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Secured and Unsecured Debt of the Operating Partnership
 12 Months Ended
Dec. 31, 2023
Debt Instrument [Line Items]  
Secured and Unsecured Debt of the Operating Partnership Secured and Unsecured Debt of the Company
In this Note 9, 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 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. At December 31, 2023 and 2022, the Operating Partnership had $4.3 billion and $4.0 billion, respectively, outstanding in total, including unamortized discounts and deferred financing costs, under these unsecured debt obligations.

In addition, although the remaining $0.6 billion and $0.2 billion of the Operating Partnership’s debt as of December 31, 2023 and 2022, 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 10 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

In July 2023, certain of the Operating Partnership’s subsidiaries entered into a $375.0 million mortgage loan transaction (the “Loan”) secured by, among other things, a deed of trust, assignment of leases and rents, security agreement and fixture filing encumbering two office buildings, 608 apartment units and over 95,000 square feet of retail at the Company’s One Paseo mixed-use campus in Del Mar, California. The Loan matures on August 10, 2034, bears interest at an annual rate of 5.90% and requires monthly interest payments only, which commenced on September 10, 2023. In addition, the Operating Partnership has entered into a guaranty in favor of the lender in connection with the Loan. The Loan is generally non-recourse to the Operating Partnership, but the lender has recourse to the Operating Partnership for certain recourse exceptions.

The following table sets forth the composition of our secured debt as of December 31, 2023 and 2022:

Annual Stated Interest Rate (1)
GAAP
Effective Rate (1)(2)
Maturity DateDecember 31,
Type of Debt20232022
(in thousands)
Mortgage note payable3.57%3.57%December 2026$156,386 $159,973 
Mortgage note payable (3)
4.48%4.48%July 202781,308 83,496 
Mortgage note payable5.90%5.90%August 2034375,000 — 
Total secured debt$612,694 $243,469 
Unamortized deferred financing costs(9,469)(531)
Total secured debt, net$603,225 $242,938 
____________________
(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 $817.3 million as of December 31, 2023.

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, 2023, 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 Debt

Early Redemption of $300.0 million Unsecured Senior Notes Due 2023

In October 2021, the Operating Partnership early redeemed, 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.

Partial Repurchase of $425.0 million Unsecured Senior Notes Due 2024

During the year ended December 31, 2023, the Company completed open-market repurchases of $21.3 million of the Operating Partnership’s 3.450% $425.0 million unsecured senior notes due December 15, 2024 at a discount, leaving an aggregate remaining principal balance of $403.7 million.

Issuance of $400.0 million Unsecured Senior Notes Due 2036

On January 12, 2024, the Operating Partnership issued $400.0 million aggregated principal amount of unsecured senior notes in a registered public offering. 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 interest rate of 6.250%. See Note 26 “Subsequent Events” for additional information.
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 unamortized discounts of $5.3 million and $6.4 million and unamortized deferred financing costs of $15.9 million and $19.1 million as of December 31, 2023 and 2022, respectively:
Net Carrying Amount
as of December 31,
Issuance dateMaturity dateStated
coupon rate
Effective interest rate (1)
20232022
(in thousands)
2.650% Unsecured Senior Notes (2)
October 2021November 20332.650%2.654%$450,000 $450,000 
Unamortized discount and deferred financing costs(3,422)(3,770)
Net carrying amount$446,578 $446,230 
2.500% Unsecured Senior Notes (2)
August 2020November 20322.500%2.560%$425,000 $425,000 
Unamortized discount and deferred financing costs(4,735)(5,268)
Net carrying amount$420,265 $419,732 
4.270% Unsecured Senior Notes (3)
April 2020January 20314.270%4.270%$350,000 $350,000 
Unamortized discount and deferred financing costs(1,282)(1,463)
Net carrying amount$348,718 $348,537 
3.050% Unsecured Senior Notes (4)
September 2019February 20303.050%3.064%$500,000 $500,000 
Unamortized discount and deferred financing costs(3,629)(4,221)
Net carrying amount$496,371 $495,779 
4.750% Unsecured Senior Notes (5)
November 2018December 20284.750%4.800%$400,000 $400,000 
Unamortized discount and deferred financing costs(2,468)(2,963)
Net carrying amount$397,532 $397,037 
4.350% Unsecured Senior Notes (3)
October 2018October 20264.350%4.350%$200,000 $200,000 
Unamortized discount and deferred financing costs(488)(663)
Net carrying amount$199,512 $199,337 
4.300% Unsecured Senior Notes (3)
July 2018July 20264.300%4.300%$50,000 $50,000 
Unamortized discount and deferred financing costs(113)(157)
Net carrying amount$49,887 $49,843 
3.450% Unsecured Senior Notes (5)
December 2017December 20243.450%3.470%$403,712 $425,000 
Unamortized discount and deferred financing costs(558)(1,148)
Net carrying amount$403,154 $423,852 
3.450% Unsecured Senior Notes (6)
February 2017February 20293.450%3.450%$75,000 $75,000 
Unamortized discount and deferred financing costs(219)(262)
Net carrying amount$74,781 $74,738 
3.350% Unsecured Senior Notes (6)
February 2017February 20273.350%3.350%$175,000 $175,000 
Unamortized discount and deferred financing costs(363)(478)
Net carrying amount$174,637 $174,522 
4.375% Unsecured Senior Notes (7)
September 2015October 20254.375%4.444%$400,000 $400,000 
Unamortized discount and deferred financing costs(969)(1,523)
Net carrying amount$399,031 $398,477 
4.250% Unsecured Senior Notes (4)
July 2014August 20294.250%4.350%$400,000 $400,000 
Unamortized discount and deferred financing costs(2,971)(3,503)
Net carrying amount$397,029 $396,497 
Total Unsecured Senior Notes, Net$3,807,495 $3,824,581 
____________________
(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.
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, 2023 and 2022:
December 31, 2023December 31, 2022
(in thousands)
Outstanding borrowings$— $— 
Remaining borrowing capacity1,100,000 1,100,000 
Total borrowing capacity (1)
$1,100,000 $1,100,000 
Interest rate (2)
6.38 %5.20 %
Facility fee-annual rate (3)
0.200%
Maturity dateJuly 31, 2025
____________________
(1)Total borrowing capacity is reduced by the amount of our outstanding letters of credit which total approximately $5.2 million as of 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 a contractual rate of 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 December 31, 2023 and 2022. 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. As of December 31, 2023 and 2022, $3.2 million and $5.3 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 Company’s option.

