KILROY REALTY CORP [KRC] Filings

10-Q 1 krc-20240930.htm 10-Q krc-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-12675 (Kilroy Realty Corporation)

Commission File Number: 000-54005 (Kilroy Realty, L.P.)

KILROY REALTY CORPORATION

KILROY REALTY, L.P.

(Exact name of registrant as specified in its charter)



Kilroy Realty Corporation	Maryland	95-4598246
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Kilroy Realty, L.P.	Delaware	95-4612685
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

12200 W. Olympic Boulevard, Suite 200, Los Angeles, California, 90064

(Address of principal executive offices) (Zip Code)

(310) 481-8400


(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Registrant	Title of each class	Name of each exchange on which registered	Ticker Symbol
Kilroy Realty Corporation	Common Stock, $.01 par value	New York Stock Exchange	KRC


Securities registered pursuant to Section 12(g) of the Act:
Registrant			Title of each class
Kilroy Realty, L.P.			Common Units Representing Limited Partnership Interests

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Kilroy Realty Corporation Yes ☑ No ☐

Kilroy Realty, L.P. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Kilroy Realty Corporation Yes ☑ No ☐

Kilroy Realty, L.P. Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Kilroy Realty Corporation

Large accelerated filer ☑ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Kilroy Realty, L.P.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☑ Smaller reporting company ☐

Emerging growth company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Kilroy Realty Corporation Yes ☐ No ☑

Kilroy Realty, L.P. Yes ☐ No ☑

As of October 25, 2024, 118,046,674 shares of Kilroy Realty Corporation common stock, par value $.01 per share, were outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2024 of Kilroy Realty Corporation and Kilroy Realty, L.P. Unless stated otherwise or the context otherwise requires, references to “Kilroy Realty Corporation” or the “Company,” “we,” “our,” and “us” mean Kilroy Realty Corporation, a Maryland corporation, and its controlled and consolidated subsidiaries, and references to “Kilroy Realty, L.P.” or the “Operating Partnership” mean Kilroy Realty, L.P., a Delaware limited partnership and its controlled and consolidated subsidiaries.

The Company is a real estate investment trust, or REIT, and the general partner of the Operating Partnership. As of September 30, 2024, the Company owned an approximate 99.0% common general partnership interest in the Operating Partnership. The remaining approximate 1.0% common limited partnership interests are owned by non-affiliated investors and a former executive officer and director. As the sole general partner of the Operating Partnership, the Company exercises exclusive and complete discretion over the Operating Partnership’s day-to-day management and control and can cause it to enter into certain major transactions, including acquisitions, dispositions, and refinancings and cause changes in its line of business, capital structure, and distribution policies.

There are a few differences between the Company and the Operating Partnership that are reflected in the disclosures in this Form 10-Q. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated, consolidated company. The Company is a REIT, the only material asset of which is the partnership interests it holds in the Operating Partnership. As a result, the Company generally does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time and guaranteeing certain debt of the Operating Partnership. The Company itself is not directly obligated under any indebtedness, but generally guarantees all of the debt of the Operating Partnership. The Operating Partnership owns substantially all of the assets of the Company either directly or through its subsidiaries, conducts the operations of the Company’s business, and is structured as a limited partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Company, which the Company generally contributes to the Operating Partnership in exchange for units of partnership interest, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness or through the issuance of units of partnership interest.

Noncontrolling interests, stockholders’ equity, and partners’ capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and, to the extent not held by the Company, as noncontrolling interests in the Company’s financial statements. The differences between stockholders’ equity, partners’ capital, and noncontrolling interests result from the differences in the equity issued by the Company and the Operating Partnership.

We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:

•Combined reports better reflect how management and the analyst community view the business as a single operating unit;

•Combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

•Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and

•Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

•consolidated financial statements;

•the following notes to the consolidated financial statements:

◦Note 12, Net Income Available to Common Stockholders Per Share of the Company;

◦Note 13, Net Income Available to Common Unitholders Per Unit of the Operating Partnership;

◦Note 14, Supplemental Cash Flows Information of the Company; and

◦Note 15, Supplemental Cash Flows Information of the Operating Partnership;

•“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

◦—Liquidity and Capital Resources of the Company;” and

◦—Liquidity and Capital Resources of the Operating Partnership.”

This report also includes separate sections under “Part I – Financial Information, Item 4. Controls and Procedures” and separate Exhibit 31 and Exhibit 32 certifications for the Company and the Operating Partnership to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.

