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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): February 5, 2024
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 February 5, 2024, Kilroy Realty Corporation issued a press release announcing its earnings for the quarter and full year ended December 31, 2023 and distributed certain supplemental financial information. On February 5, 2024, 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 and full year ended December 31, 2023 and distributed certain supplemental information. On February 5, 2024, 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: February 5, 2024
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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Q4 2023 Supplemental Financial Report
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Table of Contents
Page
7-8
11
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 and the impact labor disruptions or strikes, such as episodic strikes in the entertainment industry, may have on our tenants’ businesses; our ability to re-lease property at or above current market rates; reduced demand for office space, including as a result of remote working and flexible working arrangements that allow work from remote locations other than an employer's office premises; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; changes in interest rates and the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers' financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; 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: Crossing 900, Redwood City, CA | 9455 Towne Centre Drive, San Diego, CA | 333 Brannan Street, San Francisco, 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


Q4 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. The Company has over seven decades of experience developing, acquiring and managing office, life science and mixed-use real estate assets. At December 31, 2023, the Company’s stabilized portfolio totaled approximately 17.0 million square feet of primarily office and life science space that was 85.0% occupied and 86.4% leased. The Company also has 1,001 residential units in the Los Angeles and San Diego regions, which had an average occupancy of 92.5% for the quarter ended December 31, 2023.
Board of Directors Executive and Senior Management Team Investor Relations
John Kilroy Chair John Kilroy
Chief Executive Officer through January 21, 2024 (1)
 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 Angela M. Aman
Chief Executive Officer effective January 22, 2024 (1)
Angela M. Aman 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 Chair
Bill Hutcheson
Gary R. Stevenson Senior VP, Investor Relations & Capital Markets
Peter B. Stoneberg Heidi R. Roth Executive VP, Chief Administrative Officer
John Osmond Executive VP, Head of Asset Management
Merryl Werber Senior VP, Chief Accounting Officer and Controller
Equity Research Coverage
BofA Securities Jefferies LLC
Camille Bonnel (646) 855-5042 Peter Abramowitz (212) 336-7241
BMO Capital Markets Corp. J.P. Morgan
John P. Kim (212) 885-4115 Anthony Paolone (212) 622-6682
BTIG Keybanc Capital Markets
Thomas Catherwood (212) 738-6140 Upal Rana (917) 368-2316
Citigroup Investment Research Mizuho Securities USA LLC
Michael Griffin (212) 816-5871 Vikram Malhotra (212) 282-3827
Deutsche Bank Securities, Inc. RBC Capital Markets
Omotayo Okusanya (212) 250-9284 Mike Carroll (440) 715-2649
Evercore ISI Scotiabank
Steve Sakwa (212) 446-9462 Nicholas Yulico (212) 225-6904
Goldman Sachs & Co. LLC Wells Fargo
Caitlin Burrows (212) 902-4736 Blaine Heck (443) 263-6529
Green Street Advisors Wolfe Research
Dylan Burzinski (949) 640-8780 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)In December 2023, the Board of Directors appointed Angela M. Aman as Chief Executive Officer ("CEO") and a member of the Board, effective January 22, 2024. John Kilroy continued to serve as CEO until January 21, 2024, will serve as an advisor through the end of 2024, and will remain Chair of the Board through his current term.
1
Q4 2023 Supplemental Financial Report
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Executive Summary
Quarterly Financial Highlights Quarterly Operating Highlights
• Revenues of $269.0 million
• Stabilized portfolio was 85.0% occupied and 86.4% leased at quarter-end
• Net income available to common stockholders per diluted share of $0.40
• Approximately 369,000 square feet of leases commenced
• FFO per diluted share of $1.08
• Approximately 588,000 square feet of leases executed, including short-term
   leases
• Same Store NOI decreased 10.6% compared to the prior year. Same Store Cash
   decreased 1.2% compared to the prior year
◦GAAP and cash rents increased 21.7% and 1.6%, respectively, from
           prior levels, excluding short-term leases
◦Same Store NOI was negatively impacted by $6.4 million of rental income
           reversals related to placing tenants on a cash basis of revenue recognition
           
Capital Markets Highlights Strategic Highlights
• In January, completed a public offering of $400.0 million of 12-year unsecured • In December, added Indeed Tower, comprised of approximately 759,000 square
   senior notes at an interest rate of 6.250% due January 2036
   feet in the Austin CBD to the stabilized portfolio. The project is currently 78%
   leased and 65% occupied
• As of February 5, 2024, approximately $2.2 billion of total liquidity comprised
   of approximately $1.1 billion of cash and short term investments and
   approximately $1.1 billion available under the unsecured revolving credit facility  
  
  
________________________
Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 36-37 “Definitions Included in Supplemental.”
2
Q4 2023 Supplemental Financial Report
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Financial Highlights
(unaudited, $ in thousands, except per share amounts)
Three Months Ended
  12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023
INCOME ITEMS AND DIVIDENDS:
Capitalized Interest and Debt Costs $ 19,216  $ 17,731  $ 19,470  $ 20,056  $ 21,510 
Cash Lease Termination Fees (1)
 $ 503  $ —  $ 225  $ 1,329  $ 3,437 
Net Income Available to Common Stockholders per common share – diluted (2)
 $ 0.45  $ 0.48  $ 0.47  $ 0.45  $ 0.40 
Funds From Operations per common share – diluted (3)
 $ 1.17  $ 1.22  $ 1.19  $ 1.12  $ 1.08 
Dividends per common share (2)
 $ 0.54  $ 0.54  $ 0.54  $ 0.54  $ 0.54 
EBITDA, as adjusted (4)
 $ 174,421  $ 184,577  $ 178,020  $ 173,798  $ 171,387 
RATIOS:
Net Operating Income Margins 70.3  % 71.2  % 69.9  % 68.2  % 68.7  %
Fixed Charge Coverage Ratio - Net Income 1.5x 1.6x 1.4x 1.2x 1.0x
Fixed Charge Coverage Ratio - EBITDA 4.4x 4.6x 4.1x 3.7x 3.4x
Net Income Payout Ratio 107.2  % 97.9  % 104.3  % 108.8  % 120.5  %
FFO Payout Ratio 45.6  % 43.8  % 45.0  % 47.7  % 49.5  %
FAD Payout Ratio 60.9  % 48.2  % 53.4  % 53.9  % 58.4  %

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________________________
Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 36-37 “Definitions Included in Supplemental.”         
(1)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.
(2)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(3)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.
(4)Please refer to pages 38-39 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
Q4 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 Nareit-defined FFO per diluted share guidance for the full year 2024 of $4.10 to $4.25 per share with a midpoint of $4.18 per share.
Full Year 2024 Range
Low End High End
Net income available to common stockholders per share - diluted $ 1.45  $ 1.61 
Weighted average common shares outstanding - diluted (1)
 118,000  118,000 
Net income available to common stockholders $ 171,000  $ 190,000 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 1,900  2,000 
Net income attributable to noncontrolling interests in consolidated property partnerships 20,500  21,000 
Depreciation and amortization of real estate assets 330,000  330,000 
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (30,000) (32,000)
Funds From Operations (2)
 $ 493,400  $ 511,000 
Weighted average common shares and units outstanding - diluted (3)
 120,250  120,250 
FFO per common share/unit - diluted (3)
 $ 4.10  $ 4.25 
Key Assumptions 2023 Actuals 2024 Assumptions
Change in same store cash NOI (2)
 4.4% (4.0%) to (6.0%)
Average full year occupancy 87.3% 82.5% to 84.0%
General and administrative expenses $93 million $72 million to $80 million
Total development spending $394 million $200 million to $300 million
Weighted average common shares and units outstanding - diluted (3)
 119,241 120,250
________________________
(1)Calculated based on estimated weighted average shares outstanding, including non-participating share-based awards.
(2)See pages 33-34 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, and the dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.

