Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - KILROY REALTY CORP | exhibit991.htm |
| 8-K - 8-K - KILROY REALTY CORP | krc-20210728.htm |
Exhibit 99.2
| Contact: | FOR RELEASE: | ||||
| Tyler H. Rose | July 28, 2021 | ||||
| President | |||||
| (310) 481-8484 Or | |||||
| Michelle Ngo | |||||
| Senior Vice President, | |||||
| Chief Financial Officer and Treasurer | |||||
| (310) 481-8581 | |||||
KILROY REALTY CORPORATION REPORTS
SECOND QUARTER FINANCIAL RESULTS
---------------
LOS ANGELES, July 28, 2021 - Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its second quarter ended June 30, 2021.
Second Quarter Highlights
Financial Results
•Net income available to common stockholders per share of $0.30
•Funds from operations available to common stockholders and unitholders (“FFO”) per share of $0.88
•Revenues of $226.0 million
Stabilized Portfolio
•Stabilized portfolio was 91.8% occupied and 93.6% leased at June 30, 2021
•Signed approximately 198,000 square feet of new and renewing leases
◦GAAP and cash rents increased approximately 25.6% and 8.7%, respectively, from prior levels
•Limited lease expiration exposure with an average of approximately 6.8% of total rentable square feet expiring per year through 2025
Acquisitions
•In June, completed the acquisition of Indeed Tower in Austin, Texas, a new LEED Platinum targeted, 36-story office project in the tenant improvement phase totaling approximately 734,000 square feet located in the heart of downtown Austin for $580.2 million
•In June, completed the acquisition of 2045 Pacific Highway in San Diego, a land site directly adjacent to the company’s 2100 Kettner project in the Little Italy neighborhood, for $42.0 million. The company plans to develop up to 275,000 square feet of office space on the full city block site
1
Development
•In April, completed construction of Jardine, the company’s 193-unit residential project in the Hollywood submarket of Los Angeles, which is now 30% leased
•In June, commenced construction on Kilroy Oyster Point Phase 2 (“KOP 2”), the second phase of the company's five phase life science development in South San Francisco. KOP 2 will include approximately 875,000 square feet in three buildings and has a total estimated investment of $940.0 million
•In June, added a 92,000 square foot office building located at One Paseo in the Del Mar submarket of San Diego to the stabilized portfolio. A separate office building, totaling 195,000 square feet, remains in the tenant improvement phase. The One Paseo office project is now 100% leased
Balance Sheet / Liquidity Highlights
•In April, Kilroy Realty, L.P., (“Borrower”) the company’s operating partnership, amended and restated its unsecured revolving credit facility (the “Credit Facility”). The new sustainability-linked Credit Facility includes an increase in size from $750.0 million to $1.1 billion, a reduction in borrowing costs and an extension of the maturity date to July 31, 2025 with two six-month extension options
◦The Credit Facility now bears interest at LIBOR plus 0.900%
◦The Credit Facility also features a sustainability-linked pricing component whereby the pricing can improve if the Borrower meets certain sustainability performance targets
•As of the date of this release, the company had approximately $2.0 billion of total liquidity comprised of approximately $465.0 million of cash and cash equivalents, $395.0 million of restricted cash and full availability under the $1.1 billion unsecured revolving credit facility
•No significant debt maturities until 2023
•Weighted average debt maturity of approximately 6.7 years
Rent Collections
•Collected 97% of contractual second quarter rent billings across all property types, including 98% from office and life science tenants
Recent Development
•In July, completed the acquisition of the land that was subject to a ground lease underlying the 491,000 square foot Key Center office building in Bellevue, Washington for $47.0 million
Results for the Quarter Ended June 30, 2021
For the second quarter ended June 30, 2021, KRC reported net income available to common stockholders of $35.8 million, or $0.30 per share, compared to $19.6 million, or $0.17 per share, in the second quarter of 2020. FFO in the second quarter of 2021 was $104.6 million, or $0.88 per share, compared to $93.1 million, or $0.78 per share, in the second quarter of 2020. Prior period net income available to common stockholders and FFO per share included a reversal of revenue of $0.05 per share related to the creditworthiness of certain tenants primarily as a result of the COVID-19 pandemic and $0.17 per share negative impact of severance costs, including the departure of an executive officer.
All per share amounts in this report are presented on a diluted basis.
Net Income Available to Common Stockholders / FFO Guidance and Outlook
The company is providing a guidance range of NAREIT-defined FFO per diluted share for the full year 2021 of $3.71 to $3.82 per share, with a midpoint of $3.77 per share.