Available Information

We use our website (www.kilroyrealty.com) as a routine channel of distribution of company information, including press releases, presentations, and supplemental information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website in addition to following press releases, SEC filings, and public conference calls and webcasts. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

QUARTERLY REPORT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

TABLE OF CONTENTS


		Page
	PART I – FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY CORPORATION	1
	Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	1
	Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2024 and 2023	2
	Consolidated Statements of Equity for the Three and Nine Months ended September 30, 2024 and 2023	3
	Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2024 and 2023	5
Item 1.	FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY, L.P.	6
	Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	6
	Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2024 and 2023	7
	Consolidated Statements of Capital for the Three and Nine Months ended September 30, 2024 and 2023	8
	Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2024 and 2023	10
	Notes to Unaudited Consolidated Financial Statements	11
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	58
Item 4.	CONTROLS AND PROCEDURES (KILROY REALTY CORPORATION AND KILROY REALTY, L.P.)	58
	PART II – OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	59
Item 1A.	RISK FACTORS	59
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	59
Item 3.	DEFAULTS UPON SENIOR SECURITIES	59
Item 4.	MINE SAFETY DISCLOSURES	59
Item 5.	OTHER INFORMATION	59
Item 6.	EXHIBITS	60
SIGNATURES		61

PART I – FINANCIAL INFORMATION

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

KILROY REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except share data)


	September 30, 2024		December 31, 2023
ASSETS
REAL ESTATE ASSETS (Note 2):
Land and improvements	$	1,750,820	$	1,743,170
Buildings and improvements	8,573,332		8,463,674
Undeveloped land and construction in progress	2,254,628		2,034,804
Total real estate assets held for investment	12,578,780		12,241,648
Accumulated depreciation and amortization	(2,747,494)		(2,518,304)
Total real estate assets held for investment, net	9,831,286		9,723,344

CASH AND CASH EQUIVALENTS	625,395		510,163

MARKETABLE SECURITIES (Notes 3 and 11)	27,144		284,670
CURRENT RECEIVABLES, NET	11,218		13,609
DEFERRED RENT RECEIVABLES, NET	455,613		460,979
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Note 2)	226,991		229,705
RIGHT OF USE GROUND LEASE ASSETS	129,492		125,506
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 4)	73,495		53,069

TOTAL ASSETS	$	11,380,634	$	11,401,045
LIABILITIES AND EQUITY
LIABILITIES:
Secured debt, net (Notes 5 and 11)	$	599,478	$	603,225
Unsecured debt, net (Notes 5 and 11)	4,401,678		4,325,153

Accounts payable, accrued expenses, and other liabilities	354,785		371,179
Ground lease liabilities (Note 10)	128,606		124,353
Accrued dividends and distributions	64,844		64,440
Deferred revenue and acquisition-related intangible liabilities, net (Note 2)	151,670		173,638
Rents received in advance and tenant security deposits	71,033		79,364

Total liabilities	5,772,094		5,741,352
COMMITMENTS AND CONTINGENCIES (Note 10)
EQUITY:
Stockholders’ Equity (Note 6):
Common stock, $.01 par value, 280,000,000 shares authorized, 118,046,674 and 117,239,558 shares issued and outstanding	1,181		1,173
Additional paid-in capital	5,203,195		5,205,839
Retained earnings	175,962		221,149
Total stockholders’ equity	5,380,338		5,428,161
Noncontrolling Interests (Notes 1 and 7):
Common units of the Operating Partnership	52,441		53,275
Noncontrolling interests in consolidated property partnerships	175,761		178,257
Total noncontrolling interests	228,202		231,532
Total equity	5,608,540		5,659,693
TOTAL LIABILITIES AND EQUITY	$	11,380,634	$	11,401,045

See accompanying notes to consolidated financial statements.

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUES
Rental income (Note 9)	$	285,951	$	280,681	$	836,760	$	852,094
Other property income	3,987		2,913		12,490		8,584
Total revenues	289,938		283,594		849,250		860,678
EXPENSES
Property expenses	63,593		59,445		180,192		168,233
Real estate taxes	26,677		28,363		84,925		84,868

Ground leases (Note 10)	2,977		2,390		8,725		7,172
General and administrative expenses (Note 8)	18,066		24,761		54,596		71,356

Leasing costs	2,353		1,852		6,751		4,550
Depreciation and amortization	91,879		85,224		267,061		269,262
Total expenses	205,545		202,035		602,250		605,441
OTHER INCOME (EXPENSES)
Interest income	9,688		7,015		32,962		11,896
Interest expense (Note 5)	(36,408)		(29,837)		(112,042)		(81,891)




Total other expenses	(26,720)		(22,822)		(79,080)		(69,995)
NET INCOME	57,673		58,737		167,920		185,242
Net income attributable to noncontrolling common units of the Operating Partnership	(509)		(515)		(1,469)		(1,612)
Net income attributable to noncontrolling interests in consolidated property partnerships	(4,786)		(5,460)		(14,942)		(18,673)
Total income attributable to noncontrolling interests	(5,295)		(5,975)		(16,411)		(20,285)




NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	52,378	$	52,762	$	151,509	$	164,957
Net income available to common stockholders per share – basic (Note 12)	$	0.44	$	0.45	$	1.27	$	1.40
Net income available to common stockholders per share – diluted (Note 12)	$	0.44	$	0.45	$	1.27	$	1.40
Weighted average shares of common stock outstanding – basic (Note 12)	117,830,481		117,184,609		117,515,623		117,133,420
Weighted average shares of common stock outstanding – diluted (Note 12)	118,243,913		117,495,246		117,954,763		117,411,395

See accompanying notes to consolidated financial statements.