The Operating Partnership 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 October 2022, the Operating Partnership entered into a $400.0 million unsecured term loan facility and made an initial draw of $200.0 million. The borrowing rate under the unsecured term loan facility is variable and subject to a ratings-based pricing grid, currently calculated as Adjusted SOFR plus 0.950%. The unsecured term loan facility also has a delayed draw feature and a $100.0 million accordion mechanism, subject to lender commitments. The unsecured term loan facility is scheduled to mature in October 2024 and includes two twelve-month extension options at our option.

In January 2023, the Operating Partnership entered into the first amendment to its unsecured term loan facility agreement to (i) exercise the accordion feature under the term loan agreement to provide for $100.0 million of additional term loan commitments and (ii) increase the borrowing capacity under the accordion feature to provide additional term loan commitments or add one or more tranches of term loans up to an aggregate amount of $650.0 million. In March 2023, the Operating Partnership further amended the unsecured term loan facility agreement to exercise the accordion feature to provide for $20.0 million of additional term loan commitments, bringing the total borrowing capacity of the unsecured term loan facility to $520.0 million.
The following table summarizes the balance and terms of our unsecured term loan facility as of December 31, 2023:

December 31, 2023December 31, 2022
(in thousands)
Outstanding borrowings$520,000 $200,000 
Remaining borrowing capacity— 200,000 
Total borrowing capacity (1)
$520,000 $400,000 
Interest rate (2)
6.41 %5.23 %
Undrawn facility fee-annual rate (3)
0.200%
Maturity date (4)
October 3, 2024
____________________
(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 and $100.0 million as of December 31, 2023 and December 31, 2022, respectively, under an accordion feature pursuant to the terms of the unsecured term loan facility
(2)Our unsecured term loan facility interest rate was calculated using a contractual rate of Adjusted SOFR plus a margin of 0.950% based on our credit rating as of December 31, 2023 and December 31, 2022.
(3)Our undrawn facility fee is paid on a quarterly basis and is calculated based on the remaining borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of December 31, 2023 and 2022, $2.3 million and $4.5 million, respectively, of unamortized deferred financing costs remained to be amortized through the maturity date of our unsecured term loan facility.
(4)The maturity date may be extended by two twelve-month periods, at the Company’s option.

Debt Covenants and Restrictions

The unsecured revolving credit facility, unsecured term loan 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 maximum ratio of secured debt to total asset value, 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 were in compliance with all of our debt covenants as of December 31, 2023 and 2022.

Debt Maturities

The following table summarizes the stated debt maturities and scheduled amortization payments for all outstanding debt as of December 31, 2023:

Year(in thousands)
2024 (1)
$929,718 
2025406,246 
2026401,317 
2027249,125 
2028400,000 
Thereafter2,575,000 
Total aggregate principal value (2)
$4,961,406 
________________________ 
(1)     Includes the $520.0 million currently outstanding on the unsecured term loan facility maturing on October 3, 2024, for which the Company has two twelve-month extension options.
(2)     Includes gross principal balance of outstanding debt before the effect of the following at December 31, 2023: $27.7 million of unamortized deferred financing costs for the unsecured term loan facility, unsecured senior notes and secured debt and $5.3 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 and deferred financing cost amortization, net of capitalized interest, for the years ended December 31, 2023, 2022 and 2021. 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,
202320222021
(in thousands)
Gross interest expense$192,983 $161,761 $158,756 
Capitalized interest and deferred financing costs(78,767)(77,483)(80,201)
Interest expense$114,216 $84,278 $78,555