2
Full Year 2021 Range | |||||||||||||||||
| Low End | High End | ||||||||||||||||
| Net income available to common stockholders per share - diluted | $ | 5.33 | $ | 5.44 | |||||||||||||
Weighted average common shares outstanding - diluted (1) | 117,650 | 117,650 | |||||||||||||||
| Net income available to common stockholders | $ | 627,000 | $ | 640,000 | |||||||||||||
| Adjustments: | |||||||||||||||||
| Net income attributable to noncontrolling common units of the Operating Partnership | 6,400 | 6,500 | |||||||||||||||
| Net income attributable to noncontrolling interests in consolidated property partnerships | 22,500 | 24,500 | |||||||||||||||
| Depreciation and amortization of real estate assets | 278,000 | 278,000 | |||||||||||||||
| Gains on sales of depreciable real estate | (458,000) | (458,000) | |||||||||||||||
| Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (35,000) | (37,000) | |||||||||||||||
Funds From Operations (2) | $ | 440,900 | $ | 454,000 | |||||||||||||
Weighted average common shares/units outstanding – diluted (3) | 118,800 | 118,800 | |||||||||||||||
Funds From Operations per common share/unit – diluted (3) | $ | 3.71 | $ | 3.82 | |||||||||||||
Key 2021 assumptions include:
•Same Store Cash NOI growth of 2.0% to 2.5% (4)
•Year-end occupancy of approximately 91.5%
•Total remaining development spending of approximately $200.0 million to $250.0 million
________________________
(1)Calculated based on estimated weighted average shares outstanding including non-participating share-based awards.
(2)See management statement for Funds From Operations at end of release.
(3)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options and contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders and common unitholders.
(4)See management statement for Same Store Cash Net Operating Income on page 32 of our Supplemental Financial Report furnished on Form 8-K with this press release.
The company’s guidance estimates for the full year 2021, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this press release, reflect management’s views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this press release. Although these guidance estimates reflect the impact on the company’s operating results of an assumed range of future disposition activity, these guidance estimates do not include any estimates of possible future gains or losses from possible future dispositions because the magnitude of gains or losses on sales of depreciable operating properties, if any, will depend on the sales price and depreciated cost basis of the disposed assets at the time of disposition, information that is not known at the time the company provides guidance, and the timing of any gain recognition will depend on the closing of the dispositions, information that is also not known at the time the company provides guidance and may occur after the relevant guidance period. We caution you not to place undue reliance on our assumed range of future disposition activity because any potential future disposition transactions will ultimately depend on the market conditions and other factors, including but not limited to the company’s capital needs, the particular assets being sold and the company’s ability to defer some or all of the taxable gain on the sales. These guidance estimates also do not include the impact on operating results from potential future acquisitions, possible capital markets activity, possible future impairment charges or any events outside of the company’s control. There can be no assurance that the company’s actual results will not differ materially from these estimates.
3
Conference Call and Audio Webcast
KRC management will discuss second quarter results and the current business environment during the company’s July 29, 2021 earnings conference call. The call will begin at 10:00 a.m. Pacific Time and last approximately one hour. Those interested in listening via the Internet can access the conference call at https://services.choruscall.com/links/krc210729.html. It may be necessary to download audio software to hear the conference call. Those interested in listening via telephone can access the conference call at (866) 312-7299. International callers should dial (412) 317-1070. In order to bypass speaking to the operator on the day of the call, please pre-register anytime at https://dpregister.com/sreg/10148267/d9ab1c289e. A replay of the conference call will be available via telephone on July 29, 2021 through August 5, 2021 by dialing (877) 344-7529 and entering passcode 10148267. International callers should dial (412) 317-0088 and enter the same passcode. The replay will also be available on our website at http://investors.kilroyrealty.com/shareholders/investor-events/default.aspx.
About Kilroy Realty Corporation
Kilroy Realty Corporation (NYSE: KRC, the “company”, “KRC”) is a leading U.S. landlord and developer, with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, the Pacific Northwest and Austin, Texas. The company has earned global recognition for sustainability, building operations, innovation and design. As pioneers and innovators in the creation of a more sustainable real estate industry, the company’s approach to modern business environments helps drive creativity and productivity for some of the world’s leading technology, entertainment, life science and business services companies.
KRC is a publicly traded real estate investment trust (“REIT”) and member of the S&P MidCap 400 Index with more than seven decades of experience developing, acquiring and managing office, life science and mixed-use projects.
