8-K

Date: October 3, 2022

KILROY REALTY CORPORATION

/s/ Merryl E. Werber

Merryl E. Werber

Senior Vice President, Chief Accounting Officer and Controller

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

8-K

CURRENT REPORT

Pursuant to Section 13 or 15 (d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 3, 2022

KILROY REALTY CORPORATION

KILROY REALTY, L.P.

(Exact name of registrant as specified in its charter)


Kilroy Realty Corporation	Maryland	001-12675	95-4598246
	(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

Kilroy Realty, L.P.	Delaware	000-54005	95-4612685
	(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

12200 W. Olympic Boulevard, Suite 200, Los Angeles, California, 90064

(Address of principal executive offices) (Zip Code)

(310)

481-8400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Registrant	Title of each class	Name of each exchange on which registered	Ticker Symbol
Kilroy Realty Corporation	Common Stock, $.01 par value	New York Stock Exchange	KRC

Securities registered pursuant to Section 12(g) of the Act:


Registrant		Title of each class
Kilroy Realty, L.P.		Common Units Representing Limited Partnership Interests

Check the appropriate box below if the Form

8-K

filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule

12b-2

of the Securities Exchange Act of 1934 (17 CFR

§240.12b-2).

Kilroy Realty Corporation:

Emerging growth company ☐

Kilroy Realty, L.P.:

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Kilroy Realty Corporation ☐ Kilroy Realty, L.P. ☐

Item 1.01

Entry into a Material Definitive Agreement.

On October 3, 2022, Kilroy Realty, L.P. (the “Operating Partnership”) entered into a term loan agreement (the “Term Loan Agreement”), that provides for an unsecured delayed draw term loan facility (the “Term Loan Facility”), with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, JPMorgan Chase Bank, N.A., BofA Securities, Inc., PNC Capital Markets LLC, U.S. Bank National Association and The Bank of Nova Scotia, as joint lead arrangers and joint bookrunners, Bank of America, N.A., as a lender and syndication agent, PNC Bank, National Association, U.S. Bank National Association and The Bank of Nova Scotia, as lenders and

co-documentation

agents. The Term Loan Facility provides for borrowings of up to $400 million. The Term Loan Facility also includes an accordion feature to increase the term loan commitments or add one or more tranches of term loans up to an aggregate amount of $500 million, subject to obtaining lender commitments and the satisfaction of certain customary conditions. The Term Loan Facility is guaranteed by Kilroy Realty Corporation (the “Company”).

The Term Loan Facility provides that the term loans will bear interest, at the Operating Partnership’s option, at a rate of (x) a term SOFR-based floating interest rate option plus an applicable margin ranging from 0.80% to 1.60%, including a credit spread adjustment of 0.10%, and (y) a base rate interest rate option plus an applicable margin ranging from 0.00% to 0.60%, in each case depending on the corporate credit rating of our long-term senior unsecured debt. The Operating Partnership is also obligated to pay an unused ticking fee on the aggregate unused term loan commitments under the Term Loan Facility ranging from 12.5 basis points to 30 basis points depending on the corporate credit rating of our long-term senior unsecured debt.

The Operating Partnership is required to comply with the following financial covenants under the Term Loan Facility:

•

Maximum total debt to total asset value of less than 60%;

•

Fixed charge coverage ratio of greater than 1.5x;

•

Unsecured debt ratio of greater than 1.67x; and

•

Unencumbered asset pool debt service coverage of greater than 1.75x.

The Term Loan Facility provides for borrowings in U.S. dollars. The Term Loan Facility has a maturity date of October 3,

2026, which

reflects

two

1-year

extension options at the Operating Partnership’s option; provided, that the Operating Partnership must pay a 12.5 basis point extension fee based on the then outstanding principal amount of the term loans for the first extension and a 15 basis point extension fee based on the then outstanding principal amount of the term loans for the second extension.

The Term Loan Agreement contains customary affirmative and negative covenants that, among other things, limit the ability of the Company to pay dividends and enter into certain transactions. A breach of such covenants (after notice and cure periods in certain circumstances) or any other event of default would entitle the administrative agent to accelerate the Operating Partnership’s debt obligations.

In connection with the Term Loan Facility, the Company entered into a guaranty (the “Guaranty”) pursuant to which it has absolutely, irrevocably and unconditionally guaranteed to the administrative agent under the Term Loan Facility for the benefit of the lenders party to the Term Loan Facility, the payment and performance of the obligations of the Operating Partnership under the Term Loan Facility as and when due and payable.

As previously disclosed, on April 21, 2021, the Operating Partnership entered into an amended and restated revolving credit agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Revolving Credit Agreement”), which governs an unsecured revolving credit facility (the “Revolving Credit Facility”), with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, JPMorgan Chase Bank, N.A., BofA Securities, Inc., Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners, PNC Capital Markets LLC and U.S. Bank National Association, as joint lead arrangers, Bank of America, N.A., as a lender and syndication agent, Wells Fargo Bank, N.A., PNC Bank, National Association, U.S. Bank National Association, Bank of the West, Barclays Bank PLC, MUFG Union Bank, N.A., Sumitomo Mitsui Banking Corporation and The Bank of Nova Scotia, as lenders and

co-documentation

agents.

