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Secured and Unsecured Debt of the Operating Partnership | 12 Months Ended
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Dec. 31, 2020
Debt Instrument [Line Items] |
Secured and Unsecured Debt of the Operating Partnership | Secured and Unsecured Debt of the Company In this Note 8, the “Company” refers solely to Kilroy Realty Corporation and not to any of our subsidiaries. The Company itself does not hold any indebtedness. All of our secured and unsecured debt is held directly by the Operating Partnership. The Company generally guarantees all 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. At December 31, 2020 and 2019, the Operating Partnership had $3.7 billion and $3.3 billion, respectively, outstanding in total, including unamortized discounts and deferred financing costs, under these unsecured debt obligations. In addition, although the remaining $0.3 billion of the Operating Partnership’s debt as of December 31, 2020 and 2019, is secured and non-recourse to the Company, the Company provides limited customary secured debt guarantees for items such as voluntary bankruptcy, fraud, misapplication of payments and environmental liabilities. Debt Covenants and Restrictions One of the covenants contained within the unsecured revolving credit facility as discussed further below in Note 9 prohibits the Company from paying dividends during an event of default in excess of an amount which results in distributions to us in an amount sufficient to permit us to pay dividends to our stockholders that we reasonably believe are necessary to (a) maintain our qualification as a REIT for federal and state income tax purposes and (b) avoid the payment of federal or state income or excise tax.
Kilroy Realty L.P. [Member] |
Debt Instrument [Line Items] |
Secured and Unsecured Debt of the Operating Partnership | Secured and Unsecured Debt of the Operating Partnership Secured Debt The following table sets forth the composition of our secured debt as of December 31, 2020 and 2019:
| Annual Stated Interest Rate (1) |  | GAAP Effective Rate (1)(2) |  | Maturity Date |  | December 31,
Type of Debt |  |  |  | 2020 |  | 2019
|  |  |  |  |  |  | (in thousands)
Mortgage note payable | 3.57% |  | 3.57% |  | December 2026 |  | $ | 166,776 |  |  | $ | 170,000 |
Mortgage note payable (3) | 4.48% |  | 4.48% |  | July 2027 |  | 87,589 |  |  | 89,502 |
Total secured debt |  |  |  |  |  |  | $ | 254,365 |  |  | $ | 259,502 |
Unamortized Deferred Financing Costs |  |  |  |  |  |  | (783) |  |  | (909) |
Total secured debt, net |  |  |  |  |  |  | $ | 253,582 |  |  | $ | 258,593 |
____________________ (1)All interest rates presented are fixed-rate interest rates. (2)Represents the effective interest rate including the amortization of initial issuance discounts/premiums excluding the amortization of deferred financing costs. (3)The secured debt and the related properties that secure this debt are held in a special purpose entity and the properties are not available to satisfy the debts and other obligations of the Company or the Operating Partnership. The Operating Partnership’s secured debt was collateralized by operating properties with a combined net book value of approximately $222.0 million as of December 31, 2020. Although our mortgage loans are secured and non-recourse to the Company and the Operating Partnership, the Company provides limited customary secured debt guarantees for items such as voluntary bankruptcy, fraud, misapplication of payments and environmental liabilities. As of December 31, 2020, all of the Operating Partnership’s secured loans contained restrictions that would require the payment of prepayment penalties for the acceleration of outstanding debt. The mortgage notes payable are secured by deeds of trust on certain of our properties and the assignment of certain rents and leases associated with those properties. Unsecured Senior Notes - Registered Offerings In August 2020, the Operating Partnership issued $425.0 million aggregate principal amount of green 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 $2.7 million, on our consolidated balance sheets. The unsecured senior notes, which are scheduled to mature on November 15, 2032, require semi-annual interest payments each May and November based on a stated annual interest rate of 2.500%. The Operating Partnership may redeem the notes at any time prior to August 15, 2032, either in whole or in part, subject to the payment of an early redemption premium prior to a par call option period commencing three months prior to maturity. In September 2019, the Operating Partnership issued $500.0 million of 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 $0.6 million, on our consolidated balance sheets. The unsecured senior notes, which are scheduled to mature on February 15, 2030, require semi-annual interest payments each February and August based on a stated annual interest rate of 3.050%. The Operating Partnership may redeem the notes at any time prior to February 15, 2030, either in whole or in part, subject to the payment of an early redemption premium prior to a par call option period commencing three months prior to maturity. Unsecured Senior Notes - Private Placement In April 2020, the Operating Partnership entered into a Note Purchase Agreement in connection with the issuance and sale of $350.0 