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What changed in KILROY REALTY CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of KILROY REALTY CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+474 added−470 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-09)

Top changes in KILROY REALTY CORP's 2024 10-K

474 paragraphs added · 470 removed · 393 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

57 edited+12 added−17 removed33 unchanged
Biggest changeWe focus on enhancing long-term growth in Net Operating Income and FFO from our properties by: • maximizing cash flows through new and renewal leasing activity; • structuring leases to maximize returns; • managing operating expenses through the efficient use of internal property management, leasing, marketing, financing, accounting, legal, and construction and development management functions; • managing portfolio credit risk through effective underwriting, including the use of credit enhancements and interests in collateral to mitigate portfolio credit risk; • maintaining and developing long-term relationships with a diverse tenant base; • managing capital improvements to enhance our properties’ competitive advantages in their respective markets and integrating technology to enhance efficiencies with building management systems, security operation centers and tenant experience solutions to provide a premium experience to our tenant base while reducing operating costs; and • attracting and retaining motivated employees by providing financial and other incentives to meet our operating and financial goals.
Biggest changeWe focus on enhancing our long-term sustainable growth in Net Operating Income and FFO from our properties by: • maximizing cash flows through new and renewal leasing activity; • managing portfolio credit risk through effective underwriting, including the use of credit enhancements to mitigate individual tenant credit risks; • maintaining and developing long-term relationships with industry-leading companies in our markets; • managing operating expenses through the efficient use of internal property management, leasing, marketing, financing, accounting, legal, and construction and development management functions; • investing in capital improvements to enhance the competitive advantages of our properties in their respective markets and integrating technology, including building management systems, security operation centers, and tenant experience solutions to provide a premium experience to our tenant base while reducing operating costs; and • attracting and retaining motivated employees to meet our operating and financial goals. 7 Development and Redevelopment Strategies.
All of our properties, development projects and redevelopment projects are 100% owned, excluding four office properties owned by three consolidated property partnerships. Two of the three consolidated property partnerships, 100 First Street Member, LLC (“100 First LLC”) and 303 Second Street Member, LLC (“303 Second LLC”), each owned one office property in San Francisco, California through subsidiary REITs.
All of our properties and development and redevelopment projects are 100% owned, excluding four office properties owned by three consolidated property partnerships. Two of the three consolidated property partnerships, 100 First Street Member, LLC (“100 First LLC”) and 303 Second Street Member, LLC (“303 Second LLC”), each owned one office property in San Francisco, California through subsidiary REITs.
Risk Factors” contained in this report. • Global market, economic and geopolitical conditions may adversely affect our business, results of operations, liquidity and financial condition and those of our tenants. • Many of our costs, such as operating and general and administrative expenses, interest expense and real estate construction costs, as well as the value of our assets, could be adversely impacted by periods of heightened inflation. • All of our properties are located in California, Seattle, Washington and Austin, Texas and we may therefore be susceptible to adverse economic conditions and regulations, as well as natural disasters, in those areas. • Continuing uncertainty in the office leasing market could adversely affect our business, financial condition, results of operations and cash flows. • Our performance and the market value of our securities are subject to risks associated with our investments in real estate assets and with trends in the real estate industry. • We depend upon significant tenants, and the loss of a significant tenant could adversely affect our financial condition, results of operations, ability to borrow funds and cash flows. • Downturns in tenants’ businesses may reduce our revenues and cash flows. • A large percentage of our tenants operate in a concentrated group of industries and downturns in these industries could adversely affect our financial condition, results of operations and cash flows. • We may be unable to renew leases or re-lease available space. • We are subject to governmental regulations that may affect the development, redevelopment and use of our properties. • Epidemics, pandemics or other outbreaks, and restrictions intended to prevent their spread, could adversely impact our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and to pay dividends and distributions to security holders. • We face significant competition, which may decrease the occupancy and rental rates of our properties. • In order to maintain the quality of our properties and successfully compete against other properties, we must periodically spend money to maintain, repair and renovate our properties, which reduces our cash flows. • Potential casualty losses, such as earthquake losses, may adversely affect our financial condition, results of operations and cash flows. • We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties. • Our business is subject to risks associated with climate change and our sustainability strategies. • We are subject to environmental and health and safety laws and regulations, and any costs to comply with, or liabilities arising under, such laws and regulations could be material. • We may be unable to complete acquisitions and successfully operate acquired properties. • There are significant risks associated with property acquisition, development and redevelopment. • We face risks associated with the development and operation of mixed-use commercial properties. • Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition, and disputes between us and our co-venturers, and could expose us to potential liabilities and losses. 15 • We own certain properties subject to ground leases and other restrictive agreements that limit our uses of the properties, restrict our ability to sell or otherwise transfer the properties and expose us to the loss of the properties if such agreements are breached by us, terminated or not renewed. • Real estate assets are illiquid, and we may not be able to sell our properties when we desire. • We may invest in securities related to real estate, which could adversely affect our ability to pay dividends and distributions to our security holders. • We face risks associated with short-term liquid investments. • Our property taxes could increase due to reassessment or property tax rate changes. • Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting. • We face risks associated with perceived or actual security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems or those of our service providers. • We face risks associated with compliance with ever evolving federal and state laws relating to the handling of information about individuals, which involves significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability, negative publicity, and/or an erosion of trust, which could materially adversely affect our business, results of operations, and financial condition. • The actual density of our undeveloped land holdings and/or any particular land parcel may not be consistent with our potential density estimates. • Loss of key executive officers or our inability to successfully transition key executive officers could harm our operations and financial performance, and adversely affect the quoted trading price of our securities. • We could be adversely affected by labor disputes, strikes or other union job actions. • We may not be able to meet our debt service obligations. • The covenants in the agreements governing the Operating Partnership’s unsecured revolving credit facility, unsecured term loan facility and note purchase agreements may limit our ability to make distributions to the holders of our common stock. • A downgrade in our credit ratings could materially adversely affect our business and financial condition. • An increase in interest rates would increase our interest costs on variable rate debt and new debt and could adversely affect our ability to refinance existing debt, conduct development, redevelopment and acquisition activity and recycle capital. • Our growth depends on external sources of capital that are outside of our control and the inability to obtain capital on terms that are acceptable to us, or at all, could adversely affect our financial condition and results of operations. • Our organizational structure includes approval rights for limited partners and restrictions that may delay, deter or prevent a change of control. • We may issue additional common units and shares of capital stock without unitholder or stockholder approval, as applicable, which may dilute unitholder or stockholder investment and decrease the quoted trading price per share of the Company’s common stock. • The board of directors may change investment and financing policies without stockholder or unitholder approval. • Loss of the Company’s REIT status would have significant adverse consequences to us and the value of the Company’s common stock. 16
Risk Factors” contained in this report. • Global market, economic, and geopolitical conditions may adversely affect our business, results of operations, liquidity, and financial condition, and those of our tenants. • Many of our costs, such as operating and general and administrative expenses, interest expense and real estate construction costs, as well as the value of our assets, could be adversely impacted by periods of heightened inflation. • All of our properties are located in California, Seattle, Washington, and Austin, Texas and we may therefore be susceptible to adverse economic conditions and regulations, as well as natural disasters, in those areas. • Potential casualty losses, such as earthquake losses, may adversely affect our financial condition, results of operations, and cash flows. • Continuing uncertainty in the office leasing market could adversely affect our business, financial condition, results of operations, and cash flows. • Our performance and the market value of our securities are subject to risks associated with our investments in real estate assets and with trends in the real estate industry. • We depend upon significant tenants, and the loss of a significant tenant could adversely affect our financial condition, results of operations, ability to borrow funds, and cash flows. • Downturns in tenants’ businesses may reduce our revenues and cash flows. • A large percentage of our tenants operate in a concentrated group of industries and downturns in these industries could adversely affect our financial condition, results of operations, and cash flows. • We may be unable to renew leases or re-lease available space. • We are subject to governmental regulations that may affect the development, redevelopment, and use of our properties. • Epidemics, pandemics or other outbreaks, and restrictions intended to prevent their spread, could adversely impact our business, financial condition, results of operations, cash flows, liquidity, and ability to satisfy our debt service obligations, and to pay dividends and distributions to security holders. • We face significant competition, which may decrease the occupancy and rental rates of our properties. • In order to maintain the quality of our properties and successfully compete against other properties, we must periodically spend money to maintain, repair, and renovate our properties, which reduces our cash flows. • We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties. • Our business is subject to risks associated with climate change and our sustainability strategies. • We are subject to environmental and health and safety laws and regulations, and any costs to comply with, or liabilities arising under, such laws and regulations could be material. • We may be unable to complete acquisitions and successfully operate acquired properties. • There are significant risks associated with property acquisitions as well as development and redevelopment. • We face risks associated with the development and operation of mixed-use commercial properties. • Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition, and disputes between us and our co-venturers, and could expose us to potential liabilities and losses. 14 • We own certain properties subject to ground leases and other restrictive agreements that limit our uses of the properties, restrict our ability to sell or otherwise transfer the properties, and expose us to the loss of the properties if such agreements are breached by us, terminated, or not renewed. • Real estate assets are illiquid, and we may not be able to sell our properties when we desire. • We may invest in securities related to real estate, which could adversely affect our ability to pay dividends and distributions to our security holders. • We face risks associated with short-term liquid investments. • Our property taxes could increase due to reassessment or property tax rate changes. • Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting. • We face risks associated with perceived or actual security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems or those of our service providers. • We face risks associated with compliance with ever evolving federal and state laws relating to the handling of information about individuals, which involves significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability, negative publicity, and/or an erosion of trust, which could materially adversely affect our business, results of operations, and financial condition. • The actual density of our undeveloped land holdings and/or any particular land parcel may not be consistent with our potential density estimates. • Loss of key executive officers or our inability to successfully transition key executive officers could harm our operations and financial performance, and adversely affect the quoted trading price of our securities. • We could be adversely affected by labor disputes, strikes, or other union job actions. • We may not be able to meet our debt service obligations. • The covenants in the agreements governing the Operating Partnership’s unsecured revolving credit facility, unsecured term loan facility, and note purchase agreements may limit our ability to make distributions to the holders of our common stock. • A downgrade in our credit ratings could materially adversely affect our business and financial condition. • An increase in interest rates would increase our interest costs on variable rate debt and new debt and could adversely affect our ability to refinance existing debt, conduct development, redevelopment, and acquisition activity and recycle capital. • Our growth depends on external sources of capital that are outside of our control and the inability to obtain capital on terms that are acceptable to us, or at all, could adversely affect our financial condition and results of operations. • Our organizational structure includes approval rights for limited partners and restrictions that may delay, deter or prevent a change of control. • We may issue additional common units and shares of capital stock without unitholder or stockholder approval, as applicable, which may dilute unitholder or stockholder investment and decrease the quoted trading price per share of the Company’s common stock. • The board of directors may change investment and financing policies without stockholder or unitholder approval. • Loss of the Company’s REIT status would have significant adverse consequences to us and the value of the Company’s common stock. 15
However, our assessments may have failed to reveal all environmental conditions, liabilities, or compliance concerns; there may be material environmental conditions, liabilities, or compliance concerns that arose at a property after the review was completed; future laws, ordinances, or regulations 13 may impose material additional environmental liability; and environmental conditions at our properties may be affected in the future by tenants, third parties, or the condition of land or operations near our properties, such as the presence of underground storage tanks or migrating plumes.
However, our assessments may have failed to reveal all environmental conditions, liabilities, or compliance concerns; there may be material environmental conditions, liabilities, or compliance concerns that arose at a property after the review was completed; future laws, ordinances, or regulations may impose material additional environmental liability; and environmental conditions at our properties may be affected in the future by tenants, third parties, or the condition of land or operations near our properties, such as the presence of underground storage tanks or migrating plumes.
We are not aware of any material noncompliance, liability, or claim relating to hazardous or toxic substances or petroleum products in connection with any of our properties, and management does not believe that on-going activities by our tenants will have a material adverse effect on our operations. Costs related to government regulation and private litigation over environmental matters .
We are not aware of any material noncompliance, liability, or claim relating to hazardous or 12 toxic substances or petroleum products in connection with any of our properties, and management does not believe that on-going activities by our tenants will have a material adverse effect on our operations. Costs related to government regulation and private litigation over environmental matters .
Annualized base rental revenue 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 tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases and expense reimbursement revenue.
Annualized base rental revenue 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations —Results of Operations” and “—Non-GAAP Supplemental Financial Measures: Funds From Operations” for a reconciliation of these measures to generally accepted accounting principles (“GAAP”) net income available to common stockholders.) 7 Operating Strategies .
Management’s Discussion and Analysis of Financial Condition and Results of Operations —Results of Operations” and “—Non-GAAP Supplemental Financial Measures: Funds From Operations” for a reconciliation of these measures to generally accepted accounting principles (“GAAP”) net income available to common stockholders.) Operating Strategies .
Therefore, we cannot provide any assurance that our insurance coverage or transactional indemnities will be sufficient or that our liability, if any, will not have a material adverse effect on our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to security holders. 14 SUMMARY RISK FACTORS The following section sets forth a summary of material factors that may adversely affect our business and operations.
Therefore, we cannot provide any assurance that our insurance coverage or transactional indemnities will be sufficient or that our liability, if any, will not have a material adverse effect on our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations, and to pay dividends and distributions to security holders. 13 SUMMARY RISK FACTORS The following section sets forth a summary of material factors that may adversely affect our business and operations.
We have received the Institute for Market Transformation’s (“IMT’s”) Green Lease Leaders award for ten consecutive years. We build our new development and redevelopment projects to Leadership in Energy and Environmental Design (“LEED”) specifications. All of our office and life science new development projects pursue LEED certification, at the Platinum or Gold level.
We have received the Institute for Market Transformation’s (“IMT’s”) Green Lease Leaders award for 11 consecutive years. We build our new development and redevelopment projects to Leadership in Energy and Environmental Design (“LEED”) specifications. All of our office and life science new development projects pursue LEED certification, at the Platinum or Gold level.
Management’s Discussion and Analysis of Financial Condition and Results of Operations —Results of Operations.” As of December 31, 2023, all of our properties, development projects and redevelopment projects were owned and all of our business was conducted in the state of California with the exception of ten stabilized office properties and one future development project located in the state of Washington and one stabilized office property and one future development project located in Austin, Texas.
Management’s Discussion and Analysis of Financial Condition and Results of Operations —Results of Operations.” As of December 31, 2024, all of our properties and development and redevelopment projects were owned and all of our business was conducted in the state of California with the exception of ten stabilized office properties and one future development project located in the state of Washington and one stabilized office property and one future development project located in Austin, Texas.
As of December 31, 2023, the Company owned a 56% common equity interest in both 100 First LLC and 303 Second LLC. The third consolidated property partnership, Redwood City Partners, LLC (“Redwood LLC”), owned two office properties in Redwood City, California. As of December 31, 2023, the Company owned an approximate 93% common equity interest in Redwood LLC.
As of December 31, 2024, the Company owned a 56% common equity interest in both 100 First LLC and 303 Second LLC. The third consolidated property partnership, Redwood City Partners, LLC (“Redwood LLC”), owned two office properties in Redwood City, California. As of December 31, 2024, the Company owned an approximate 93% common equity interest in Redwood LLC.
The following documents relating to corporate governance are also available on our website under “Investors —Overview —Governance Documents” and available in print to any security holder upon request: • Corporate Governance Guidelines; • Code of Business Conduct and Ethics; • Audit Committee Charter; • Executive Compensation Committee Charter; • Nominating / Corporate Governance Committee Charter; and • Corporate Social Responsibility and Sustainability Committee Charter. 6 You may request copies of any of these documents by writing to: Attention: Investor Relations Kilroy Realty Corporation 12200 West Olympic Boulevard, Suite 200 Los Angeles, California 90064 We intend to disclose on our website under “Investors —Overview —Governance Documents” any amendment to, or waiver of, any provisions of our Code of Business Conduct and Ethics applicable to the directors and/or officers of the Company that would otherwise be required to be disclosed under the rules of the Securities and Exchange Commission or the New York Stock Exchange.
The following documents relating to corporate governance are also available on our website under “Investors —Overview —Governance Documents” and available in print to any security holder upon request: • Corporate Governance Guidelines; • Code of Business Conduct and Ethics; • Policies and Procedures Concerning Consideration of Director Candidates; • Audit Committee Charter; • Executive Compensation Committee Charter; • Nominating / Corporate Governance Committee Charter; and • Corporate Social Responsibility and Sustainability Committee Charter. 6 You may request copies of any of these documents by writing to: Attention: Investor Relations Kilroy Realty Corporation 12200 West Olympic Boulevard, Suite 200 Los Angeles, California 90064 We intend to disclose on our website under “Investors —Overview —Governance Documents” any amendment to, or waiver of, any provisions of our Code of Business Conduct and Ethics applicable to the directors and/or officers of the Company that would otherwise be required to be disclosed under the rules of the Securities and Exchange Commission or the New York Stock Exchange.
As of December 31, 2023, other than routine cleaning materials and chemicals used in routine office operations, approximately 4-6% of our tenants handled hazardous substances and/or wastes on approximately 1-2% of the aggregate square footage of our properties as part of their business operations. These tenants are primarily involved in the life sciences business.
As of December 31, 2024, other than routine cleaning materials and chemicals used in routine office operations, approximately 1-2% of our tenants handled hazardous substances and/or wastes on approximately 4-5% of the aggregate square footage of our properties as part of their business operations. These tenants are primarily involved in the life sciences business.
Strong Communities and Healthy Planet. We are deeply aware that our buildings are part of the larger community and that we thrive when the communities around us thrive. We are proud to make these communities better places to live and work through our volunteerism and philanthropy initiatives.
We are deeply aware that our buildings are part of the larger community and that we thrive when the communities around us thrive. We are proud to make these communities better places to live and work through our volunteerism and philanthropy initiatives.
Number of Properties Number of Units 2023 Average Occupancy Stabilized Residential Properties 3 1,001 92.8 % Our stabilized portfolio includes all of our properties with the exception of development properties currently committed for construction, under construction, or in the tenant improvement phase, redevelopment properties under construction, undeveloped land and real estate assets held for sale.
Number of Properties Number of Units 2024 Average Occupancy Stabilized Residential Properties 3 1,001 92.5 % Our stabilized portfolio includes all of our properties with the exception of development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, undeveloped land, and real estate assets held for sale.
Management and our board of directors, through the Corporate Social Responsibility and Sustainability Committee (the “CSR&S Committee”) established in April 2018, currently oversee and advance the Company’s corporate social responsibility and sustainability initiatives. The CSR&S Committee recognizes that community engagement and sustainable operations benefit our investors, tenants, and other stakeholders and are key to preserving our Company’s value and credibility.
Our board of directors, through the Corporate Social Responsibility and Sustainability Committee (the “CSR&S Committee”) in conjunction with management, currently oversee and advance the Company’s corporate social responsibility and sustainability initiatives. The CSR&S Committee recognizes that community engagement and sustainable operations benefit our investors, tenants, and other stakeholders and are key to preserving our Company’s value and credibility.
For further information on our 15 largest tenants and the composition of our tenant base, see “Item 2.
For further information on our 20 largest tenants and the composition of our tenant base, see “Item 2.
The remaining interests in all three property partnerships were owned by unrelated third parties. We own our interests in all of our real estate assets through the Operating Partnership and generally conduct substantially all of our operations through the Operating Partnership, of which we owned a 99.0% common general partnership interest as of December 31, 2023.
The remaining interests in all three property partnerships were owned by unrelated third parties. We own our interests in all of our real estate assets through the Operating Partnership and generally conduct substantially all of our operations through the Operating Partnership, of which we owned an approximate 99.0% common general partnership interest as of December 31, 2024.
Projects in the tenant improvement phase are added to our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities.
Projects in the tenant improvement phase are moved into our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities.
As of December 31, 2023, all of our properties, development projects and redevelopment projects were owned and all of our business was conducted in the state of California with the exception of ten stabilized office properties and one future development project located in the state of Washington and one stabilized office property and one future development project in Austin, Texas.
As of December 31, 2024, all of our properties and development and redevelopment projects, and all of our business was conducted in the state of California, with the exception of ten stabilized office properties and one future development project located in the state of Washington, and one stabilized office property and one future 5 development project located in Austin, Texas.
As of December 31, 2023, we had accrued environmental remediation liabilities of approximately $76.6 million recorded on our consolidated balance sheets in connection with certain of our in-process and future development projects. The accrued environmental remediation liabilities represent the remaining costs we estimate we will incur prior to and during the development process.
As of December 31, 2024, we had accrued environmental remediation liabilities of approximately $72.0 million recorded on our consolidated balance sheets in connection with certain of our in-process and future development projects. The accrued environmental remediation liabilities represent the remaining costs we estimate we will incur prior to and during the development process.
Development and Redevelopment Strategies . We and our predecessors have developed office properties primarily located in California since 1947. As of December 31, 2023, we had one development project under construction totaling approximately 875,000 square feet of office and life science space and two redevelopment projects under construction totaling approximately 100,000 square feet.
We and our predecessors have developed office properties primarily located in California since 1947. As of December 31, 2024, we had two redevelopment projects in the tenant improvement phase totaling approximately 100,000 square feet and one development project under construction totaling approximately 875,000 square feet of office and life science space.
Our longstanding leadership in sustainability in real estate is globally recognized, and our commitment to advancing progress toward our sustainability ambitions remains strong. Our vision is a resilient portfolio that minimizes the environmental impact of our buildings while maximizing the health and productivity of our tenants, employees and communities while also delivering returns to stockholders.
Our longstanding leadership in sustainability in real estate is globally recognized, and our commitment to sustainable operations remains strong. Our vision is a resilient portfolio that minimizes the environmental impact of our buildings while maximizing the health and productivity of our tenants, employees, and communities, while also delivering compelling returns to stockholders.
Our strategy with respect to development and redevelopment is to: • develop or redevelop assets in highly populated, amenity rich, supply-constrained locations that are attractive to a broad array of tenants; • be the premier provider of modern and collaborative office, life science and mixed-use projects on the West Coast and in Austin, Texas with a focus on design and environment; • maintain a disciplined approach by commencing development when appropriate based on market conditions, focusing on leasing, developing in stages or phasing, and cost control; • self-fund our development and redevelopment activity through internally generated free cash flows and/or selective disposition activity; We may engage in the additional development or redevelopment of office, life science and mixed-use properties when market conditions support a favorable risk-adjusted return on such development or redevelopment.
We execute on our development and redevelopment strategies by: • developing or redeveloping assets in highly populated, amenity rich, supply-constrained locations that are attractive to a broad array of tenants; • being the premier provider of modern and collaborative office, life science, and mixed-use projects on the West Coast and in Austin, Texas, with a focus on design and environment; • maintaining a disciplined approach and commencing development only when appropriate based on market conditions, focusing on pre-leasing, developing in stages / phasing, and cost control; • self-funding our development and redevelopment activities primarily through internally generated free cash flows and/or selective disposition activity; We may engage in the additional development and redevelopment of office, life science, and mixed-use properties when market conditions support a favorable risk-adjusted return on such projects.
Our future development pipeline was comprised of eight potential development sites representing approximately 64 gross acres of undeveloped land on which we believe we have the potential to develop over 6.0 million square feet of office, life science, residential and retail space, depending upon economic conditions.