On October 3, 2022 the Operating Company entered into an amendment to the Revolving Credit Agreement (the “Amendment”). The Amendment replaced the LIBOR-based and daily LIBOR-based floating interest rate options with a term SOFR-based floating interest rate option and a daily SOFR-based floating interest rate option as benchmark rates for borrowings denominated in U.S. dollars for all purposes under the Credit Agreement, including, in each case, a credit spread adjustment of 0.10%.

The foregoing descriptions of the Amendment to the Revolving Credit Facility, the Term Loan Facility and the Guaranty are only summaries and are qualified in their entirety by reference to the full text of the Amendment, the Term Loan Facility and the Guaranty, copies of which will be filed as exhibits to the Company’s and the Operating Partnership’s Annual Report on Form

10-K

for the year ending December 31, 2022.

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an

Off-Balance

Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 is incorporated herein by reference.

Item 7.01

Regulation FD Disclosure.

On October 3, 2022, the Company issued a press release announcing its entry into the Term Loan Facility and the Amendment to the Revolving Credit Facility. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form

8-K.

The information included in this Current Report on Form

8-K

under this Item 7.01 (including Exhibit 99.1) shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company or the Operating Partnership under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such a filing.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.


99.1		Press Release dated October 3, 2022

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: October 3, 2022	KILROY REALTY, L.P.

	By:	Kilroy Realty Corporation, Its general partner

	By:	/s/ Merryl E. Werber
		Merryl E. Werber Senior Vice President, Chief Accounting Officer and Controller

Exhibit 99.1

LOGO


Contact:		FOR RELEASE:
Eliott Trencher		October 3, 2022
EVP, Chief Investment Officer,
Interim Chief Financial Officer
(310) 481-8587 or
Taylor Friend
SVP, Treasurer
(310) 481-8574

KILROY REALTY ANNOUNCES $400 MILLION UNSECURED TERM LOAN FACILITY

LOS ANGELES, CA – October 3, 2022 — Kilroy Realty Corporation (NYSE: KRC) (the “Company”), today announced that its operating partnership, Kilroy Realty, L.P. (“KRLP” or the “Borrower”) has closed on a new unsecured term loan facility for an aggregate amount of $400 million with a maturity date of October 3, 2026, which reflects two 1-year extension options (the “Term Loan”) at the Borrower’s option. The Term Loan also includes a delayed draw feature and a $100 million accordion mechanism, subject to lender commitments.

The borrowing rate under the Term Loan is variable and subject to a ratings-based pricing grid, currently calculated as one-month Adjusted Secured Overnight Financing Rate (“SOFR”) plus 95-basis points. The Company expects to use the proceeds for general corporate purposes, including funding development and redevelopment projects.

“We’re pleased to have received the strong support from our established and long-standing banking partners,” said Eliott Trencher, the Company’s Interim Chief Financial Officer. “We believe the new term loan further strengthens our liquidity and provides an attractive source of capital to continue to fund our value enhancing development pipeline.”

A total of thirteen lenders participated in the Term Loan, including JP Morgan Chase Bank, N.A. as a Joint Bookrunner, Joint Lead Arranger and Administrative Agent and BofA Securities, Inc. as a Joint Bookrunner, Joint Lead Arranger and Syndication Agent. PNC Capital Markets LLC, U.S. Bank National Association, and The Bank of Nova Scotia served as a Joint Bookrunners and Joint Lead Arrangers. The Bank of New York Mellon, Bank of the West, a California Banking Corporation, Barclays Bank PLC, KeyBank National Association, Sumitomo Mitsui Banking Corporation, Associated Bank, National Association, MUFG Union Bank, N.A., and Comerica Bank served as Co-Documentation Agents.

In connection with the Term Loan, the Company amended its unsecured Revolving Credit Agreement to replace the LIBOR-based interest rate option with a SOFR-based interest rate option for its loan borrowings.


				1 of 3

LOGO

About Kilroy Realty Corporation

Kilroy Realty Corporation (NYSE: KRC, the “company”, “Kilroy”) 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.

The company 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, 2022, Kilroy’s stabilized portfolio totaled approximately 15.8 million square feet of primarily office and life science space that was 91.4% occupied and 93.7% leased. The company also had more than 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 93.7%. In addition, the company had three in-process life science redevelopment projects with total estimated redevelopment costs of $115.0 million, totaling approximately 344,000 square feet, and four in-process development projects with an estimated total investment of $1.8 billion, totaling approximately 1.9 million square feet of office and life science space. The in-process development and redevelopment office and life science space was 38% leased.

A Leader in Sustainability and Commitment to Corporate Social Responsibility

The company is listed on the Dow Jones Sustainability World Index and has been recognized by industry organizations around the world. The company’s office portfolio was 72% LEED certified and 42% Fitwel certified, and 77% of eligible properties were ENERGY STAR certified as of June 30, 2022.

The company has been recognized by GRESB as the listed sustainability leader in the Americas for eight of the last nine years. Other honors have included the National Association of Real Estate Investment Trust’s (NAREIT) Leader in the Light award for eight consecutive years and ENERGY STAR Partner of the Year for nine years as well as ENERGY STAR’s highest honor of Sustained Excellence, for the past seven 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 third 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.

More information is available at http://www.kilroyrealty.com.


				2 of 3

LOGO

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, including periods of heightened inflation, 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, Texas 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 quarterly report on Form 10-Q for the period ending June 30, 2022 and in our annual report on Form 10-K for the year ended December 31, 2021 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.

###


				3 of 3