The Company’s guidance estimates for the full year 2024, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this 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. These guidance estimates do not include the impact on Company’s operating results from potential future acquisitions, dispositions (including any associated gains or losses), capital markets activity, impairment charges or any events outside of the Company’s control, as the timing and magnitude of any such events are not known at the time the company provides guidance. There can be no assurance that the Company’s actual results will not differ materially from these estimates.
4
Q4 2023 Supplemental Financial Report
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Consolidated Balance Sheets
(unaudited, $ in thousands)
12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022
ASSETS:
Land and improvements $ 1,743,170  $ 1,743,170  $ 1,738,242  $ 1,738,242  $ 1,738,242 
Buildings and improvements 8,463,674  8,431,499  8,353,596  8,335,285  8,302,081 
Undeveloped land and construction in progress 2,034,804  1,950,424  1,894,545  1,788,542  1,691,860 
Total real estate assets held for investment 12,241,648  12,125,093  11,986,383  11,862,069  11,732,183 
Accumulated depreciation and amortization (2,518,304) (2,443,659) (2,369,515) (2,294,202) (2,218,710)
Total real estate assets held for investment, net 9,723,344  9,681,434  9,616,868  9,567,867  9,513,473 
Cash and cash equivalents 510,163  618,794  361,885  476,358  347,379 
Marketable securities 284,670  278,789  25,786  23,288  23,547 
Current receivables, net 13,609  11,383  10,686  15,926  20,583 
Deferred rent receivables, net 460,979  466,073  463,640  457,870  452,200 
Deferred leasing costs and acquisition-related intangible assets, net 229,705  228,742  230,559  238,184  250,846 
Right of use ground lease assets 125,506  125,765  126,022  126,277  126,530 
Prepaid expenses and other assets, net 53,069  60,141  75,588  63,622  62,429 
TOTAL ASSETS $ 11,401,045  $ 11,471,121  $ 10,911,034  $ 10,969,392  $ 10,796,987 
LIABILITIES AND EQUITY:
Liabilities:
Secured debt, net $ 603,225  $ 604,480  $ 240,142  $ 241,547  $ 242,938 
Unsecured debt, net 4,325,153  4,330,326  4,172,833  4,171,029  4,020,058 
Accounts payable, accrued expenses and other liabilities 371,179  426,662  377,733  418,902  392,360 
Ground lease liabilities 124,353  124,517  124,678  124,837  124,994 
Accrued dividends and distributions 64,440  64,423  64,438  64,461  64,285 
Deferred revenue and acquisition-related intangible liabilities, net 173,638  178,542  185,429  195,629  195,959 
Rents received in advance and tenant security deposits 79,364  74,646  78,187  80,565  81,432 
Total liabilities 5,741,352  5,803,596  5,243,440  5,296,970  5,122,026 
Equity:
Stockholders’ Equity
Common stock 1,173  1,173  1,172  1,171  1,169 
Additional paid-in capital 5,205,839  5,195,106  5,184,227  5,175,402  5,170,760 
Retained earnings 221,149  237,665  248,695  257,079  265,118 
Total stockholders’ equity 5,428,161  5,433,944  5,434,094  5,433,652  5,437,047 
Noncontrolling Interests
Common units of the Operating Partnership 53,275  53,328  53,358  53,386  53,524 
Noncontrolling interests in consolidated property partnerships 178,257  180,253  180,142  185,384  184,390 
Total noncontrolling interests 231,532  233,581  233,500  238,770  237,914 
Total equity 5,659,693  5,667,525  5,667,594  5,672,422  5,674,961 
TOTAL LIABILITIES AND EQUITY $ 11,401,045  $ 11,471,121  $ 10,911,034  $ 10,969,392  $ 10,796,987 
5
Q4 2023 Supplemental Financial Report
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Consolidated Statements of Operations
(unaudited, $ and shares in thousands, except per share amounts)
Three Months Ended December 31, Year Ended December 31,
2023 2022 2023 2022
REVENUES
Rental income $ 265,643  $ 281,688  $ 1,117,737  $ 1,086,018 
Other property income 3,373  2,656  11,957  10,969 
Total revenues 269,016  284,344  1,129,694  1,096,987 
EXPENSES
Property expenses 60,731  55,323  228,964  202,744 
Real estate taxes 21,000  27,151  105,868  105,869 
Ground leases 2,560  2,092  9,732  7,565 
General and administrative expenses (1)
 22,078  25,217  93,434  93,642 
Leasing costs 1,956  1,404  6,506  4,879 
Depreciation and amortization 86,016  91,396  355,278  357,611 
Total expenses 194,341  202,583  799,782  772,310 
OTHER INCOME (EXPENSES)
Interest and other income, net 10,696  1,264  22,592  1,765 
Interest expense (32,325) (23,550) (114,216) (84,278)
Gain on sale of depreciable operating property —  —  —  17,329 
Total other expenses (21,629) (22,286) (91,624) (65,184)
NET INCOME 53,046  59,475  238,288  259,493 
Net income attributable to noncontrolling common units of the Operating Partnership (471) (588) (2,083) (2,283)
Net income attributable to noncontrolling interests in consolidated property partnerships (5,291) (6,262) (23,964) (24,595)
Total income attributable to noncontrolling interests (5,762) (6,850) (26,047) (26,878)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 47,284  $ 52,625  $ 212,241  $ 232,615 
Weighted average common shares outstanding – basic 117,240  116,878  117,160  116,807 
Weighted average common shares outstanding – diluted 117,816  117,389  117,506  117,220 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE
Net income available to common stockholders per share – basic $ 0.40  $ 0.45  $ 1.80  $ 1.98 
Net income available to common stockholders per share – diluted $ 0.40  $ 0.45  $ 1.80  $ 1.97 
_______________________
(1)The three months and year ended December 31, 2023 includes $4.9 million and $17.0 million, respectively, of retirement costs for our former CEO and former President, primarily comprised of accelerated stock compensation expense.
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Q4 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 December 31, Year Ended December 31,
2023 2022 2023 2022
FUNDS FROM OPERATIONS: (1)
Net income available to common stockholders $ 47,284  $ 52,625  $ 212,241  $ 232,615 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 471  588  2,083  2,283 
Net income attributable to noncontrolling interests in consolidated property partnerships 5,291  6,262  23,964  24,595 
Depreciation and amortization of real estate assets 84,402  89,536  348,064  350,665 
Gain on sale of depreciable real estate —  —  —  (17,329)
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (8,191) (9,156) (35,236) (36,198)
Funds From Operations (1)(2)
 $ 129,257  $ 139,855  $ 551,116  $ 556,631 
Weighted average common shares/units outstanding – basic (3)
 118,896  118,568  118,895  118,586 
Weighted average common shares/units outstanding – diluted (4)
 119,473  119,079  119,241  118,999 
FFO per common share/unit – basic (1)
 $ 1.09  $ 1.18  $ 4.64  $ 4.69 
FFO per common share/unit – diluted (1)
 $ 1.08  $ 1.17  $ 4.62  $ 4.68 
FUNDS AVAILABLE FOR DISTRIBUTION: (1)
Funds From Operations (1)(2)
 $ 129,257  $ 139,855  $ 551,116  $ 556,631 
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures (31,411) (28,480) (87,546) (81,328)
Amortization of deferred revenue related to tenant-funded tenant improvements (2)(5)
 (5,717) (5,100) (20,697) (19,321)
Net effect of straight-line rents 5,143  (9,214) (8,578) (47,936)
Amortization of net below market rents (6)
 (973) (2,305) (6,648) (10,476)
Amortization of deferred financing costs and net debt discount/premium 1,279  1,215  5,200  3,657 
Non-cash amortization of share-based compensation awards 8,498  6,712  36,858  28,347 
Lease related adjustments, leasing costs and other (7)
 1,966  833  4,921  9,536 
Adjustments attributable to noncontrolling interests in consolidated property partnerships 1,486  1,223  5,679  5,687 
Funds Available for Distribution (1)
 $ 109,528  $ 104,739  $ 480,305  $ 444,797 
________________________
(1)See page 34 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 $5.7 million and $5.1 million for the three months ended December 31, 2023 and 2022, respectively, and $20.7 million and $19.3 million for the year ended December 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
Q4 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 December 31, Year Ended December 31,
  2023 2022 2023 2022
GAAP Net Cash Provided by Operating Activities
$ 110,223  $ 108,005  $ 602,589  $ 592,235 
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures (31,411) (28,480) (87,546) (81,328)
Depreciation of non-real estate furniture, fixtures and equipment (1,614) (1,860) (7,214) (6,946)
Net changes in operating assets and liabilities (1)
 39,064  36,343  1,816  (12,634)
Noncontrolling interests in consolidated property partnerships’ share of FFO and FAD
 (6,705) (7,933) (29,557) (30,511)
Cash adjustments related to investing and financing activities (29) (1,336) 217  (16,019)
Funds Available for Distribution (2)
 $ 109,528  $ 104,739  $ 480,305  $ 444,797 
   