As of June 30, 2021, KRC’s stabilized portfolio totaled approximately 14.2 million square feet of primarily office and life science space that was 91.8% occupied and 93.6% leased. The company also had more than 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 71.9%. In addition, KRC had seven in-process development projects with an estimated total investment of $2.9 billion, totaling approximately 3.4 million square feet of office and life science space. The office and life science space was 57% leased, which included the June commencement of the KOP 2 project.
A Leader in Sustainability and Commitment to Corporate Social Responsibility
KRC is listed on the Dow Jones Sustainability World Index and has been recognized by industry organizations around the world. KRC’s stabilized portfolio was 74% LEED certified, 42% Fitwel certified, the highest of any non-government organization, and 72% of eligible properties were ENERGY STAR certified as of June 30, 2021.
The company has been recognized by GRESB, the Global Real Estate Sustainability Benchmark, as the listed sustainability leader in the Americas for six of the last seven years. Other honors have included the National Association of Real Estate Investment Trust’s (NAREIT) Leader in the Light award for six consecutive years and ENERGY STAR Partner of the Year for eight years as well as ENERGY STAR’s highest honor of Sustained Excellence, for the past six years.
A big part of the company’s foundation is its commitment to enhancing employee growth, satisfaction and wellness while maintaining a diverse and thriving culture. For the second year in a row, the company has been named to Bloomberg’s Gender Equality Index—recognizing companies committed to supporting gender equality through policy development, representation, and transparency.
4
More information is available at http://www.kilroyrealty.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: global market and general economic conditions 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 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; our ability to re-lease property at or above current market rates; 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; 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; our ability to maintain our status as a REIT; and uncertainties regarding the impact of the COVID-19 pandemic, and restrictions intended to prevent its spread, on our business and the economy generally. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors included under the caption “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2020 and our other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information and speak only as of the dates on which they are made. We assume no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.
5
KILROY REALTY CORPORATION
SUMMARY OF QUARTERLY RESULTS
(unaudited; in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues | $ | 225,983 | $ | 219,423 | $ | 461,629 | $ | 440,751 | |||||||||||||||
| Net income available to common stockholders | $ | 35,839 | $ | 19,618 | $ | 533,470 | $ | 59,435 | |||||||||||||||
| Weighted average common shares outstanding – basic | 116,452 | 115,085 | 116,398 | 110,980 | |||||||||||||||||||
| Weighted average common shares outstanding – diluted | 116,917 | 115,540 | 116,860 | 111,465 | |||||||||||||||||||
| Net income available to common stockholders per share – basic | $ | 0.30 | $ | 0.17 | $ | 4.58 | $ | 0.53 | |||||||||||||||
| Net income available to common stockholders per share – diluted | $ | 0.30 | $ | 0.17 | $ | 4.56 | $ | 0.52 | |||||||||||||||
Funds From Operations (1)(2) | $ | 104,595 | $ | 93,089 | $ | 220,839 | $ | 203,262 | |||||||||||||||
Weighted average common shares/units outstanding – basic (3) | 118,340 | 118,218 | 118,337 | 114,125 | |||||||||||||||||||
Weighted average common shares/units outstanding – diluted (4) | 118,806 | 118,673 | 118,798 | 114,609 | |||||||||||||||||||
Funds From Operations per common share/unit – basic (2) | $ | 0.88 | $ | 0.79 | $ | 1.87 | $ | 1.78 | |||||||||||||||
Funds From Operations per common share/unit – diluted (2) | $ | 0.88 | $ | 0.78 | $ | 1.86 | $ | 1.77 | |||||||||||||||
| Common shares outstanding at end of period | 116,454 | 115,177 | |||||||||||||||||||||
| Common partnership units outstanding at end of period | 1,151 | 1,935 | |||||||||||||||||||||
| Total common shares and units outstanding at end of period | 117,605 | 117,112 | |||||||||||||||||||||
| June 30, 2021 | June 30, 2020 | ||||||||||||||||||||||
Stabilized office portfolio occupancy rates: (5) | |||||||||||||||||||||||
| Greater Los Angeles | 86.7 | % | 91.2 | % | |||||||||||||||||||
| San Diego County | 91.0 | % | 87.4 | % | |||||||||||||||||||
| San Francisco Bay Area | 94.7 | % | 93.7 | % | |||||||||||||||||||
| Greater Seattle | 96.5 | % | 95.9 | % | |||||||||||||||||||
| Weighted average total | 91.8 | % | 92.3 | % | |||||||||||||||||||
Total square feet of stabilized office properties owned at end of period: (5) | |||||||||||||||||||||||
| Greater Los Angeles | 4,410 | 4,030 | |||||||||||||||||||||
| San Diego County | 2,410 | 2,146 | |||||||||||||||||||||
| San Francisco Bay Area | 5,528 | 6,350 | |||||||||||||||||||||
| Greater Seattle | 1,804 | 1,802 | |||||||||||||||||||||
| Total | 14,152 | 14,328 | |||||||||||||||||||||
________________________
(1)Reconciliation of Net income available to common stockholders to Funds From Operations available to common stockholders and unitholders and management statement on Funds From Operations are included after the Consolidated Statements of Operations.