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in thousands, except share and per share/unit data)


	Common Stock							Total Stock- holders’ Equity		Noncontrolling Interests		Total Equity
	Number of Shares	Common Stock		Additional Paid-in Capital		Retained Earnings
BALANCE AS OF DECEMBER 31, 2023	117,239,558	$	1,173	$	5,205,839	$	221,149	$	5,428,161	$	231,532	$	5,659,693
Net income						49,920		49,920		5,780		55,700

Issuance of share-based compensation awards				4,017				4,017				4,017
Non-cash amortization of share-based compensation (Note 8)				4,727				4,727				4,727

Settlement of restricted stock units for shares of common stock	217,496	2		(2)				—				—
Repurchase of common stock and restricted stock units	(90,649)	(1)		(5,897)				(5,898)				(5,898)


Distributions to noncontrolling interests in consolidated property partnerships								—		(6,898)		(6,898)
Adjustment for noncontrolling interest				69				69		(69)		—

Dividends declared per share of common stock and common unit ($0.54 per share/unit)						(67,989)		(67,989)		(621)		(68,610)
BALANCE AS OF MARCH 31, 2024	117,366,405	1,174		5,208,753		203,080		5,413,007		229,724		5,642,731
Net income						49,211		49,211		5,336		54,547

Issuance of share-based compensation awards				1,085				1,085				1,085
Non-cash amortization of share-based compensation (Note 8)				6,942				6,942				6,942

Settlement of restricted stock units for shares of common stock	19,395	—		—				—				—
Repurchase of common stock and restricted stock units	(569)	—		(20)				(20)				(20)


Distributions to noncontrolling interests in consolidated property partnerships								—		(5,911)		(5,911)
Adjustment for noncontrolling interest				(61)				(61)		61		—

Dividends declared per common share and common unit ($0.54 per share/unit)						(64,495)		(64,495)		(621)		(65,116)
BALANCE AS OF JUNE 30, 2024	117,385,231	1,174		5,216,699		187,796		5,405,669		228,589		5,634,258
Net income						52,378		52,378		5,295		57,673

Issuance of share-based compensation awards				1,107				1,107				1,107
Non-cash amortization of share-based compensation (Note 8)				6,682				6,682				6,682

Settlement of restricted stock units for shares of common stock	1,249,236	13		(13)				—				—
Repurchase of common stock, stock options and restricted stock units	(587,793)	(6)		(21,712)				(21,718)				(21,718)


Distributions to noncontrolling interests in consolidated property partnerships								—		(4,629)		(4,629)
Adjustment for noncontrolling interest				432				432		(432)		—

Dividends declared per common share and common unit ($0.54 per share/unit)						(64,212)		(64,212)		(621)		(64,833)
BALANCE AS OF SEPTEMBER 30, 2024	118,046,674	$	1,181	$	5,203,195	$	175,962	$	5,380,338	$	228,202	$	5,608,540

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY – (Continued)

(Unaudited; in thousands, except share and per share/unit data)


	Common Stock							Total Stock- holders’ Equity		Noncontrolling Interests		Total Equity
	Number of Shares	Common Stock		Additional Paid-in Capital		Retained Earnings
BALANCE AS OF DECEMBER 31, 2022	116,878,031	$	1,169	$	5,170,760	$	265,118	$	5,437,047	$	237,914	$	5,674,961
Net income						56,608		56,608		8,622		65,230

Issuance of share-based compensation awards				1,365				1,365				1,365
Non-cash amortization of share-based compensation				11,566				11,566				11,566

Settlement of restricted stock units for shares of common stock	445,973	4		(4)				—				—
Repurchase of common stock and restricted stock units	(203,042)	(2)		(8,361)				(8,363)				(8,363)


Distributions to noncontrolling interests in consolidated property partnerships								—		(7,068)		(7,068)
Adjustment for noncontrolling interest				76				76		(76)		—

Dividends declared per share of common stock and common unit ($0.54 per share/unit)						(64,647)		(64,647)		(622)		(65,269)
BALANCE AS OF MARCH 31, 2023	117,120,962	1,171		5,175,402		257,079		5,433,652		238,770		5,672,422
Net income						55,587		55,587		5,688		61,275

Issuance of share-based compensation awards				726				726				726
Non-cash amortization of share-based compensation				9,496				9,496				9,496

Settlement of restricted stock units for shares of common stock	103,135	1		(1)				—				—
Repurchase of common stock and restricted stock units	(46,189)	—		(1,340)				(1,340)				(1,340)


Distributions to noncontrolling interests in consolidated property partnerships								—		(10,393)		(10,393)
Adjustment for noncontrolling interest				(56)				(56)		56		—

Dividends declared per common share and common unit ($0.54 per share/unit)						(63,971)		(63,971)		(621)		(64,592)
BALANCE AS OF JUNE 30, 2023	117,177,908	1,172		5,184,227		248,695		5,434,094		233,500		5,667,594
Net income						52,762		52,762		5,975		58,737

Issuance of share-based compensation awards				538				538				538
Non-cash amortization of share-based compensation				12,310				12,310				12,310

Settlement of restricted stock units for shares of common stock	115,492	2		(2)				—				—
Repurchase and cancellation of common stock, stock options, and restricted stock units	(53,842)	(1)		(1,891)				(1,892)				(1,892)


Distributions to noncontrolling interests in consolidated property partnerships								—		(5,349)		(5,349)
Adjustment for noncontrolling interest				(76)				(76)		76		—

Dividends declared per common share and common unit ($0.54 per share/unit)						(63,792)		(63,792)		(621)		(64,413)
BALANCE AS OF SEPTEMBER 30, 2023	117,239,558	$	1,173	$	5,195,106	$	237,665	$	5,433,944	$	233,581	$	5,667,525

See accompanying notes to consolidated financial statements.