_______________________
(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 34 for a Management Statement on Funds Available for Distribution.

8
Q4 2023 Supplemental Financial Report
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Net Operating Income (1)
(unaudited, $ in thousands)
Three Months Ended December 31, Year Ended December 31,
2023 2022 % Change 2023 2022 % Change
Operating Revenues:
Rental income (2)
 $ 223,835  $ 237,884  (5.9) % $ 933,492  $ 923,780  1.1  %
Tenant reimbursements (2)
 41,808  43,804  (4.6) % 184,245  162,238  13.6  %
Other property income 3,373  2,656  27.0  % 11,957  10,969  9.0  %
Total operating revenues 269,016  284,344  (5.4) % 1,129,694  1,096,987  3.0  %
Operating Expenses:
Property expenses 60,731  55,323  9.8  % 228,964  202,744  12.9  %
Real estate taxes 21,000  27,151  (22.7) % 105,868  105,869  0.0  %
Ground leases 2,560  2,092  22.4  % 9,732  7,565  28.6  %
Total operating expenses 84,291  84,566  (0.3) % 344,564  316,178  9.0  %
Net Operating Income $ 184,725  $ 199,778  (7.5) % $ 785,130  $ 780,809  0.6  %

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________________________
(1)Please refer to page 32 for Management Statements on Net Operating Income and page 38 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)

Q4 2023 Supplemental Financial Report
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Same Store Analysis (1)
(unaudited, $ in thousands)
Three Months Ended December 31, Year Ended December 31,
2023 2022 % Change 2023 2022 % Change
Total Same Store Portfolio
Office Portfolio
Number of properties 115  115  115  115 
Square Feet 15,063,419  15,063,419  15,063,419  15,063,419 
Percent of Stabilized Portfolio 88.4  % 93.0  % 88.4  % 93.0  %
Average Occupancy 86.3  % 91.7  % 87.7  % 91.6  %
Operating Revenues:
Rental income (2)
 $ 199,295  $ 218,276  (8.7) % $ 840,013  $ 863,577  (2.7) %
Tenant reimbursements (2)
 38,552  40,751  (5.4) % 166,020  153,745  8.0  %
Other property income 3,084  2,465  25.1  % 10,874  9,820  10.7  %
Total operating revenues 240,931  261,492  (7.9) % 1,016,907  1,027,142  (1.0) %
Operating Expenses:
Property expenses 56,119  51,824  8.3  % 213,788  193,353  10.6  %
Real estate taxes 19,064  24,428  (22.0) % 93,383  98,266  (5.0) %
Ground leases 1,915  1,897  0.9  % 7,588  7,162  5.9  %
Total operating expenses 77,098  78,149  (1.3) % 314,759  298,781  5.3  %
Net Operating Income (3)(4)
 $ 163,833  $ 183,343  (10.6) % $ 702,148  $ 728,361  (3.6) %
Same Store Analysis (Cash Basis)
  Three Months Ended December 31, Year Ended December 31,
  2023 2022 % Change 2023 2022 % Change
Total operating revenues $ 246,716  $ 249,807  (1.2) % $ 1,005,711  $ 960,820  4.7  %
Total operating expenses 77,000  78,049  (1.3) % 314,360  298,354  5.4  %
Cash Net Operating Income (4)(5)
 $ 169,716  $ 171,758  (1.2) % $ 691,351  $ 662,466  4.4  %
________________________
(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 December 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 December 31, 2023, includes $7.9 million of non-recurring net charges. For the three months ended December 31, 2022, includes $3.3 million of non-recurring income. For the year ended December 31, 2023 and 2022, includes $1.4 million and $6.8 million of non-recurring income, respectively.
(4)Please refer to page 38 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 December 31, 2023 and 2022, includes $3.8 million and $1.2 million of non-recurring income, respectively. For the year ended December 31, 2023 and 2022, includes $18.2 million and $1.8 million of non-recurring income, respectively.
11
Q4 2023 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region

Portfolio Breakdown Occupied at Leased at
STABILIZED PORTFOLIO (1) (2)
 Buildings YTD NOI % SF % Total SF 12/31/2023 9/30/2023 12/31/2023
Greater Los Angeles
Culver City 19 0.7  % 1.0  % 166,207  71.9  % 78.9  % 71.9  %
El Segundo 5 2.7  % 6.5  % 1,103,595  75.4  % 75.4  % 75.6  %
Hollywood 10 6.9  % 7.0  % 1,200,631  87.3  % 87.4  % 91.1  %
Long Beach 7 2.1  % 5.6  % 957,706  85.7  % 82.6  % 85.7  %
West Hollywood 4 1.0  % 1.1  % 189,459  91.3  % 87.4  % 92.5  %
West Los Angeles 8 4.2  % 4.3  % 726,975  60.0  % 76.5  % 60.0  %
Total Greater Los Angeles 53 17.6  % 25.5  % 4,344,573  79.0  % 81.2  % 80.1  %
San Diego County
Del Mar 17 13.4  % 10.5  % 1,791,486  96.9  % 96.7  % 97.1  %
I-15 Corridor 3 0.9  % 2.5  % 433,851  82.6  % 68.0  % 85.5  %
Little Italy / Point Loma 2 —  % 1.8  % 313,983  41.6  % 41.0  % 43.8  %
University Towne Center 2 1.3  % 1.4  % 231,060  100.0  % 100.0  % 100.0  %
Total San Diego County 24 15.6  % 16.2  % 2,770,380  88.6  % 86.1  % 89.5  %
San Francisco Bay Area
Menlo Park 6 2.0  % 1.9  % 329,944  86.1  % 86.1  % 93.1  %
Mountain View 3 3.1  % 2.7  % 457,066  100.0  % 100.0  % 100.0  %
Palo Alto 2 1.3  % 1.0  % 165,574  100.0  % 100.0  % 100.0  %
Redwood City 2 2.9  % 2.0  % 347,269  100.0  % 100.0  % 100.0  %
San Francisco 10 25.5  % 20.0  % 3,400,600  85.0  % 85.3  % 85.5  %
South San Francisco 6 8.3  % 4.7  % 806,109  100.0  % 100.0  % 100.0  %
Sunnyvale 4 4.0  % 3.9  % 663,460  100.0  % 100.0  % 100.0  %
Total San Francisco Bay Area 33 47.1  % 36.2  % 6,170,022  91.0  % 91.1  % 91.6  %
Greater Seattle
Bellevue 2 5.3  % 5.4  % 919,295  93.6  % 94.0  % 95.4  %
Lake Union / Denny Regrade 8 11.0  % 12.2  % 2,080,883  78.9  % 78.9  % 78.9  %
Total Greater Seattle 10 16.3  % 17.6  % 3,000,178  83.4  % 83.5  % 84.0  %
Austin
Austin CBD 1 3.4  % 4.5  % 758,975  64.9  % —  % 78.2  %
Total Austin 1 3.4  % 4.5  % 758,975  64.9  % —  % 78.2  %
TOTAL STABILIZED PORTFOLIO 121 100.0  % 100.0  % 17,044,128  85.0  % 86.2  % 86.4  %
Average Occupancy
Quarter-to-Date Year-to-Date
85.9% 87.3%
________________________
(1)Excludes residential properties.
(2)Buildings within a complex of properties are analyzed at the complex level.
12
Q4 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  71.9  % 71.9  %
2240 E. Imperial Highway El Segundo 122,870  100.0  % 100.0  %
2250 E. Imperial Highway 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  78.6  % 79.3  %
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 Hollywood 113,447  41.4  % 63.6  %
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  53.0  % 53.0  %
6121 W. Sunset Boulevard Hollywood 93,418  100.0  % 100.0  %
6255 W. Sunset Boulevard Hollywood 332,100  77.9  % 84.1  %
3750 Kilroy Airport Way Long Beach 10,718  100.0  % 100.0  %
3760 Kilroy Airport Way Long Beach 166,761  77.0  % 77.0  %
3780 Kilroy Airport Way Long Beach 221,452  91.4  % 91.4  %
3800 Kilroy Airport Way Long Beach 192,476  89.3  % 89.3  %
3840 Kilroy Airport Way Long Beach 138,441  77.6  % 77.6  %
3880 Kilroy Airport Way Long Beach 96,923  100.0  % 100.0  %
3900 Kilroy Airport Way Long Beach 130,935  78.7  % 78.7  %
8560 W. Sunset Boulevard West Hollywood 76,558  87.6  % 87.6  %
8570 W. Sunset Boulevard West Hollywood 49,276  94.5  % 99.0  %
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  74.1  % 74.1  %
12200 W. Olympic Boulevard West Los Angeles 154,544  32.0  % 32.0  %
12233 W. Olympic Boulevard West Los Angeles 156,746  52.7  % 52.7  %
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  68.4  % 68.4  %
Total Greater Los Angeles 4,344,573  79.0  % 80.1  %
 