Our future development pipeline was comprised of eight potential development sites representing approximately 64 gross acres of undeveloped land on which we believe could develop over 6.0 million square feet of office, life science, residential, and retail space.
We define redevelopment properties as those properties for which we expect to spend significant development and construction costs on the existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property.
We define redevelopment properties as those properties for which we expect to spend significant development and construction costs pursuant to a formal plan to change its use, the intended result of which is a higher economic return on the property.
In addition to offering a 401(k) plan with matching contributions, in 2023, we put a focus on employee financial wellness by offering a variety of educational events, web workshops, and financial tips, all aimed at helping our employees improve their overall financial well-being. Competitive Benefits and Compensation.
In addition to offering a 401(k) plan with matching contributions and immediate vesting after 90-days of employment, in 2024, we focused on employee financial wellness by offering a variety of educational events, web workshops, and financial tips, all aimed at helping our employees improve their overall financial well-being. Competitive Benefits and Compensation.
The remaining 1.0% common limited partnership interest in the Operating Partnership as of December 31, 2023 was owned by non-affiliated investors and certain of our executive officers and directors. With the exception of the Operating Partnership and our consolidated property partnerships, all of our subsidiaries are wholly-owned.
The remaining approximate 1.0% common limited partnership interest in the Operating Partnership as of December 31, 2024 was owned by non-affiliated investors and a former executive officer and director. With the exception of the Operating Partnership and our consolidated property partnerships, all of our subsidiaries are wholly-owned.
ITEM 1. BUSINESS The Company Kilroy Realty Corporation (the “Company”) is a self-administered real estate investment trust (“REIT”) active in premier office, life science and mixed-use property types in the United States. The Company has earned global recognition for sustainability, building operations, innovation and design.
ITEM 1. BUSINESS The Company Kilroy Realty Corporation (the “Company”) is a self-administered real estate investment trust (“REIT”) active in premier office, life science, and mixed-use property types in the United States.
Our approach is designed to, among other things, attract, retain, and incentivize talented and experienced individuals in the highly competitive employment and commercial real estate markets in which we operate. Several of our human capital development initiatives include the following: Training and Education.
Our approach is designed to, among other things, attract, retain, develop, and incentivize talented and experienced individuals in the highly competitive employment and commercial real estate markets in which we operate. Several of our human capital development initiatives include the following: Talent Acquisition and Retention. We are committed to fostering a performance-based culture.
These risks include transitional risks such as policy, market, technology and reputational concerns, as well as physical risks, and are a focus area for the board of directors and management. Climate-related risks are governed by the board of directors through the CSR&S Committee.
These risks may include transitional risks such as policy, market, technology, and reputational concerns, as well as physical risks, and are a focus area for the board of directors and management.
Historical operations at or near some of our properties, including the presence of underground or above ground storage tanks, various sites uses that involved hazardous substances, the landfilling of hazardous substances and solid waste, and migration of contamination from other sites, may have caused soil or groundwater contamination.
For properties where asbestos-containing materials were identified or suspected, an operations and maintenance plan was generally prepared and implemented. 11 Historical operations at or near some of our properties, including the presence of underground or above ground storage tanks, various sites uses that involved hazardous substances, the landfilling of hazardous substances and solid waste, and migration of contamination from other sites, may have caused soil or groundwater contamination.
Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets at the historical cost of the property as the projects or phases of projects are placed in service.
Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets as the projects or phases of projects are placed in service. We did not have any properties or undeveloped land held for sale at December 31, 2024.
As of December 31, 2023, all of our properties, development projects and redevelopment projects were 100% owned, excluding four office properties owned by three consolidated property partnerships. 11 Human Capital Resources As of December 31, 2023, we employed 248 people through the Operating Partnership and Kilroy Realty TRS, Inc. We believe that relations with our employees are good.
As of December 31, 2024, all of our properties and development and redevelopment projects were 100% owned, excluding four office properties owned by three consolidated property partnerships. Human Capital Resources As of December 31, 2024, we employed 229 people through the Operating Partnership.
We define properties in the tenant improvement phase as office and life science properties that we are developing or redeveloping where the project has reached cold shell condition and is ready for tenant improvements, which may require additional major base building construction before being placed in service.
We define a property in the tenant improvement phase as a development or redevelopment property where the project has reached “cold shell condition” and is ready for tenant improvements, which may require additional major base building modifications before being placed in service.
Depending on the age of the property, the Phase I may have included an assessment of asbestos-containing materials or a separate hazardous materials survey may have been conducted. For properties where asbestos-containing materials were identified or suspected, an operations and maintenance plan was generally prepared and implemented.
Depending on the age of the property, the Phase I may have included an assessment of asbestos-containing materials or a separate hazardous materials survey may have been conducted.
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’s approach to modern business environments is designed to drive creativity and productivity for some of the world’s leading technology, entertainment, life science, and business services companies, and we have been consistently recognized for our leadership in sustainability and building operations.
As a result of our commitment to sustainability, we have consistently received high rankings in sustainability performance by the Global Real Estate Sustainability Benchmark (“GRESB”). In 2023, we were proud to be named the GRESB Regional Sector Leader in the Americas for Development (Diversified), earning the highly competitive GRESB 5 Star designation.
As a result of our commitment to sustainability, we have consistently received high rankings in sustainability performance by the Global Real Estate Sustainability Benchmark (“GRESB”). In 2024, we were proud to earn the highly competitive GRESB 5 Star designation for both our standing assets and development portfolio. We have been recognized with the U.S.
We aim to incorporate green lease language into all of our new leases, and the majority of our leases also include a cost recovery clause for resource-efficiency related capital expenditures.
Many of our existing and prospective tenants have ambitious sustainability targets of their own, and we engage with tenants on a range of sustainability topics throughout each year. We aim to incorporate green lease language into all of our new leases, and the majority of our leases also include a cost recovery clause for resource-efficiency related capital expenditures.
As of December 31, 2023, the following properties were excluded from our stabilized portfolio: Number of Properties/Projects Estimated Rentable Square Feet (1) In-process development projects - under construction 1 875,000 In-process redevelopment projects - under construction 2 100,000 ________________________ (1) Estimated rentable square feet upon completion. 5 Our stabilized portfolio also excludes our future development pipeline, which as of December 31, 2023, was comprised of eight future development sites, representing approximately 64 gross acres of undeveloped land.
As of December 31, 2024, the following properties were excluded from our stabilized portfolio: Number of Properties/Projects Estimated Rentable Square Feet (1) In-process redevelopment projects - tenant improvement 2 100,000 In-process development projects - under construction 1 875,000 ________________________ (1) Estimated rentable square feet upon completion.
Our financing strategies include: • maintaining financial flexibility, including a low secured-to-unsecured debt ratio; • maximizing our ability to access a variety of both public and private capital sources; • maintaining a staggered debt maturity schedule in which the maturity dates of our debt are spread over several years to limit risk exposure at any particular point in the capital and credit market cycles; • completing financing in advance of capital needs; • managing interest rate exposure by primarily financing on a fixed-rate basis; and • maintaining an investment grade credit rating.
Our financing strategies include: • maintaining financial flexibility, including a significant unencumbered asset base; • maximizing our ability to access a variety of public and private capital sources; • maintaining a staggered debt maturity schedule to limit risk exposure at any particular point in the capital and credit market cycles; • completing financing in advance of capital needs; • managing interest rate exposure by primarily financing on a fixed-rate basis; and • maintaining an investment grade credit rating. 8 We utilize multiple sources of capital, including borrowings under our unsecured revolving credit facility and our unsecured term loan facility, proceeds from the issuance of public or private debt or equity securities, and other bank and/or institutional borrowings, and our capital recycling program.
We own, develop, acquire and manage real estate assets, consisting primarily of Class A properties in Los Angeles, San Diego, the San Francisco Bay Area, Seattle and Austin, which we believe have strategic advantages and strong barriers to entry.
The Company owns, develops, acquires, and manages real estate assets, consisting primarily of premier properties in Los Angeles, San Diego, the San Francisco Bay Area, Seattle, and Austin, which we believe have strategic advantages and strong barriers to entry. The Company qualifies as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).
We recognize the value of our employees to our business and believe that our human capital development goals and initiatives demonstrate our commitment to enhancing employee growth, satisfaction, and wellness while maintaining a collaborative and inclusive culture.
We believe our people are our greatest resource and managing and developing talent is our most important responsibility. Our human capital development goals and initiatives demonstrate our commitment to enhancing employee growth, satisfaction, and wellness while maintaining a collaborative and inclusive culture.
For further discussion of the potential impact of competitive conditions on our business, see “Item 1A. Risk Factors.” 10 Segment and Geographic Financial Information During 2023 and 2022, we had one reportable segment, our office and life science properties segment. For information about our office property revenues and long-lived assets and other financial information, see “Item 7.
For further discussion of the potential impact of competitive conditions on our business, see “Item 1A. Risk Factors.” Segment and Geographic Financial Information During 2024 and 2023, we had one reportable segment. See Note 26 “Segments” to our consolidated financial statements included in this report for information regarding our reportable segment. For information, see “Item 7.
While many companies leverage a mix of competitive salaries and ancillary benefits to attract and retain their people, we have gone beyond those traditional structures and placed more emphasis on offering an expanded comprehensive benefits program as noted above, as well as offering other benefits, including fully funded life and disability insurance, enhanced paid pregnancy and parental leave benefits, parental leave coaching, and well-being programming and activities coordinated by the company that align with our core values of Belong, Connect and Progress.
While many companies leverage a mix of competitive salaries and ancillary benefits to attract and retain their people, we have gone beyond those traditional structures and placed more emphasis on offering an expanded comprehensive benefits program as noted above.
Business and Growth Strategies Growth Strategies . We believe that a number of factors and strategies will enable us to continue to achieve our objectives of long-term sustainable growth in Net Operating Income (defined below) and FFO (defined below) as well as maximization of long-term stockholder value.
We believe that a number of strategies will enable us to continue to achieve our objectives of long-term sustainable growth in Net Operating Income (defined below) and FFO (defined below), and the maximization of long-term stockholder value, including: • Operating strategies • Development and redevelopment strategies • Capital recycling strategies • Financing strategies • Sustainability strategies “Net Operating Income” is defined as consolidated operating revenues (rental income and other property income) less consolidated operating expenses (property expenses, real estate taxes and ground leases).
We expect that our significant working relationships with tenants, municipalities and landowners on the West Coast and in Austin, Texas will give us further access to development and redevelopment opportunities.
We expect that our significant working relationships with tenants, municipalities, and landowners on the West Coast and in Austin, Texas will give us further access to additional opportunities in the future. Capital Recycling Strategies. We believe we are well-positioned to acquire and/or dispose of properties due to our extensive experience and proven track record of capital allocation.
We pursue a variety of strategies to drive energy efficiency across the portfolio, such as utility use monitoring, systematic energy auditing, mechanical, lighting and other building upgrades, optimizing operations and engaging tenants. We identify climate change as a risk to our Company, its tenants and our other stakeholders and a key driver in long-term strategic business decisions.
We pursue a variety of strategies to drive energy efficiency across the portfolio, such as utility use monitoring, systematic energy auditing, mechanical, lighting, and other building upgrades, optimizing operations and engaging tenants. We collaborate with our tenants on efforts to reduce their energy and water consumption and increase recycling diversion and compost rates.
Aman as our new Chief Executive Officer and a director on our Board, effective January 22, 2024. Following her appointment, women comprise 38% of our directors. Employee Health and Wellness. The physical and mental health and wellness of our employees is of central importance to our culture.
Aman as our new Chief Executive Officer and a director on our Board, effective January 22, 2024. Following her appointment, three of our eight directors (or 38%) are women. In addition, in May 2024, we announced the appointment of Daryl J.
Our stabilized portfolio of operating properties was comprised of the following properties at December 31, 2023: Number of Buildings Rentable Square Feet Number of Tenants Percentage Occupied (1) Percentage Leased Stabilized Office Properties (2) 121 17,044,128 410 85.0 % 86.4 % ________________________ (1) Represents economic occupancy. (2) Includes stabilized life science and retail space.
Our stabilized portfolio of operating properties was comprised of the following properties at December 31, 2024: Number of Buildings Rentable Square Feet Number of Tenants Percentage Occupied (1) Stabilized Office Properties (2) 123 17,142,721 428 82.8 % ________________________ (1) Represents economic occupancy for space where we have achieved revenue recognition for the associated lease agreements.
We evaluate our group health and ancillary benefits annually to ensure our benefits package is robust and competitive. We are proud to offer several comprehensive medical, dental, and vision benefit programs to our employees and their families, with over 90% of the premiums absorbed by the Company.
The physical and mental health and well-being of our employees is of central importance to our culture. We evaluate our health and ancillary benefits annually to ensure our benefits package is robust and competitive. We are proud to offer a comprehensive health benefits program that provides employees and their families with care and coverage built around their total health.
The company-wide initiative gave our team enhanced opportunities to connect with local organizations and meaningful causes in the spirit of community enrichment and employee volunteerism. Over 165 employees assisted 18 organizations, dedicating more than 1,000 hours, almost triple the number of volunteer hours provided in 2022. 12 Environmental Regulations and Potential Liabilities Government Regulations Relating to the Environment.
Over 152 employees assisted 18 organizations, dedicating more than 1,200 hours, a 17% increase in number of volunteer hours provided versus 2023. Environmental Regulations and Potential Liabilities Government Regulations Relating to the Environment.
We periodically conduct wellness surveys to help us better tailor our employee health and wellness programs. In 2023, we selected a new Employee Assistance Program and continued our focus and support of mental health and wellness by providing our employees education on self-care and offering an increased variety of programming.
Our enhanced Employee Assistance Program helps support mental health and wellness and we continue to focus on providing a variety of programming in this area.
We also conduct annual performance and career development reviews for all employees. Diversity and Inclusion. We are committed to cultivating a culture of inclusion. To emphasize this commitment, we have developed programming to promote workplace diversity and inclusion and we continue to require mandatory unconscious bias training for all employees.
To emphasize this commitment, we have developed programming to promote workplace diversity and inclusion, and we continue to require mandatory unconscious bias training for all employees. As of December 31, 2024, our workforce was 56% female and 46% was ethnically diverse. In December 2023, we announced the appointment of Angela M.
We support the continual growth and development of our employees through various training and education programs throughout their tenure at the Company, from onboarding to skill building to leadership development. During 2023, across all teams and regions, employees participated in various training and developmental opportunities including virtual workshops, in-person sessions, “lunch and learns”, online webinars, and conferences.
During 2024, across all teams and regions, employees participated in various training and developmental opportunities, including virtual workshops, self-paced training, in-person sessions, “lunch and learns,” online webinars, and conferences. We also conducted annual competency-based performance assessments and talent development plans for all employees. Employee Health and Wellness.
We have been recognized with the US EPA ENERGY STAR ® Partner of the Year Sustained Excellence Award for the last eight years, Nareit’s Leader in the Light Award in the Listed Office category for eight of the last ten years and Nareit’s Leader in the Light Most Innovative award in 2018 and 2020.
EPA ENERGY STAR ® Partner of the Year Sustained Excellence Award for the last nine years, and the U.S. EPA’s National Top 100 list of largest green power users. We have also been included on Newsweek’s list of America’s Most Responsible Companies since 2020, and in 2024 Kilroy was awarded the Green Lease Leader of the Decade award.
We are actively pursuing LEED Gold certification for approximately 946,000 square feet of recently stabilized and under construction office and life science space. Reducing energy use year over year is an ongoing aspect of our operational strategy.
We are actively pursuing LEED Gold certification for one approximately 875,000 square foot office and life science project under construction. We identify climate change as a risk to our Company, its tenants, and our other stakeholders.
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Class A real estate encompasses attractive and efficient buildings of high quality that are attractive to tenants, are well-designed and constructed with above-average material, workmanship and finishes and are well-maintained and managed. We qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).
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(2) Includes stabilized life science and retail space.
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During the year ended December 31, 2023, we added two development projects to our stabilized portfolio consisting of two buildings totaling 829,591 square feet of office space in San Diego, California and Austin, Texas. We did not have any properties held for sale at December 31, 2023.
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Our stabilized portfolio also excludes our future development pipeline, which, as of December 31, 2024, was comprised of eight future development sites, representing approximately 64 gross acres of undeveloped land.
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These factors and strategies include: • the quality, physical characteristics and operating sustainability of our properties, as well as our geographic presence in technology and life science market clusters; • our ability to efficiently manage our assets through our seasoned management team, which possesses core capabilities in all aspects of real estate ownership, including property management, leasing, marketing, financing, accounting, legal, and construction and development management; • our strong financial position that has and will continue to allow us to pursue attractive acquisition and development and redevelopment opportunities; • our access to development, redevelopment, acquisition and leasing opportunities as a result of our extensive experience and significant working relationships with major West Coast property owners, brokers, corporate tenants, municipalities and landowners given our over 75-year presence in the West Coast markets; • our ability to capitalize on inflection points in real estate cycles to add high quality assets to our portfolio at substantial discounts to long-term value through acquisition activity or to dispose of non-strategic assets to harvest attractively priced capital embedded in our portfolio.
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Against the backdrop of market volatilities, we intend to evaluate opportunities based on: • submarket dynamics for the property being evaluated, which may include job growth of companies or industries located in that area and/or current or future competitive supply; • physical characteristics of the property, which help determine the revenue growth potential over time, as well as the capital required to maintain and/or grow that revenue; and • investment returns, including both the in-place income and the future income, factoring in projections of occupancy and rents over time.
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Our acquisitions may include expansions of our product offerings into new submarkets where we believe operating and fundamental synergies provide us with a competitive advantage; and • our development and redevelopment program and our future development pipeline of undeveloped land sites (see “Item 7.
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We manage our properties to offer the maximum degree of utility and operational efficiency to our tenants. Reducing energy use year over year is an ongoing aspect of our operational strategy.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations —Factors That May Influence Future Results of Operations” for additional information pertaining to the Company’s in-process and future development pipeline). “Net Operating Income” is defined as consolidated operating revenues (rental income and other property income) less consolidated operating expenses (property expenses, real estate taxes and ground leases).
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Climate-related risks are governed by the board of directors through the CSR&S Committee and by management through a newly established ESG Steering Committee which includes members from Asset Management, Development & Construction, Finance, Accounting, Human Resources, Investments, Leasing, Legal, and Sustainability. We are proud to have achieved carbon neutral operations since 2020.
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We cannot ensure that we will be able to successfully develop or redevelop any of our properties or that we will have access to additional development or redevelopment opportunities in the future. 8 Acquisition Strategies.
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Our annual sustainability report includes additional detail on our carbon neutral operations strategy, other voluntary sustainability goals, as well as portfolio-wide energy, carbon, water, and waste data which are subject to a limited assurance process conducted by an independent third party. 9 Significant Tenants As of December 31, 2024, our 20 largest tenants in terms of annualized base rental revenues represented approximately 53.6% of our total annualized base rental revenues, defined as annualized monthly contractual rents from existing tenants as of December 31, 2024.
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We believe we are well-positioned to acquire properties and future development and redevelopment opportunities as the result of our extensive experience, strong financial position and ability to access capital.
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As a result, we focus on recruiting and retaining talent based on merit without discrimination on the basis of any legally protected characteristic. We strive to cultivate a culture of engagement and inclusion, and we believe this commitment will allow us to attract and retain a highly qualified workforce to better serve our stakeholders.
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We continue to focus on growth opportunities in West Coast and Austin, Texas markets populated by knowledge and creative-based tenants in a variety of industries, including technology, media, healthcare, life sciences, entertainment and professional services.
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Carter as a member of our Board, resulting in 12.5% of our directors being racially or ethnically diverse. 10 Training and Education. We support the continual growth and development of our employees through various training and education programs throughout their tenure at the Company, offering a portfolio of learning experiences in various modalities to elevate their knowledge, skills, and abilities.
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Against the backdrop of market volatilities, we intend to maintain a strong balance sheet and selectively evaluate opportunities that: • provide attractive initial yields and/or significant potential for growth in cash flows from property operations; • present growth opportunities in our existing or new strategic markets; and • demonstrate the potential for improved performance through intensive management, repositioning, capital investment and leasing.
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Our offerings include a medical HDHP and two-PPO plans, dental, and vision, with over 90% of the premiums absorbed by the Company. Employees have the option to participate in an HSA with a generous Company contribution, and we offer medical FSA and dependent care FSA options.
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We utilize multiple sources of capital, including borrowings under our unsecured term loan facility and unsecured revolving credit facility, proceeds from the issuance of public or private debt or equity securities and other bank and/or institutional borrowings and our capital recycling program.
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Our package also includes Company paid group LTD, Life & AD&D, with voluntary employee paid buy-up options. We periodically conduct wellness surveys to help us better tailor our employee health and wellness programs and, during 2024, we added a new fitness reimbursement benefit meant to offset the costs associated with a gym membership or fitness class participation.
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We have also been included on Newsweek’s list of America’s Most Responsible Companies for the past five years. 9 We manage our properties to offer the maximum degree of utility and operational efficiency to our tenants. We collaborate with our tenants on efforts to reduce their energy and water consumption and increase recycling diversion and compost rates.
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Additional benefits include enhanced paid pregnancy and parental leave benefits, parental leave coaching, and well-being programming and activities, coordinated by the Company, that align with our core values of Belong, Connect, and Progress. Strong Communities and Healthy Planet.
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In 2018, the CSR&S Committee endorsed the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) and tasked management with assessing and reporting against climate related risk for the Company. We are proud to have achieved carbon neutral operations since 2020, and we expect to achieve this goal for a fourth consecutive year in 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf these conditions become more volatile or worsen, our business, results of operations, liquidity and financial condition and those of our tenants may be adversely affected as a result of the following consequences, among others: • the financial condition of our tenants, many of which are technology; life science and healthcare; finance, insurance and real estate; media and professional business and other service firms, may be adversely affected, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures or for other reasons; • significant job losses in the technology; life science and healthcare; finance, insurance and real estate; media and professional business and other service firm industries may occur, which may decrease demand for our office space, causing market rental rates and property values to be negatively impacted; • our ability to obtain financing on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities and increase our future interest expense; • reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; and • one or more lenders under the Operating Partnership’s unsecured revolving credit facility could refuse to fund their financing commitment to us or could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.
Biggest changeIf these conditions become more volatile or worsen, our business, results of operations, liquidity and financial condition, and those of our tenants may be adversely affected as a result of the following consequences, among others: • our ability to obtain financing on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities, and increase our future interest expense; • the financial condition of our tenants, many of which are technology; life science and healthcare; finance, insurance and real estate; media and professional business, and other service firms, may be adversely affected, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures, or for other reasons; • significant job losses in the technology; life science and healthcare; finance, insurance and real estate; media and professional business and other service firm industries may occur, which may decrease demand for our office space, causing market rental rates and property values to be negatively impacted; • reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; and • one or more lenders under the Operating Partnership’s unsecured revolving credit facility could refuse to fund their financing commitment to us or could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.