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)


	Nine Months Ended September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	167,920	$	185,242
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate assets and leasing costs	262,292		263,662
Depreciation of non-real estate furniture, fixtures, and equipment	4,769		5,600
Revenue reversals for doubtful accounts, net (Note 9)	4,657		3,931
Non-cash amortization of share-based compensation awards	13,271		28,360
Non-cash amortization of deferred financing costs and debt discounts	5,243		3,921
Non-cash amortization of net below market rents	(2,675)		(5,675)


Non-cash amortization of deferred revenue related to tenant-funded tenant improvements	(13,539)		(14,643)
Straight-line rents	(888)		(16,533)
Amortization of right of use ground lease assets	796		765
Net change in other operating assets	(7,427)		2,042
Net change in other operating liabilities	(1,507)		35,694
Net cash provided by operating activities	432,912		492,366
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity (Purchases) of certificates of deposit (Note 3)	256,581		(252,830)
Expenditures for development and redevelopment properties and undeveloped land	(290,593)		(338,794)
Expenditures for operating properties and other capital assets	(64,381)		(68,853)
Expenditures for acquisitions of operating properties (Note 2)	(35,155)		—






Net cash used in investing activities	(133,548)		(660,477)
CASH FLOWS FROM FINANCING ACTIVITIES:

Distributions to noncontrolling interests in consolidated property partnerships	(17,446)		(22,818)
Dividends and distributions paid to common stockholders and common unitholders	(191,938)		(191,499)
Repurchase of common stock and restricted stock units	(27,636)		(11,595)
Financing costs	(18,146)		(10,962)
Principal payments and repayments of secured debt	(4,482)		(4,310)


Proceeds from the issuance of unsecured debt (Note 5)	395,516		375,000
Repayments of unsecured debt (Note 5)	(320,000)		—
Borrowings on unsecured debt	—		320,000
Repurchases of unsecured debt	—		(14,290)





Net cash (used in) provided by financing activities	(184,132)		439,526
Net increase in cash and cash equivalents and restricted cash	115,232		271,415
Cash and cash equivalents and restricted cash, beginning of period	510,163		347,379
Cash and cash equivalents and restricted cash, end of period	$	625,395	$	618,794

See accompanying notes to consolidated financial statements.

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

KILROY REALTY, L.P.

CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except unit data)


	September 30, 2024		December 31, 2023
ASSETS
REAL ESTATE ASSETS (Note 2):
Land and improvements	$	1,750,820	$	1,743,170
Buildings and improvements	8,573,332		8,463,674
Undeveloped land and construction in progress	2,254,628		2,034,804
Total real estate assets held for investment	12,578,780		12,241,648
Accumulated depreciation and amortization	(2,747,494)		(2,518,304)
Total real estate assets held for investment, net	9,831,286		9,723,344

CASH AND CASH EQUIVALENTS	625,395		510,163

MARKETABLE SECURITIES (Notes 3 and 11)	27,144		284,670
CURRENT RECEIVABLES, NET	11,218		13,609
DEFERRED RENT RECEIVABLES, NET	455,613		460,979
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Note 2)	226,991		229,705
RIGHT OF USE GROUND LEASE ASSETS	129,492		125,506
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 4)	73,495		53,069

TOTAL ASSETS	$	11,380,634	$	11,401,045
LIABILITIES AND CAPITAL
LIABILITIES:
Secured debt, net (Notes 5 and 11)	$	599,478	$	603,225
Unsecured debt, net (Notes 5 and 11)	4,401,678		4,325,153

Accounts payable, accrued expenses, and other liabilities	354,785		371,179
Ground lease liabilities (Note 10)	128,606		124,353
Accrued distributions	64,844		64,440
Deferred revenue and acquisition-related intangible liabilities, net (Note 2)	151,670		173,638
Rents received in advance and tenant security deposits	71,033		79,364

Total liabilities	5,772,094		5,741,352
COMMITMENTS AND CONTINGENCIES (Note 10)
CAPITAL:
Partner's Capital - Common units, 118,046,674 and 117,239,558 held by the general partner and 1,150,574 held by common limited partners issued and outstanding	5,432,779		5,481,436
Noncontrolling interests in consolidated property partnerships (Note 1)	175,761		178,257
Total capital	5,608,540		5,659,693
TOTAL LIABILITIES AND CAPITAL	$	11,380,634	$	11,401,045

See accompanying notes to consolidated financial statements.