13
Q4 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 39,192  100.0  % 100.0  %
12400 High Bluff Drive * Del Mar 216,518  91.7  % 91.7  %
3579 Valley Centre Drive
Del Mar 54,960  94.7  % 94.7  %
3611 Valley Centre Drive Del Mar 132,425  100.0  % 100.0  %
3661 Valley Centre Drive Del Mar 131,662  100.0  % 100.0  %
3721 Valley Centre Drive Del Mar 115,193  78.4  % 78.4  %
3811 Valley Centre Drive Del Mar 118,912  100.0  % 100.0  %
3745 Paseo Place Del Mar 95,871  89.6  % 93.2  %
 13480 Evening Creek Drive North I-15 Corridor 143,401  54.5  % 63.1  %
13500 Evening Creek Drive North I-15 Corridor 143,749  92.9  % 92.9  %
13520 Evening Creek Drive North I-15 Corridor 146,701  100.0  % 100.0  %
2100 Kettner Boulevard * Little Italy 206,527  20.5  % 23.8  %
2305 Historic Decatur Road Point Loma 107,456  82.1  % 82.1  %
9455 Towne Centre Drive University Towne Center 160,444  100.0  % 100.0  %
9514 Towne Centre Drive * University Towne Center 70,616  100.0  % 100.0  %
Total San Diego County 2,770,380  88.6  % 89.5  %
________________________
* Excluded from our Same Store portfolio.







14
Q4 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 47,643  100.0  % 100.0  %
4200 Bohannon Drive Menlo Park 43,600  69.4  % 69.4  %
4300 Bohannon Drive Menlo Park 63,430  48.8  % 85.1  %
4500 Bohannon Drive Menlo Park 63,429  100.0  % 100.0  %
4600 Bohannon Drive Menlo Park 48,413  100.0  % 100.0  %
4700 Bohannon Drive Menlo Park 63,429  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  98.3  % 98.3  %
303 Second Street San Francisco 784,658  71.1  % 73.5  %
201 Third Street San Francisco 346,538  68.2  % 68.2  %
360 Third Street San Francisco 436,357  66.6  % 66.6  %
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 6,170,022  91.0  % 91.6  %


15
Q4 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  100.0  % 100.0  %
10900 NE 4th Street Bellevue 428,557  86.2  % 90.1  %
2001 West 8th Avenue Denny Regrade 539,226  20.0  % 20.0  %
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  83.4  % 84.0  %
Austin
200 W. 6th Street * Austin CBD 758,975  64.9  % 78.2  %
Total Austin 758,975  64.9  % 78.2  %
TOTAL STABILIZED PORTFOLIO 17,044,128  85.0  % 86.4  %
________________________
* Excluded from our Same Store portfolio.

Average Residential Occupancy
RESIDENTIAL PROPERTIES Submarket Total No. of Units Quarter-to-Date Year-to-Date
Greater Los Angeles
1550 N. El Centro Avenue Hollywood 200 91.7% 92.7%
6390 De Longpre Avenue Hollywood 193 91.2% 92.2%
San Diego County
3200 Paseo Village Way Del Mar 608 93.1% 93.0%
TOTAL RESIDENTIAL PROPERTIES 1,001 92.5% 92.8%
16
Q4 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 12  9  153,006  180,926  333,932  70  $ 59.54  $ 10.21  18.8  % 2.1  %
Development Leasing (4)
 2  —  35,002  —  35,002  112  $ 102.20  $ 10.95 
TOTAL: 14  9  188,008  180,926  368,934 

Year 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 45  47  512,626  568,443  1,081,069  72  $ 54.70  $ 9.12  14.9  % 0.3  %
Development Leasing (4)
 5  —  139,018  —  139,018  137  $ 116.82  $ 10.23 
TOTAL: 50  47  651,644  568,443  1,220,087 
________________________
(1)Includes 100% of consolidated property partnerships.
(2)Represents leasing activity for leases that commenced at properties in the stabilized and development portfolios 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)Represents leases commenced on new construction added to the stabilized portfolio and leasing activity for leases signed in our development portfolio.

17
Q4 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 11  9  273,501  180,926  454,427  75  $ 49.95  $ 7.99  21.7  % 1.6  % 46.8  %
Development Leasing (5)
 3  —  35,467  —  35,467  122  $ 133.54  $ 13.13 
TOTAL: 14  9  308,968  180,926  489,894 

Year to Date (6)
# 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 46  47  615,477  568,443  1,183,920  68  $ 52.96  $ 9.35  14.8  % 0.1  % 29.1  %
Development Leasing (5)
 7  —  64,919  —  64,919  127  $ 149.44  $ 14.12 
TOTAL: 53  47  680,396  568,443  1,248,839 
________________________
(1)Includes 100% of consolidated property partnerships. Excludes leases with a lease term of less than one year. During the three months ended December 31, 2023, we signed 98,573 square feet of leases with a lease term less than one year.
(2)During the three months ended December 31, 2023, 11 new leases totaling 291,412 square feet were signed but not commenced as of December 31, 2023.
(3)Represents leasing activity for leases signed at properties in the stabilized and development portfolios 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.
(5)Represents leasing on new construction added to the stabilized portfolio and leasing activity for leases signed in our development and redevelopment portfolios.
(6)During the year ended December 31, 2023, 21 new leases totaling 368,859 square feet were signed but not commenced as of December 31, 2023.