In addition to the 100 First LLC and 303 Second LLC strategic ventures and the Redwood City Partners, LLC venture, we may continue to co-invest in the future with third parties through partnerships, joint ventures or other entities, or through acquiring non-controlling interests in, or sharing responsibility for, managing the affairs of a property, partnership, joint venture or other entity, which may subject us to risks that may not be present with other methods of ownership, including the following: • we would not be able to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity, which would allow for impasses on decisions that could restrict our ability to sell or transfer our interests in such entity or such entity’s ability to transfer or sell its assets; • partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions, which could delay construction or development of a property or increase our financial commitment to the partnership or joint venture; • partners or co-venturers may pursue economic or other business interests, policies or objectives that are competitive or inconsistent with ours; 26 • if we become a limited partner or non-managing member in any partnership or limited liability company, and such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity; • disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business; and • we may, in certain circumstances, be liable for the actions of our third-party partners or co-venturers.
In addition to the 100 First LLC and 303 Second LLC strategic ventures and the Redwood City Partners, LLC venture, we may continue to co-invest in the future with third parties through partnerships, joint ventures, or other entities, or through acquiring non-controlling interests in, or sharing responsibility for, managing the affairs of a property, partnership, joint venture, or other entity, which may subject us to risks that may not be present with other methods of ownership, including the following: • we would not be able to exercise sole decision-making authority regarding the property, partnership, joint venture, or other entity, which would allow for impasses on decisions that could restrict our ability to sell or transfer our interests in such entity or such entity’s ability to transfer or sell its assets; • partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions, which could delay construction or development of a property or increase our financial commitment to the partnership or joint venture; • partners or co-venturers may pursue economic or other business interests, policies or objectives that are competitive or inconsistent with ours; • if we become a limited partner or non-managing member in any partnership or limited liability company, and such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity; • disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business; and • we may, in certain circumstances, be liable for the actions of our third-party partners or co-venturers.
We may be unable to successfully complete and operate acquired, developed and redeveloped properties, and it is possible that: • we may be unable to lease acquired, developed or redeveloped properties on lease terms projected at the time of acquisition, development or redevelopment or within budgeted timeframes; • the operating expenses at acquired, developed or redeveloped properties may be greater than projected at the time of acquisition, development or redevelopment, resulting in our investment being less profitable than we expected; • we may not commence or complete development or redevelopment properties on schedule or within budgeted amounts or at all; • we may not be able to develop or redevelop the estimated square footage and other features of our development and redevelopment properties; • we may suspend development or redevelopment projects after construction has begun due to changes in economic conditions or other factors, and this may result in the write-off of costs, payment of additional costs or increases in overall costs when the development or redevelopment project is restarted; • we may expend funds on and devote management’s time to acquisition, development or redevelopment properties that we may not complete and as a result we may lose deposits or fail to recover expenses already incurred; • we may encounter delays or refusals in obtaining all necessary zoning, land use, and other required entitlements, and building, occupancy, and other required governmental permits and authorizations; • we may encounter delays or unforeseen cost increases associated with building materials or construction services resulting from trade tensions, disruptions, tariffs, duties or restrictions or an outbreak of an epidemic or pandemic; 25 • we may encounter delays, refusals, unforeseen cost increases and other impairments resulting from third-party litigation; and • we may fail to obtain the financial results expected from properties we acquire, develop or redevelop.
We may be unable to successfully complete and operate acquired, developed, and redeveloped properties, and it is possible that: • we may be unable to lease acquired, developed, or redeveloped properties on lease terms projected at the time of acquisition, development, or redevelopment, or within budgeted timeframes; • the operating expenses at acquired, developed, or redeveloped properties may be greater than projected at the time of acquisition, development, or redevelopment, resulting in our investment being less profitable than we expected; • we may not commence or complete development or redevelopment properties on schedule or within budgeted amounts or at all; • we may not be able to develop or redevelop the estimated square footage and other features of our development and redevelopment properties; • we may suspend development or redevelopment projects after construction has begun due to changes in economic conditions or other factors, and this may result in the write-off of costs, payment of additional costs, or increases in overall costs when the development or redevelopment project is restarted; • we may expend funds on and devote management’s time to acquisition, development, or redevelopment properties that we may not complete and as a result we may lose deposits or fail to recover expenses already incurred; • we may encounter delays or refusals in obtaining all necessary zoning, land use, and other required entitlements, and building, occupancy, and other required governmental permits and authorizations; • we may encounter delays or unforeseen cost increases associated with building materials or construction services resulting from trade tensions, disruptions, tariffs, duties or restrictions, or an outbreak of an epidemic or pandemic; • we may encounter delays, refusals, unforeseen cost increases, and other impairments resulting from third-party litigation; and • we may fail to obtain the financial results expected from properties we acquire, develop, or redevelop.
Events and conditions applicable to owners and operators of real estate that are beyond our control and could impact our economic performance and the value of our real estate assets may include: • local oversupply or reduction in demand for office, mixed-use or other commercial space, which may result in decreasing rental rates and greater concessions to tenants; • inability to collect rent from tenants; • vacancies or inability to rent space on favorable terms or at all; • inability to finance property development and acquisitions on favorable terms or at all; • increased operating costs, including insurance premiums, utilities and real estate taxes; • costs of complying with changes in governmental regulations; • the relative illiquidity of real estate investments; • declines in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing; • changing submarket demographics; • changes in space utilization by our tenants due to technology, economic conditions and business culture, including a shift away from in-person work environments to flexible work arrangements and remote work; • the development of harmful mold or other airborne toxins or contaminants that could damage our properties or expose us to third-party liabilities; and • property damage resulting from seismic activity or other natural disasters.
Events and conditions applicable to owners and operators of real estate that are beyond our control and could impact our economic performance and the value of our real estate assets may include: • local oversupply or reduction in demand for office, mixed-use, or other commercial space, which may result in decreasing rental rates and greater concessions to tenants; • inability to collect rent from tenants; • vacancies or inability to rent space on favorable terms or at all; • inability to finance property development and acquisitions on favorable terms or at all; • increased operating costs, including insurance premiums, utilities, and real estate taxes; • costs of complying with changes in governmental regulations; • the relative illiquidity of real estate investments; • declines in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing; • changing submarket demographics; • changes in space utilization by our tenants due to technology, economic conditions, and business culture, including a shift away from in-person work environments to flexible work arrangements and remote work; 19 • the development of harmful mold or other airborne toxins or contaminants that could damage our properties or expose us to third-party liabilities; and • property damage resulting from seismic activity or other natural disasters.
Our ability to acquire properties on favorable terms and successfully operate them is subject to various risks, including the following: • we may potentially be unable to acquire a desired property because of competition from other real estate investors with significant capital, including both publicly traded and private REITs, institutional investment funds and other real estate investors; 24 • even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price; • even if we enter into agreements for the acquisition of a desired property, we may be unable to complete such acquisitions because they remain subject to customary conditions to closing, including the completion of due diligence investigations to management’s satisfaction; • we may be unable to finance acquisitions on favorable terms or at all; • we may spend more than budgeted amounts in operating costs or to make necessary improvements or renovations to acquired properties; • we may lease acquired properties at economic lease terms different than projected; • we may acquire properties that are subject to liabilities for which we may have limited or no recourse; and • we may be unable to complete an acquisition after making a nonrefundable deposit and incurring certain other acquisition-related costs.
Our ability to acquire properties on favorable terms and successfully operate them is subject to various risks, including the following: • we may potentially be unable to acquire a desired property because of competition from other real estate investors with significant capital, including both publicly traded and private REITs, institutional investment funds, and other real estate investors; • even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price; • even if we enter into agreements for the acquisition of a desired property, we may be unable to complete such acquisitions because they remain subject to customary conditions to closing, including the completion of due diligence investigations to management’s satisfaction; • we may be unable to finance acquisitions on favorable terms or at all; • we may spend more than budgeted amounts in operating costs or to make necessary improvements or renovations to acquired properties; • we may lease acquired properties at economic lease terms different than projected; • we may acquire properties that are subject to liabilities for which we may have limited or no recourse; and • we may be unable to complete an acquisition after making a nonrefundable deposit and incurring certain other acquisition-related costs.
The instruments and agreements governing some of our outstanding indebtedness (including borrowings under the Operating Partnership’s unsecured term loan facility, unsecured revolving credit facility and note purchase agreements) contain provisions that require us to repurchase for cash or repay that indebtedness under specified circumstances or upon the occurrence of specified events (including upon the acquisition by any person or group of more than a specified percentage of the aggregate voting power of all the Company’s issued and outstanding voting stock, upon certain changes in the composition of a majority of the members of the Company’s board of directors, if the Company or one of its wholly-owned subsidiaries ceases to be the sole general partner of the Operating Partnership or if the Company ceases to own, directly or indirectly, at least 60% of the voting equity interests in the Operating Partnership), and our future debt agreements and debt securities may contain similar provisions or may require that we repay or repurchase or offer to repurchase for cash the applicable indebtedness under specified circumstances or upon the occurrence of specified changes of control of the Company or the Operating Partnership or other events.
The instruments and agreements governing some of our outstanding indebtedness (including borrowings under the Operating Partnership’s unsecured revolving credit facility, unsecured term loan facility, and note purchase agreements) contain provisions that require us to repurchase for cash or repay that indebtedness under specified circumstances or upon the occurrence of specified events (including upon the acquisition by any person or group of more than a specified percentage of the aggregate voting power of all the Company’s issued and outstanding voting stock, upon certain changes in the composition of a majority of the members of the Company’s board of directors, if the Company or one of its wholly-owned subsidiaries ceases to be the sole general partner of the Operating Partnership, or if the Company ceases to own, directly or indirectly, at least 60% of the voting equity interests in the 30 Operating Partnership), and our future debt agreements and debt securities may contain similar provisions or may require that we repay or repurchase or offer to repurchase for cash the applicable indebtedness under specified circumstances or upon the occurrence of specified changes of control of the Company or the Operating Partnership or other events.
We are susceptible to adverse developments in the economic and regulatory environments of California, Seattle and Austin, Texas (such as periods of economic slowdown or recession, business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes, costs of complying with governmental regulations or increased regulation and other factors), as well as adverse weather conditions and natural disasters that occur in those areas (such as earthquakes, wind, landslides, droughts, fires, floods and other events).
We are susceptible to adverse developments in the economic and regulatory environments of California, Seattle, Washington, and Austin, Texas (such as periods of economic slowdown or recession, business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes, costs of complying with governmental regulations or increased regulation, and other factors), as well as adverse weather conditions and natural disasters that occur in those areas (such as earthquakes, wind, landslides, droughts, fires, floods, and other events).
As a result, we are experiencing longer lease negotiation periods prior to signing deals. Our office tenants may elect to not renew their leases, or to renew them for less space than they currently 19 occupy or shorter terms, which could increase vacancy, place downward pressure on occupancy, rental rates and income and property valuations.
As a result, we are experiencing longer lease negotiation periods prior to signing deals. Our office tenants may elect to not renew their leases, or to renew them for less space than they currently occupy or for shorter terms, which could increase vacancy, place downward pressure on occupancy, rental rates and income, and property valuations.
From time to time, we have significant cash balances that we invest in a variety of short-term investments that are intended to preserve principal value and maintain a high degree of liquidity while providing current income. These investments may include (either directly or indirectly): 27 • direct obligations issued by the U.S.
From time to time, we have significant cash balances that we invest in a variety of short-term investments that are intended to preserve principal value and maintain a high degree of liquidity while providing current income. These investments may include (either directly or indirectly): • direct obligations issued by the U.S.
Office tenants are still active in the leasing markets but are more selective in making rental decisions, and relocating and renewing tenants are pursuing space efficiencies, which may be accompanied by reductions in the amount of space they are leasing due to the impact of hybrid work and/or a desire to manage real estate expenses.
Office tenants are still active in the leasing markets but are more selective in making rental decisions, and both relocating and renewing tenants are pursuing space efficiencies, which may be accompanied by reductions in the amount of space they are leasing due to the impact of hybrid work and/or a desire to manage real estate expenses.
The loss of the ownership rights to these properties or an increase of rental expense could have a material adverse effect on our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
The loss of the ownership rights to these properties or an increase of rental expense could have a material adverse effect on our financial condition, results of operations, cash 25 flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
Certain increases in the costs of construction materials can often be managed in our development and redevelopment projects through either general budget contingencies built into our overall construction costs estimates for each of our projects or guaranteed maximum price construction contracts, which stipulate a maximum price for certain construction costs and shift inflation risk to our construction general contractors.
Certain increases in the costs of 17 construction materials can often be managed in our development and redevelopment projects through either general budget contingencies built into our overall construction costs estimates for each of our projects or guaranteed maximum price construction contracts, which stipulate a maximum price for certain construction costs and shift inflation risk to our construction general contractors.
We face risks associated with perceived or actual security breaches, whether through cyber attacks or cyber intrusions over the internet, malware, computer viruses, IT bugs or malfunctions, 28 persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems or those of our service providers.
We face risks associated with perceived or actual security breaches, whether through cyber attacks or cyber intrusions over the internet, malware, computer viruses, IT bugs or malfunctions, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems or those of our service providers.
Because of these distribution requirements, the Operating Partnership is required to make distributions to the Company, and we may not be able to fund future capital needs, including any necessary acquisition financing, from operating cash flows. Consequently, management relies on third-party sources of capital to fund our capital needs.
Because of these distribution requirements, the Operating Partnership is required to make distributions to the Company, and we 32 may not be able to fund future capital needs, including any necessary acquisition financing, from operating cash flows. Consequently, management relies on third-party sources of capital to fund our capital needs.
Increases in the amount of debt outstanding would result in an increase in our debt service costs, which could adversely affect cash flows and 35 our ability to pay dividends and distributions to our security holders. Higher leverage also increases the risk of default on our obligations and limits our ability to obtain additional financing in the future.
Increases in the amount of debt outstanding would result in an increase in our debt service costs, which could adversely affect cash flows and our ability to pay dividends and distributions to our security holders. Higher leverage also increases the risk of default on our obligations and limits our ability to obtain additional financing in the future.
Additionally, inflation may have a negative effect on the construction costs necessary to complete our development and redevelopment projects, including, but not limited to, costs of construction materials, labor and services from third-party contractors and suppliers. We rely on a number of third-party suppliers and contractors to 18 supply raw materials, skilled labor and services for our construction projects.
Additionally, inflation may have a negative effect on the construction costs necessary to complete our development and redevelopment projects, including, but not limited to, costs of construction materials, labor, and services from third-party contractors and suppliers. We rely on a number of third-party suppliers and contractors to supply raw materials, skilled labor, and services for our construction projects.
For additional information on our scheduled lease expirations, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations —Factors That May Influence Future Results of Operations.” We are subject to governmental regulations that may affect the development, redevelopment and use of our properties .
For additional information on our scheduled lease expirations, see “Item 7. Management’s 20 Discussion and Analysis of Financial Condition and Results of Operations —Factors That May Influence Future Results of Operations.” We are subject to governmental regulations that may affect the development, redevelopment, and use of our properties .
Any limitation on our ability to make distributions to our stockholders, whether as a result of these provisions in the unsecured revolving credit facility, the unsecured term loan facility, the note purchase agreements or otherwise, could have a material adverse effect on the market value of our common stock.
Any limitation on our ability to make distributions to our 31 stockholders, whether as a result of these provisions in the unsecured revolving credit facility, the unsecured term loan facility, the note purchase agreements or otherwise, could have a material adverse effect on the market value of our common stock.
If releases from our sites migrate offsite, or if our site redevelopment activities cause or contribute to a migration of hazardous substances, neighbors or others could make claims against us, such as for property damage, personal injury, cost recovery, or natural resources damage.
If releases from our sites migrate offsite, or if our site redevelopment activities cause or 22 contribute to a migration of hazardous substances, neighbors or others could make claims against us, such as for property damage, personal injury, cost recovery, or natural resources damage.
We manage a portion of our exposure to interest rate risk by accessing debt with staggered maturities, and we may in the future mitigate this risk through the use of derivative instruments, including interest rate swap agreements 33 or other interest rate hedging agreements, including swaps, caps and floors.
We manage a portion of our exposure to interest rate risk by accessing debt with staggered maturities, and we may in the future mitigate this risk through the use of derivative instruments, including interest rate swap agreements or other interest rate hedging agreements, including swaps, caps, and floors.
Any of these events or circumstances could have a material adverse effect on our financial condition, results of operations, cash flows, the trading price of our securities and our ability to satisfy our debt service obligations and to 32 pay dividends and distributions to our security holders.
Any of these events or circumstances could have a material adverse effect on our financial condition, results of operations, cash flows, the trading price of our securities and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
Management’s Discussion and Analysis of Financial Condition and Results of Operations —Factors That May Influence Future Results of Operations.” Loss of key executive officers or our inability to successfully transition key executive officers could harm our operations and financial performance, and adversely affect the quoted trading price of our securities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations —Factors That May Influence Future Results of Operations.” 29 Loss of key executive officers or our inability to successfully transition key executive officers could harm our operations and financial performance, and adversely affect the quoted trading price of our securities.
Like other businesses, we and our third-party service providers have been and expect to continue to be subject to attacks that result in unauthorized access, mishandling or misuse, computer viruses or malware, cyber attacks and other events of varying degrees.
Like other businesses, we and our third-party 27 service providers have been and expect to continue to be subject to attacks that result in unauthorized access, mishandling or misuse, computer viruses or malware, cyber attacks and other events of varying degrees.
Access to third-party sources of capital depends, in part, on general market conditions and the availability of credit, the market’s perception of our growth potential, our current and expected future earnings, our cash flows and cash distributions and the quoted trading price of our securities.
Access to third-party sources of capital depends, in part, on general market conditions and the availability of credit, the market’s perception of our growth potential, our current and expected future earnings, our cash flows and cash distributions, the quoted trading price of our securities, and our credit rating.
To qualify as a REIT for federal income tax purposes, the Company must continually satisfy tests concerning, among other things, the sources of its income, the nature and diversification of its assets, the amounts it distributes to its stockholders and the ownership of its capital stock.
To qualify as a REIT for federal income tax purposes, the Company must continually satisfy tests concerning, among other things, the sources of its income, the nature and diversification of 36 its assets, the amounts it distributes to its stockholders and the ownership of its capital stock.
We have not requested and do not plan to request a ruling from the Internal Revenue Service (“IRS”) regarding the Company’s qualification as a REIT. To maintain the Company’s REIT status, we may be forced to borrow funds during unfavorable market conditions.
We have not requested and do not plan to request a ruling from the Internal Revenue Service (“IRS”) regarding the Company’s qualification as a REIT. 35 To maintain the Company’s REIT status, we may be forced to borrow funds during unfavorable market conditions.
As a result, our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders may be adversely affected.
As a result, our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our 21 ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders may be adversely affected.
If we do not partner with such a developer, or if we choose to develop the space ourselves, we would be exposed to specific risks associated with the development and ownership of non-office/life science real estate.
If we do not partner with such a developer, or if we choose to develop the space ourselves, we would be exposed to 24 specific risks associated with the development and ownership of non-office/life science real estate.
No single stockholder may own, either actually or constructively, 34 absent a waiver from the board of directors, more than 7.0% (by value or by number of shares, whichever is more restrictive) of the Company’s outstanding common stock.
No single stockholder may own, either actually or constructively, absent a waiver from the board of directors, more than 7.0% (by value or by number of shares, whichever is more restrictive) of the Company’s outstanding common stock.
Dividends payable by REITs, including the Company, generally do not qualify for the reduced tax rates available for some dividends. “Qualified dividends” payable to U.S. stockholders that are individuals, trusts and 37 estates generally are subject to tax at preferential rates.
Dividends payable by REITs, including the Company, generally do not qualify for the reduced tax rates available for some dividends. “Qualified dividends” payable to U.S. stockholders that are individuals, trusts, and estates generally are subject to tax at preferential rates.
If we were not in compliance with material provisions of the ADA or other regulations affecting our properties, we 21 might be required to take remedial action, which could include making modifications or renovations to our properties.
If we were not in compliance with material provisions of the ADA or other regulations affecting our properties, we might be required to take remedial action, which could include making modifications or renovations to our properties.
The board of directors has waived the ownership limits with respect to John Kilroy, members of his family and some of their affiliated entities. These named individuals and entities may own either actually or constructively, in the aggregate, up to 19.6% of our outstanding common stock, excluding common units that are exchangeable into shares of common stock.
The board of directors has waived the ownership limits with respect to our former CEO, John Kilroy, members of his family and some of their affiliated entities. These named individuals and entities may own either actually or constructively, in the aggregate, up to 19.6% of our outstanding common stock, excluding common units that are exchangeable into shares of common stock.
Treasury; • obligations issued or guaranteed by the U.S. government or its agencies; • taxable municipal securities; • obligations (including certificates of deposits) of banks and thrifts; • commercial paper and other instruments consisting of short-term U.S. dollar denominated obligations issued by corporations and banks; • repurchase agreements collateralized by corporate and asset-backed obligations; • both registered and unregistered money market funds; and • other highly rated short-term securities.
Treasury; • obligations issued or guaranteed by the U.S. government or its agencies; • taxable municipal securities; • obligations (including certificates of deposit) of banks and thrifts; • commercial paper and other instruments consisting of short-term U.S. dollar denominated obligations issued by corporations and banks; • repurchase agreements collateralized by corporate and asset-backed obligations; • both registered and unregistered money market funds; and • other highly rated short-term securities.
Further, in order to comply with the varying state laws around data breaches, we must maintain adequate security measures, which require significant investments in resources and ongoing attention. Our business is also increasingly seeing the use of artificial intelligence to complement our decision making in order to improve our services and tailor our interactions.
Further, in order to comply with the varying state laws around data breaches, we must maintain adequate security measures, which require significant investments in resources and ongoing attention. Our business is also gradually seeing the use of artificial intelligence to complement our decision making in order to improve our services and tailor our interactions.
Properties —Significant Tenants.” 20 Our financial condition, results of operations, ability to borrow funds and cash flows would be adversely affected if any of our significant tenants fails to renew its lease(s), renew its lease(s) on terms less favorable to us, or becomes bankrupt or insolvent or otherwise unable to satisfy its lease obligations.
Properties —Significant Tenants.” Our financial condition, results of operations, ability to borrow funds, and cash flows would be adversely affected if any of our significant tenants fails to renew its lease(s), renew its lease(s) on terms less favorable to us, becomes bankrupt or insolvent, or is otherwise unable to satisfy its lease obligations.
As of December 31, 2023, we owned fourteen office buildings located on various land parcels and in various regions, which we lease individually on a long-term basis, and we may in the future invest in additional properties that are subject to ground leases or other similar restrictive arrangements.
As of December 31, 2024, we owned fourteen office buildings located on various land parcels and in various regions, which we lease individually on a long-term basis, and we may in the future invest in additional properties that are subject to ground leases or other similar restrictive arrangements.
The Operating Partnership’s $1.1 billion unsecured revolving credit facility, $520.0 million unsecured term loan facility and note purchase agreements contain financial covenants that could limit the amount of distributions payable by us on our common stock and any preferred stock we may issue in the future.
The Operating Partnership’s $1.1 billion unsecured revolving credit facility, $200.0 million unsecured term loan facility, and note purchase agreements contain financial covenants that could limit the amount of distributions payable by us on our common stock and any preferred stock we may issue in the future.
Other states have passed laws that will subject us to additional compliance and operational costs that will go into effect in 2024 and beyond, and other states are considering similar legislation regarding the collection, sharing, use and other processing of information related to individuals for marketing purposes or otherwise.
Other states have passed laws that will subject us to additional compliance and operational costs that will go into effect in 2025 and beyond, and other states are considering similar legislation regarding the collection, sharing, use, and other processing of information related to individuals for marketing purposes or otherwise.