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except unit and per unit data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUES
Rental income (Note 9)	$	285,951	$	280,681	$	836,760	$	852,094

Other property income	3,987		2,913		12,490		8,584
Total revenues	289,938		283,594		849,250		860,678
EXPENSES
Property expenses	63,593		59,445		180,192		168,233
Real estate taxes	26,677		28,363		84,925		84,868

Ground leases (Note 10)	2,977		2,390		8,725		7,172
General and administrative expenses (Note 8)	18,066		24,761		54,596		71,356

Leasing costs	2,353		1,852		6,751		4,550
Depreciation and amortization	91,879		85,224		267,061		269,262
Total expenses	205,545		202,035		602,250		605,441
OTHER INCOME (EXPENSES)
Interest income	9,688		7,015		32,962		11,896
Interest expense (Note 5)	(36,408)		(29,837)		(112,042)		(81,891)



Total other expenses	(26,720)		(22,822)		(79,080)		(69,995)

NET INCOME	57,673		58,737		167,920		185,242
Net income attributable to noncontrolling interests in consolidated property partnerships and subsidiaries	(4,786)		(5,460)		(14,942)		(18,673)




NET INCOME AVAILABLE TO COMMON UNITHOLDERS	$	52,887	$	53,277	$	152,978	$	166,569
Net income available to common unitholders per unit – basic (Note 13)	$	0.44	$	0.45	$	1.27	$	1.40
Net income available to common unitholders per unit – diluted (Note 13)	$	0.44	$	0.45	$	1.27	$	1.40
Weighted average common units outstanding – basic (Note 13)	118,981,055		118,335,183		118,666,197		118,283,994
Weighted average common units outstanding – diluted (Note 13)	119,394,487		118,645,820		119,105,337		118,561,969

See accompanying notes to consolidated financial statements.

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

(Unaudited; in thousands, except unit and per unit data)


	Partners’ Capital			Noncontrolling Interests in Consolidated Property Partnerships
	Number of Common Units	Common Units				Total Capital
BALANCE AS OF DECEMBER 31, 2023	118,390,132	$	5,481,436	$	178,257	$	5,659,693
Net income		50,422		5,278		55,700


Issuance of share-based compensation awards		4,017				4,017
Non-cash amortization of share-based compensation (Note 8)		4,727				4,727

Settlement of restricted stock units	217,496	—				—
Repurchase of common units and restricted stock units	(90,649)	(5,898)				(5,898)

Distributions to noncontrolling interests in consolidated property partnerships				(6,898)		(6,898)

Distributions declared per common unit ($0.54 per unit)		(68,610)				(68,610)
BALANCE AS OF MARCH 31, 2024	118,516,979	5,466,094		176,637		5,642,731
Net income		49,669		4,878		54,547

Issuance of share-based compensation awards		1,085				1,085
Non-cash amortization of share-based compensation (Note 8)		6,942				6,942

Settlement of restricted stock units	19,395	—				—
Repurchase of common units and restricted stock units	(569)	(20)				(20)

Distributions to noncontrolling interests in consolidated property partnerships				(5,911)		(5,911)

Distributions declared per common unit ($0.54 per unit)		(65,116)				(65,116)
BALANCE AS OF JUNE 30, 2024	118,535,805	5,458,654		175,604		5,634,258
Net income		52,887		4,786		57,673


Issuance of share-based compensation awards		1,107				1,107
Non-cash amortization of share-based compensation (Note 8)		6,682				6,682

Settlement of restricted stock units	1,249,236	—				—
Repurchase of common units, stock options and restricted stock units	(587,793)	(21,718)				(21,718)


Distributions to noncontrolling interests in consolidated property partnerships				(4,629)		(4,629)

Distributions declared per common unit ($0.54 per unit)		(64,833)				(64,833)
BALANCE AS OF SEPTEMBER 30, 2024	119,197,248	$	5,432,779	$	175,761	$	5,608,540


	Partners’ Capital			Noncontrolling Interests in Consolidated Property Partnerships
	Number of Common Units	Common Units				Total Capital
BALANCE AS OF DECEMBER 31, 2022	118,028,605	$	5,490,571	$	184,390	$	5,674,961
Net income		57,168		8,062		65,230

Issuance of share-based compensation awards		1,365				1,365
Non-cash amortization of share-based compensation		11,566				11,566

Settlement of restricted stock units	445,973	—				—
Repurchase of common units and restricted stock units	(203,042)	(8,363)				(8,363)

Distributions to noncontrolling interests in consolidated property partnerships				(7,068)		(7,068)

Distributions declared per common unit ($0.54 per unit)		(65,269)				(65,269)
BALANCE AS OF MARCH 31, 2023	118,271,536	5,487,038		185,384		5,672,422
Net income		56,124		5,151		61,275

Issuance of share-based compensation awards		726				726
Non-cash amortization of share-based compensation		9,496				9,496

Settlement of restricted stock units	103,135	—				—
Repurchase of common units and restricted stock units	(46,189)	(1,340)				(1,340)

Distributions to noncontrolling interests in consolidated property partnerships				(10,393)		(10,393)

Distributions declared per common unit ($0.54 per unit)		(64,592)				(64,592)
BALANCE AS OF JUNE 30, 2023	118,328,482	5,487,452		180,142		5,667,594
Net income		53,277		5,460		58,737
Issuance of common units	—	—				—
Issuance of share-based compensation awards		538				538
Non-cash amortization of share-based compensation		12,310				12,310
Exercise of stock options		—				—
Settlement of restricted stock units	115,492	—				—
Repurchase and cancellation of common units, stock options, and restricted stock units	(53,842)	(1,892)				(1,892)
Contributions from noncontrolling interests in consolidated property partnerships				—		—
Distributions to noncontrolling interests in consolidated property partnerships				(5,349)		(5,349)
Preferred distributions						—
Distributions declared per common unit ($0.54 per unit)		(64,413)				(64,413)
BALANCE AS OF SEPTEMBER 30, 2023	118,390,132	$	5,487,272	$	180,253	$	5,667,525

See accompanying notes to consolidated financial statements.