18
Q4 2023 Supplemental Financial Report
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Stabilized Portfolio Capital Expenditures
($ in thousands)
Total 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023
1st Generation (Nonrecurring) Capital Expenditures: (1)
Capital Improvements $ 1,797  $ 206  $ 1,091  $ 153  $ 347 
Tenant Improvements & Leasing Commissions (2)
 (329) (329) —  —  — 
Total $ 1,468  $ (123) $ 1,091  $ 153  $ 347 
Total 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023
2nd Generation (Recurring) Capital Expenditures: (1)
Capital Improvements $ 33,793  $ 12,872  $ 6,361  $ 7,263  $ 7,297 
Tenant Improvements & Leasing Commissions (2)
 53,753  18,539  14,158  10,587  10,469 
Total $ 87,546  $ 31,411  $ 20,519  $ 17,850  $ 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
Q4 2023 Supplemental Financial Report
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Stabilized Portfolio Lease Expiration Summary (1)(2)
($ in thousands, except for annualized rent per sq. ft.)

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# of Expiring Leases 19  15 19 17 18 13 17 17 61 70 51 36 39 40 15 13 16
% of Total Leased Sq. Ft. 1.7  % 1.0  % 2.0  % 2.6  % 1.4  % 0.8  % 1.0  % 1.6  % 13.5  % 7.5  % 7.8  % 8.2  % 10.8  % 14.6  % 7.8  % 8.1  % 9.6  %
Annualized Base Rent $11,594 $6,837 $9,896 $23,869 $9,075 $4,938 $6,980 $12,738 $90,656 $43,736 $68,568 $62,676 $91,673 $137,161 $73,937 $69,315 $84,155
% of Total Annualized Base Rent (3)
 1.4  % 0.8  % 1.2  % 3.0  % 1.1  % 0.6  % 0.9  % 1.6  % 11.2  % 5.4  % 8.5  % 7.8  % 11.3  % 17.0  % 9.2  % 8.6  % 10.4  %
Annualized Rent per Sq. Ft. $48.41 $46.90 $35.08 $61.72 $47.96 $44.45 $46.91 $55.78 $47.18 $41.10 $61.97 $53.92 $59.56 $65.78 $66.29 $59.93 $62.11
________________________
(1)For leases that have been renewed early with existing tenants, the expiration date and annualized base rent information presented takes into consideration the renewed lease terms. Excludes leases not commenced as of December 31, 2023, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of December 31, 2023.
(2)Adjusting for leasing transactions executed as of December 31, 2023 but not yet commenced, the 2024 and 2025 expirations would be reduced by 107,219 and 40,278 square feet, respectively.
(3)Includes 100% of annualized base rent of consolidated property partnerships.
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Stabilized Portfolio Lease Expiration Schedule by Region
($ 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.
2024 Greater Los Angeles 45  516,779  3.6  % $ 23,273  2.9  % $ 45.03 
San Diego County 6  45,597  0.3  % 1,759  0.2  % 38.58 
San Francisco Bay Area 11  318,262  2.2  % 20,752  2.6  % 65.20 
Greater Seattle 8  173,458  1.2  % 6,412  0.7  % 36.97 
Austin —  —  —  % —  —  % — 
Total 70  1,054,096  7.3  % $ 52,196  6.4  % $ 49.52 
2025 Greater Los Angeles 28  168,613  1.2  % $ 6,946  0.9  % $ 41.19 
San Diego County 18  243,773  1.7  % 12,508  1.5  % 51.31 
San Francisco Bay Area 9  124,246  0.9  % 8,725  1.1  % 70.22 
Greater Seattle 10  140,831  1.0  % 5,552  0.7  % 39.42 
Austin —  —  —  % —  —  % — 
Total 65  677,463  4.8  % $ 33,731  4.2  % $ 49.79 
2026 Greater Los Angeles 23  398,506  2.8  % $ 15,650  1.9  % $ 39.27 
San Diego County 11  186,397  1.3  % 9,515  1.2  % 51.05 
San Francisco Bay Area 16  941,332  6.6  % 49,294  6.1  % 52.37 
Greater Seattle 11  395,359  2.8  % 16,197  2.0  % 40.97 
Austin —  —  —  % —  —  % — 
Total 61  1,921,594  13.5  % $ 90,656  11.2  % $ 47.18 
2027 Greater Los Angeles 37  731,395  5.1  % $ 27,012  3.3  % $ 36.93 
San Diego County 18  172,477  1.3  % 8,730  1.1  % 50.62 
San Francisco Bay Area 5  73,790  0.5  % 4,729  0.6  % 64.09 
Greater Seattle 10  86,543  0.6  % 3,265  0.4  % 37.73 
Austin —  —  —  % —  —  % — 
Total 70  1,064,205  7.5  % $ 43,736  5.4  % $ 41.10 
2028 Greater Los Angeles 21  112,683  0.8  % $ 5,978  0.7  % $ 53.05 
San Diego County 13  221,434  1.6  % 12,635  1.6  % 57.06 
San Francisco Bay Area 9  711,066  5.0  % 48,028  6.0  % 67.54 
Greater Seattle 8  61,231  0.4  % 1,927  0.2  % 31.47 
Austin —  —  —  % —  —  % — 
Total 51  1,106,414  7.8  % $ 68,568  8.5  % $ 61.97 
2029
and
Beyond		 Greater Los Angeles 39  1,361,741  9.5  % $ 77,678  9.6  % $ 57.04 
San Diego County 52  1,572,621  11.1  % 96,782  12.0  % 61.54 
San Francisco Bay Area 36  3,391,679  23.9  % 250,075  30.9  % 73.73 
Greater Seattle 23  1,602,084  11.2  % 73,407  9.2  % 45.82 
Austin 9  485,538  3.4  % 20,975  2.6  % 43.20 
Total 159  8,413,663  59.1  % $ 518,917  64.3  % $ 61.68 
________________________
(1)Includes 100% of annualized base rent of consolidated property partnerships.
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Top Fifteen Tenants (1)
($ in thousands)  
Tenant Name (2)
 Region
Annualized Base Rental Revenue (3)
 Rentable
Square Feet		 Percentage of
Total Annualized Base Rental Revenue		 Percentage of
Total Rentable
Square Feet
Year(s) of Significant Lease Expiration(s) (4)
Global technology company Greater Seattle /
San Diego County		 $ 44,851  849,826  5.6  % 5.0  % 2032 - 2033 / 2037
Cruise LLC San Francisco Bay Area 35,449  374,618  4.4  % 2.2  % 2031
Stripe, Inc. San Francisco Bay Area 33,110  425,687  4.1  % 2.5  % 2034
Salesforce, Inc. (5)
 San Francisco Bay Area /
Greater Seattle		 29,981  613,497  3.7  % 3.6  % 2024 / 2029 - 2030 / 2032
LinkedIn Corporation / Microsoft Corporation (6)
 San Francisco Bay Area 29,752  663,460  3.7  % 3.9  % 2024 / 2026
Adobe Systems, Inc. San Francisco Bay Area /
Greater Seattle		 27,897  522,879  3.5  % 3.1  % 2027 / 2031
Okta, Inc. San Francisco Bay Area 24,206  293,001  3.0  % 1.7  % 2028
DoorDash, Inc. San Francisco Bay Area 23,842  236,759  3.0  % 1.4  % 2032
Netflix, Inc. Greater Los Angeles 21,854  361,388  2.7  % 2.1  % 2032
Box, Inc. (7)
 San Francisco Bay Area 19,788  341,441  2.5  % 2.0  % 2024 / 2028
Cytokinetics, Inc. San Francisco Bay Area 18,167  234,892  2.3  % 1.4  % 2033
DIRECTV, LLC Greater Los Angeles 16,085  532,956  2.0  % 3.1  % 2026 - 2027
Synopsys, Inc. San Francisco Bay Area 15,492  342,891  1.9  % 2.0  % 2030
Amazon.com Greater Seattle 14,989  340,705  1.9  % 2.0  % 2029 - 2030
Riot Games, Inc. (8)
 Greater Los Angeles 14,628  218,824  1.8  % 1.3  % 2024 / 2031
Total Top Fifteen Tenants $ 370,091  6,352,824  46.1  % 37.3  %
       