(2)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(3)Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding.
(4)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options and contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.
(5)Occupancy percentages and total square feet reported are based on the company’s stabilized office portfolio for the periods presented. Occupancy percentages and total square feet shown for June 30, 2020 include the office properties that were sold subsequent to June 30, 2020.
6
KILROY REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
| June 30, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| REAL ESTATE ASSETS: | |||||||||||
| Land and improvements | $ | 1,551,653 | $ | 1,628,848 | |||||||
| Buildings and improvements | 6,682,208 | 6,783,092 | |||||||||
| Undeveloped land and construction in progress | 2,318,215 | 1,778,106 | |||||||||
| Total real estate assets held for investment | 10,552,076 | 10,190,046 | |||||||||
| Accumulated depreciation and amortization | (1,900,740) | (1,798,646) | |||||||||
| Total real estate assets held for investment, net | 8,651,336 | 8,391,400 | |||||||||
| Cash and cash equivalents | 519,307 | 731,991 | |||||||||
| Restricted cash | 450,457 | 91,139 | |||||||||
| Marketable securities | 25,885 | 27,481 | |||||||||
| Current receivables, net | 9,773 | 12,007 | |||||||||
| Deferred rent receivables, net | 384,475 | 386,658 | |||||||||
| Deferred leasing costs and acquisition-related intangible assets, net | 184,510 | 210,949 | |||||||||
| Right of use ground lease assets | 141,529 | 95,523 | |||||||||
| Prepaid expenses and other assets, net | 67,494 | 53,560 | |||||||||
| TOTAL ASSETS | $ | 10,434,766 | $ | 10,000,708 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| LIABILITIES: | |||||||||||
| Secured debt, net | $ | 251,000 | $ | 253,582 | |||||||
| Unsecured debt, net | 3,672,152 | 3,670,099 | |||||||||
| Accounts payable, accrued expenses and other liabilities | 429,168 | 445,100 | |||||||||
| Ground lease liabilities | 143,885 | 97,778 | |||||||||
| Accrued dividends and distributions | 59,455 | 59,431 | |||||||||
| Deferred revenue and acquisition-related intangible liabilities, net | 122,902 | 128,523 | |||||||||
| Rents received in advance and tenant security deposits | 62,739 | 68,874 | |||||||||
| Total liabilities | 4,741,301 | 4,723,387 | |||||||||
| EQUITY: | |||||||||||
| Stockholders’ Equity | |||||||||||
| Common stock | 1,165 | 1,160 | |||||||||
| Additional paid-in capital | 5,134,320 | 5,131,916 | |||||||||
| Retained earnings (distributions in excess of earnings) | 311,458 | (103,133) | |||||||||
| Total stockholders’ equity | 5,446,943 | 5,029,943 | |||||||||
| Noncontrolling Interests | |||||||||||
| Common units of the Operating Partnership | 53,810 | 49,875 | |||||||||
| Noncontrolling interests in consolidated property partnerships | 192,712 | 197,503 | |||||||||
| Total noncontrolling interests | 246,522 | 247,378 | |||||||||
| Total equity | 5,693,465 | 5,277,321 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 10,434,766 | $ | 10,000,708 | |||||||
7
KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Rental income | $ | 224,473 | $ | 218,356 | $ | 459,129 | $ | 436,989 | |||||||||||||||
| Other property income | 1,510 | 1,067 | 2,500 | 3,762 | |||||||||||||||||||
| Total revenues | 225,983 | 219,423 | 461,629 | 440,751 | |||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Property expenses | 40,482 | 37,829 | 79,341 | 76,812 | |||||||||||||||||||
| Real estate taxes | 22,109 | 21,854 | 47,375 | 44,056 | |||||||||||||||||||
| Ground leases | 2,023 | 2,330 | 3,851 | 4,647 | |||||||||||||||||||
| General and administrative expenses | 24,507 | 38,597 | 46,492 | 57,607 | |||||||||||||||||||
| Leasing costs | 883 | 1,330 | 1,575 | 2,786 | |||||||||||||||||||
| Depreciation and amortization | 73,589 | 80,085 | 149,521 | 154,455 | |||||||||||||||||||
| Total expenses | 163,593 | 182,025 | 328,155 | 340,363 | |||||||||||||||||||
| OTHER INCOME (EXPENSES) | |||||||||||||||||||||||