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)


	Nine Months Ended September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	167,920	$	185,242
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate assets and leasing costs	262,292		263,662
Depreciation of non-real estate furniture, fixtures, and equipment	4,769		5,600
Revenue reversals for doubtful accounts, net (Note 9)	4,657		3,931
Non-cash amortization of share-based compensation awards	13,271		28,360
Non-cash amortization of deferred financing costs and debt discounts	5,243		3,921
Non-cash amortization of net below market rents	(2,675)		(5,675)


Non-cash amortization of deferred revenue related to tenant-funded tenant improvements	(13,539)		(14,643)
Straight-line rents	(888)		(16,533)
Amortization of right of use ground lease assets	796		765
Net change in other operating assets	(7,427)		2,042
Net change in other operating liabilities	(1,507)		35,694
Net cash provided by operating activities	432,912		492,366
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity (Purchases) of certificates of deposit (Note 3)	256,581		(252,830)
Expenditures for development and redevelopment properties and undeveloped land	(290,593)		(338,794)
Expenditures for operating properties and other capital assets	(64,381)		(68,853)
Expenditures for acquisitions of operating properties (Note 2)	(35,155)		—






Net cash used in investing activities	(133,548)		(660,477)
CASH FLOWS FROM FINANCING ACTIVITIES:

Distributions to noncontrolling interests in consolidated property partnerships	(17,446)		(22,818)
Distributions paid to common unitholders	(191,938)		(191,499)
Repurchase of common units and restricted stock units	(27,636)		(11,595)
Financing costs	(18,146)		(10,962)
Principal payments and repayments of secured debt	(4,482)		(4,310)


Proceeds from the issuance of unsecured debt (Note 5)	395,516		375,000
Repayments of unsecured debt (Note 5)	(320,000)		—

Borrowings on unsecured debt	—		320,000
Repurchases of unsecured debt	—		(14,290)




Net cash (used in) provided by financing activities	(184,132)		439,526
Net increase in cash and cash equivalents and restricted cash	115,232		271,415
Cash and cash equivalents and restricted cash, beginning of period	510,163		347,379
Cash and cash equivalents and restricted cash, end of period	$	625,395	$	618,794

See accompanying notes to consolidated financial statements.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Ownership, and Basis of Presentation

Organization and Ownership

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’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. 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”). The Company’s common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “KRC.”

We own our interests in all of our real estate assets through Kilroy Realty, L.P. (the “Operating Partnership”) and conduct substantially all of our operations through the Operating Partnership. Unless stated otherwise or the context otherwise requires, the terms “Kilroy Realty Corporation” or the “Company,” “we,” “our,” and “us” refer to Kilroy Realty Corporation and its consolidated subsidiaries, including the Operating Partnership, and the term “Operating Partnership” refers to Kilroy Realty, L.P. and its consolidated subsidiaries. The descriptions of our business, employees, and properties apply to both the Company and the Operating Partnership.

Our stabilized portfolio of operating properties was comprised of the following properties at September 30, 2024:


	Number of Buildings	Rentable Square Feet	Number of Tenants	Percentage Occupied (1)
Stabilized Office Properties (2)	123	17,140,465	424	84.3	%

________________________

(1)Represents economic occupancy.

(2)Includes stabilized life science and retail space.


	Number of Projects	Number of Units	2024 Average Occupancy
Stabilized Residential Properties	3	1,001	92.6	%

Our stabilized portfolio includes all of our properties with the exception of development properties currently committed for construction, under construction, in the tenant improvement phase, redevelopment properties under construction or in the tenant improvement phase, undeveloped land, and real estate assets held for sale. 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. We define properties in the tenant improvement phase as development or redevelopment properties 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. 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. 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.

As of September 30, 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.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

We did not have any properties held for sale at September 30, 2024. Our stabilized portfolio also excludes our future development pipeline, which, as of September 30, 2024, was comprised of eight future development sites, representing approximately 64 gross acres of undeveloped land.

As of September 30, 2024, all of our properties, development projects, 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 in Austin, Texas. 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. As of September 30, 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 September 30, 2024, the Company owned an approximate 93% common equity interest in Redwood LLC. The remaining interests in all three property partnerships were owned by unrelated third parties.