________________________
(1)The information presented is based upon annualized base rental revenues as of December 31, 2023.
(2)Includes subsidiaries of tenant listed.
(3)Includes 100% of annualized base rental revenues of consolidated property partnerships.
(4)We define significant lease expirations as those with space expiring greater than 25,000 rentable square feet.
(5)The 2024 lease expiration represents 140,509 rentable square feet expiring on August 31, 2024.
(6)The 2024 lease expiration represents 76,031 rentable square feet expiring on October 31, 2024.
(7)The 2024 lease expiration represents 53,762 rentable square feet that expired on January 31, 2024.
(8)The 2024 lease expiration represents 131,982 rentable square feet comprised of 8,691 rentable square feet that expired on January 31, 2024, 6,411 rentable square feet expiring on July 31, 2024 and 116,880 rentable square feet expiring on November 30, 2024, of which 76,644 rentable square feet was renewed in January 2024.

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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 38, 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.
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03
Development


–Stabilized Development Projects
–In-Process Development & Redevelopment
–Future Development Pipeline

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Stabilized Development Projects
($ in millions)
STABILIZED DEVELOPMENT PROJECTS Location Construction Start Date
Stabilization Date (1)
 Total Estimated Investment Rentable
Square Feet		 % Leased Total Project % Occupied
1st Quarter
None
2nd Quarter
None
3rd Quarter
9514 Towne Centre Drive University Towne Center 3Q 2021 3Q 2023 $ 60  70,616  100% 100%
4th Quarter
200 W. 6th Street Austin CBD 2Q 2021 4Q 2023 690  758,975  78% 65%
TOTAL: $ 750  829,591  80% 68%
____________________
(1)Represents the earlier of 95% occupancy date or one year from substantial completion of base building components.
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In-Process Development & Redevelopment
($ in millions)
UNDER CONSTRUCTION Location Construction Start Date
Estimated Stabilization Date (1)
 Estimated Rentable Square Feet Total Estimated Investment
Total Cash Costs Incurred as of
12/31/2023 (2)(3)
 % Leased
Office / Life Science
San Francisco Bay Area
Kilroy Oyster Point - Phase 2 South San Francisco 2Q 2021 4Q 2025 875,000  $ 1,000  $ 600  —%
4400 Bohannon Drive (4)
 Menlo Park 4Q 2022 3Q 2025 48,000  55  20  —%
San Diego County
4690 Executive Drive (4)
 University Towne Center 1Q 2022 2Q 2025 52,000  25  19  —%
TOTAL: 975,000  $ 1,080  $ 639  —%
________________________
(1)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.
(2)Represents costs incurred as of December 31, 2023, excluding GAAP accrued liabilities and leasing overhead.
(3)For redevelopment projects, includes the existing depreciated basis for the buildings to be redeveloped.
(4)Redevelopment project.

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Future Development Pipeline
($ in millions)
FUTURE DEVELOPMENT PIPELINE Location
Approx. Developable
Square Feet (1)
Total Cash Costs Incurred as of 12/31/2023 (2)
Greater Los Angeles
1633 26th Street West Los Angeles 190,000 $ 15 
San Diego County
Santa Fe Summit South / North 56 Corridor 600,000 - 650,000 114 
2045 Pacific Highway Little Italy 275,000 54 
Kilroy East Village East Village TBD 68 
San Francisco Bay Area
Kilroy Oyster Point - Phases 3 and 4 South San Francisco 875,000 - 1,000,000 220 
Flower Mart SOMA 2,300,000 567 
Greater Seattle
SIX0 Denny Regrade 925,000 183 
Austin
Stadium Tower Stadium District / Domain 493,000 70 
TOTAL: $ 1,291 
________________________
(1)Represents developable office/life science square feet. 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 December 31, 2023, excluding accrued liabilities recorded in accordance with GAAP.




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04
Debt and
Capitalization Data

–Capital Structure
–Debt Analysis

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Capital Structure
As of December 31, 2023 ($ in thousands)
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Debt Balance (3)
 Stated Rate Maturity Date
Unsecured Debt (4)
$ 403,712  3.45  % 12/15/2024
$ 400,000  4.38  % 10/1/2025
$ 50,000  4.30  % 7/18/2026
$ 520,000  6.41  %
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
$ 4,348,712  3.97  %
Secured Debt
$ 156,386  3.57  % 12/1/2026
$ 81,308  4.48  % 7/1/2027
$ 375,000  5.90  % 8/10/2034
$ 612,694  5.12  %
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________________________
(1)Value based on closing share price of $39.84 as of December 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 December 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 December 31, 2023
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TOTAL DEBT COMPOSITION (1)
Weighted Average
Interest Rate
Years to Maturity (2)
Secured vs. Unsecured Debt
Unsecured Debt 4.0% 5.1
Secured Debt 5.1% 8.0
Floating vs. Fixed-Rate Debt
Floating-Rate Debt 6.4% 2.8
Fixed-Rate Debt 3.8% 5.8
   
Stated Interest Rate 4.1% 5.4
GAAP Effective Rate 4.1%
GAAP Effective Rate Including Debt Issuance Costs 4.3%
 
KEY DEBT COVENANTS (3)
Covenant Actual Performance
as of December 31, 2023
Unsecured Credit and Term Loan Facility and Private Placement Notes:
Total debt to total asset value less than 60% 29%
Fixed charge coverage ratio greater than 1.5x 3.5x
Unsecured debt ratio greater than 1.67x 3.42x
Unencumbered asset pool debt service coverage greater than 1.75x 3.96x
Unsecured Senior Notes due 2024, 2025, 2028, 2029, 2030, 2032 and 2033:
Total debt to total asset value less than 60% 39%
Interest coverage greater than 1.5x 6.5x
Secured debt to total asset value less than 40% 5%
Unencumbered asset pool value to unsecured debt greater than 150% 271%
________________________
(1)As of December 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

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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 February 5, 2024 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.
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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, 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.
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06
Definitions and Reconciliations


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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 developed space, redeveloped space (in which a significant change in use is planned) or repositioned space that is expected to result in additional revenue generated when the space is re-leased, and acquired operating properties in which we are making our first significant investments post-acquisition. 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.

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Q4 2023 Supplemental Financial Report
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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 renewed 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 December 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.

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Q4 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 December 31, Year Ended December 31,
  2023 2022 2023 2022
Net Income Available to Common Stockholders $ 47,284  $ 52,625  $ 212,241  $ 232,615 
Net income attributable to noncontrolling common units of the Operating Partnership 471  588  2,083  2,283 
Net income attributable to noncontrolling interests in consolidated property partnerships 5,291  6,262  23,964  24,595 
Net Income 53,046  59,475  238,288  259,493 
Adjustments:
General and administrative expenses 22,078  25,217  93,434  93,642 
Leasing costs 1,956  1,404  6,506  4,879 
Depreciation and amortization 86,016  91,396  355,278  357,611 
Interest income and other income, net (10,696) (1,264) (22,592) (1,765)
Interest expense 32,325  23,550  114,216  84,278 
Gain on sale of depreciable operating property —  —  —  (17,329)
Net Operating Income, as defined (1)
 184,725  199,778  785,130  780,809 
Wholly-Owned Properties 162,348  174,983  688,940  682,260 
Consolidated property partnerships: (2)
100 First Street (3)
 6,561  6,116  25,420  23,593 
303 Second Street (3)
 10,099  12,702  47,285  50,998 
Crossing/900 (4)
 5,717  5,977  23,485  23,958 
Net Operating Income, as defined (1)
 184,725  199,778  785,130  780,809 
Non-Same Store Net Operating Income (5)
 (20,892) (16,435) (82,982) (52,448)
Same Store Net Operating Income 163,833  183,343  702,148  728,361 
GAAP to Cash Adjustments:
GAAP Operating Revenues Adjustments, net (6)
 5,785  (11,685) (11,196) (66,322)
GAAP Operating Expenses Adjustments, net 98  100  399  427 
Same Store Cash Net Operating Income $ 169,716  $ 171,758  $ 691,351  $ 662,466 
     