We caution you not to place undue reliance on the potential density estimates for our undeveloped land holdings and/or any particular land parcel because they are based solely on our estimates, using data currently available to us, and our business plans as of December 31, 2023.
We caution you not to place undue reliance on the potential density estimates for our undeveloped land holdings and/or any particular land parcel because they are based solely on our estimates, using data currently available to us, and our business plans as of December 31, 2024.
Above market rental rates on some of our properties may force us to renew or re-lease expiring leases at rates below current lease rates. We cannot provide any assurance that leases will be renewed, available space will be re-leased or that our rental rates will be equal to or above the current rental rates.
Above market in-place rental rates on some of our properties may force us to renew or re-lease expiring leases at rates below current lease rates. We cannot provide any assurance that leases will be renewed, available space will be re-leased, or that our rental rates will be equal to or above the current rental rates.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. 38 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. 37 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
While we historically have acquired, developed and redeveloped office properties in California and Seattle markets, over the past two years we have acquired properties in Austin, Texas, where we currently have one stabilized office property and one future development project.
While we historically have acquired, developed, and redeveloped office properties in California and Seattle markets, over the past three years we have acquired properties in Austin, Texas, where we currently have one stabilized office property and one future development project.
Many of our costs, such as operating and general and administrative expenses, interest expense and real estate construction costs, as well as the value of our assets, could be adversely impacted by periods of heightened inflation. While inflation has moderated in the latter part of 2023, the consumer price index was at significantly elevated levels for most of the year.
Many of our costs, such as operating and general and administrative expenses, interest expense, and real estate construction costs, as well as the value of our assets, could be adversely impacted by periods of heightened inflation. While inflation has moderated in 2024, the consumer price index was at significantly elevated levels for most of the year.
As of December 31, 2023, there was no amount outstanding under our unsecured revolving credit facility and $520.0 million was outstanding under our unsecured term loan facility. However, we may borrow on the revolving credit facility, borrow additional amounts under the accordion feature of the term loan facility, or incur additional variable rate debt in the future.
As of December 31, 2024, there was no amount outstanding under our unsecured revolving credit facility and $200.0 million was outstanding under our unsecured term loan facility. However, we may borrow on the unsecured revolving credit facility, borrow additional amounts under the accordion feature of the unsecured term loan facility, or incur additional variable rate debt in the future.
These interest rate increases have increased the costs of our variable rate debt, and any further interest rate increases would increase our interest costs for any variable rate debt and for new debt, which could in turn make the financing of any development, redevelopment and acquisition activity costlier.
Further interest rate increases would increase our interest costs for any variable rate debt and for new debt, which could in turn make the financing of any development, redevelopment, and acquisition activity costlier.
These ratings are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that any rating will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant.
These ratings are subject to ongoing evaluation by credit rating agencies, and we cannot make assurances that any rating will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant.
As of December 31, 2023, as a percentage of our annualized base rental revenue for the stabilized portfolio, 54% of our tenants operated in the technology industry, 17% in the life science and health care industries, 8% in the finance, insurance and real estate industries, 7% in the media industry, 7% in the professional, business and other services industries and 7% in other industries.
As of December 31, 2024, as a percentage of our annualized base rental revenue for the stabilized portfolio, 54% of our tenants operated in the technology industry, 17% in the life science and health care industries, 9% in the professional, business, and other services industries, 7% in the media industry, 6% in the finance, insurance, and real estate industries, and 7% in other industries.
As of December 31, 2023, we had a $1.1 billion unsecured revolving credit facility and a $520.0 million unsecured term loan facility, each bearing interest at a variable rate on any amount drawn and outstanding.
As of December 31, 2024, we had a $1.1 billion unsecured revolving credit facility and a $200.0 million unsecured term loan facility, each bearing interest at a variable rate on any amount drawn and outstanding.
It is possible that the qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be currently taxable or that we may be unable to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange.
When possible and appropriate, we enter into Section 1031 Exchanges. It is possible that the qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be currently taxable or that we may be unable to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange.
As of December 31, 2023, we had accrued environmental remediation liabilities of approximately $76.6 million on our consolidated balance sheets in connection with certain of our in-process and future development projects. The accrued environmental remediation liabilities represent the costs we estimate we will incur when we commence development at various development acquisition sites.
As of December 31, 2024, we had accrued environmental remediation liabilities of approximately $72.0 million on our consolidated balance sheets in connection with certain of our in-process and future development projects. The accrued environmental remediation liabilities represent the costs we estimate we will incur when we commence development at various development acquisition sites.
Our total debt at December 31, 2023 represented 51.3% of our total market capitalization (which we define as the aggregate of our long-term debt and the market value of the Company’s common stock and the Operating Partnership’s common units of limited partnership interest, or common units, based on the closing price per share of the Company’s 31 common stock as of that date).
Our total debt at December 31, 2024 represented 49.0% of our total market capitalization (which we define as the aggregate of our long-term debt and the market value of the Company’s common stock and the Operating Partnership’s common units of limited partnership interest, or common units, based on the closing price per share of the Company’s common stock as of that date).
Downturns in tenants’ businesses may reduce our revenues and cash flows . For the year ended December 31, 2023, we derived approximately 98.9% of our revenues from rental income.
Downturns in tenants’ businesses may reduce our revenues and cash flows . For the year ended December 31, 2024, we derived approximately 98.5% of our revenues from rental income.
As of December 31, 2023, we had approximately 2.3 million aggregate rentable square feet, or 13.7% of our total stabilized portfolio located on these leased parcels.
As of December 31, 2024, we had approximately 2.3 million aggregate rentable square feet, or 13.6% of our total stabilized portfolio located on these leased parcels.
As of December 31, 2023, the Company had reserved for future issuance the following shares of common stock: 1,150,574 shares issuable upon the exchange, at the Company’s option, of the Operating Partnership’s common units; approximately 2.8 million shares remained available for grant under our 2006 Incentive Award Plan (see Note 16 “Share-Based and Other Compensation” to our consolidated financial statements included in this report); approximately 0.9 million shares issuable upon settlement of time-based RSUs; and a maximum of 1.8 million shares contingently issuable upon settlement of RSUs subject to the achievement of market and/or performance conditions.
As of December 31, 2024, 118,046,674 shares of the Company’s common stock were issued and outstanding. 34 As of December 31, 2024, the Company had reserved for future issuance the following shares of common stock: 1,150,574 shares issuable upon the exchange, at the Company’s option, of the Operating Partnership’s common units; approximately 2.6 million shares remained available for grant under our 2006 Incentive Award Plan (see Note 16 “Share-Based and Other Compensation” to our consolidated financial statements included in this report); approximately 0.8 million shares issuable upon settlement of time-based RSUs; and a maximum of 1.4 million shares contingently issuable upon settlement of RSUs subject to the achievement of market and/or performance conditions.
However, in the future, if events such as these (or other disruptions involving our or third-party IT networks and related systems) occur, or are perceived to occur, this could, among other things: • result in unauthorized access to, destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, including personally identifiable and account information; • result in disclosure of information that could be used to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; • result in unauthorized access to or changes to our financial accounting and reporting systems and related data; • result in the theft of funds; • result in our inability to maintain building systems relied on by our tenants; • require significant management attention and resources to remedy any damage that results; • subject us to regulatory penalties, private actions or claims for breach of contract, damages, credits, penalties or terminations of leases or other agreements; • increase our costs of operations; or • damage our reputation among our tenants, investors, and others. 29 These events could have an adverse impact on our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
However, in the future, if events such as these (or other disruptions involving our or third-party IT networks and related systems) occur, or are perceived to occur, this could, among other things: • result in unauthorized access to, destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, including personally identifiable and account information; • result in disclosure of information that could be used to compete against us or for disruptive, destructive, or otherwise harmful purposes and outcomes; • result in unauthorized access to or changes to our financial accounting and reporting systems and related data; • result in the theft of funds; • result in our inability to maintain building systems relied on by our tenants; • require significant management attention and resources to remedy any damage that results; • subject us to regulatory penalties, private actions or claims for breach of contract, damages, credits, penalties, or terminations of leases or other agreements; • increase our costs of operations; or • damage our reputation among our tenants, investors, and others.
However, our organizational documents do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. As of December 31, 2023, we had approximately $5.0 billion aggregate principal amount of indebtedness outstanding, which represented 51.3% of our total market capitalization. See “Item 7.
However, our organizational documents do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. As of December 31, 2024, we had approximately $4.6 billion aggregate principal amount of indebtedness outstanding, which represented 49.0% of our total market capitalization. See “Item 7.
If we cannot finance property acquisitions on favorable terms or operate acquired properties to meet financial expectations, our financial condition, results of operations, cash flows, the quoted trading price of our securities and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders could be adversely affected.
If we cannot finance property acquisitions on favorable terms or operate acquired properties to meet financial expectations, our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders could be adversely affected. 23 There are significant risks associated with property acquisitions as well as development and redevelopment.
Risks Related to Our Indebtedness We may not be able to meet our debt service obligations. As of December 31, 2023, we had approximately $5.0 billion aggregate principal amount of indebtedness, of which $929.7 million in principal payments, before the consideration of extension options, is expected to be paid during the year ending December 31, 2024.
Risks Related to Our Indebtedness We may not be able to meet our debt service obligations. As of December 31, 2024, we had approximately $4.6 billion aggregate principal amount of indebtedness, of which $606.2 million in principal payments, before the consideration of extension options, is expected to be paid during the year ending December 31, 2025.
Any adverse developments in the economy or real estate market in California and the surrounding region, or in Seattle or Austin, Texas or any decrease in demand for office space resulting from the California or Seattle or Austin, Texas regulatory or business environment could impact our ability to generate revenues sufficient to meet our operating expenses or other obligations, which would adversely impact our financial condition, results of operations, cash flows, the quoted trading price of our securities and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
Further, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if the properties were irreparable. 18 Any adverse developments in the economy or real estate market in California and the surrounding region, or in Seattle, Washington, or Austin, Texas or any decrease in demand for office space resulting from the California or Seattle, Washington, or Austin, Texas regulatory or business environment could impact our ability to generate revenues sufficient to meet our operating expenses or other obligations, which would adversely impact our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations, and to pay dividends and distributions to our security holders.
We depend upon significant tenants, and the loss of a significant tenant could adversely affect our financial condition, results of operations, ability to borrow funds and cash flows. As of December 31, 2023, our 15 largest tenants represented approximately 46.1% of total annualized base rental revenues on a prospective basis.
We depend upon significant tenants, and the loss of a significant tenant could adversely affect our financial condition, results of operations, ability to borrow funds, and cash flows. As of December 31, 2024, our 20 largest tenants represented approximately 53.6% of total annualized base rental revenues.
For example, in the United States, the Federal Trade Commission and state regulators enforce a variety of data privacy issues, such as promises made in privacy policies or failures to appropriately protect information about individuals, as unfair or deceptive acts or practices in or affecting commerce in violation of the Federal Trade Commission Act or similar state laws.
For example, in the United States, the Federal Trade Commission, and state regulators enforce a variety of data privacy issues, such as promises made in privacy policies or failures to appropriately protect information about individuals, as unfair or deceptive acts or practices in or affecting commerce in violation of the Federal Trade Commission Act or similar state laws. 28 In addition, many states have adopted new or modified privacy and security laws and regulations that apply to our business.
We had office space representing approximately 15.0% of the total square footage of our stabilized office properties that was not occupied as of December 31, 2023. In addition, leases representing approximately 7.3% and 4.8% of the leased rentable square footage of our properties are scheduled to expire in 2024 and 2025, respectively.
We had office space representing approximately 17.2% of the total square footage of our stabilized office properties that was not occupied as of December 31, 2024. In addition, leases representing approximately 5.2% and 14.0% of the leased rentable square footage of our properties are scheduled to expire in 2025 and 2026, respectively.
At December 31, 2023, 48% of our properties were leased to tenants on a triple net basis, 23% of our properties were leased to 17 tenants on a full service gross basis, 21% were leased to tenants on a modified gross basis, and 8% were leased to tenants on a modified net basis, in each case as a percentage of our annualized base rental revenue.
At December 31, 2024, 46% of our properties were leased to tenants on a triple net basis, 27% were leased to tenants on a 16 modified gross basis, 21% of our properties were leased to tenants on a full service gross basis, and 6% of our properties were leased to tenants on a modified net basis, in each case as a percentage of our annualized base rental revenue.
If anyone acquires shares in excess of any ownership limits without a waiver, the transfer to the transferee will be void with respect to the excess shares, the excess shares will be automatically transferred to a trust for the benefit of a qualified charitable organization, and the purported transferee or owner will have no rights with respect to those excess shares.
If anyone acquires shares in excess of any ownership limits without a waiver, the transfer to the transferee will be void with respect to the excess shares, the excess shares will be automatically transferred to a trust for the benefit of a qualified charitable organization, and the purported transferee or owner will have no rights with respect to those excess shares. 33 The Company’s charter contains provisions that may delay, deter, or prevent a change of control transaction.
Any failure or perceived failure by us to comply with applicable data privacy and security laws could result in proceedings or actions against us by governmental entities or others, subject us to fines, penalties, judgments and negative publicity, require us to change our business practices, increase our costs of operations and adversely affect our business. 30 The actual density of our undeveloped land holdings and/or any particular land parcel may not be consistent with our potential density estimates .
Any failure or perceived failure by us to comply with applicable data privacy and security laws could result in proceedings or actions against us by governmental entities or others, subject us to fines, penalties, judgments, and negative publicity, require us to change our business practices, increase our costs of operations, and adversely affect our business.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve Board. Since 2022, the Federal Reserve has raised interest rates in an effort to curb inflation.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve Board. Although the Federal Reserve began lowering interest rates in the second half of 2024, it may may increase rates in the future in an effort to curb inflation.
Management cannot predict whether future issuances of shares of the Company’s common stock, or the availability of shares for resale in the open market will result in decreasing the market price per share of the Company’s common stock. As of December 31, 2023, 117,239,558 shares of the Company’s common stock were issued and outstanding.
Management cannot predict whether future issuances of shares of the Company’s common stock, or the availability of shares for resale in the open market will result in decreasing the market price per share of the Company’s common stock.
If we experience a loss that is uninsured or which exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Further, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if the properties were irreparable.
If we experience a loss that is uninsured or which exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties.
Climate change could trigger extreme weather and changes in precipitation, temperature, and air quality, all of which may result in physical damage to, or a decrease in demand for, our properties located in the areas affected by these conditions.
Climate change could trigger changes in precipitation, temperature, and air quality, and cause increases in both the frequency and severity of extreme weather events and natural disasters (including, but not limited to, storms, flooding, drought, wildfires, and extreme temperatures), all of which may result in physical damage to, or a decrease in demand for, our properties located in the areas affected by these conditions.
Climate change may also have indirect effects on our business by increasing the cost of, or decreasing the availability of, property insurance on terms we find acceptable or at all, or by increasing the cost of energy or water. There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.
Climate change may also have indirect effects on our business by increasing the cost of, or decreasing the availability of, property insurance on terms we find acceptable or at all, or by increasing the cost of energy or water.
As of December 31, 2023, we estimate that our eight future development sites, representing approximately 64 gross acres of undeveloped land, provide more than 6.0 million square feet of potential density.
The actual density of our undeveloped land holdings and/or any particular land parcel may not be consistent with our potential density estimates . As of December 31, 2024, we estimate that our eight future development sites, representing approximately 64 gross acres of undeveloped land, provide more than 6.0 million square feet of potential density.
Our property taxes could increase due to reassessment or property tax rate changes. We are required to pay state and local taxes on our properties. In addition, the real property taxes on our properties may increase as our properties are reassessed by taxing authorities or as property tax rates change.
In addition, the real property taxes on our properties may increase as our properties are reassessed by taxing authorities or as property tax rates change.
The complexity of these provisions and of the applicable Treasury regulations that have been promulgated under the Code is greater in the case of a REIT that, like the Company, holds its assets through a partnership.
Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The complexity of these provisions and of the applicable Treasury regulations that have been promulgated under the Code is greater in the case of a REIT that, like the Company, holds its assets through a partnership.
As a result of all these factors, the Company’s failure to qualify as a REIT also could impair our ability to expand our business and raise capital, and could adversely affect the value and the quoted trading price of the Company’s common stock. 36 Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations.
As a result of all these factors, the Company’s failure to qualify as a REIT also could impair our ability to expand our business and raise capital, and could adversely affect the value and the quoted trading price of the Company’s common stock.
In addition, California is also regarded as more litigious and more highly regulated and taxed than many other states, which may reduce demand for office space in California.
In addition, California is also regarded as more litigious and more highly regulated and taxed than many other states, which may reduce demand for office space in California. Potential casualty losses, such as earthquake losses, may adversely affect our financial condition, results of operations, and cash flows.
Risks Related to Taxes and the Company’s Status as a REIT Loss of the Company’s REIT status would have significant adverse consequences to us and the value of the Company’s common stock. The Company currently operates in a manner that is intended to allow it to qualify as a REIT for federal income tax purposes under the Code.
The Company currently operates in a manner that is intended to allow it to qualify as a REIT for federal income tax purposes under the Code.
Should the impact of climate change be severe or occur for lengthy periods of time, our financial condition or results of operations would be adversely affected.
As our properties are concentrated in West Coast markets of the United States and in Austin, Texas, should the impact of climate change be severe or occur for lengthy periods of time in such markets, our financial condition and results or operations could be adversely affected.
We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties. In the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications.
In the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications. Further, reconstruction or improvement of such property could potentially require significant upgrades to meet zoning and building code requirements or be subject to environmental and other legal restrictions.
Since 2022, the Federal Reserve has raised interest rates in an effort to curb inflation. Our exposure to increases in interest rates in the short term is limited to our variable-rate borrowings, which consist of borrowings under our unsecured term loan facility and unsecured revolving credit facility.
Our exposure to increases in interest rates in the short term is limited to our variable-rate borrowings, which consist of borrowings under our unsecured revolving credit facility and unsecured term loan facility. As of December 31, 2024, we had no borrowings under our unsecured revolving credit facility and $200.0 million outstanding under our unsecured term loan facility.
In addition, many states have adopted new or modified privacy and security laws and regulations that apply to our business. The California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act, imposes obligations on businesses that process personal information of California residents.
The California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act, imposes obligations on businesses that process personal information of California residents.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management team - including our Executive Vice President, Chief Administrative Officer, Senior Vice President, Chief Accounting Officer and Controller, Senior Vice President, Corporate Counsel and Senior Vice President, Information Technology - is responsible for assessing and managing our material risks from cybersecurity threats.
Biggest changeOur cybersecurity risk management team - including our Executive Vice President, Chief Financial Officer and Treasurer, Executive Vice President, Chief Administrative Officer, Executive Vice President, General Counsel and Secretary, Senior Vice President, Chief Accounting Officer and Controller, Senior Vice President, Information Technology, and the Vice President, Enterprise Applications - is responsible for assessing and managing our material risks from cybersecurity threats.
The team is informed about and monitors the prevention, 39 detection, mitigation, and remediation of cybersecurity incidents through briefings with internal and external personnel, publicly available information about cybersecurity risks and threats and through alerts from security tools deployed in our IT environment.
The team is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity incidents through briefings with internal and external personnel, publicly available information about cybersecurity risks and threats, and through alerts from security tools deployed in our IT environment.
Our Vice President, Enterprise Application’s experience includes a Certified Information Systems Security Professional (“CISSP”) certification, which is designed for security professionals with extensive knowledge in contemporary cybersecurity and information security practices. In addition, our Chief Executive Officer has broad expertise in overseeing cybersecurity programs, incident response teams and information technology departments. 40
Our Vice President, Enterprise Application’s experience includes a Certified Information Systems Security Professional (“CISSP”) certification, which is designed for security professionals with extensive knowledge in contemporary cybersecurity and information security practices. In addition, our Chief Executive Officer has broad expertise in overseeing cybersecurity programs, incident response teams, and information technology departments. 39
The team has primary responsibility for our overall cybersecurity risk management program and supervises our internal cybersecurity personnel, our retained external cybersecurity consultants, and the simulated exercises of our Cybersecurity Incident Response Plan, conducted at least annually to ensure our team is prepared to respond to any future cybersecurity incidents.
The team has primary responsibility for our overall cybersecurity risk management program and supervises our internal cybersecurity personnel, our retained external cybersecurity consultants, and the simulated tabletop exercises of our Cybersecurity Incident Response Plan, conducted at least 38 annually to ensure our team is prepared to respond to any future cybersecurity incidents.
Board members receive presentations on cybersecurity topics from our Executive Vice President, Chief Administrative Officer, Senior Vice President, Corporate Counsel and Vice President, Enterprise Applications as part of the Board’s continuing education.