million principal amount of the Operating Partnership’s 4.270% Senior Notes due January 31, 2031 (the “Notes due 2031”), pursuant to a private placement. The Notes due 2031 mature on their due date, unless earlier redeemed or prepaid pursuant to the terms of the Note Purchase Agreement. Interest on the Notes is payable semi-annually in arrears on April 18 and October 18 of each year beginning October 18, 2020. Unsecured Senior Notes - Early Redemption In December 2018, at our option, we early redeemed the $250.0 million aggregate principal amount of our outstanding 6.625% unsecured senior notes that were scheduled to mature on June 1, 2020. In connection with our early redemption, we incurred a $12.6 million loss on early extinguishment of debt comprised of an $11.8 million premium paid to the note holders at the redemption date and a $0.8 million write-off of the unamortized discount and unamortized deferred financing costs. Unsecured Senior Notes The following table summarizes the balance and significant terms of the registered unsecured senior notes issued by the Operating Partnership and outstanding, including the issuances noted above, and including unamortized discounts of $8.3 million and $6.5 million and unamortized deferred financing costs of $21.6 million and $18.7 million as of December 31, 2020 and 2019, respectively:
|  |  |  |  |  |  |  |  | Net Carrying Amount as of December 31,
| Issuance date |  | Maturity date |  | Stated coupon rate |  | Effective interest rate (1) |  | 2020 |  | 2019
|  |  |  |  |  |  |  |  | (in thousands)
2.500% Unsecured Senior Notes (2) | August 2020 |  | November 2032 |  | 2.500% |  | 2.560% |  | $ | 425,000 |  |  | $ | — |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (6,332) |  |  | — |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 418,668 |  |  | $ | — |
4.270% Unsecured Senior Notes (3) | April 2020 |  | January 2031 |  | 4.270% |  | 4.270% |  | $ | 350,000 |  |  | $ | — |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (1,825) |  |  | — |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 348,175 |  |  | $ | — |
3.050% Unsecured Senior Notes (4) | September 2019 |  | February 2030 |  | 3.050% |  | 3.064% |  | $ | 500,000 |  |  | $ | 500,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (5,399) |  |  | (5,998) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 494,601 |  |  | $ | 494,002 |
4.750% Unsecured Senior Notes (5) | November 2018 |  | December 2028 |  | 4.750% |  | 4.800% |  | $ | 400,000 |  |  | $ | 400,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (3,952) |  |  | (4,446) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 396,048 |  |  | $ | 395,554 |
4.350% Unsecured Senior Notes (6) | October 2018 |  | October 2026 |  | 4.350% |  | 4.350% |  | $ | 200,000 |  |  | $ | 200,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (1,012) |  |  | (1,186) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 198,988 |  |  | $ | 198,814 |
4.300% Unsecured Senior Notes (6) | July 2018 |  | July 2026 |  | 4.300% |  | 4.300% |  | $ | 50,000 |  |  | $ | 50,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (246) |  |  | (290) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 49,754 |  |  | $ | 49,710 |
3.450% Unsecured Senior Notes (7) | December 2017 |  | December 2024 |  | 3.450% |  | 3.470% |  | $ | 425,000 |  |  | $ | 425,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (2,321) |  |  | (2,907) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 422,679 |  |  | $ | 422,093 |
3.450% Unsecured Senior Notes (8) | February 2017 |  | February 2029 |  | 3.450% |  | 3.450% |  | $ | 75,000 |  |  | $ | 75,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (347) |  |  | (390) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 74,653 |  |  | $ | 74,610 |
3.350% Unsecured Senior Notes (8) | February 2017 |  | February 2027 |  | 3.350% |  | 3.350% |  | $ | 175,000 |  |  | $ | 175,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (709) |  |  | (825) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 174,291 |  |  | $ | 174,175 |
4.375% Unsecured Senior Notes (9) | September 2015 |  | October 2025 |  | 4.375% |  | 4.444% |  | $ | 400,000 |  |  | $ | 400,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (2,631) |  |  | (3,185) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 397,369 |  |  | $ | 396,815 |
4.250% Unsecured Senior Notes (10) | July 2014 |  | August 2029 |  | 4.250% |  | 4.350% |  | $ | 400,000 |  |  | $ | 400,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (4,567) |  |  | (5,100) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 395,433 |  |  | $ | 394,900 |
3.800% Unsecured Senior Notes (11) | January 2013 |  | January 2023 |  | 3.800% |  | 3.800% |  | $ | 300,000 |  |  | $ | 300,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (560) |  |  | (834) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 299,440 |  |  | $ | 299,166 |
Total Unsecured Senior Notes, Net |  |  |  |  |  |  |  |  | $ | 3,670,099 |  |  | $ | 2,899,839 |