________________________
(1)Please refer to pages 32-33 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, one office development building added to the stabilized portfolio during the third quarter of 2023, one office development building added to the stabilized portfolio during the fourth quarter of 2023 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.
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Q4 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 December 31,
  2023 2022
Net Income Available to Common Stockholders $ 47,284  $ 52,625 
Interest expense 32,325  23,550 
Depreciation and amortization 86,016  91,396 
Net income attributable to noncontrolling common units of the Operating Partnership 471  588 
Net income attributable to noncontrolling interests in consolidated property partnerships 5,291  6,262 
EBITDA, as adjusted (1)
 $ 171,387  $ 174,421 
________________________
(1)Please refer to page 33 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.

39

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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 February 5, 2024
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
FOURTH QUARTER FINANCIAL RESULTS
---------------

LOS ANGELES, February 5, 2024 - Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its fourth quarter and full year ended December 31, 2023.

Fourth Quarter and Full Year Highlights

Financial Results
•Revenues of $269.0 million
•Net income available to common stockholders of $0.40 per diluted share
•Funds from operations available to common stockholders and unitholders (“FFO”) of $129.3 million, or $1.08 per diluted share

Leasing and Occupancy
•Stabilized portfolio was 85.0% occupied and 86.4% leased at December 31, 2023
•Signed approximately 588,000 square feet of new and renewal leases during the quarter, including short-term leases, the highest quarterly leasing volume since Q2 2019
◦GAAP and cash rents increased 21.7% and 1.6%, respectively, from prior levels in the stabilized portfolio, excluding short-term leases
•For the full year, signed approximately 1,347,000 square feet of new or renewal leases, including short-term leases, the highest annual leasing volume since 2019

Development
•Added approximately $750.0 million of new development properties to the stabilized portfolio throughout the year
◦During the fourth quarter, added Indeed Tower, a $690.0 million, approximately 759,000 square foot office building in the Austin CBD, which is currently 78% leased and 65% occupied ◦During the third quarter, added 9514 Towne Centre Drive, a $60.0 million, approximately 71,000 square foot office building in the University Towne Center submarket of San Diego, which is 100% leased and occupied
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Balance Sheet / Liquidity
•During the first quarter, increased the borrowing capacity of the unsecured term loan facility to $520.0 million, which was fully outstanding at December 31, 2023
•During the third quarter, entered into an eleven-year, non-recourse mortgage note for $375.0 million. The mortgage note bears interest at a fixed rate of 5.90% and matures on August 10, 2034
•As of the date of this release, the company had approximately $2.2 billion of total liquidity comprised of approximately $1.1 billion of cash and short-term investments and approximately $1.1 billion available under the unsecured revolving credit facility

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

Sustainability and Corporate Social Responsibility
•Achieved carbon neutral operations across the portfolio for the fourth consecutive year
•On-site solar at company properties has the capacity to generate over six megawatts of clean electricity, which is equivalent to the annual electricity use of over 1,200 homes
•Listed on U.S. EPA’s National Top 100 List of largest green power users
•For the eighth consecutive year, awarded the ENERGY STAR Partner of the Year Sustained Excellence Award
•Named the GRESB Regional Sector Leader in the Americas for Development (Diversified), earning the highly competitive GRESB 5 Star designation
•For the fifth consecutive year, included in Bloomberg’s Gender Equality Index

Recent Developments
•On January 12, 2024, completed a public offering of $400.0 million of 12-year unsecured senior notes at an interest rate of 6.250% due January 2036
•On January 21, 2024, John Kilroy retired as Chief Executive Officer (“CEO”) and effective January 22, 2024, Angela Aman assumed the CEO role and joined the Board. John Kilroy will serve as an advisor through the end of 2024 and will remain Chair of the Board through his current term
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Net Income Available to Common Stockholders / FFO Guidance and Outlook
The company is providing Nareit-defined FFO per diluted share guidance for the full year 2024 of $4.10 to $4.25 per share, with a midpoint of $4.18 per share.
Full Year 2024 Range
Low End High End
$ and shares/units in thousands, except per share/unit amounts
Net income available to common stockholders per share - diluted $ 1.45  $ 1.61 
Weighted average common shares outstanding - diluted (1)
 118,000  118,000 
Net income available to common stockholders $ 171,000  $ 190,000 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 1,900  2,000 
Net income attributable to noncontrolling interests in consolidated property partnerships 20,500  21,000 
Depreciation and amortization of real estate assets 330,000  330,000 
Gains on sales of depreciable real estate —  — 
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (30,000) (32,000)
Funds From Operations (2)
 $ 493,400  $ 511,000 
Weighted average common shares/units outstanding – diluted (3)
 120,250  120,250 
Funds From Operations per common share/unit – diluted (3)
 $ 4.10  $ 4.25 

Key Assumptions 2023 Actuals 2024 Assumptions
Change in same store cash NOI (4)
 4.4% (4.0%) to (6.0%)
Average full year occupancy 87.3% 82.5% to 84.0%
General and administrative expenses $93 million $72 million to $80 million
Total development spending $394 million $200 million to $300 million
Weighted average common shares/units outstanding – diluted
(in thousands) (3)
 119,241 120,250
 ________________________
(1)Calculated based on estimated weighted average shares outstanding, including non-participating share-based awards.
(2)See management statement for Funds From Operations at end of release.
(3)Calculated based on weighted average shares outstanding, including participating and non-participating share-based awards, and the dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(4)See management statement for Same Store Cash Net Operating Income on page 33 of our Supplemental Financial Report furnished on Form 8-K with this press release.

The company’s guidance estimates for the full year 2024, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this press release, reflect management’s views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this press release. These guidance estimates do not include the impact on the company’s operating results from potential future acquisitions, dispositions (including any associated gains or losses), capital markets activity, impairment charges or any events outside of the company’s control, as the timing and magnitude of any such events are not known at the time the company provides guidance. There can be no assurance that the company’s actual results will not differ materially from these estimates.

Conference Call and Audio Webcast
The company’s management will discuss fourth quarter results and the current business environment during the company’s February 6, 2024 earnings conference call. The call will begin at 10:00 a.m. Pacific Time and last approximately one hour.
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To participate and obtain conference call dial-in details, register by using the following link, https://www.netroadshow.com/events/login?show=87605277&confId=57126. Those interested in listening via the Internet can access the conference call at https://events.q4inc.com/attendee/931384027. It may be necessary to download audio software to hear the conference call. A replay of the conference call will be available via telephone on February 6, 2024 through February 13, 2024 by dialing (866) 813-9403 and entering passcode 236874. International callers should dial (929) 458-6194 and enter the same passcode. The replay will also be available on our website at https://investors.kilroyrealty.com/shareholders/investor-events/default.aspx.

About Kilroy Realty Corporation

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

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

As of December 31, 2023, Kilroy’s stabilized portfolio totaled approximately 17.0 million square feet of primarily office and life science space that was 85.0% occupied and 86.4% leased. The company also had approximately 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 92.5%. In addition, the company had two in-process life science redevelopment projects totaling approximately 100,000 square feet with total estimated redevelopment costs of $80.0 million and one approximately 875,000 square foot in-process development project with a total estimated investment of $1.0 billion.

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

Kilroy is proud to have achieved carbon neutral operations across our portfolio since 2020. The company also has a longstanding commitment to maintain high levels of LEED, Fitwel and ENERGY STAR certifications across the portfolio.