Board members receive presentations on cybersecurity topics from our Executive Vice President, Chief Administrative Officer, Executive Vice President, General Counsel and Secretary, and Vice President, Enterprise Applications as part of the Board’s continuing education.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperty Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2023 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) Greater Los Angeles 3101-3243 La Cienega Boulevard, Culver City, California 19 2008-2017 166,207 71.9 % $ 6,030 $ 50.45 2240 East Imperial Highway, El Segundo, California 1 1983/ 2008 122,870 100.0 % 3,712 30.21 2250 East Imperial Highway, El Segundo, California 1 1983 298,728 46.2 % 4,517 33.03 2260 East Imperial Highway, El Segundo, California 1 1983/ 2012 298,728 100.0 % 9,026 30.21 909 North Pacific Coast Highway, El Segundo, California 1 1972/ 2005 244,880 78.6 % 7,175 37.84 999 North Pacific Coast Highway, El Segundo, California 1 1962/ 2003 138,389 58.1 % 2,557 33.91 1350 Ivar Avenue, Los Angeles, California 1 2020 16,448 100.0 % 1,005 61.10 1355 Vine Street, Los Angeles, California 1 2020 183,129 100.0 % 10,882 59.42 1375 Vine Street, Los Angeles, California 1 2020 159,236 100.0 % 9,805 61.58 1395 Vine Street, Los Angeles, California 1 2020 2,575 100.0 % 161 62.65 1500 North El Centro Avenue, Los Angeles, California 1 2016 113,447 41.4 % 3,084 65.62 1525 North Gower Street, Los Angeles, California 1 2016 9,610 100.0 % 650 67.61 1575 North Gower Street, Los Angeles, California 1 2016 264,430 100.0 % 16,209 61.30 6115 West Sunset Boulevard, Los Angeles, California 1 1938/ 2015 26,238 53.0 % 481 34.56 42 Property Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2023 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) 6121 West Sunset Boulevard, Los Angeles, California 1 1938/ 2015 93,418 100.0 % 4,605 49.29 6255 West Sunset Boulevard, Los Angeles, California 1 1971/ 1999 332,100 77.9 % 10,775 43.00 3750 Kilroy Airport Way, Long Beach, California 1 1989 10,718 100.0 % 126 32.81 3760 Kilroy Airport Way, Long Beach, California 1 1989 166,761 77.0 % 4,696 38.15 3780 Kilroy Airport Way, Long Beach, California 1 1989 221,452 91.4 % 7,300 36.81 3800 Kilroy Airport Way, Long Beach, California 1 2000 192,476 89.3 % 5,588 32.53 3840 Kilroy Airport Way, Long Beach, California 1 1999 138,441 77.6 % 4,451 41.44 3880 Kilroy Airport Way, Long Beach, California 1 1987/ 2013 96,923 100.0 % 2,839 29.29 3900 Kilroy Airport Way, Long Beach, California 1 1987 130,935 78.7 % 3,473 33.77 8560 West Sunset Boulevard, West Hollywood, California 1 1963/ 2007 76,558 87.6 % 5,438 81.87 8570 West Sunset Boulevard, West Hollywood, California 1 2002/ 2007 49,276 94.5 % 3,050 65.84 8580 West Sunset Boulevard, West Hollywood, California 1 2002/ 2007 6,875 59.0 % — — 8590 West Sunset Boulevard, West Hollywood, California 1 2002/ 2007 56,750 97.4 % 2,315 41.90 12100 West Olympic Boulevard, Los Angeles, California 1 2003 155,679 74.1 % 8,519 73.89 12200 West Olympic Boulevard, Los Angeles, California 1 2000 154,544 32.0 % 1,055 75.00 12233 West Olympic Boulevard, Los Angeles, California 1 1980/ 2011 156,746 52.7 % 4,073 59.61 12312 West Olympic Boulevard, Los Angeles, California 1 1950/ 1997 76,644 100.0 % 4,096 53.44 2100/2110 Colorado Avenue, Santa Monica, California 3 1992/ 2009 104,853 55.4 % 4,580 78.79 501 Santa Monica Boulevard, Santa Monica, California 1 1974 78,509 68.4 % 4,264 79.40 Subtotal/Weighted Average – Los Angeles 53 4,344,573 79.0 % $ 156,537 $ 46.79 San Diego County 12225 El Camino Real, Del Mar, California 1 1998 58,401 100.0 % $ 2,555 $ 43.75 12235 El Camino Real, Del Mar, California 1 1998 53,751 100.0 % 2,627 48.87 12340 El Camino Real, Del Mar, California 1 2002/ 2022 109,307 100.0 % 7,942 72.66 12390 El Camino Real, Del Mar, California 1 2000 73,238 100.0 % 4,237 57.85 12770 El Camino Real, Del Mar, California 1 2016 75,035 100.0 % 4,226 64.26 12780 El Camino Real, Del Mar, California 1 2013 140,591 100.0 % 7,138 50.77 12790 El Camino Real, Del Mar, California 1 2013 87,944 100.0 % 4,940 56.18 12830 El Camino Real, Del Mar, California 1 2021 196,444 100.0 % 14,424 73.42 12860 El Camino Real, Del Mar, California 1 2021 92,042 100.0 % 6,621 71.93 12348 High Bluff Drive, Del Mar, California 1 1999 39,192 100.0 % 1,620 41.33 43 Property Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2023 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) 12400 High Bluff Drive, Del Mar, California 1 2004/ 2022 216,518 91.7 % 15,475 77.93 3579 Valley Centre Drive, Del Mar, California 1 1999 54,960 94.7 % 3,098 59.54 3611 Valley Centre Drive, Del Mar, California 1 2000 132,425 100.0 % 7,373 55.68 3661 Valley Centre Drive, Del Mar, California 1 2001 131,662 100.0 % 6,269 50.25 3721 Valley Centre Drive, Del Mar, California 1 2003 115,193 78.4 % 5,161 57.20 3811 Valley Centre Drive, Del Mar, California 1 2000 118,912 100.0 % 6,782 57.03 3745 Paseo Place, Del Mar, California 1 2019 95,871 89.6 % 5,762 67.10 13480 Evening Creek Drive North, San Diego, California 1 2008 143,401 54.5 % 3,514 50.99 13500 Evening Creek Drive North, San Diego, California 1 2004 143,749 92.9 % 6,077 45.50 13520 Evening Creek Drive North, San Diego, California 1 2004 146,701 100.0 % 5,972 41.57 2100 Kettner Boulevard, San Diego, California 1 2022 206,527 20.5 % 3,058 72.27 2305 Historic Decatur Road, Point Loma, California 1 2009 107,456 82.1 % 4,015 45.51 9455 Towne Centre Drive, UTC, California 1 2021 160,444 100.0 % 7,823 48.76 9514 Towne Centre Drive, UTC, California 1 2023 70,616 100.0 % 5,220 73.92 Subtotal/Weighted Average – San Diego County 24 2,770,380 88.6 % $ 141,929 $ 58.47 San Francisco Bay Area 4100 Bohannon Drive, Menlo Park, California 1 1985 47,643 100.0 % $ 2,640 $ 55.41 4200 Bohannon Drive, Menlo Park, California 1 1987 43,600 69.4 % 1,720 56.79 4300 Bohannon Drive, Menlo Park, California 1 1988 63,430 48.8 % 2,206 71.28 4500 Bohannon Drive, Menlo Park, California 1 1990 63,429 100.0 % 4,074 64.23 4600 Bohannon Drive, Menlo Park, California 1 1990 48,413 100.0 % 2,792 57.67 4700 Bohannon Drive, Menlo Park, California 1 1989 63,429 100.0 % 3,513 55.39 1290-1300 Terra Bella Avenue, Mountain View, California 1 1961 114,175 100.0 % 7,445 65.21 680 East Middlefield Road, Mountain View, California 1 2014 171,676 100.0 % 7,763 45.22 690 East Middlefield Road, Mountain View, California 1 2014 171,215 100.0 % 7,729 45.14 1701 Page Mill Road, Palo Alto, California 1 2015 128,688 100.0 % 8,461 65.75 3150 Porter Drive, Palo Alto, California 1 1998 36,886 100.0 % 3,277 88.83 900 Jefferson Avenue, Redwood City, California 1 2015 228,505 100.0 % 13,468 58.94 900 Middlefield Road, Redwood City, California 1 2015 118,764 100.0 % 6,487 54.85 100 Hooper Street, San Francisco, California 1 2018 417,914 95.5 % 23,676 59.41 100 First Street, San Francisco, California 1 1988 480,457 98.3 % 32,646 71.83 44 Property Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2023 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) 303 Second Street, San Francisco, California 1 1988 784,658 71.1 % 50,885 91.63 201 Third Street, San Francisco, California 1 1983 346,538 68.2 % 17,659 75.90 360 Third Street, San Francisco, California 1 2013 436,357 66.6 % 25,489 88.08 250 Brannan Street, San Francisco, California 1 1907/ 2001 100,850 100.0 % 10,323 102.36 301 Brannan Street, San Francisco, California 1 1909/ 1989 82,834 100.0 % 7,391 89.23 333 Brannan Street, San Francisco, California 1 2016 185,602 100.0 % 17,688 95.30 345 Brannan Street, San Francisco, California 1 2015 110,050 99.7 % 10,551 96.76 350 Mission Street, San Francisco, California 1 2016 455,340 99.7 % 24,076 53.09 345 Oyster Point Boulevard, South San Francisco, California 1 2001 40,410 100.0 % 2,192 54.24 347 Oyster Point Boulevard, South San Francisco, California 1 1998 39,780 100.0 % 2,158 54.24 349 Oyster Point Boulevard, South San Francisco, California 1 1999 65,340 100.0 % 4,265 65.27 350 Oyster Point Boulevard, South San Francisco, California 1 2021 234,892 100.0 % 18,167 77.34 352 Oyster Point Boulevard, South San Francisco, California 1 2021 232,215 100.0 % 18,062 77.78 354 Oyster Point Boulevard, South San Francisco, California 1 2021 193,472 100.0 % 15,048 77.78 505 North Mathilda Avenue, Sunnyvale, California 1 2014 212,322 100.0 % 9,449 44.50 555 North Mathilda Avenue, Sunnyvale, California 1 2014 212,322 100.0 % 9,449 44.50 599 North Mathilda Avenue, Sunnyvale, California 1 2000 76,031 100.0 % 3,610 47.48 605 North Mathilda Avenue, Sunnyvale, California 1 2014 162,785 100.0 % 7,244 44.50 Subtotal/Weighted Average – San Francisco 33 6,170,022 91.0 % $ 381,603 $ 68.32 Greater Seattle 601 108th Avenue North East, Bellevue, Washington 1 2000 490,738 100.0 % $ 19,647 $ 40.46 10900 North East 4th Street, Bellevue, Washington 1 1983 428,557 86.2 % 15,082 41.01 2001 West 8th Avenue, Seattle, Washington 1 2009 539,226 20.0 % 4,587 43.15 333 Dexter Ave North, Seattle, Washington 1 2022 618,766 100.0 % 31,940 51.62 701 North 34th Street, Seattle, Washington 1 1998 141,860 100.0 % 5,199 36.65 801 North 34th Street, Seattle, Washington 1 1998 173,615 100.0 % 5,789 33.34 837 North 34th Street, Seattle, Washington 1 2008 112,487 100.0 % 4,093 36.38 320 Westlake Avenue North, Seattle, Washington 1 2007 184,644 96.1 % 8,041 45.31 321 Terry Avenue North, Seattle, Washington 1 2013 135,755 100.0 % 5,374 39.59 401 Terry Avenue North, Seattle, Washington 1 2003 174,530 100.0 % 7,008 40.15 Subtotal/Weighted Average – Greater Seattle 10 3,000,178 83.4 % $ 106,760 $ 42.80 Austin 45 Property Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2023 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) 200 W. 6th Street, Austin CBD, Texas 1 2023 758,975 64.9 % $ 20,975 $ 42.61 Subtotal/Weighted Average - Austin 1 758,975 64.9 % $ 20,975 $ 42.61 TOTAL/WEIGHTED AVERAGE 121 17,044,128 85.0 % $ 807,804 $ 56.31 ____________________ (1) Based on all leases at the respective properties in effect as of December 31, 2023.
Biggest changeProperty Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2024 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) Los Angeles 3101-3243 La Cienega Boulevard, Culver City, California 19 2008-2017 166,207 18.6 % $ 1,682 $ 54.52 2240 East Imperial Highway, El Segundo, California 1 1983/ 2008 122,870 100.0 % 3,713 30.21 2250 East Imperial Highway, El Segundo, California 1 1983 298,728 46.2 % 4,653 34.03 2260 East Imperial Highway, El Segundo, California 1 1983/ 2012 298,728 100.0 % 9,026 30.21 909 North Pacific Coast Highway, El Segundo, California 1 1972/ 2005 244,880 72.2 % 6,725 38.03 999 North Pacific Coast Highway, El Segundo, California 1 1962/ 2003 138,389 48.7 % 2,137 34.64 1350 Ivar Avenue, Los Angeles, California 1 2020 16,448 100.0 % 1,005 61.10 1355 Vine Street, Los Angeles, California 1 2020 183,129 100.0 % 10,882 59.42 1375 Vine Street, Los Angeles, California 1 2020 159,236 100.0 % 9,805 61.58 1395 Vine Street, Los Angeles, California 1 2020 2,575 100.0 % 161 62.65 1500 North El Centro Avenue, Los Angeles, California 1 2016 113,447 63.6 % 4,872 67.54 1525 North Gower Street, Los Angeles, California 1 2016 9,610 100.0 % 650 67.61 1575 North Gower Street, Los Angeles, California 1 2016 264,430 98.3 % 15,990 61.52 6115 West Sunset Boulevard, Los Angeles, California 1 1938/ 2015 26,238 23.8 % 390 62.49 6121 West Sunset Boulevard, Los Angeles, California 1 1938/ 2015 93,418 100.0 % 4,605 49.29 6255 West Sunset Boulevard, Los Angeles, California 1 1971/ 1999 325,772 59.0 % 9,768 52.92 3750 Kilroy Airport Way, Long Beach, California 1 1989 10,718 100.0 % 128 33.52 41 Property Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2024 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) 3760 Kilroy Airport Way, Long Beach, California 1 1989 166,761 80.4 % 4,967 37.04 3780 Kilroy Airport Way, Long Beach, California 1 1989 221,452 96.6 % 7,977 38.03 3800 Kilroy Airport Way, Long Beach, California 1 2000 192,476 93.5 % 5,934 32.97 3840 Kilroy Airport Way, Long Beach, California 1 1999 138,441 77.6 % 4,446 41.40 3880 Kilroy Airport Way, Long Beach, California 1 1987/ 2013 96,923 51.9 % 1,655 32.93 3900 Kilroy Airport Way, Long Beach, California 1 1987 130,935 87.3 % 2,791 38.06 8560 West Sunset Boulevard, West Hollywood, California 1 1963/ 2007 76,359 93.6 % 5,854 82.70 8570 West Sunset Boulevard, West Hollywood, California 1 2002/ 2007 49,276 99.0 % 3,203 66.03 8580 West Sunset Boulevard, West Hollywood, California 1 2002/ 2007 6,875 — % — — 8590 West Sunset Boulevard, West Hollywood, California 1 2002/ 2007 56,750 99.7 % 3,407 60.19 12100 West Olympic Boulevard, Los Angeles, California 1 2003 155,679 74.1 % 8,590 74.51 12200 West Olympic Boulevard, Los Angeles, California 1 2000 154,544 32.0 % 973 69.00 12233 West Olympic Boulevard, Los Angeles, California 1 1980/ 2011 156,746 54.0 % 3,231 40.69 12312 West Olympic Boulevard, Los Angeles, California 1 1950/ 1997 78,900 100.0 % 3,919 49.66 2100/2110 Colorado Avenue, Santa Monica, California 3 1992/ 2009 104,853 55.4 % 4,580 78.79 501 Santa Monica Boulevard, Santa Monica, California 1 1974 78,509 65.0 % 4,038 80.93 Subtotal/Weighted Average – Los Angeles 53 4,340,302 75.0 % $ 151,757 $ 48.25 San Diego 12225 El Camino Real, Del Mar, California 1 1998 58,401 100.0 % $ 2,543 $ 43.55 12235 El Camino Real, Del Mar, California 1 1998 53,751 100.0 % 2,627 48.87 12340 El Camino Real, Del Mar, California 1 2002/ 2022 109,307 100.0 % — — 12390 El Camino Real, Del Mar, California 1 2000 73,238 100.0 % 4,237 57.85 12770 El Camino Real, Del Mar, California 1 2016 75,035 100.0 % 4,226 56.33 12780 El Camino Real, Del Mar, California 1 2013 140,591 100.0 % 7,137 50.77 12790 El Camino Real, Del Mar, California 1 2013 87,944 100.0 % 4,940 56.18 12830 El Camino Real, Del Mar, California 1 2021 196,444 100.0 % 14,419 73.40 12860 El Camino Real, Del Mar, California 1 2021 92,042 100.0 % 6,621 71.93 12348 High Bluff Drive, Del Mar, California 1 1999 39,192 51.5 % 926 45.90 12400 High Bluff Drive, Del Mar, California 1 2004/ 2022 216,518 100.0 % 15,576 71.94 12707 High Bluff Drive, Del Mar, California 1 2017 59,245 93.5 % 3,428 61.87 12777 High Bluff Drive, Del Mar, California 1 2017 44,486 100.0 % 2,319 52.14 42 Property Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2024 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) 3579 Valley Centre Drive, Del Mar, California 1 1999 54,960 94.7 % 3,085 59.30 3611 Valley Centre Drive, Del Mar, California 1 2000 132,425 100.0 % 7,337 55.41 3661 Valley Centre Drive, Del Mar, California 1 2001 131,662 100.0 % 4,205 33.71 3721 Valley Centre Drive, Del Mar, California 1 2003 117,777 90.3 % 6,003 56.46 3811 Valley Centre Drive, Del Mar, California 1 2000 118,912 100.0 % 6,782 57.03 3745 Paseo Place, Del Mar, California 1 2019 95,871 86.3 % 5,876 71.00 13480 Evening Creek Drive North, San Diego, California 1 2008 143,401 56.7 % 4,139 50.90 13500 Evening Creek Drive North, San Diego, California 1 2004 137,660 100.0 % 6,267 45.53 13520 Evening Creek Drive North, San Diego, California 1 2004 146,701 74.2 % 4,861 44.65 2100 Kettner Boulevard, San Diego, California 1 2022 212,423 30.2 % 4,469 69.83 2305 Historic Decatur Road, Point Loma, California 1 2009 107,456 88.3 % 4,536 47.84 9455 Towne Centre Drive, UTC, California 1 2021 160,444 100.0 % 7,822 48.76 9514 Towne Centre Drive, UTC, California 1 2023 70,616 100.0 % 5,220 73.92 Subtotal/Weighted Average – San Diego 26 2,876,502 89.2 % $ 139,601 $ 54.57 San Francisco Bay Area 4100 Bohannon Drive, Menlo Park, California 1 1985 47,643 100.0 % $ 2,640 $ 55.41 4200 Bohannon Drive, Menlo Park, California 1 1987 43,600 69.4 % 1,477 48.78 4300 Bohannon Drive, Menlo Park, California 1 1988 63,430 63.5 % 2,526 62.77 4500 Bohannon Drive, Menlo Park, California 1 1990 63,429 100.0 % 4,074 64.23 4600 Bohannon Drive, Menlo Park, California 1 1990 48,413 100.0 % 2,600 53.71 4700 Bohannon Drive, Menlo Park, California 1 1989 63,429 100.0 % 3,513 55.39 1290-1300 Terra Bella Avenue, Mountain View, California 1 1961 114,175 100.0 % 7,445 65.21 680 East Middlefield Road, Mountain View, California 1 2014 171,676 100.0 % 7,763 45.22 690 East Middlefield Road, Mountain View, California 1 2014 171,215 100.0 % 7,729 45.14 1701 Page Mill Road, Palo Alto, California 1 2015 128,688 100.0 % 8,461 65.75 3150 Porter Drive, Palo Alto, California 1 1998 36,886 100.0 % 3,277 88.83 900 Jefferson Avenue, Redwood City, California 1 2015 228,226 100.0 % 13,468 59.01 900 Middlefield Road, Redwood City, California 1 2015 119,616 100.0 % 10,236 85.92 100 Hooper Street, San Francisco, California 1 2018 417,914 95.5 % 23,646 59.33 100 First Street, San Francisco, California 1 1988 480,457 93.6 % 30,940 71.62 303 Second Street, San Francisco, California 1 1988 784,658 73.5 % 51,919 91.47 43 Property Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2024 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) 201 Third Street, San Francisco, California 1 1983 346,538 25.5 % 6,081 72.01 360 Third Street, San Francisco, California 1 2013 436,357 66.6 % 25,489 88.08 250 Brannan Street, San Francisco, California 1 1907/ 2001 100,850 100.0 % 10,323 102.36 301 Brannan Street, San Francisco, California 1 1909/ 1989 82,834 100.0 % 7,391 89.23 333 Brannan Street, San Francisco, California 1 2016 185,602 100.0 % 17,688 95.30 345 Brannan Street, San Francisco, California 1 2015 110,050 99.7 % 10,551 96.16 350 Mission Street, San Francisco, California 1 2016 455,340 99.7 % 24,076 53.09 345 Oyster Point Boulevard, South San Francisco, California 1 2001 40,410 100.0 % 2,192 54.24 347 Oyster Point Boulevard, South San Francisco, California 1 1998 39,780 100.0 % 2,158 54.24 349 Oyster Point Boulevard, South San Francisco, California 1 1999 65,340 100.0 % 4,265 65.27 350 Oyster Point Boulevard, South San Francisco, California 1 2021 234,892 100.0 % 18,167 77.34 352 Oyster Point Boulevard, South San Francisco, California 1 2021 232,215 100.0 % 18,062 77.78 354 Oyster Point Boulevard, South San Francisco, California 1 2021 193,472 100.0 % 15,048 77.78 505 North Mathilda Avenue, Sunnyvale, California 1 2014 212,322 100.0 % 9,449 44.50 555 North Mathilda Avenue, Sunnyvale, California 1 2014 212,322 100.0 % 9,449 44.50 599 North Mathilda Avenue, Sunnyvale, California 1 2000 76,031 — % — — 605 North Mathilda Avenue, Sunnyvale, California 1 2014 162,785 100.0 % 7,244 44.50 Subtotal/Weighted Average – San Francisco 33 6,170,595 87.4 % $ 369,347 $ 68.89 Seattle 601 108th Avenue North East, Bellevue, Washington 1 2000 490,738 98.7 % $ 20,410 $ 42.60 10900 North East 4th Street, Bellevue, Washington 1 1983 428,557 89.7 % 13,681 37.60 2001 West 8th Avenue, Seattle, Washington 1 2009 535,395 19.5 % 4,913 47.65 333 Dexter Ave North, Seattle, Washington 1 2022 618,766 100.0 % 31,809 51.41 701 North 34th Street, Seattle, Washington 1 1998 141,860 44.8 % 2,194 34.52 801 North 34th Street, Seattle, Washington 1 1998 173,615 100.0 % 5,789 33.34 837 North 34th Street, Seattle, Washington 1 2008 112,487 85.6 % 2,269 23.57 320 Westlake Avenue North, Seattle, Washington 1 2007 184,644 96.1 % 8,079 45.52 321 Terry Avenue North, Seattle, Washington 1 2013 135,755 100.0 % 5,417 39.90 401 Terry Avenue North, Seattle, Washington 1 2003 174,530 100.0 % 7,008 40.15 Subtotal/Weighted Average – Seattle 10 2,996,347 80.5 % $ 101,569 $ 42.57 Austin 200 W. 6th Street, Austin CBD, Texas 1 2023 758,975 74.7 % $ 25,283 $ 44.58 44 Property Location No. of Buildings Year Built/ Renovated Rentable Square Feet Percentage Occupied at 12/31/2024 (1) Annualized Base Rent (in $000’s) (2) Annualized Rent Per Square Foot (2) Subtotal/Weighted Average - Austin 1 758,975 74.7 % $ 25,283 $ 44.58 TOTAL/WEIGHTED AVERAGE 123 17,142,721 82.8 % $ 787,557 $ 56.18 ____________________ (1) Based on all leases at the respective properties in effect as of December 31, 2024.
In addition, some office and life science properties, primarily in Seattle and Austin and certain properties in certain submarkets in the San Francisco Bay Area and Los Angeles, are leased to tenants on a triple net basis, pursuant to which the tenants pay their proportionate share of real estate taxes, operating costs and utility costs.
In addition, some office and life science properties, primarily in Seattle and Austin and certain properties in certain submarkets in the San Francisco Bay Area, San Diego, and Los Angeles, are leased to tenants on a triple net basis, pursuant to which the tenants pay their proportionate share of real estate taxes, operating costs, and utility costs.
All of our properties, development projects and redevelopment projects are 100% owned, excluding four office properties owned by three consolidated property partnerships. 41 We own our interests in all of our real estate assets through the Operating Partnership.
All of our properties and development and redevelopment projects are 100% owned, excluding four office properties owned by three consolidated property partnerships. We own our interests in all of our real estate assets through the Operating Partnership.
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. (2) Includes 100% of annualized based rent of consolidated property partnerships..
Additionally, the underlying leases contain various expense structures, including full service gross, modified gross, and triple net. Percentages represent percentage of total portfolio annualized contractual base rental revenue. (2) Includes 100% of annualized based rent of consolidated property partnerships..
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. Future Development Pipeline The following table sets forth certain information relating to our future development pipeline as of December 31, 2023. Future Development Pipeline Location Approx.
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. 45 Future Development Pipeline The following table sets forth certain information relating to our future development pipeline as of December 31, 2024. Future Development Pipeline Location Approx.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Liquidity Sources,” Notes 9 and 10 to our consolidated financial statements and Schedule III—Real Estate and Accumulated Depreciation included in this report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Liquidity Sources,” Notes 9 and 10 to our consolidated financial statements and “Schedule III—Real Estate and Accumulated Depreciation,” included in this report.
