Kilroy Realty(US:KRC)2025-05-05 21:02Financial Performance - Revenues for Q1 2025 were $270.8 million, a decrease of 2.8% from $278.6 million in Q1 2024[8] - Net income available to common stockholders was $39.0 million, or $0.33 per diluted share, compared to $49.9 million, or $0.42 per diluted share in the prior year[8] - Funds from operations (FFO) for the quarter were $122.3 million, or $1.02 per diluted share, down from $133.7 million, or $1.11 per diluted share in Q1 2024[8] - Revenues for Q1 2025 were $270,844,000, a decrease of 5.4% compared to $286,379,000 in Q4 2024[27] - Net income available to common stockholders for Q1 2025 was $39,008,000, down 34.4% from $59,460,000 in Q4 2024[27] - Net operating income for Q1 2025 was $180,239,000, a decline of 6.9% from $193,645,000 in Q4 2024[27] - Funds from operations (FFO) for Q1 2025 were $122,310,000, compared to $144,875,000 in Q4 2024, representing a decrease of 15.6%[27] - The company's share of adjusted EBITDAre for Q1 2025 was $153,585,000, down from $168,788,000 in Q4 2024, a decrease of 9.0%[27] - The net income payout ratio for Q1 2025 was 147.6%, significantly higher than 99.0% in Q4 2024[29] - Total expenses for Q1 2025 were $196.992 million, slightly down from $198.376 million in Q4 2024[39] - Interest income for Q1 2025 was $1.134 million, a significant decrease from $4.790 million in Q4 2024[39] - Interest expense for Q1 2025 was $31.148 million, down from $33.245 million in Q4 2024, indicating a reduction of 6.3%[39] - The company reported a total of $161,999,000 in EBITDAre for Q1 2025, down from $181,421,000 in Q4 2024[1] - The company reported a decrease in EBITDA from $165,625,000 in Q4 2023 to $163,059,000 in Q1 2025[155] Occupancy and Leasing - The stabilized portfolio was 81.4% occupied and 83.9% leased as of March 31, 2025[8] - Approximately 248,000 square feet of leases were signed during the quarter, including 98,000 square feet of new leasing on previously vacant space[8] - Average occupancy rate decreased to 81.3% in Q1 2025 from 84.3% in Q1 2024[1] - The total leased rate for the stabilized portfolio is 83.9% as of March 31, 2025, down from 84.9% on December 31, 2024[58] - The company executed 21 new and renewal leases totaling 244,189 square feet, with a retention rate of 19.3% for the quarter[66] - The company is focusing on maintaining and improving occupancy rates through strategic leasing efforts[63] - The overall trend shows a slight decline in occupancy rates across the portfolio, which may require further analysis and strategic adjustments[63] Dividends and Shareholder Returns - The board declared a quarterly cash dividend of $0.54 per share, equivalent to an annual rate of $2.16 per share[6] - The company declared dividends of $0.54 per common share, consistent with the previous quarters[29] - The FFO Payout Ratio is calculated as current-quarter dividends divided by FFO attributable to common stockholders, indicating the proportion of earnings distributed[133] Debt and Financial Ratios - As of March 31, 2025, total debt amounts to $4,630,149, representing 54.2% of total market capitalization of $8,542,327[98] - The company has a fixed charge coverage ratio of 3.3x, exceeding the required minimum of 1.5x[106] - The total principal amount of debt is $4,630,149, with net debt calculated at $4,483,438[106] - The company's share of trailing 12-month EBITDAre is $677,632, with a net debt to EBITDAre ratio of 6.6x[106] - The secured debt to total asset value ratio is 5%, well below the 40% limit[106] - The company’s unsecured debt ratio stands at 3.04x, above the required minimum of 1.67x[106] Future Outlook and Guidance - The company affirmed FFO per share guidance for the full year 2025 at $3.85 to $4.05 per diluted share[9] - Same Property Cash Net Operating Income (NOI) growth guidance for 2025 is projected to be between (1.5%) to (3.0%)[10] - Total annualized base rent for 2025 is projected to be $447,571,000, representing a 3.3% increase[75] - The company expects a total of 1,900,007 rentable square feet by 2026, with a 13.9% increase in annualized base rent to $89,927,000[75] - In 2027, total rentable square feet is anticipated to be 1,078,806, with a 7.9% increase in annualized base rent to $43,722,000[75] Property and Portfolio Management - The total assets as of March 31, 2025, were $10,878,685,000, a slight decrease from $10,898,357,000 at the end of Q4 2024[33] - The total liabilities as of March 31, 2025, were $5,298,700,000, compared to $5,289,488,000 at the end of Q4 2024[33] - The company maintains a diversified tenant industry portfolio, with significant contributions from technology and entertainment sectors[80] - The company has ongoing projects with a total estimated investment of $1,105 million, including 975,000 square feet of office/life science space[89] - The company plans to stabilize the Kilroy Oyster Point - Phase 2 project by Q1 2026, with an estimated rentable area of 875,000 square feet[89] Changes in Accounting and Metrics - The company began excluding lease termination fees from Net Operating Income starting January 1, 2025, aligning with a new definition[1] - The Company began excluding lease termination fees from the calculation of rental revenue for Net Operating Income (NOI) metrics starting January 1, 2025, to provide a more accurate measure of operating performance[111] - The Company's Funds From Operations (FFO) is calculated in accordance with the 2018 Restated White Paper on FFO, excluding depreciation and amortization related to real estate, and is considered a standard measure for REITs[118] - The Company computes Funds Available for Distribution (FAD) by adjusting FFO for recurring tenant improvements, leasing commissions, and capital expenditures, providing insight into liquidity[122] - The Company calculates EBITDAre as a supplemental measure of operating performance, which excludes financing costs and depreciation, providing a clearer view of operational results[115]