| Interest income and other net investment gain (loss) | 1,337 | 2,838 | 2,710 | (290) | |||||||||||||||||||
| Interest expense | (21,390) | (15,884) | (43,724) | (30,328) | |||||||||||||||||||
| Gain on sale of depreciable operating property | 543 | — | 457,831 | — | |||||||||||||||||||
| Total other (expenses) income | (19,510) | (13,046) | 416,817 | (30,618) | |||||||||||||||||||
| NET INCOME | 42,880 | 24,352 | 550,291 | 69,770 | |||||||||||||||||||
| Net income attributable to noncontrolling common units of the Operating Partnership | (354) | (367) | (5,240) | (1,072) | |||||||||||||||||||
| Net income attributable to noncontrolling interests in consolidated property partnerships | (6,687) | (4,367) | (11,581) | (9,263) | |||||||||||||||||||
| Total income attributable to noncontrolling interests | (7,041) | (4,734) | (16,821) | (10,335) | |||||||||||||||||||
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 35,839 | $ | 19,618 | $ | 533,470 | $ | 59,435 | |||||||||||||||
| Weighted average common shares outstanding – basic | 116,452 | 115,085 | 116,398 | 110,980 | |||||||||||||||||||
| Weighted average common shares outstanding – diluted | 116,917 | 115,540 | 116,860 | 111,465 | |||||||||||||||||||
| Net income available to common stockholders per share – basic | $ | 0.30 | $ | 0.17 | $ | 4.58 | $ | 0.53 | |||||||||||||||
| Net income available to common stockholders per share – diluted | $ | 0.30 | $ | 0.17 | $ | 4.56 | $ | 0.52 | |||||||||||||||
8
KILROY REALTY CORPORATION
FUNDS FROM OPERATIONS
(unaudited; in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net income available to common stockholders | $ | 35,839 | $ | 19,618 | $ | 533,470 | $ | 59,435 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Net income attributable to noncontrolling common units of the Operating Partnership | 354 | 367 | 5,240 | 1,072 | |||||||||||||||||||
| Net income attributable to noncontrolling interests in consolidated property partnerships | 6,687 | 4,367 | 11,581 | 9,263 | |||||||||||||||||||
| Depreciation and amortization of real estate assets | 72,037 | 75,981 | 146,468 | 148,419 | |||||||||||||||||||
| Gain on sale of depreciable real estate | (543) | — | (457,831) | — | |||||||||||||||||||
| Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (9,779) | (7,244) | (18,089) | (14,927) | |||||||||||||||||||
Funds From Operations(1)(2)(3) | $ | 104,595 | $ | 93,089 | $ | 220,839 | $ | 203,262 | |||||||||||||||
Weighted average common shares/units outstanding – basic (4) | 118,340 | 118,218 | 118,337 | 114,125 | |||||||||||||||||||
Weighted average common shares/units outstanding – diluted (5) | 118,806 | 118,673 | 118,798 | 114,609 | |||||||||||||||||||
Funds From Operations per common share/unit – basic (2) | $ | 0.88 | $ | 0.79 | $ | 1.87 | $ | 1.78 | |||||||||||||||
Funds From Operations per common share/unit – diluted (2) | $ | 0.88 | $ | 0.78 | $ | 1.86 | $ | 1.77 | |||||||||||||||
________________________
(1)We calculate Funds From Operations available to common stockholders and common unitholders (“FFO”) in accordance with the 2018 Restated White Paper on FFO approved by the Board of Governors of NAREIT. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders.
We believe that FFO is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.
Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide.
However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.
(2)Reported amounts are attributable to common stockholders and common unitholders.
(3)FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $4.7 million and $8.0 million for the three months ended June 30, 2021 and 2020, respectively, and $8.9 million and $13.0 million for the six months ended June 30, 2021 and 2020, respectively.
(4)Calculated based on weighted average shares outstanding including participating share-based awards (i.e. certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding.
(5)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options and contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.
9