While technology companies comprise 54% of our office portfolio base rent, technology is a broad concept that encompasses diverse industries including software, social media, hardware, cloud computing, internet media and technology services. 49 Lease Expirations The following table sets forth a summary of our lease expirations for our stabilized portfolio, excluding our residential properties, for each of the next ten years beginning with 2024, assuming that none of the tenants exercise renewal options or termination rights.
While technology companies comprise 54% of our office portfolio base rent, technology is a broad concept that encompasses diverse industries, including software, social media, hardware, cloud computing, internet media, and technology services. 48 Lease Expirations The following table sets forth a summary of our lease expirations for our stabilized portfolio, excluding our residential properties, for each of the next ten years beginning with 2025, assuming that none of the tenants exercise renewal options or termination rights.
Our stabilized portfolio also excludes our future development pipeline, which as of December 31, 2023, was comprised of eight future development sites, representing approximately 64 gross acres of undeveloped land.
Our stabilized portfolio also excludes our future development pipeline, which as of December 31, 2024, was comprised of eight future development sites, representing approximately 64 gross acres of undeveloped land.
Number of Properties Number of Units 2023 Average Occupancy Stabilized Residential Properties 3 1,001 92.8 % Our stabilized portfolio includes all of our properties with the exception of development properties currently committed for construction, under construction or in the tenant improvement phase, redevelopment properties under construction, undeveloped land, and real estate assets held for sale.
Number of Properties Number of Units 2024 Average Occupancy Stabilized Residential Properties 3 1,001 92.5 % Our stabilized portfolio includes all of our properties with the exception of development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, undeveloped land, and real estate assets held for sale.
Secured Debt As of December 31, 2023, the Operating Partnership had three outstanding mortgage notes payable which were secured by certain of our properties. Our secured debt represents an aggregate principal indebtedness of approximately $612.7 million . See additional information regarding our secured debt in “Item 7.
Secured Debt As of December 31, 2024, the Operating Partnership had three outstanding mortgage notes payable which were secured by certain of our properties. Our secured debt represents an aggregate principal indebtedness of approximately $606.7 million. See additional information regarding our secured debt in “Item 7.
As of December 31, 2023, the following properties were excluded from our stabilized portfolio: Number of Properties/Projects Estimated Rentable Square Feet (1) In-process development projects - under construction 1 875,000 In-process redevelopment projects - under construction 2 100,000 ________________________ (1) Estimated rentable square feet upon completion.
As of December 31, 2024, the following properties were excluded from our stabilized portfolio: Number of Properties/Projects Estimated Rentable Square Feet (1) In-process redevelopment projects - tenant improvement 2 100,000 In-process development projects - under construction 1 875,000 ________________________ (1) Estimated rentable square feet upon completion.
As of December 31, 2023, all of our properties, development projects and redevelopment projects were owned and all of our business was conducted in the state of California with the exception of ten stabilized office properties and one future development project located in the state of Washington and one stabilized office property and one future development project located in Austin, Texas.
As of December 31, 2024, all of our properties and development and redevelopment projects, and all of our business was conducted in the state of California with the exception of ten stabilized office properties and one future development project located in the state of Washington and one stabilized office property and one future development project located in Austin, Texas.
Projects in the tenant improvement phase are added to our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities.
Projects in the tenant improvement phase are moved into our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities.
In-Process Development Projects As of December 31, 2023, the following development project was under construction: Construction Start Date Estimated Stabilization Date (1) Estimated Rentable Square Feet % Leased UNDER CONSTRUCTION Location Office / Life Science San Francisco Bay Area Kilroy Oyster Point - Phase 2 South San Francisco 2Q 2021 4Q 2025 875,000 —% TOTAL: 875,000 —% ____________________ (1) Represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components.
In-Process Development Projects As of December 31, 2024, the following development project was under construction: Construction Start Date Estimated Stabilization Date (1) Estimated Rentable Square Feet % Leased UNDER CONSTRUCTION Location Office / Life Science San Francisco Bay Area Kilroy Oyster Point - Phase 2 South San Francisco 2Q 2021 1Q 2026 875,000 —% TOTAL: 875,000 —% ____________________ (1) For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components.
Tenant Name Region Annualized Base Rental Revenue (1)(2) Rentable Square Feet Percentage of Total Annualized Base Rental Revenue (1) Percentage of Total Rentable Square Feet Year(s) of Significant Lease Expiration(s) (3) (in thousands) 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.
Tenant Name (1) Region Annualized Base Rental Revenue (2) Rentable Square Feet (2) Percentage of Total Annualized Base Rental Revenue (2) Percentage of Total Rentable Square Feet Year(s) of Significant Lease Expiration(s) (3) Weighted Average Remaining Lease Term (Years) (in thousands) 1 Global technology company Seattle / San Diego $ 44,851 849,826 5.7% 5.0% 2032 - 2033 / 2037 8.6 2 Cruise LLC San Francisco Bay Area 35,449 374,618 4.5% 2.2% 2031 6.9 3 Stripe, Inc.
We define redevelopment properties as those properties for which we expect to spend significant development and construction costs on the existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property.
We define redevelopment properties as those properties for which we expect to spend significant development and construction costs pursuant to a formal plan to change its use, the intended result of which is a higher economic return on the property.
All our properties are held in fee, except for the fourteen office buildings that are held subject to five long-term ground leases for the land (see Note 19 “Commitments and Contingencies” to our consolidated financial statements included in this report for additional information regarding our ground lease obligations).
All our properties are held in fee, except for the fourteen office buildings that are held subject to five long-term ground leases for the land (see Note 19 “Commitments and Contingencies” to our consolidated financial statements included in this report for additional information regarding our ground lease obligations). 40 In general, the office properties are leased to tenants on a full service gross, modified gross, or triple net basis.
The tenant pays its pro-rata share of increases in expenses above the Base Year. A modified gross lease is similar to a full service gross lease, except tenants are obligated to pay their proportionate share of certain operating expenses, usually electricity, directly to the service provider.
A modified gross lease is similar to a full service gross lease, except tenants are obligated to pay their proportionate share of certain operating expenses, usually electricity, directly to the service provider.
Excludes month-to-month leases and vacant space as of December 31, 2023. (2) Includes 100% of the annualized base rental revenues of consolidated property partnerships. (3) We define significant lease expirations as those with space expiring greater than 25,000 rentable square feet. (4) The 2024 lease expiration represents 140,509 rentable square feet expiring on August 31, 2024.
Excludes month-to-month leases, vacant space. ad leases with a lease term of less than one year, as of December 31, 2024. Includes 100% of the annualized base rental revenues of consolidated property partnerships. (3) We define significant lease expirations as those with space expiring greater than 25,000 rentable square feet.
Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets at the historical cost of the property as the projects or phases of projects are placed in service.
Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets as the projects or phases of projects are placed in service. We did not have any properties or undeveloped land held for sale at December 31, 2024.
Excludes month-to-month leases and vacant space as of December 31, 2023. Includes 100% of annualized base rent of consolidated property partnerships.
Excludes month-to-month leases, vacant space, and leases with a lease term of less than one year, as of December 31, 2024. Includes 100% of annualized base rent of consolidated property partnerships.
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.
San Francisco Bay Area / Seattle 24,706 472,988 3.1% 2.8% 2029 - 2030 / 2032 5.4 7 Okta, Inc. San Francisco Bay Area 24,206 293,001 3.1% 1.7% 2028 3.8 8 DoorDash, Inc. San Francisco Bay Area 23,842 236,759 3.0% 1.4% 2032 7.1 9 Netflix, Inc. Los Angeles 21,854 361,388 2.8% 2.1% 2032 7.6 10 Cytokinetics, Inc.
We define properties in the tenant improvement phase as office and life science properties that we are developing or redeveloping where the project has reached cold shell condition and is ready for tenant improvements, which may require additional major base building construction before being placed in service.
We define a property in the tenant improvement phase as a development or redevelopment property where the project has reached “cold shell condition” and is ready for tenant improvements, which may require additional major base building modifications before being placed in service.
(7) Greater Los Angeles 14,628 218,824 1.8% 1.3% 2024 / 2031 Total $ 370,091 6,352,824 46.1% 37.3% _____________________ (1) Annualized base rental revenue 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 tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue.
(2) Annualized base rental revenue 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.
In general, the office and life science properties are leased to tenants on a full service gross, modified gross or triple net basis. Under a full service gross lease, we are obligated to pay the tenant’s proportionate share of real estate taxes, insurance and operating expenses up to the amount incurred during the tenant’s first year of occupancy (“Base Year”).
Under a full service gross lease, we are obligated to pay the tenant’s proportionate share of real estate taxes, insurance, and operating expenses up to the amount incurred during the tenant’s first year of occupancy (“Base Year”). The tenant pays its pro-rata share of increases in expenses above the Base Year.
(3) 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.
(3) 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.
(7) 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. 48 The following pie chart sets forth the composition of our tenant base by industry and as a percentage of our annualized base rental revenue based on the North American Industry Classification System as of December 31, 2023.
(5) The 2025 lease expiration represents 56,398 rentable square feet that expired on January 15, 2025. 47 The following pie chart sets forth the composition of our tenant base by industry as a percentage of our annualized base rental revenue based on the North American Industry Classification System as of December 31, 2024.
As of December 31, 2023, all of our stabilized office properties, excluding one office property and our three residential properties, were managed through internal property managers. Office Properties The following table sets forth certain information relating to each of the stabilized office properties owned as of December 31, 2023.
Office Properties The following table sets forth certain information relating to each of the stabilized office properties owned as of December 31, 2024.
San Francisco Bay Area 33,110 425,687 4.1% 2.5% 2034 Salesforce, Inc. (4) San Francisco Bay Area / Greater Seattle 29,981 613,497 3.7% 3.6% 2024 / 2029 - 2030 / 2032 LinkedIn Corporation / Microsoft Corporation (5) San Francisco Bay Area 29,752 663,460 3.7% 3.9% 2024 / 2026 Adobe Systems, Inc.
San Francisco Bay Area 33,110 425,687 4.2% 2.5% 2034 9.5 4 Adobe Systems, Inc. San Francisco Bay Area / Seattle 27,897 522,879 3.5% 3.1% 2027 / 2031 6.4 5 LinkedIn Corporation / Microsoft Corporation San Francisco Bay Area 26,142 587,429 3.3% 3.4% 2026 1.7 6 Salesforce, Inc.
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. 46 In-Process Redevelopment Projects As of December 31, 2023, the following redevelopment projects were under construction: Construction Start Date Estimated Stabilization Date (1) Estimated Rentable Square Feet % Leased UNDER CONSTRUCTION Location Life Science San Francisco Bay Area 4400 Bohannon Drive Menlo Park 4Q 2022 3Q 2025 48,000 —% San Diego County 4690 Executive Drive University Towne Center 1Q 2022 2Q 2025 52,000 —% TOTAL: 100,000 —% ____________________ (1) Represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components.
In-Process Redevelopment Projects As of December 31, 2024, the following redevelopment projects were in the tenant improvement phase: Construction Start Date Estimated Stabilization Date (2) Estimated Rentable Square Feet % Leased Total Project Occupied (3) TENANT IMPROVEMENT (1) Location Office / Life Science San Francisco Bay Area 4400 Bohannon Drive Other Peninsula 4Q 2022 3Q 2025 48,000 —% —% San Diego 4690 Executive Drive University Towne Center 1Q 2022 3Q 2025 52,000 —% —% TOTAL: 100,000 —% —% ____________________ (1) Represents projects that have reached “cold shell condition” and are ready for tenant improvements, which may require additional major base building modifications before being placed in service.
ITEM 2. PROPERTIES General Our stabilized portfolio of operating properties was comprised of the following properties at December 31, 2023: Number of Buildings Rentable Square Feet Number of Tenants Percentage Occupied (1) Percentage Leased Stabilized Office Properties (2) 121 17,044,128 410 85.0 % 86.4 % _______________________ (1) Represents economic occupancy. (2) Includes stabilized life science and retail space.
ITEM 2. PROPERTIES General Our stabilized portfolio of operating properties was comprised of the following properties at December 31, 2024: Number of Buildings Rentable Square Feet Number of Tenants Percentage Occupied (1) Stabilized Office Properties (2) 123 17,142,721 428 82.8 % _______________________ (1) Represents economic occupancy for space where we have achieved revenue recognition for the associated lease agreements.
Developable Square Feet (1) Greater Los Angeles 1633 26th Street West Los Angeles 190,000 San Diego County Santa Fe Summit South / North 56 Corridor 600,000 - 650,000 2045 Pacific Highway Little Italy 275,000 Kilroy East Village East Village TBD San Francisco Bay Area Kilroy Oyster Point - Phases 3 and 4 South San Francisco 875,000 - 1,000,000 Flower Mart SOMA 2,300,000 Greater Seattle SIX0 Denny Regrade 925,000 Austin Stadium Tower Stadium District / Domain 493,000 ____________________ (1) The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes or project design. 47 Significant Tenants The following table sets forth information about our 15 largest tenants based upon annualized base rental revenues, as defined below, as of December 31, 2023.
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, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes, or project design. 46 Significant Tenants The following table sets forth information about our 20 largest tenants based upon annualized base rental revenues, as defined below, as of December 31, 2024.
(6) 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.
San Francisco Bay Area 18,167 234,892 2.3% 1.4% 2033 8.8 11 Box, Inc. San Francisco Bay Area 16,853 287,680 2.1% 1.7% 2028 3.5 12 Neurocrine Biosciences, Inc. (4) San Diego 16,365 299,064 2.1% 1.7% 2025 / 2029 / 2031 5.7 13 DIRECTV, LLC Los Angeles 16,085 532,956 2.0% 3.1% 2026 - 2027 2.7 14 Synopsys, Inc.
At December 31, 2023, 48% of our properties were leased to tenants on a triple net basis, 23% of our properties were leased to tenants on a full service gross basis, and 21% were leased to tenants on a modified gross basis. We believe that all of our properties are well maintained and do not require significant capital improvements.
At December 31, 2024, 46% of our properties were leased to tenants on a triple net basis, 27% of our properties were leased to tenants on a modified gross basis, and 21% of our properties were leased to tenants on a full service gross basis, and 6% of our properties were leased to tenants on a modified net basis, in each case as a percentage of our annualized base rental revenue.
Lease Expirations Year of Lease Expiration # of Expiring Leases Total Square Feet % of Total Leased Square Feet Annualized Base Rent (000’s) (1) (2) % of Total Annualized Base Rent (1) Annualized Rent per Square Foot (1) 2024 70 1,054,096 7.3 % $ 52,196 6.4 % $ 49.52 2025 65 677,463 4.8 % 33,731 4.2 % 49.79 2026 61 1,921,594 13.5 % 90,656 11.2 % 47.18 2027 70 1,064,205 7.5 % 43,736 5.4 % 41.10 2028 51 1,106,414 7.8 % 68,568 8.5 % 61.97 2029 36 1,162,475 8.2 % 62,676 7.8 % 53.92 2030 39 1,539,066 10.8 % 91,673 11.3 % 59.56 2031 40 2,085,131 14.6 % 137,161 17.0 % 65.78 2032 15 1,115,436 7.8 % 73,937 9.2 % 66.29 2033 13 1,156,673 8.1 % 69,315 8.6 % 59.93 2034 and beyond 16 1,354,882 9.6 % 84,155 10.4 % 62.11 Total (3) 476 14,237,435 100.0 % $ 807,804 100.0 % $ 56.74 ____________________ (1) 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 tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases and expense reimbursement revenue.
Lease Expirations Year of Lease Expiration # of Expiring Leases Total Square Feet % of Total Leased Square Feet Annualized Base Rent (000’s) (1) (2) % of Total Annualized Base Rent (1) Annualized Rent per Square Foot (1) 2025 67 715,573 5.2 % $ 30,212 3.8 % $ 42.22 2026 74 1,934,525 14.0 % 93,174 11.8 % 48.16 2027 77 1,095,562 7.9 % 44,802 5.7 % 40.89 2028 58 1,160,992 8.4 % 71,467 9.1 % 61.56 2029 49 1,213,765 8.9 % 66,518 8.5 % 54.80 2030 55 1,661,615 12.0 % 98,690 12.5 % 59.39 2031 47 2,261,711 16.4 % 145,974 18.5 % 64.54 2032 17 1,125,182 8.2 % 74,380 9.4 % 66.10 2033 11 995,693 7.2 % 58,538 7.4 % 58.79 2034 19 710,620 5.1 % 47,932 6.2 % 67.45 2035 and beyond 19 919,502 6.7 % 55,870 7.1 % 60.76 Total (3) 493 13,794,740 100.0 % $ 787,557 100.0 % $ 57.09 ____________________ (1) 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.
Removed
During the year ended December 31, 2023, we added two development projects to our stabilized portfolio consisting of two buildings totaling 829,591 square feet of office space in San Diego, California and Austin, Texas. We did not have any properties held for sale at December 31, 2023.
Added
(2) Includes stabilized life science and retail space.
Removed
Includes month-to-month leases as of December 31, 2023. Represents economic occupancy.
Added
We believe that all of our properties are well maintained and do not require significant capital improvements. As of December 31, 2024, all of our stabilized office properties, excluding our three residential properties, were managed through internal property managers.
Removed
Stabilized Development Projects During the year ended December 31, 2023, the following properties were added to our stabilized portfolio of operating properties: Construction Period Stabilized Development Projects Location Start Date Completion Date Stabilization Date (1) Rentable Square Feet % Occupied (2) 9514 Towne Centre Drive University Towne Center 3Q 2021 3Q 2023 3Q 2023 70,616 100% Indeed Tower Austin CBD 2Q 2021 4Q 2022 4Q 2023 758,975 65% TOTAL: 829,591 68% ____________________ (1) For office and retail, represents the earlier of anticipated 95% occupancy date or one year from cessation of major base building construction activities.
Added
Includes month-to-month leases and leases with a lease term of less than one year as of December 31, 2024. Represents economic occupancy for space where we have achieved revenue recognition for the associated lease agreements..
Removed
(5) The 2024 lease expiration represents 76,031 rentable square feet expiring on October 31, 2024. (6) The 2024 lease expiration represents 53,762 rentable square feet that expired on January 31, 2024.
Added
(2) For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components. For multi-phase projects, interest and carry cost capitalization may cease and recommence driven by various factors, including tenant improvement construction and other tenant related timing or project scope.
Added
Redevelopment will occur in phases based on existing lease expiration dates and timing of the tenant improvement build-out. (3) Represents economic occupancy for space where we have achieved revenue recognition for the associated lease agreements.
Added
Developable Square Feet / Resi Units (1) Los Angeles 1633 26th Street West Los Angeles 190,000 San Diego Santa Fe Summit South / North 56 Corridor 600,000 - 650,000 2045 Pacific Highway Little Italy 275,000 Kilroy East Village East Village 1,100 units San Francisco Bay Area Kilroy Oyster Point - Phases 3 and 4 South San Francisco 875,000 - 1,000,000 Flower Mart SOMA 2,300,000 Seattle SIX0 Denny Regrade 925,000 and 650 units Austin Stadium Tower Stadium District / Domain 493,000 ____________________ (1) Represents developable office/life science square feet and/or residential units.
Added
San Francisco Bay Area 15,492 342,891 2.0% 2.0% 2030 5.7 15 Viacom International, Inc. Los Angeles 13,718 220,330 1.7% 1.3% 2028 4.0 16 Indeed, Inc.
Added
Austin 13,430 330,394 1.7% 1.9% 2034 10.0 17 Sony Interactive Entertainment, LLC San Francisco Bay Area 13,059 127,760 1.7% 0.7% 2030 5.3 18 Amazon.com (5) Seattle 12,921 340,705 1.6% 2.0% 2025 / 2030 4.3 19 Riot Games, Inc. Los Angeles 12,893 205,978 1.6% 1.2% 2026 / 2031 3.6 20 Tandem Diabetes Care, Inc.
Added
San Diego 12,409 143,850 1.6% 0.8% 2035 10.3 Total $ 423,449 7,191,075 53.6% 42.0% 6.0 _____________________ (1) Includes subsidiaries of tenant listed.
Added
(4) The 2025 lease expiration represents 26,043 rentable square feet expiring on June 30, 2025.
Added
Excludes leases not commenced as of December 31, 2024, space leased under month-to-month leases, storage leases, vacant space, leases with a lease term of less than one year, intercompany leases, and future lease renewal options not executed as of December 31, 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of December 31, 2023, we were not a defendant in, and our properties were not subject to, any legal proceedings that we believe, if determined adversely to us, would have a material adverse effect upon our financial condition, results of operations, or cash flows.
Biggest changeAs of December 31, 2024, we were not a defendant in, and our properties were not subject to, any legal proceedings that we believe, if determined adversely to us, would have a material adverse effect upon our financial condition, results of operations, or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table reports the distributions per common unit declared during the years ended December 31, 2023 and 2022. 2023 Per Unit Common Unit Distribution Declared First quarter $ 0.5400 Second quarter 0.5400 Third quarter 0.5400 Fourth quarter 0.5400 2022 Per Unit Common Unit Distribution Declared First quarter $ 0.5200 Second quarter 0.5200 Third quarter 0.5400 Fourth quarter 0.5400 52 PERFORMANCE GRAPH The following line graph compares the change in cumulative stockholder return on shares of the Company’s common stock to the cumulative total return of the FTSE Nareit All Equity REIT Index, the Standard & Poor’s (“S&P”) 500 Stock Index, and the S&P Composite 1500 – Office REIT Index for the five-year period ended December 31, 2023.
Biggest changeThe following table reports the distributions per common unit declared during the years ended December 31, 2024 and 2023. 2024 Per Unit Common Unit Distribution Declared First quarter $ 0.5400 Second quarter 0.5400 Third quarter 0.5400 Fourth quarter 0.5400 2023 Per Unit Common Unit Distribution Declared First quarter $ 0.5400 Second quarter 0.5400 Third quarter 0.5400 Fourth quarter 0.5400 51 PERFORMANCE GRAPH The following line graph compares the change in cumulative stockholder return on shares of the Company’s common stock to the cumulative total return of the FTSE Nareit All Equity REITs Index, the Standard & Poor’s (“S&P”) 500 Index, and the S&P Composite 1500 – Office REITs Index for the five-year period ended December 31, 2024.
ITEM 5. MARKET FOR KILROY REALTY CORPORATION’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “KRC.” As of the date this report was filed, there were approximately 86 registered holders of the Company’s common stock.
ITEM 5. MARKET FOR KILROY REALTY CORPORATION’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “KRC.” As of the date this report was filed, there were approximately 84 registered holders of the Company’s common stock.
The graph assumes an investment of $100 in us and each of the indices on December 31, 2018 and, as required by the SEC, the reinvestment of all distributions. The return shown on the graph is not necessarily indicative of future performance.
The graph assumes an investment of $100 in us and each of the indices on December 31, 2019 and, as required by the SEC, the reinvestment of all distributions. The return shown on the graph is not necessarily indicative of future performance.
The following table illustrates dividends declared during 2023 and 2022 as reported on the NYSE. 2023 Per Share Common Stock Dividends Declared First quarter $ 0.5400 Second quarter 0.5400 Third quarter 0.5400 Fourth quarter 0.5400 2022 Per Share Common Stock Dividends Declared First quarter $ 0.5200 Second quarter 0.5200 Third quarter 0.5400 Fourth quarter 0.5400 The Company pays distributions to common stockholders quarterly each January, April, July and October, at the discretion of the board of directors.
