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Secured and Unsecured Debt of the Operating Partnership | 12 Months Ended
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Dec. 31, 2021
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 and all of the unsecured senior notes. At December 31, 2021 and 2020, the Operating Partnership had $3.8 billion and $3.7 billion, respectively, outstanding in total, including unamortized discounts and deferred financing costs, under these unsecured debt obligations. In addition, although the remaining $0.2 billion and $0.3 billion of the Operating Partnership’s debt as of December 31, 2021 and 2020, respectively, 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. |
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, 2021 and 2020:
| Annual Stated Interest Rate (1) |  | GAAP Effective Rate (1)(2) |  | Maturity Date |  | December 31,
Type of Debt |  |  |  | 2021 |  | 2020
|  |  |  |  |  |  | (in thousands)
Mortgage note payable | 3.57% |  | 3.57% |  | December 2026 |  | $ | 163,435 |  |  | $ | 166,776 |
Mortgage note payable (3) | 4.48% |  | 4.48% |  | July 2027 |  | 85,588 |  |  | 87,589 |
Total secured debt |  |  |  |  |  |  | $ | 249,023 |  |  | $ | 254,365 |
Unamortized deferred financing costs |  |  |  |  |  |  | (656) |  |  | (783) |
Total secured debt, net |  |  |  |  |  |  | $ | 248,367 |  |  | $ | 253,582 |
____________________ (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 $212.0 million as of December 31, 2021. 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, 2021, 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 October 2021, the Operating Partnership issued $450.0 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 $0.2 million, on our consolidated balance sheets. The unsecured senior notes, which are scheduled to mature on November 15, 2033, require semi-annual interest payments each May and November based on a stated annual interest rate of 2.650%. The Operating Partnership may redeem the notes at any time prior to August 15, 2033, 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 October 2021, the Operating Partnership used a portion of the net proceeds from the issuance of the $450.0 million, 2.650% green unsecured senior notes to early redeem, at our option, the $300.0 million aggregate principal amount of our outstanding 3.800% unsecured senior notes that were scheduled to mature on January 15, 2023. In connection with the early redemption, we incurred a $12.2 million loss on early extinguishment of debt comprised of a $12.1 million premium paid to the note holders at the redemption date and a $0.1 million write-off of the unamortized discount and unamortized deferred financing costs. 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. 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 in April and October of each year. 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 $7.4 million and $8.3 million and unamortized deferred financing costs of $22.2 million and $21.6 million as of December 31, 2021 and 2020, respectively:
|  |  |  |  |  |  |  |  | Net Carrying Amount as of December 31,
| Issuance date |  | Maturity date |  | Stated coupon rate |  | Effective interest rate (1) |  | 2021 |  | 2020
|  |  |  |  |  |  |  |  | (in thousands)
2.650% Unsecured Senior Notes (2) | October 2021 |  | November 2033 |  | 2.650% |  | 2.654% |  | $ | 450,000 |  |  | $ | — |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (4,117) |  |  | — |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 445,883 |  |  | $ | — |
2.500% Unsecured Senior Notes (2) | August 2020 |  | November 2032 |  | 2.500% |  | 2.560% |  | $ | 425,000 |  |  | $ | 425,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (5,802) |  |  | (6,332) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 419,198 |  |  | $ | 418,668 |
4.270% Unsecured Senior Notes (3) | April 2020 |  | January 2031 |  | 4.270% |  | 4.270% |  | $ | 350,000 |  |  | $ | 350,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (1,644) |  |  | (1,825) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 348,356 |  |  | $ | 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 |  |  |  |  |  |  |  |  | (4,814) |  |  | (5,399) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 495,186 |  |  | $ | 494,601 |
4.750% Unsecured Senior Notes (5) | November 2018 |  | December 2028 |  | 4.750% |  | 4.800% |  | $ | 400,000 |  |  | $ | 400,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (3,457) |  |  | (3,952) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 396,543 |  |  | $ | 396,048 |
4.350% Unsecured Senior Notes (3) | October 2018 |  | October 2026 |  | 4.350% |  | 4.350% |  | $ | 200,000 |  |  | $ | 200,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (837) |  |  | (1,012) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 199,163 |  |  | $ | 198,988 |
4.300% Unsecured Senior Notes (3) | July 2018 |  | July 2026 |  | 4.300% |  | 4.300% |  | $ | 50,000 |  |  | $ | 50,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (202) |  |  | (246) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 49,798 |  |  | $ | 49,754 |
3.450% Unsecured Senior Notes (5) | December 2017 |  | December 2024 |  | 3.450% |  | 3.470% |  | $ | 425,000 |  |  | $ | 425,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (1,734) |  |  | (2,321) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 423,266 |  |  | $ | 422,679 |