Ownership and Basis of Presentation

The consolidated financial statements of the Company include the consolidated financial position and results of operations of the Company, the Operating Partnership, 303 Second LLC, 100 First LLC, Redwood LLC, and all of our wholly-owned and controlled subsidiaries. The consolidated financial statements of the Operating Partnership include the consolidated financial position and results of operations of the Operating Partnership, 303 Second LLC, 100 First LLC, Redwood LLC, and all of our wholly-owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

As of September 30, 2024, the Company owned an approximate 99.0% common general partnership interest in the Operating Partnership. The remaining approximate 1.0% common limited partnership interest in the Operating Partnership as of September 30, 2024 was owned by non-affiliated investors and a former executive officer and director. Both the general and limited common partnership interests in the Operating Partnership are denominated in common units. Generally, the number of common units held by the Company is equivalent to the number of outstanding shares of the Company’s common stock, and the rights of all the common units to quarterly distributions and payments in liquidation mirror those of the Company’s common stockholders. The common limited partners have certain redemption rights as provided in the Operating Partnership’s Seventh Amended and Restated Agreement of Limited Partnership, as amended (the “Partnership Agreement”). With the exception of the Operating Partnership and our consolidated property partnerships, all of our subsidiaries are wholly-owned.

The accompanying interim financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The interim financial statements for the Company and the Operating Partnership should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2023.

Variable Interest Entities

The Operating Partnership is a variable interest entity (“VIE”) that is consolidated by the Company as the primary beneficiary, as the Operating Partnership is a limited partnership in which the common limited partners do not have substantive kick-out or participating rights. At September 30, 2024, the consolidated financial statements of the Company included three VIEs in addition to the Operating Partnership: 100 First LLC, 303 Second LLC, and one entity established during the third quarter of 2024 to facilitate a potential future Section 1031 Exchange. At September 30, 2024, the Company and the Operating Partnership were determined to be the primary beneficiaries of these three VIEs since we had the ability to control the activities that most significantly impacted each of the VIEs’ economic performance. As of September 30, 2024, the three VIEs’ total assets, liabilities, and noncontrolling interests included on our consolidated balance sheet were approximately $443.0 million (of which $361.6 million related to real estate held for investment), approximately $20.8 million, and approximately $171.1

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

million, respectively. Revenues, income, and net assets generated by 100 First LLC and 303 Second LLC may only be used to settle their contractual obligations, which primarily consist of operating expenses, capital expenditures, and required distributions.

At December 31, 2023, the consolidated financial statements of the Company included two VIEs in addition to the Operating Partnership: 100 First LLC and 303 Second LLC. At December 31, 2023, the Company and the Operating Partnership were determined to be the primary beneficiaries of these two VIEs since we had the ability to control the activities that most significantly impacted each of the VIEs’ economic performance. At December 31, 2023, the impact of consolidating the VIEs increased the Company’s total assets, liabilities, and noncontrolling interests on our consolidated balance sheet by approximately $416.7 million (of which $350.0 million related to real estate held for investment), approximately $23.6 million, and approximately $173.7 million, respectively.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Tax Disclosures.” The ASU is effective for annual periods beginning after December 15, 2024. The Company does not currently anticipate that the guidance will have a material impact on our consolidated financial statements or notes to our consolidated financial statements.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2. Acquisitions

Operating Property Acquisitions

During the nine months ended September 30, 2024, we acquired the operating property listed below from an unrelated third party:

Property

Date of Acquisition

Number of Buildings

Rentable Square Feet

Purchase Price (in millions) (1)

12707 & 12777 High Bluff Drive (Junction at Del Mar)

September 27, 2024

103,731

35.0

________________________

(1)Excludes acquisition-related costs.

The related assets, liabilities, and results of operations of the acquired properties are included in the consolidated financial statements as of the date of acquisition. The following table summarizes the estimated relative fair values of the assets acquired and liabilities assumed as of the date of acquisition, excluding acquisition-related costs:


	Total 2024 Operating Property Acquisitions (1)(2)
Assets
Land and improvements	$	6,000
Buildings and improvements (3)	15,703
Deferred leasing costs and acquisition-related intangible assets (4)	13,534
Prepaid expenses and other assets, net	30
Total assets acquired	$	35,267
Liabilities
Acquisition-related intangible liabilities (5)	$	267
Total liabilities assumed	267
Net assets and liabilities acquired	$	35,000

________________________

(1)As of September 30, 2024, this property was temporarily being held in a separate VIE to facilitate a potential Section 1031 Exchange. See Note 1 “Organization, Ownership, and Basis of Presentation” to our consolidated financial statements included in this report for additional information.

(2)Excludes acquisition related costs of $0.2 million.

(3)Represents buildings, building improvements, and tenant improvements.

(4)Represents in-place leases (approximately $10.5 million with a weighted average amortization period of 4.7 years), leasing commissions (approximately $2.0 million with a weighted average amortization period of 4.9 years), and an above-market lease (approximately $1.0 million with a weighted average amortization period of 4.6 years).

(5)Represents below-market leases (approximately $0.3 million with a weighted average amortization period of 4.9 years).