The following table illustrates dividends declared during 2024 and 2023 as reported on the NYSE. 2024 Per Share Common Stock Dividends Declared First quarter $ 0.5400 Second quarter 0.5400 Third quarter 0.5400 Fourth quarter 0.5400 2023 Per Share Common Stock Dividends Declared First quarter $ 0.5400 Second quarter 0.5400 Third quarter 0.5400 Fourth quarter 0.5400 The Company pays distributions to common stockholders quarterly each January, April, July, and October, at the discretion of the board of directors.
We include the S&P Composite 1500 – Office REIT Index because management believes it provides additional information to investors about our performance relative to a more specific peer group. The S&P Composite 1500 – Office REIT Index is a published and widely recognized index that comprises 13 office equity REITs, including us.
We include the S&P Composite 1500 – Office REITs Index because management believes it provides additional information to investors about our performance relative to a more specific peer group. The S&P Composite 1500 – Office REITs Index is a published and widely recognized index that comprises 11 office equity REITs, including us.
The Company did not purchase any equity securities during the three month period leading up to December 31, 2023. 51 MARKET FOR KILROY REALTY, L.P.’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES There is no established public trading market for the Operating Partnership’s common units.
The Company did not purchase any equity securities during the three month period leading up to December 31, 2024. 50 MARKET FOR KILROY REALTY, L.P.’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES There is no established public trading market for the Operating Partnership’s common units.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn March 2023, the Operating Partnership further amended the unsecured term loan facility agreement to exercise the accordion feature to provide for $20.0 million of additional term loan commitments, bringing the total borrowing capacity of the unsecured term loan facility to $520.0 million. 82 The following table summarizes the balance and terms of our unsecured term loan facility as of December 31, 2023: December 31, 2023 December 31, 2022 (in thousands) Outstanding borrowings $ 520,000 $ 200,000 Remaining borrowing capacity — 200,000 Total borrowing capacity (1) $ 520,000 $ 400,000 Interest rate (2) 6.41 % 5.23 % Undrawn facility fee-annual rate (3) 0.200% Maturity date (4) October 2024 ______________________ (1) We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $130.0 million and $100.0 million as of December 31, 2023 and December 31, 2022, respectively, under an accordion feature pursuant to the terms of the unsecured term loan facility (2) Our unsecured term loan facility interest rate was calculated using a contractual rate of Adjusted SOFR plus a margin of 0.950% based on our credit rating as of December 31, 2023 and December 31, 2022.
Biggest changeThe following table summarizes the balance and terms of our 2022 Term Loan Facility as of December 31, 2023: 2022 Term Loan Facility December 31, 2023 (in thousands) Outstanding borrowings $ 520,000 Remaining borrowing capacity — Total borrowing capacity $ 520,000 Interest rate (1) 6.41 % Undrawn facility fee-annual rate (2) 0.200% Maturity date October 3, 2024 ______________________ (1) Our 2022 Term Loan Facility interest rate was calculated using Adjusted SOFR plus a margin of 0.950% based on our credit rating as of December 31, 2023.
Base Rent The timing of when we commence rental revenue recognition for office, life science and retail properties depends largely on our conclusion as to whether we are or the tenant is the owner for accounting purposes of tenant improvements at the leased property.
Base Rent The timing of when we commence rental revenue recognition for office, life science, and retail properties depends largely on our conclusion as to whether we are or the tenant is the owner of tenant improvements at the leased property for accounting purposes.
Termination fee income, included in rental income, is recognized on a straight-line basis from the date of the executed termination agreement through revised lease expiration when the amount of the fee is determinable and collectability of the fee is probable. This fee income is reduced on a straight-line basis by any deferred rent receivable related to the lease.
Termination fee income, included in rental income, is recognized on a straight-line basis from the date of the executed termination agreement through the revised lease expiration when the amount of the fee is determinable and collectability of the fee is probable. This fee income is reduced on a straight-line basis by any deferred rent receivable related to the lease.
We expect to execute on our development and redevelopment programs with prudence and will be pursuing opportunities with attractive economic returns in strategic locations with proximity to public transportation or transportation access and retail amenities and in markets with strong fundamentals and visible demand.
We expect to execute on our development and redevelopment programs with prudence and will be pursuing opportunities with attractive economic returns in strategic locations with proximity to public transportation or transportation access, retail amenities, and in markets with strong fundamentals and visible demand.
The timing of any potential future disposition or strategic venture transactions will depend on market conditions and other factors, including but not limited to, our capital needs, the availability of financing for potential buyers (which has been and may continue to be constrained for some potential buyers due to the current economic and market conditions), and our ability to defer some or all of the taxable gains on the sales.
The timing of any potential future disposition or strategic venture transactions will depend on market conditions and other factors, including, but not limited to, our capital needs, the availability of financing for potential buyers (which has been and may continue to be constrained due to current economic and market conditions), and our ability to defer some or all of the taxable gains on the sales.
The Company evaluates the capital markets on an ongoing basis for opportunities to raise capital, and, as circumstances warrant, the Company and the Operating Partnership may issue securities of all of these types in one or more offerings at any time and from time to time on an opportunistic basis, depending upon, among other things, market conditions, available pricing and capital needs.
The Company evaluates the capital markets on an ongoing basis for opportunities to raise capital, and, as circumstances warrant, the Company and the Operating Partnership may issue securities of all of these types in one or more offerings at any time and from time to time on an opportunistic basis, depending upon, among other things, market conditions, available pricing, and capital needs.
When the Company receives proceeds from the sales of its preferred or common stock, it generally contributes the net proceeds from those sales to the Operating Partnership in exchange for corresponding preferred or common partnership units of the Operating Partnership.
When the Company receives proceeds from the sales of its preferred or common stock, it generally contributes the net proceeds from those sales to the Operating Partnership in exchange for corresponding preferred or common partnership units of the Operating Partnership.
The Operating Partnership may use these proceeds and proceeds from the sale of its debt securities to repay debt, including borrowings under its unsecured revolving credit facility and unsecured term loan facility, to develop new or redevelop existing properties, to make acquisitions of properties or portfolios of properties, or for general corporate purposes.
The Operating Partnership may use these proceeds and proceeds from the sale of its debt securities to repay debt, including borrowings under its unsecured revolving credit facility and unsecured term loan facility, to develop new or redevelop existing properties, to make acquisitions of properties or portfolios of properties, or for general corporate purposes.
Specifically, the grant date fair value of share-based compensation programs that include market conditions are calculated using a Monte Carlo simulation pricing model. Additionally, certain of our market condition share-based compensation programs also contain pre-defined financial performance conditions, including FFO per share and 63 debt to EBITDA ratio goals which can impact the number of restricted stock units ultimately earned.
Specifically, the grant date fair value of share-based compensation programs that include market conditions are calculated using a Monte Carlo simulation pricing model. Additionally, certain of our market condition share-based compensation programs also contain pre-defined financial performance conditions, including FFO per share and debt to EBITDA ratio goals which can impact the number of restricted stock units ultimately earned.
The acquired assets and assumed liabilities for an acquisition generally include but are not limited to: (i) land and improvements, buildings and improvements, undeveloped land and construction in progress and (ii) identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market operating leases and ground leases, acquired in-place lease values and tenant relationships, if any.
The acquired assets and assumed liabilities for an acquisition generally include, but are not limited to: (i) land and improvements, buildings and improvements, undeveloped land, and construction in progress, and (ii) identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market operating leases and ground leases, acquired 59 in-place lease values, and tenant relationships, if any.
Such assessment involves using a methodology that incorporates a specific identification analysis and an aging analysis, considering the current economic and business environment, including factors such as the age and nature of the receivables, the payment 59 history and financial condition of the tenant, our assessment of the tenant’s ability to meet its lease obligations, and the status of negotiations of any disputes with the tenant.
Such assessment involves using a methodology that incorporates a specific identification analysis and an aging analysis, considering the current economic and business environment, including factors such as the age and nature of the receivables, the payment history and financial condition of the tenant, our assessment of the tenant’s ability to meet its lease obligations, and the status of negotiations of any disputes with the tenant.
We are also required to 62 make a number of assumptions relating to future economic and market events and prospective operating trends. Determining the appropriate capitalization rate also requires significant judgment and is typically based on many factors including the prevailing rate for the market or submarket, as well as the quality and location of the properties.
We are also required to make a number of assumptions relating to future economic and market events and prospective operating trends. Determining the appropriate capitalization rate also requires significant judgment and is typically based on many factors, including the prevailing rate for the market or submarket, as well as the quality and location of the properties.
Deferred rent receivables represent the amount by which the cumulative straight-line rental revenue recorded to date exceeds cash rents billed to date under the lease agreement. We carry our current and deferred rent receivables net of allowances for amounts that may not be collected.
Deferred rent receivables represent the amount by which the cumulative straight-line rental revenue recorded to date exceeds cash rents billed to date under the lease agreement. 58 We carry our current and deferred rent receivables net of allowances for amounts that may not be collected.
In addition, because the value of above and below market leases are amortized as either a reduction or increase to rental income, respectively, our judgments for these intangibles could have a significant impact on our reported rental revenues and results of operations.
In addition, because the value of above and below market leases are 60 amortized as either a reduction or increase to rental income, respectively, our judgments for these intangibles could have a significant impact on our reported rental revenues and results of operations.
The following tables set forth certain information regarding our lease expirations for our stabilized portfolio, excluding our residential properties, for the next five years and by region for the next two years. Lease Expirations (1) Year of Lease Expiration Number of Expiring Leases Total Square Feet % of Total Leased Sq. Ft.
The following tables set forth certain information regarding our lease expirations for our stabilized portfolio, excluding our residential properties, for the next five years and by region for the next two years. Lease Expirations (1)(2) Year of Lease Expiration Number of Expiring Leases Total Square Feet % of Total Leased Sq. Ft.
We believe our conservative leverage and staggered debt maturities provide us with financial flexibility and enhance our ability to obtain additional sources of liquidity if necessary, and, therefore, we are well-positioned to refinance or repay maturing debt and to pursue our strategy of seeking attractive acquisition opportunities, which we may finance, as necessary, with future public and private issuances of debt and equity securities, although there can be no assurance in this regard. 81 2023 Capital and Financing Transactions We continue to be active in the capital markets to finance potential acquisitions and our development activity, as well as our continued desire to extend our debt maturities.
We believe our conservative leverage and staggered debt maturities provide us with financial flexibility and enhance our ability to obtain additional sources of liquidity if necessary, and, therefore, we are well-positioned to refinance or repay maturing debt and to pursue our strategy of seeking attractive acquisition opportunities, which we may finance, as necessary, with future public and private issuances of debt and equity securities, although there can be no assurance in this regard. 81 2024 Capital and Financing Transactions We continue to be active in the capital markets to finance potential acquisitions and our development activity, as well as our continued desire to extend our debt maturities.
The determination of the fair value of any debt assumed in connection with a property acquisition is estimated by discounting the future cash flows using interest rates available for the issuance of debt with similar terms and remaining maturities.
The determination of the fair value of any debt assumed in connection with a property acquisition is estimated by discounting the future cash flows using market interest rates available for the issuance of debt with similar terms and remaining maturities.
Distribution Requirements For a discussion of our dividend and distribution requirements, see “Liquidity and Capital Resources of the Company —Distribution Requirements.” 88 Factors That May Influence Future Sources of Capital and Liquidity of the Company and the Operating Partnership We continue to evaluate sources of financing for our business activities, including borrowings under the unsecured revolving credit facility, the unsecured term loan facility, issuance of public and private equity securities, unsecured debt and fixed-rate secured mortgage financing, proceeds from the disposition of selective assets through our capital recycling program, and the formation of strategic ventures.
Distribution Requirements For a discussion of our dividend and distribution requirements, see “Liquidity and Capital Resources of the Company —Distribution Requirements.” 89 Factors That May Influence Future Sources of Capital and Liquidity of the Company and the Operating Partnership We continue to evaluate sources of financing for our business activities, including borrowings under the unsecured revolving credit facility, the unsecured term loan facility, issuance of public and private equity securities, unsecured debt and fixed-rate secured mortgage financing, proceeds from the disposition of selective assets through our capital recycling program, and the formation of strategic ventures.
Our stabilized portfolio includes all of our properties with the exception of development properties currently committed for construction, under construction or in the tenant improvement phase, redevelopment projects under construction, undeveloped land and real estate assets held for sale.
Our stabilized portfolio includes all of our properties with the exception of development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, undeveloped land, and real estate assets held for sale.
We assume no obligation to update any forward-looking statement 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. 55 Company Overview We are a self-administered REIT active in premier office, life science and mixed-use property types in the United States.
We assume no obligation to update any forward-looking statement 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. 54 Company Overview We are a self-administered REIT active in premier office, life science, and mixed-use property types in the United States.
All of our properties are held in fee except for the fourteen office buildings that are held subject to long-term ground leases for the land (see Note 19 “Commitments and Contingencies” to our consolidated financial statements included in this report for additional information regarding our ground lease obligations). 2023 Operating and Development Highlights Throughout 2023, we remained focused on creating value for our stockholders through leasing, development and redevelopment activities.
All of our properties are held in fee except for the fourteen office buildings that are held subject to long-term ground leases for the land (see Note 19 “Commitments and Contingencies” to our consolidated financial statements included in this report for additional information regarding our ground lease obligations). 2024 Operating and Development Highlights Throughout 2024, we remained focused on creating value for our stockholders through leasing, and development and redevelopment activities.
Debt Maturities We believe our conservative leverage, staggered debt maturities, unsecured term loan facility and our unsecured revolving credit facility provide us with financial flexibility and enhance our ability to obtain additional sources of liquidity if necessary, and, therefore, we believe we are well-positioned to refinance or repay maturing debt and to pursue our strategy of seeking attractive acquisition opportunities, which we may finance, as necessary, with future public and private issuances of debt and equity securities.
Debt Maturities We believe our conservative leverage, staggered debt maturities, and our unsecured revolving credit facility provide us with financial flexibility and enhance our ability to obtain additional sources of liquidity if necessary, and, therefore, we believe we are well-positioned to refinance or repay maturing debt and to pursue our strategy of seeking attractive acquisition opportunities, which we may finance, as necessary, with future public and private issuances of debt and equity securities.
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 work and flexible working arrangements that allow work from remote locations other than the employer’s office premises; 54 • 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.
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; 53 • costs to comply with government regulations, including environmental remediation; • the availability of cash for distribution and debt service, and exposure to risk of default under debt obligations; • increases in interest rates and our ability to manage interest rate exposure; • changes in interest rates and the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment, and acquisition opportunities and refinance existing debt; • a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices, or obtain or maintain debt financing, and which may result in write-offs or impairment charges; • significant competition, which may decrease the occupancy and rental rates of properties; • potential losses that may not be covered by insurance; • the ability to successfully complete acquisitions and dispositions on announced terms; • the ability to successfully operate acquired, developed, and redeveloped properties; • the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; • delays or refusals in obtaining all necessary zoning, land use, and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; • increases in anticipated capital expenditures, tenant improvement, and/or leasing costs; • defaults on leases for land on which some of our properties are located; • adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes; • risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers; • environmental uncertainties and risks related to natural disasters; • risks associated with climate change and our sustainability strategies, and our ability to achieve our sustainability goals; and • our ability to maintain our status as a REIT.
Management’s Discussion and Analysis of Financial Condition and Results of Operations –Results of Operations” in our Form 10-K for the year ended December 31, 2022 for a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021. 77 Liquidity and Capital Resources of the Company In this “Liquidity and Capital Resources of the Company” section, the term the “Company” refers only to Kilroy Realty Corporation on an unconsolidated basis and excludes the Operating Partnership and all other subsidiaries.
Management’s Discussion and Analysis of Financial Condition and Results of Operations –Results of Operations” in our Form 10-K for the year ended December 31, 2023 for a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022. 77 Liquidity and Capital Resources of the Company In this “Liquidity and Capital Resources of the Company” section, the term the “Company” refers only to Kilroy Realty Corporation on an unconsolidated basis and excludes the Operating Partnership and all other subsidiaries.
The fair value of buildings and improvements, tenant improvements and leasing 60 costs considers the value of the property as if it was vacant as well as current replacement costs and other relevant market rate information.
The fair value of buildings and improvements, tenant improvements, and leasing costs considers the value of the property as if it was vacant as well as current replacement costs and other relevant market rate information.
For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term and, for some tenants, may include an offsetting partial allowance for uncollectible accounts related to current tenant and deferred rent receivables that exhibit a certain level of collection risk based on the results of the assessment described above.
For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the non-cancellable lease term and, for some tenants, may include an offsetting partial allowance for uncollectible accounts related to current tenant and deferred rent receivables that exhibit a certain level of collection risk based on the results of the assessment described above.
For Leases Commenced (1) Year to Date Number of Leases (2) Rentable Square Feet (2) Weighted Average Lease Term (in months) TI/LC per Sq. Ft. (3) TI/LC per Sq.
For Leases Commenced (1) Year to Date Number of Leases Rentable Square Feet Weighted Average Lease Term (in months) TI/LC per Sq. Ft. (2) TI/LC per Sq.
(3) Our residential portfolio consists of our 200-unit residential tower and 193-unit Jardine project in Hollywood, California and 608 residential units at our One Paseo mixed-use project in Del Mar, California. 72 Results of Operations Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Net Operating Income Management internally evaluates the operating performance and financial results of our stabilized portfolio based on Net Operating Income.
(3) Our residential portfolio consists of our 200-unit residential tower and 193-unit Jardine project in Hollywood, California and 608 residential units at our One Paseo mixed-use project in Del Mar, California. 72 Results of Operations Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 Net Operating Income Management internally evaluates the operating performance and financial results of our stabilized portfolio based on Net Operating Income.
Changes to compensation cost resulting from changes in the estimated level of achievement of the performance conditions are recorded as cumulative adjustments in the period the change in the estimated level of achievement of the performance conditions is determined.
Changes to compensation cost resulting from changes in the estimated level of achievement of the performance 63 conditions are recorded as cumulative adjustments in the period the change in the estimated level of achievement of the performance conditions is determined.
As part of this strategy, we attempt to enter into transactions intended to qualify as like-kind exchanges pursuant to Section 1031 of the Code (“Section 1031 Exchanges”) and other tax deferred transaction structures, when possible, to defer some or all of the taxable gains on the sales, if any, 66 for federal and state income tax purposes.
As part of this strategy, we may attempt to enter into transactions intended to qualify as like-kind exchanges pursuant to Section 1031 of the Code (“Section 1031 Exchanges”) and other tax deferred transaction structures, when possible, to defer some or all of the taxable gains on the sales, if any, for federal and state income tax purposes.
The table: (i) indicates the maturities and scheduled principal repayments of our secured and unsecured debt outstanding as of December 31, 2023; (ii) indicates the scheduled interest payments of our fixed-rate and variable-rate debt as of December 31, 2023; (iii) provides information about the minimum commitments due in connection with our ground lease obligations and other lease and contractual commitments; and (iv) provides estimated in-process and recently completed development commitments as of December 31, 2023.
The table: (i) indicates the maturities and scheduled principal repayments of our secured and unsecured debt outstanding as of December 31, 2024; (ii) indicates the scheduled interest payments of our fixed-rate and variable-rate debt as of December 31, 2024; (iii) provides information about the minimum commitments due in connection with our ground lease obligations and other lease and contractual commitments; and (iv) provides estimated in-process and recently completed development commitments as of December 31, 2024.
This variability relating to the level of the performance condition achieved requires management’s judgment and estimates, which impacts compensation cost recognized for these awards during the performance period. As of December 31, 2023, the performance condition for certain of our outstanding market condition share-based compensation programs has been met and compensation cost for these awards is no longer variable.
This variability relating to the level of the performance condition achieved requires management’s judgment and estimates, which impacts compensation cost recognized for these awards during the performance period. As of December 31, 2024, the performance condition for certain of our outstanding market condition share-based compensation programs has been met and compensation cost for these awards is no longer variable.
The following table sets forth our historical actual capital expenditures, and tenant improvements and leasing commissions for deals commenced, excluding tenant-funded tenant improvements, for renewed and re-tenanted space within our stabilized portfolio for each of the years ended December 31, 2023, 2022 and 2021 on a per square foot basis.
The following table sets forth our historical actual capital expenditures and tenant improvements and leasing commissions for deals commenced, excluding tenant-funded tenant improvements, for renewed and re-tenanted space within our stabilized portfolio for each of the years ended December 31, 2024, 2023 and 2022 on a per square foot basis.
After completing this process, we determined that for each of the operating properties evaluated, undiscounted cash flows over the holding period were in excess of carrying value and, therefore, we did not record any impairment losses for these properties for the years ended December 31, 2023, 2022 and 2021.
After completing this process, we determined that for each of the operating properties evaluated, undiscounted cash flows over the holding period were in excess of carrying value and, therefore, we did not record any impairment losses for these properties for the years ended December 31, 2024, 2023, and 2022.
(4) Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships. 80 Liquidity and Capital Resources of the Operating Partnership In this “Liquidity and Capital Resources of the Operating Partnership” section, the terms “we,” “our,” and “us” refer to the Operating Partnership or the Operating Partnership and the Company together, as the context requires.
(6) Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships. 80 Liquidity and Capital Resources of the Operating Partnership In this “Liquidity and Capital Resources of the Operating Partnership” section, the terms “we,” “our,” and “us” refer to the Operating Partnership or the Operating Partnership and the Company together, as the context requires.
The information in the table above reflects our projected interest rate obligations for those variable-rate payments based on the outstanding principal balance as of December 31, 2023, the scheduled payment interest payment dates and the contractual maturity date. (5) Reflects minimum lease payments through the contractual lease expiration date before the impact of extension options.
The information in the table above reflects our projected interest rate obligations for those variable-rate payments based on the outstanding principal balance as of December 31, 2024, the scheduled payment interest payment dates and the contractual maturity date. (5) Reflects minimum lease payments through the contractual lease expiration date before the impact of extension options.
(2) Represents cash paid and costs incurred, including accrued liabilities in accordance with GAAP, as of December 31, 2023. Fluctuations in our development activities could cause fluctuations in the average development asset balances qualifying for interest and other carrying cost and internal cost capitalization in future periods.
(2) Represents cash paid and costs incurred, including accrued liabilities in accordance with GAAP, as of December 31, 2024. Fluctuations in our development activities could cause fluctuations in the average development asset balances qualifying for interest and other carrying cost and internal cost capitalization in future periods.
Share-Based Incentive Compensation Accounting At December 31, 2023, the Company had one share-based incentive compensation plan, the Kilroy Realty 2006 Incentive Award Plan, which is described more fully in Note 16 “Share-Based and Other Compensation” to our consolidated financial statements included in this report.
Share-Based Incentive Compensation Accounting At December 31, 2024, the Company had one share-based incentive compensation plan, the Kilroy Realty 2006 Incentive Award Plan, which is described more fully in Note 16 “Share-Based and Other Compensation” to our consolidated financial statements included in this report.
Liquidity Uses • Property operating and corporate expenses; • Capital expenditures, tenant improvement and leasing costs; • Development and redevelopment costs; • Operating property or undeveloped land acquisitions; • Debt service and principal payments, including debt maturities; • Distributions to common security holders; • Repurchases and redemptions of outstanding common stock of the Company; and • Outstanding debt repurchases, redemptions and repayments.