3.450% Unsecured Senior Notes (6) | February 2017 |  | February 2029 |  | 3.450% |  | 3.450% |  | $ | 75,000 |  |  | $ | 75,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (304) |  |  | (347) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 74,696 |  |  | $ | 74,653 |
3.350% Unsecured Senior Notes (6) | February 2017 |  | February 2027 |  | 3.350% |  | 3.350% |  | $ | 175,000 |  |  | $ | 175,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (594) |  |  | (709) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 174,406 |  |  | $ | 174,291 |
4.375% Unsecured Senior Notes (7) | September 2015 |  | October 2025 |  | 4.375% |  | 4.444% |  | $ | 400,000 |  |  | $ | 400,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (2,077) |  |  | (2,631) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 397,923 |  |  | $ | 397,369 |
4.250% Unsecured Senior Notes (4) | July 2014 |  | August 2029 |  | 4.250% |  | 4.350% |  | $ | 400,000 |  |  | $ | 400,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | (4,035) |  |  | (4,567) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | 395,965 |  |  | $ | 395,433 |
3.800% Unsecured Senior Notes (8) | January 2013 |  | January 2023 |  | 3.800% |  | 3.800% |  | $ | — |  |  | $ | 300,000 |
Unamortized discount and deferred financing costs |  |  |  |  |  |  |  |  | — |  |  | (560) |
Net carrying amount |  |  |  |  |  |  |  |  | $ | — |  |  | $ | 299,440 |
Total Unsecured Senior Notes, Net |  |  |  |  |  |  |  |  | $ | 3,820,383 |  |  | $ | 3,670,099 |
____________________ (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 15th and November 15th of each year. (3)Interest on these notes is payable semi-annually in arrears on April 18th and October 18th 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 February 17th and August 17th of each year. (7)Interest on these notes is payable semi-annually in arrears on April 1st and October 1st of each year. (8)Interest on these notes was payable semi-annually in arrears on January 15th and July 15th of each year. In October 2021, the Operating Partnership early redeemed these notes. Unsecured Revolving Credit Facility In April 2021, the Operating Partnership amended and restated the terms of its unsecured revolving credit facility. The amendment and restatement increased the size of the unsecured revolving credit facility from $750.0 million to $1.1 billion, reduced the borrowing costs, extended the maturity date of the unsecured revolving credit facility to July 2025, with two six-month extension options, and added a sustainability-linked pricing component whereby the interest rate is lowered by 0.01% if certain sustainability performance targets are met. The LIBOR replacement provisions of the unsecured revolving credit facility permit the use of rates based on the secured overnight financing rate (“SOFR”) administered by the Federal Reserve Bank of New York. The following table summarizes the balance and terms of our unsecured revolving credit facility as of December 31, 2021 and 2020:
| December 31, 2021 |  | December 31, 2020
| (in thousands)
Outstanding borrowings | $ | — |  |  | $ | — |
Remaining borrowing capacity | 1,100,000 |  |  | 750,000 |
Total borrowing capacity (1) | $ | 1,100,000 |  |  | $ | 750,000 |
Interest rate (2) | 1.00 | % |  | 1.14 | %
Facility fee-annual rate (3) | 0.200%
Maturity date | July 2025 |  | July 2022
____________________ (1)We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $500.0 million and $600.0 million as of December 31, 2021 and 2020, respectively, under an accordion feature under the terms of the unsecured revolving credit facility. (2)Our unsecured revolving credit facility interest rate was calculated based on the contractual rate of LIBOR plus 0.900% and LIBOR plus 1.000% as of December 31, 2021 and 2020, respectively. (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, 2021 and 2020, $7.3 million and $2.1 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 its $150.0 million unsecured term loan facility, which had a contractual interest rate of LIBOR plus 1.100% and was scheduled to mature in July 2022. Debt Covenants and Restrictions The unsecured revolving credit facility, the unsecured senior notes, including the private placement notes, 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, 2021 and 2020. Debt Maturities The following table summarizes the stated debt maturities and scheduled amortization payments as of December 31, 2021:
Year | (in thousands)
2022 | $ | 5,554 |
2023 | 5,775 |
2024 | 431,006 |
2025 | 406,246 |
2026 | 401,317 |
Thereafter | 2,849,125 |
Total aggregate principal value (1) | $ | 4,099,023 |
________________________ (1) Includes gross principal balance of outstanding debt before the effect of the following at December 31, 2021: $22.9 million of unamortized deferred financing costs for the unsecured senior notes and secured debt and $7.4 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, 2021, 2020 and 2019. The interest expense capitalized was recorded as a cost of development and redevelopment and increased the carrying value of undeveloped land and construction in progress.
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
| (in thousands)
Gross interest expense | $ | 158,756 |  |  | $ | 150,325 |  |  | $ | 129,778 |
Capitalized interest and deferred financing costs | (80,201) |  |  | (79,553) |  |  | (81,241) |
Interest expense | $ | 78,555 |  |  | $ | 70,772 |  |  | $ | 48,537 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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