets held for investment, net 9,567,867  9,513,473 
Cash and cash equivalents 476,358  347,379 
Marketable securities 23,288  23,547 
Current receivables, net 15,926  20,583 
Deferred rent receivables, net 457,870  452,200 
Deferred leasing costs and acquisition-related intangible assets, net 238,184  250,846 
Right of use ground lease assets 126,277  126,530 
Prepaid expenses and other assets, net 63,622  62,429 
TOTAL ASSETS $ 10,969,392  $ 10,796,987 
LIABILITIES AND EQUITY
LIABILITIES:
Secured debt, net $ 241,547  $ 242,938 
Unsecured debt, net 4,171,029  4,020,058 
Accounts payable, accrued expenses and other liabilities 418,902  392,360 
Ground lease liabilities 124,837  124,994 
Accrued dividends and distributions 64,461  64,285 
Deferred revenue and acquisition-related intangible liabilities, net 195,629  195,959 
Rents received in advance and tenant security deposits 80,565  81,432 
Total liabilities 5,296,970  5,122,026 
EQUITY:
Stockholders’ Equity
Common stock 1,171  1,169 
Additional paid-in capital 5,175,402  5,170,760 
Retained earnings 257,079  265,118 
Total stockholders’ equity 5,433,652  5,437,047 
Noncontrolling Interests
Common units of the Operating Partnership 53,386  53,524 
Noncontrolling interests in consolidated property partnerships 185,384  184,390 
Total noncontrolling interests 238,770  237,914 
Total equity 5,672,422  5,674,961 
TOTAL LIABILITIES AND EQUITY $ 10,969,392  $ 10,796,987 

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KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)

Three Months Ended March 31,
2023 2022
REVENUES
Rental income $ 290,104  $ 263,208 
Other property income 2,698  2,293 
Total revenues 292,802  265,501 
EXPENSES
Property expenses 53,780  45,424 
Real estate taxes 28,228  25,870 
Ground leases 2,369  1,826 
General and administrative expenses 23,936  22,781 
Leasing costs 1,372  1,013 
Depreciation and amortization 93,676  88,660 
Total expenses 203,361  185,574 
OTHER INCOME (EXPENSES)
Interest and other income, net 1,460  81 
Interest expense (25,671) (20,625)
Total other expenses (24,211) (20,544)
NET INCOME 65,230  59,383 
Net income attributable to noncontrolling common units of the Operating Partnership (560) (516)
Net income attributable to noncontrolling interests in consolidated property partnerships (8,062) (5,739)
Total income attributable to noncontrolling interests (8,622) (6,255)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 56,608  $ 53,128 
Weighted average common shares outstanding – basic 117,059  116,650 
Weighted average common shares outstanding – diluted 117,407  117,060 
Net income available to common stockholders per share – basic $ 0.48  $ 0.45 
Net income available to common stockholders per share – diluted $ 0.48  $ 0.45 

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KILROY REALTY CORPORATION
FUNDS FROM OPERATIONS
(unaudited; in thousands, except per share data)
 
Three Months Ended March 31,
2023 2022
Net income available to common stockholders $ 56,608  $ 53,128 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 560  516 
Net income attributable to noncontrolling interests in consolidated property partnerships 8,062  5,739 
Depreciation and amortization of real estate assets 91,671  87,001 
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (10,942) (8,618)
Funds From Operations(1)(2)(3)
 $ 145,959  $ 137,766 
Weighted average common shares/units outstanding – basic (4)
 118,818  118,628 
Weighted average common shares/units outstanding – diluted (5)
 119,165  119,038 
Funds From Operations per common share/unit – basic (2)
 $ 1.23  $ 1.16 
Funds From Operations per common share/unit – diluted (2)
 $ 1.22  $ 1.16 
 ________________________
(1)We calculate Funds From Operations available to common stockholders and common unitholders (“FFO”) in accordance with the 2018 Restated White Paper on FFO approved by the Board of Governors of Nareit. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders.

We believe that FFO is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide.

However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.
 
(2)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.

(3)FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $5.2 million and $4.3 million for the three months ended March 31, 2023 and 2022, respectively.

(4)Calculated based on weighted average shares outstanding including participating share-based awards (i.e. certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding.

(5)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.


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