3. Marketable Securities

Marketable securities consisted of the following at September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
	(in thousands)
Deferred compensation plan assets	$	27,144	$	28,089
Certificates of deposit (1)	—		256,581
Total marketable securities	$	27,144	$	284,670

________________________

(1)The certificates of deposit had an original issuance term greater than three months but less than 12 months.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

4. Prepaid Expenses and Other Assets, Net

Prepaid expenses and other assets, net consisted of the following at September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
	(in thousands)
Furniture, fixtures and other long-lived assets, net	$	38,934	$	37,073
Prepaid expenses and deferred financing costs, net	28,346		10,532
Other assets	6,215		5,464
Total prepaid expenses and other assets, net	$	73,495	$	53,069

5. Secured and Unsecured Debt of the Operating Partnership

The Company generally guarantees all of the Operating Partnership’s unsecured debt obligations, including the unsecured revolving credit facility, the unsecured term loan facility, and all of the unsecured senior notes.

Unsecured Senior Notes - Registered Public Offering

In January 2024, the Operating Partnership issued $400.0 million aggregate principal amount of unsecured senior notes in a registered public offering. The outstanding balance of the unsecured senior notes is included in unsecured debt, net of an initial issuance discount of $4.5 million, on our consolidated balance sheets. The unsecured senior notes, which are scheduled to mature on January 15, 2036, require semi-annual interest payments each January and July based on a stated annual interest rate of 6.250%. The Operating Partnership may redeem the notes at any time, either in whole or in part, subject to the payment of an early redemption premium with respect to redemptions prior to October 15, 2035. On or after October 15, 2035, the Operating Partnership may redeem the notes at any time, either in whole or in part, at par.

Unsecured Revolving Credit Facility and Term Loan Facilities

In March 2024, the Operating Partnership amended and restated the terms of its unsecured revolving credit facility. The amendment and restatement maintained the $1.1 billion borrowing capacity and extended the maturity date of the unsecured revolving credit facility to July 31, 2028.

The following table summarizes the balance and terms of our unsecured revolving credit facility as of September 30, 2024 and December 31, 2023:


	Unsecured Revolving Credit Facility
	September 30, 2024			December 31, 2023
	(in thousands)
Outstanding borrowings	$	—		$	—
Remaining borrowing capacity (1)	1,100,000			1,100,000
Total borrowing capacity (1)	$	1,100,000		$	1,100,000
Interest rate (2)	5.96		%	6.38		%
Facility fee-annual rate (3)	0.200%
Maturity date (4)	July 31, 2028			July 31, 2025

________________________

(1)Remaining and total borrowing capacity are further reduced by the amount of our outstanding letters of credit which total approximately $5.2 million as of September 30, 2024 and December 31, 2023. We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $500.0 million under an accordion feature pursuant to the terms of the unsecured revolving credit facility.

(2)Our unsecured revolving credit facility interest rate was calculated using the Secured Overnight Financing Rate (“SOFR”) plus a SOFR adjustment of 0.10% (“Adjusted SOFR”) and a margin of 0.900% based on our credit rating as of September 30, 2024 and December 31, 2023. We may be entitled to a temporary 0.01% reduction in the interest rate provided we meet certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions.

(3)Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs in connection with the amendment and restatement of the unsecured revolving credit facility. As of September 30, 2024 and December 31, 2023, $13.6 million and $3.2 million of unamortized deferred financing costs, respectively, which are included in prepaid expenses and other assets, net on our consolidated balance sheets, remained to be amortized through the maturity date of our unsecured revolving credit facility.

(4)The maturity date may be extended by two six-month periods, at the Operating Partnership’s election.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Operating Partnership intends to borrow under the unsecured revolving credit facility from time to time for general corporate purposes, including to finance development and redevelopment expenditures, to fund potential acquisitions, to repay long-term debt, and to supplement cash balances in response to market conditions.

In connection with amending and restating the unsecured revolving credit facility, the Operating Partnership repaid $200.0 million of its existing $520.0 million unsecured term loan facility (the “2022 Term Loan Facility”) and extended the maturity date on $200.0 million of the remaining $320.0 million principal balance by 12 months to October 3, 2025 (the “2024 Term Loan Facility”). The following table summarizes the balance and terms of our 2024 Term Loan Facility as of September 30, 2024:


	2024 Term Loan Facility
	September 30, 2024
	(in thousands)
Outstanding borrowings	$	200,000
Remaining borrowing capacity	—
Total borrowing capacity (1)	$	200,000
Interest rate (2)	6.16		%
Maturity date (3)	October 3, 2025

____________________

(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 as of September 30, 2024, under an accordion feature pursuant to the terms of the 2024 Term Loan Facility.

(2)Our 2024 Term Loan Facility interest rate was calculated using Adjusted SOFR plus a margin of 0.950% based on our credit rating as of September 30, 2024. Additionally, we incurred debt origination and legal costs in connection with the amendment and restatement of the unsecured revolving credit facility. As of September 30, 2024, $1.6 million of unamortized deferred financing costs, inclusive of unamortized initial issuance costs transferred from the 2022 Term Loan Facility, remained to be amortized through the maturity date of the 2024 Term Loan Facility.

(3)The maturity date may be extended by two 12-month periods, at the Operating Partnership’s election.

In September 2024, the Operating Partnership repaid the remaining $120.0 million outstanding on its 2022 Term Loan Facility. The 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.

(2)