____________________ (1)Represents the effective interest rate including the amortization of initial issuance discounts, excluding the amortization of deferred financing costs. (2)Interest on these notes is payable semi-annually in arrears on May 15 and November 15 of each year. (3)Interest on these notes is payable semi-annually in arrears on April 18 and October 18 of each year. (4)Interest on these notes is payable semi-annually in arrears on February 15th and August 15th of each year. (5)Interest on these notes is payable semi-annually in arrears on June 15th and December 15th of each year. (6)Interest on these notes is payable semi-annually in arrears on April 18th and October 18th of each year. (7)Interest on these notes is payable semi-annually in arrears on June 15th and December 15th of each year. (8)Interest on these notes is payable semi-annually in arrears on February 17th and August 17th of each year. (9)Interest on these notes is payable semi-annually in arrears on April 1st and October 1st of each year. (10)Interest on these notes is payable semi-annually in arrears on February 15th and August 15th of each year. (11)Interest on these notes is payable semi-annually in arrears on January 15th and July 15th of each year. Unsecured Revolving Credit Facility and Term Loan Facility The following table summarizes the balance and terms of our unsecured revolving credit facility as of December 31, 2020 and 2019:
| December 31, 2020 |  | December 31, 2019
| (in thousands)
Outstanding borrowings | $ | — |  |  | $ | 245,000 |
Remaining borrowing capacity | 750,000 |  |  | 505,000 |
Total borrowing capacity (1) | $ | 750,000 |  |  | $ | 750,000 |
Interest rate (2) | 1.14 | % |  | 2.76 | %
Facility fee-annual rate (3) | 0.200%
Maturity date | July 2022
____________________ (1)We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $600.0 million under an accordion feature under the terms of the unsecured revolving credit facility and unsecured term loan facility. (2)Our unsecured revolving credit facility interest rate was calculated based on the contractual rate of LIBOR plus 1.000% as of December 31, 2020 and 2019. (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. As of December 31, 2020 and 2019, $2.1 million and $3.4 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. The Company intends to borrow under the unsecured revolving credit facility from time to time for general corporate purposes, to finance development and redevelopment expenditures, to fund potential acquisitions and to potentially repay long-term debt and to supplement cash balances given uncertainties and volatility in market conditions. In August 2020, the Company repaid in full the $150.0 million unsecured term loan facility. The following table summarizes the balance and terms of our unsecured term loan facility as of December 31, 2019, which is included in unsecured debt, net on our consolidated balance sheets:
| December 31, 2019
Outstanding borrowings | $ | 150,000 |
Remaining borrowing capacity | — |
Total borrowing capacity (1) | $ | 150,000 |
Interest rate (2) | 2.85 | %
Undrawn facility fee-annual rate | 0.200%
Maturity date | July 2022
____________________ (1)As of December 31, 2019, $0.7 million of unamortized deferred financing costs remained to be amortized through the maturity date of our unsecured term loan facility. (2)Our unsecured term loan facility interest rate was calculated based on the contractual rate of LIBOR plus 1.100% as of December 31, 2019. Debt Covenants and Restrictions The unsecured revolving credit facility, the unsecured senior notes, the Series A and B Notes due 2026, Series A and B Notes due 2027 and 2029, and Notes due 2031 and certain other secured debt arrangements contain covenants and restrictions requiring us to meet certain financial ratios and reporting requirements. Some of the more restrictive financial covenants include a maximum ratio of total debt to total asset value, a minimum fixed-charge coverage ratio, a minimum unsecured debt ratio and a minimum unencumbered asset pool debt service coverage ratio. Noncompliance with one or more of the covenants and restrictions could result in the full principal balance of the associated debt becoming immediately due and payable. We believe we were in compliance with all of our debt covenants as of December 31, 2020 and 2019. Debt Maturities The following table summarizes the stated debt maturities and scheduled amortization payments as of December 31, 2020:
Year | (in thousands)
2021 | $ | 5,342 |
2022 | 5,554 |
2023 | 305,775 |
2024 | 431,006 |
2025 | 406,246 |
Thereafter | 2,800,442 |
Total aggregate principal value (1) | $ | 3,954,365 |
________________________ (1) Includes gross principal balance of outstanding debt before the effect of the following at December 31, 2020: $22.4 million of unamortized deferred financing costs for the unsecured senior notes and secured debt and $8.3 million of unamortized discounts for the unsecured senior notes. Capitalized Interest and Loan Fees The following table sets forth gross interest expense, including debt discount/premium and deferred financing cost amortization, net of capitalized interest, for the years ended December 31, 2020, 2019 and 2018. The interest expense capitalized was recorded as a cost of development and increased the carrying value of undeveloped land and construction in progress.
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
| (in thousands)
Gross interest expense | $ | 150,325 |  |  | $ | 129,778 |  |  | $ | 117,789 |
Capitalized interest and deferred financing costs | (79,553) |  |  | (81,241) |  |  | (68,068) |
Interest expense | $ | 70,772 |  |  | $ | 48,537 |  |  | $ | 49,721 |

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