A significant part of the company’s foundation is its commitment to enhancing employee growth, satisfaction and wellness while maintaining a diverse and thriving culture. For the fifth 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.

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

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

Three Months Ended December 31, Year Ended December 31,
  2023 2022 2023 2022
Revenues $ 269,016  $ 284,344  $ 1,129,694 $ 1,096,987
Net income available to common stockholders $ 47,284  $ 52,625  $ 212,241 $ 232,615
Weighted average common shares outstanding – basic 117,240  116,878  117,160 116,807
Weighted average common shares outstanding – diluted 117,816  117,389  117,506 117,220
Net income available to common stockholders per share – basic $ 0.40  $ 0.45  $ 1.80 $ 1.98
Net income available to common stockholders per share – diluted $ 0.40  $ 0.45  $ 1.80 $ 1.97
Funds From Operations (1)(2)
 $ 129,257  $ 139,855  $ 551,116 $ 556,631
Weighted average common shares/units outstanding – basic (3)
 118,896  118,568  118,895 118,586
Weighted average common shares/units outstanding – diluted (4)
 119,473  119,079  119,241 118,999
Funds From Operations per common share/unit – basic (2)
 $ 1.09  $ 1.18  $ 4.64 $ 4.69
Funds From Operations per common share/unit – diluted (2)
 $ 1.08  $ 1.17  $ 4.62 $ 4.68
Common shares outstanding at end of period 117,240 116,878
Common partnership units outstanding at end of period 1,151 1,151
Total common shares and units outstanding at end of period 118,391 118,029
  December 31, 2023 December 31, 2022
Stabilized office portfolio occupancy rates: (5)
Greater Los Angeles 79.0  % 85.2  %
San Diego County 88.6  % 86.2  %
San Francisco Bay Area 91.0  % 95.5  %
Greater Seattle 83.4  % 97.7  %
Austin 64.9  % —  %
Weighted average total 85.0  % 91.6  %
Total square feet of stabilized office properties owned at end of period: (5)
Greater Los Angeles 4,345 4,332
San Diego County 2,770 2,698
San Francisco Bay Area 6,170 6,164
Greater Seattle 3,000 3,000
Austin 759 —
Total 17,044 16,194
________________________
(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.
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KILROY REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
  December 31, 2023 December 31, 2022
ASSETS
REAL ESTATE ASSETS:
Land and improvements $ 1,743,170  $ 1,738,242 
Buildings and improvements 8,463,674  8,302,081 
Undeveloped land and construction in progress 2,034,804  1,691,860 
Total real estate assets held for investment 12,241,648  11,732,183 
Accumulated depreciation and amortization (2,518,304) (2,218,710)
Total real estate assets held for investment, net 9,723,344  9,513,473 
Cash and cash equivalents 510,163  347,379 
Marketable securities 284,670  23,547 
Current receivables, net 13,609  20,583 
Deferred rent receivables, net 460,979  452,200 
Deferred leasing costs and acquisition-related intangible assets, net 229,705  250,846 
Right of use ground lease assets 125,506  126,530 
Prepaid expenses and other assets, net 53,069  62,429 
TOTAL ASSETS $ 11,401,045  $ 10,796,987 
LIABILITIES AND EQUITY
LIABILITIES:
Secured debt, net $ 603,225  $ 242,938 
Unsecured debt, net 4,325,153  4,020,058 
Accounts payable, accrued expenses and other liabilities 371,179  392,360 
Ground lease liabilities 124,353  124,994 
Accrued dividends and distributions 64,440  64,285 
Deferred revenue and acquisition-related intangible liabilities, net 173,638  195,959 
Rents received in advance and tenant security deposits 79,364  81,432 
Total liabilities 5,741,352  5,122,026 
EQUITY:
Stockholders’ Equity
Common stock 1,173  1,169 
Additional paid-in capital 5,205,839  5,170,760 
Retained earnings 221,149  265,118 
Total stockholders’ equity 5,428,161  5,437,047 
Noncontrolling Interests
Common units of the Operating Partnership 53,275  53,524 
Noncontrolling interests in consolidated property partnerships 178,257  184,390 
Total noncontrolling interests 231,532  237,914 
Total equity 5,659,693  5,674,961 
TOTAL LIABILITIES AND EQUITY $ 11,401,045  $ 10,796,987 

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

Three Months Ended December 31, Year Ended December 31,
2023 2022 2023 2022
REVENUES
Rental income $ 265,643  $ 281,688  $ 1,117,737  $ 1,086,018 
Other property income 3,373  2,656  11,957  10,969 
Total revenues 269,016  284,344  1,129,694  1,096,987 
EXPENSES
Property expenses 60,731  55,323  228,964  202,744 
Real estate taxes 21,000  27,151  105,868  105,869 
Ground leases 2,560  2,092  9,732  7,565 
General and administrative expenses (1)
 22,078  25,217  93,434  93,642 
Leasing costs 1,956  1,404  6,506  4,879 
Depreciation and amortization 86,016  91,396  355,278  357,611 
Total expenses 194,341  202,583  799,782  772,310 
OTHER INCOME (EXPENSES)
Interest and other income, net 10,696  1,264  22,592  1,765 
Interest expense (32,325) (23,550) (114,216) (84,278)
Gain on sale of depreciable operating property —  —  —  17,329 
Total other expenses (21,629) (22,286) (91,624) (65,184)
NET INCOME 53,046  59,475  238,288  259,493 
Net income attributable to noncontrolling common units of the Operating Partnership (471) (588) (2,083) (2,283)
Net income attributable to noncontrolling interests in consolidated property partnerships (5,291) (6,262) (23,964) (24,595)
Total income attributable to noncontrolling interests (5,762) (6,850) (26,047) (26,878)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 47,284  $ 52,625  $ 212,241  $ 232,615 
Weighted average common shares outstanding – basic 117,240  116,878  117,160  116,807 
Weighted average common shares outstanding – diluted 117,816  117,389  117,506  117,220 
Net income available to common stockholders per share – basic $ 0.40  $ 0.45  $ 1.80  $ 1.98 
Net income available to common stockholders per share – diluted $ 0.40  $ 0.45  $ 1.80  $ 1.97 
________________________
(1)The three months and year ended December 31, 2023 includes $4.9 million and $17.0 million, respectively, of retirement costs for our former CEO and former President, primarily comprised of accelerated stock compensation expense.
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KILROY REALTY CORPORATION
FUNDS FROM OPERATIONS
(unaudited; in thousands, except per share data)
 
Three Months Ended December 31, Year Ended December 31,
2023 2022 2023 2022
Net income available to common stockholders $ 47,284  $ 52,625  $ 212,241  $ 232,615 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 471  588  2,083  2,283 
Net income attributable to noncontrolling interests in consolidated property partnerships 5,291  6,262  23,964  24,595 
Depreciation and amortization of real estate assets 84,402  89,536  348,064  350,665 
Gain on sale of depreciable real estate —  —  —  (17,329)
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (8,191) (9,156) (35,236) (36,198)
Funds From Operations(1)(2)(3)
 $ 129,257  $ 139,855  $ 551,116  $ 556,631 
Weighted average common shares/units outstanding – basic (4)
 118,896  118,568  118,895  118,586 
Weighted average common shares/units outstanding – diluted (5)
 119,473  119,079  119,241  118,999 
Funds From Operations per common share/unit – basic (2)
 $ 1.09  $ 1.18  $ 4.64  $ 4.69 
Funds From Operations per common share/unit – diluted (2)
 $ 1.08  $ 1.17  $ 4.62  $ 4.68 
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(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 $5.7 million and $5.1 million for the three months ended December 31, 2023 and 2022, respectively, and $20.7 million and $19.3 million for the year ended December 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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