Liquidity Uses • Property operating and corporate expenses; • Capital expenditures, tenant improvements, and leasing costs; • Development and redevelopment costs; • Operating property or undeveloped land acquisitions; • Debt service and principal payments, including debt maturities; • Distributions to common security holders; • Repurchases and redemptions of outstanding common stock of the Company; and • Outstanding debt repurchases, redemptions and repayments.
Most of our lease amendments are accounted for as a modification of our operating leases, which requires us to reassess both the lease term and fixed lease payments, including any prepaid or deferred rent receivables relating to the original lease, as a part of the lease payments for the modified lease.
Most of our lease amendments are accounted for as modifications of our operating leases, which requires us to reassess both the lease term and fixed lease payments, including any prepaid or deferred rent receivables relating to the original lease, as a part of the lease payments for the modified lease.
Further, the Company may deliver leased space in phases, rather than for an entire building or project, resulting in various revenue commencement dates for a particular lease, which involves significant judgment surrounding when the tenant takes possession of or controls each respective phase, building or project. 57 The determination of whether we are or the tenant is the owner of tenant improvements for accounting purposes is subject to significant judgment.
Further, we may deliver leased space in phases, rather than for an entire building or project, resulting in various revenue commencement dates for a particular lease, which involves significant judgment surrounding when the tenant takes possession of or controls each respective phase, building, or project. 56 The determination of whether we are or the tenant is the owner of tenant improvements for accounting purposes is subject to significant judgment.
In 2023, the Company’s distributions exceeded 100% of its taxable income, resulting in a return of capital to its stockholders (see Note 25 “Tax Treatment of Distributions” to our consolidated financial statements included in this report for additional information).
In 2024, the Company’s distributions exceeded 100% of its taxable income, resulting in a return of capital to its stockholders (see Note 25 “Tax Treatment of Distributions” to our consolidated financial statements included in this report for additional information).
Refer to our 2023 Financing Highlights in “—Liquidity and Capital Resources of the Operating Partnership” for a list of financing transactions completed in 2023 and Note 10, “Secured and Unsecured Debt of the Operating Partnership” to our consolidated financial statements included in this report for additional information regarding our debt and capital market activity. 56 Critical Accounting Policies and Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting periods.
Refer to our 2024 Financing Highlights in “—Liquidity and Capital Resources of the Operating Partnership” for a list of financing transactions completed in 2024 and Note 10 “Secured and Unsecured Debt of the Operating Partnership” to our consolidated financial statements included in this report for additional information regarding our debt and capital market activity. 55 Critical Accounting Policies and Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting periods.
Net Operating Income is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. This measure thereby provides an operating perspective not immediately apparent from GAAP income from operations or net income.
Net Operating Income is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. This measure thereby provides an operating perspective not immediately apparent from net income.
See Note 12 “Noncontrolling Interests on the Company’s Consolidated Financial Statements” to our consolidated financial statements included in this report for additional information. Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 Refer to “Item 7.
See Note 12 “Noncontrolling Interests on the Company’s Consolidated Financial Statements” to our consolidated financial statements included in this report for additional information. Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Refer to “Item 7.
(2) As of December 31, 2023 and 2022, there was no outstanding balance on the unsecured revolving credit facility. (3) Excludes the impact of the amortization of any debt discounts/premiums and deferred financing costs.
(2) As of December 31, 2024 and 2023, there was no outstanding balance on the unsecured revolving credit facility. (3) Excludes the impact of the amortization of any debt discounts/premiums and deferred financing costs.
However, in the event of an economic slowdown or continued volatility in the credit markets, there is no certainty that the Operating Partnership will be able to continue to satisfy all the covenant requirements. 89 Consolidated Historical Cash Flow Summary The following summary discussion of our consolidated historical cash flow is based on the consolidated statements of cash flows in Item 15.
However, in the event of an economic slowdown or continued volatility in the credit markets, there is no certainty that the Operating Partnership will be able to continue to satisfy all the covenant requirements. 90 Consolidated Historical Cash Flows Summary The following summary discussion of our consolidated historical cash flows is based on the consolidated statements of cash flows in Item 15.
Our historical experience for the years ended December 31, 2022 and 2021 has been that our final reconciliation and billing process resulted in final amounts that approximated the total annual additional rent recognized.
Our historical experience for the years ended December 31, 2023 and 2022 has been that our final reconciliation and billing process resulted in final amounts that approximated the total annual additional rent recognized.
During the year ended December 31, 2023, we capitalized interest on in-process development projects and future development pipeline projects with an average aggregate cost basis of approximately $1.9 billion, as it was determined these projects qualified for interest and other carrying cost capitalization under GAAP.
During the year ended December 31, 2024, we capitalized interest on in-process development and redevelopment projects and future development pipeline projects with an average aggregate cost basis of approximately $1.9 billion, as it was determined these projects qualified for interest and other carrying cost capitalization under GAAP.
As of December 31, 2023, there are certain outstanding share-based compensation awards where the achievement of the performance condition is yet unknown as the award is still within its performance measurement period.
As of December 31, 2024, there are certain outstanding share-based compensation awards where the achievement of the performance condition is yet unknown as the award is still within its performance measurement period.
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.
The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: significant changes in the economy, market conditions, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes, or project design.
Cash flows from operating activities generated by the Operating Partnership for the year ended December 31, 2023 were sufficient to cover the Company’s payment of cash dividends to its stockholders.
Cash flows from operating activities generated by the Operating Partnership for the year ended December 31, 2024 were sufficient to cover the Company’s payment of cash dividends to its stockholders.
Costs incurred for tenant improvement and leasing commissions in 2024 will depend upon the current economic environment, market conditions in each of our submarkets and actual leasing activity.
Costs incurred for tenant improvement and leasing commissions in 2025 will depend upon the current economic environment, market conditions in each of our submarkets, and actual leasing activity.
In-Process Development Projects - Under Construction As of December 31, 2023, we had one development project under construction: • Kilroy Oyster Point (Phase 2), South San Francisco, California. In June 2021, we commenced construction on Phase 2 of this 39-acre life science campus situated on the waterfront in South San Francisco.
In-Process Development - Under Construction As of December 31, 2024, we had one development project under construction: • Kilroy Oyster Point (Phase 2), South San Francisco, California. In June 2021, we commenced construction on Phase 2 of this 39-acre life science campus situated on the waterfront in South San Francisco.
(2) 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 tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue.
(3) 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.
Any potential future disposition transactions and the timing of any potential future capital recycling transactions will depend on market conditions and other factors including but not limited to our capital needs, the availability of financing for potential buyers (which has been and may continue to be constrained for some potential buyers due to current economic and market conditions), and our ability to defer some or all of the taxable gains on the sales.
The timing of any potential future disposition or strategic venture transactions will depend on market conditions and other factors, including, but not limited to, our capital needs, the availability of financing for potential buyers (which has been and may continue to be constrained due to current economic and market conditions) and our ability to absorb or defer some or all of the taxable gains on the sales.
Termination options require advance notification from the tenant and payment of a termination fee that reimburses us for a portion of the remaining rent under the original 58 lease term and the net book value of lease inception costs such as commissions, tenant improvements and lease incentives.
Termination options generally require advance notification from the tenant, and payment of a termination fee that reimburses us for a portion of the remaining rent under the 57 original lease term and the net book value of lease inception costs such as commissions, tenant improvements, and lease incentives.
The Company believes the Operating Partnership’s sources of working capital, specifically its cash flows from operations and borrowings available under its unsecured revolving credit facility and unsecured term loan facility and funds from its capital recycling program, including strategic ventures, are adequate for it to make its distribution payments to the Company and, in turn, for the Company to make its dividend payments to its common stockholders for the next twelve months.
The Company believes the Operating Partnership’s sources of working capital, specifically its cash flows from operations and borrowings available under its unsecured revolving credit facility and funds from its capital recycling program, including strategic ventures, are adequate for it to make its distribution payments to the Company to make its dividend payments to its common stockholders for the next twelve months.
See Note 19 “Commitments and Contingencies” to our consolidated financial statements included in this report for further information. (6) Amounts represent cash commitments under signed leases and contracts for operating properties, excluding tenant-funded tenant improvements, and for other contractual commitments. The timing of these expenditures may fluctuate.
See Note 19 “Commitments and Contingencies” to our consolidated financial statements included in this report for further information about our ground lease obligations. (6) Amounts represent cash commitments under signed leases and contracts for operating properties, excluding tenant-funded tenant improvements, and for other contractual commitments. The timing of these expenditures may fluctuate.
In addition, for development and redevelopment projects, we also capitalize the following costs during periods in which activities necessary to prepare the project for its intended use are in progress: interest costs based on the weighted average interest rate of our outstanding indebtedness for the period, real estate taxes and insurance.
In addition, for development and redevelopment projects, we also capitalize the following costs during periods in which activities necessary to prepare the project for its intended use are in progress: pre-construction costs essential to the development of the property, interest costs based on the weighted average interest rate of our outstanding indebtedness for the period, real estate taxes, and insurance.
Such investments may include, for example, obligations of the Government National Mortgage Association, other governmental agency securities, certificates of deposit, and interest-bearing bank deposits. On December 6, 2023, the Board of Directors declared a regular quarterly cash dividend of $0.54 per share of common stock.
Such investments may include, for example, obligations of the Government National Mortgage Association, other governmental agency securities, certificates of deposit, and interest-bearing bank deposits. On December 5, 2024, the Board of Directors declared a regular quarterly cash dividend of $0.54 per share of common stock.
During the years ended December 31, 2023, 2022, and 2021, we capitalized $7.1 million, $22.8 million, and $37.3 million, respectively, of tenant-funded tenant improvements. The amount of tenant-funded tenant improvements recorded in any given year varies based upon the mix of specific leases executed and/or commenced during the reporting period.
During the years ended December 31, 2024, 2023, and 2022, we capitalized $3.5 million, $7.1 million, and $22.8 million, respectively, of tenant-funded tenant improvements. The amount of tenant-funded tenant improvements recorded in any given year varies based upon the mix of specific leases executed and/or commenced during the reporting period.
Our impairment loss calculation compares the net carrying amount of the real estate asset to the real estate asset’s estimated fair value, which may be based on estimated discounted future cash flow calculations or third-party valuations or appraisals. We recognize an impairment loss if the amount of the asset’s net carrying amount exceeds the asset’s estimated fair value.
Our impairment loss calculation compares the net carrying amount of the real estate asset to the real estate asset’s estimated fair value, which may be based on estimated discounted future cash flow calculations or third-party valuations or appraisals, and we recognize an impairment loss to the extent that the asset’s net carrying amount exceeds the asset’s estimated fair value.
Refer to “Part I, Item IA. Risk Factors” included in this report for additional information about the potential impact of inflation on our interest expense and construction costs and the impact on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations.
For additional information about the potential impact of inflation on our interest expense and construction costs and the impact on our business, financial condition, results of operations, cash flows, liquidity, and ability to satisfy our debt service obligations, refer to “Part I, Item IA. Risk Factors”.
In the event our estimates were not consistent with actual collections and we had to change our allowances by 1% of revenue from continuing operations, the potential impact to our net income available to common stockholders would be approximately $11.3 million, $11.0 million and $9.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.
In the event our estimates were not consistent with actual collections and we had to change our allowances by 1% of revenue from continuing operations, the potential impact to our net income available to common stockholders would be approximately $11.4 million, $11.3 million and $11.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Annualized Base Rent (2)(3) % of Total Annualized Base Rent (2) Annualized Base Rent per Sq. Ft.
Annualized Base Rent (3) % of Total Annualized Base Rent (3) Annualized Base Rent per Sq. Ft.
Ft. Annualized Base Rent (2)(3) % of Total Annualized Base Rent (2) Annualized Rent per Sq. Ft.
Ft. Annualized Base Rent (3) % of Total Annualized Base Rent (3) Annualized Rent per Sq. Ft.
Such amount is based in part upon the estimated future outcome of the performance metrics as of December 31, 2023, and the actual compensation cost ultimately recognized could increase or decrease from this estimate based upon actual performance results. The costs are expected to be recognized over a weighted-average period of 1.6 years.
Such amount is based in part upon the estimated future outcome of the performance metrics as of December 31, 2024, and the actual compensation cost ultimately recognized could increase or decrease from this estimate based upon actual performance results. These costs are expected to be recognized over a weighted-average period of 1.7 years.
The amount of rental income we generate also depends on our ability to maintain or increase rental rates in our submarkets. Negative trends in one or more of these factors could adversely affect our rental income in future periods. The following tables set forth certain information regarding leasing activity during the year ended December 31, 2023.
The amount of rental income we generate also depends on our ability to maintain or increase rental rates at our properties. Negative trends in one or more of these factors could adversely affect our rental income in future periods. The following tables set forth certain information regarding leasing activity during the year ended December 31, 2024.
The regular quarterly cash dividend is payable to stockholders of record on December 29, 2023 and a corresponding cash distribution of $0.54 per Operating Partnership unit is payable to holders of the Operating Partnership’s common limited partnership interests of record on December 29, 2023, including those owned by the Company.
The regular quarterly cash dividend is payable to stockholders of record on December 31, 2024 and a corresponding cash distribution of $0.54 per Operating Partnership unit is payable to holders of the Operating Partnership’s common limited partnership interests of record on December 31, 2024, including those owned by the Company.
For the years ended December 31, 2023, 2022 and 2021, we recorded a net reduction to rental revenues for direct write-offs associated with transitioning certain tenants to a cash basis of reporting and an allowance for uncollectible accounts for both current tenant receivables and deferred rent receivables of approximately 1.1% (of which 0.5% relates to one tenant), 0.2% and 0.3% of total revenues, respectively.
For the years ended December 31, 2024, 2023, and 2022, we recorded a net reduction to rental revenues for direct write-offs associated with transitioning certain tenants to a cash basis of reporting and an allowance for uncollectible accounts for both current tenant receivables and deferred rent receivables of approximately 0.4%, 1.1% (of which 0.5% related to one tenant), and 0.2% of total revenues, respectively.
As of December 31, 2023, the following properties were excluded from our stabilized portfolio: Number of Properties/Projects Estimated Rentable Square Feet (1) In-process development projects - under construction 1 875,000 In-process redevelopment projects - under construction 2 100,000 ________________________ (1) Estimated rentable square feet upon completion.
As of December 31, 2024, the following properties were excluded from our stabilized portfolio: Number of Properties/Projects Estimated Rentable Square Feet (1) In-process redevelopment projects - tenant improvement 2 100,000 In-process development projects - under construction 1 875,000 ________________________ (1) Estimated rentable square feet upon completion.
Potential Future Acquisitions As discussed in the section “—Factors That May Influence Future Results of Operations - Acquisitions,” we continue to evaluate strategic opportunities and remain a disciplined buyer of development and redevelopment opportunities as well as value-add and strategic operating properties, dependent on market conditions and business cycles, among other factors.
Potential Future Acquisitions As discussed in the section “—Factors That May Influence Future Results of Operations - Acquisitions,” we continue to evaluate strategic opportunities and remain a disciplined buyer of core, value-add and strategic operating properties, and land, dependent on market conditions and business cycles, among other factors.
This fair value is based on a variety of considerations including, but not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases; (2) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period; and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period.
This fair value is based on a variety of considerations, including, but not necessarily limited to: (i) the value associated with lost rental revenue from existing leases during the assumed lease-up period; (ii) the value associated with avoiding the cost of originating the acquired in-place leases; and (iii) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period.
(4) Includes the impact of amortization of any debt discounts/premiums, excluding deferred financing costs. 85 Liquidity Uses Contractual Obligations The following table provides information with respect to our contractual obligations as of December 31, 2023.
(4) Includes the impact of amortization of any debt discounts/premiums, excluding deferred financing costs. 86 Liquidity Uses Contractual Obligations The following table provides information with respect to our contractual obligations as of December 31, 2024.
Projects in the tenant improvement phase are added to our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities.
Projects in the tenant improvement phase are moved into our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities.
As the Company intends to maintain distributions at a level sufficient to meet the REIT distribution requirements and minimiz e its obligation to pay income and excise taxes, it will continue to evaluate whether the current levels of distribution are appropriate to do so throughout 2024.
As the Company intends to maintain distributions at a level sufficient to meet the REIT distribution requirements and minimize its obligation to pay income and excise taxes, it will continue to evaluate whether the current levels of distribution are appropriate to do so throughout 2025.
The information in the table above reflects our projected interest rate obligations for these fixed-rate payments based on the contractual interest rates on an accrual basis and scheduled maturity dates. (4) As of December 31, 2023, 10.5% of our debt bore interest at variable rates which was incurred under the unsecured term loan facility.
The information in the table above reflects our projected interest rate obligations for these fixed-rate payments based on the contractual interest rates on an accrual basis and scheduled maturity dates. (4) As of December 31, 2024, 4.3% of our debt bore interest at variable rates which was incurred under the 2024 Term Loan Facility.
Acquisitions As part of our growth strategy, which is highly dependent on market conditions and business cycles, among other factors, we continue to evaluate strategic opportunities and remain a disciplined buyer of development and redevelopment opportunities as well as value-add and strategic operating properties and land.
As part of our growth strategy, which is highly dependent on market conditions and business cycles, among other factors, we continue to evaluate strategic opportunities and remain a disciplined buyer of core, value-add and strategic operating properties and land.
We focus on growth opportunities primarily in markets populated by knowledge and creative based tenants in a variety of industries, including technology, media, healthcare, life sciences, entertainment and professional services.
We historically have focused on growth opportunities primarily in markets populated by knowledge and creative-based tenants in a variety of industries, including technology, media, healthcare, life sciences, entertainment, and professional services.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2022, there was no outstanding balance on our unsecured revolving credit facility; however, it was available for borrowing at the following variable rate: Adjusted SOFR plus a spread of 0.900% (weighted average interest rate of 5.20%).
Biggest changeThere was no outstanding balance on our $1.1 billion unsecured revolving credit facility at December 31, 2024; however, it was available for borrowing at the following variable rate: Adjusted SOFR plus a spread of 1.100% (weighted average interest rate of 5.69%).
These policies include maintaining prudent amounts of debt, including a greater amount of fixed-rate debt as compared to variable-rate debt in our portfolio, and may include the periodic use of derivative instruments. Information about our changes in interest rate risk exposures from December 31, 2022 to December 31, 2023 is incorporated herein by reference from “Item 7.
These policies include maintaining prudent amounts of debt, including a greater amount of fixed-rate debt as compared to variable-rate debt in our portfolio, and may include the periodic use of derivative instruments. Information about our changes in interest rate risk exposures from December 31, 2023 to December 31, 2024 is incorporated herein by reference from “Item 7.
See Note 20 “Fair Value Measurements and Disclosures” and Note 2 “Basis of Presentation and Significant Accounting Policies” in the consolidated financial statements included in this report for additional information on the fair value of our financial assets and liabilities as of December 31, 2023 and December 31, 2022.
See Note 20 “Fair Value Measurements and Disclosures” and Note 2 “Basis of Presentation and Significant Accounting Policies” in the consolidated financial statements included in this report for additional information on the fair value of our financial assets and liabilities as of December 31, 2024 and December 31, 2023.
These credit spreads take into account factors, including but not limited to, our credit profile, the tenure of the debt, amortization period, whether the debt is secured or unsecured, and the loan-to-value ratio of the debt to the collateral, amongst other factors.
These credit spreads take into account factors, including, but not limited to, our credit rating, the tenure of the debt, amortization period, whether the debt is secured or unsecured, and the loan-to-value ratio of the debt to the collateral, amongst other factors.
There was no outstanding balance on our $1.1 billion unsecured revolving credit facility at December 31, 2023; however, it was available for borrowing at the following variable rate: Adjusted SOFR plus a spread of 0.900% (weighted average interest rate of 6.38%).
As of December 31, 2023, there was no outstanding balance on our unsecured revolving credit facility; however, it was available for borrowing at the following variable rate: Adjusted SOFR plus a spread of 0.900% (weighted average interest rate of 6.38%).
We calculate the market rate by obtaining period-end treasury rates for maturities that correspond to the maturities of our fixed-rate debt and then adding an appropriate credit spread based on information obtained from third-party financial institutions.
We calculate the market rate by obtaining period-end benchmark interest rates for maturities that correspond to the maturities of our fixed-rate debt and then adding an appropriate credit spread based on information obtained from third-party financial institutions.
Assuming no changes in the outstanding balance of our existing variable-rate debt as of December 31, 2023, a 100 basis-point increase in the Adjusted SOFR rate would have increased our projected annual interest expense, before the effect of capitalization, by approximately $5.2 million.
Assuming no changes in the outstanding balance of our existing variable-rate debt as of December 31, 2024, a 100 basis-point increase in the Adjusted SOFR rate would have increased our projected annual interest expense, before the effect of capitalization, by approximately $2.0 million.
For sensitivity purposes, a 100 basis-point increase in the discount rate equates to a decrease in the total fair value of our fixed-rate debt of approximately $180.7 million, or 4.5%, as of December 31, 2023.
For sensitivity purposes, a 100 basis-point increase in the discount rate equates to a decrease in the total fair value of our fixed-rate debt of approximately $181.7 million, or 4.5%, as of 94 December 31, 2024.
Comparatively, a 100 basis-point increase in the discount rate equates to a decrease in the total fair value of our fixed-rate debt of approximately $172.6 million, or 4.9%, as of December 31, 2022. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the index included at Item 15. “Exhibits and Financial Statement Schedules.”
Comparatively, a 100 basis-point increase in the discount rate equates to a decrease in the total fair value of our fixed-rate debt of approximately $180.7 million, or 4.5%, as of December 31, 2023. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the index included at Item 15. “Exhibits and Financial Statement Schedules.”
The total carrying value of our fixed-rate debt was approximately $4.4 billion and $4.1 billion as of December 31, 2023 and 2022, respectively. The total estimated fair value of our fixed-rate debt was approximately $4.0 billion 93 and $3.5 billion as of December 31, 2023 and 2022, respectively.
The total carrying value of our fixed-rate debt was approximately $4.4 billion as of December 31, 2024 and 2023. The total estimated fair value of our fixed-rate debt was approximately $4.1 billion and $4.0 billion as of December 31, 2024 and 2023, respectively.
Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources of the Operating Partnership.” Interest Rate Risk As of December 31, 2023, 10.5% of our total outstanding debt of $5.0 billion (before the effects of debt discounts and deferred financing costs) was subject to variable interest rates. The remaining 89.5% bore interest at fixed rates.
Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources of the Operating Partnership.” Interest Rate Risk As of December 31, 2024, 4.3% of our total outstanding debt of $4.6 billion (before the effects of debt discounts and deferred financing costs) was subject to variable interest rates. The remaining 95.7% bore interest at fixed rates.
Removed
Prior to amending the terms of our unsecured revolving credit facility in October 2022, we calculated the market rate of our unsecured revolving credit facility by obtaining the period-end LIBOR and then adding an appropriate credit spread based on our credit ratings and the amended terms of our unsecured revolving credit facility agreement.
Added
At December 31, 2024, the total outstanding balance of our variable-rate debt was comprised of borrowings on our unsecured term loan facility of $200.0 million, which was indexed to Adjusted SOFR plus a spread of 1.200% (weighted average interest rate of 5.7%).

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