KILROY REALTY CORP

Previous wording

As of June 30, 2024, we had two redevelopment projects under construction:

Current wording

As of September 30, 2024, we had two redevelopment projects in the tenant improvement phase:

Previous wording

•4690 Executive Drive, University Towne Center, San Diego, California. In March 2022, we began the phased redevelopment of this property, comprised of approximately 52,000 square feet of life science space with a total estimated investment of $25.0 million, inclusive of the depreciated basis of the building.

Current wording

•4690 Executive Drive, University Towne Center, San Diego, California. In March 2022, we began the phased redevelopment of this property and completed base building components and moved the building to the tenant improvement phase during the third quarter of 2024. This project is comprised of approximately 52,000 square feet of life science space with a total estimated investment of $25.0 million, inclusive of the depreciated basis of the building.

Previous wording

•4400 Bohannon Drive, Menlo Park, California. In December 2022, we began the redevelopment of this property in the Other Peninsula submarket, comprised of approximately 48,000 square feet of life science space with a total estimated investment of $55.0 million, inclusive of the depreciated basis of the building.

Current wording

•4400 Bohannon Drive, Menlo Park, California. In December 2022, we began the redevelopment of this property in the Other Peninsula submarket and completed base building components and moved the building to the tenant improvement phase during the third quarter of 2024. This project is comprised of approximately 48,000 square feet of life science space with a total estimated investment of $55.0 million, inclusive of the depreciated basis of the building.

Previous wording

Fluctuations in our development activities could cause fluctuations in the average development asset balances qualifying for interest and other carrying cost and internal cost capitalization in future periods. A slowdown in development activities could result in fewer projects qualifying for interest capitalization under GAAP, resulting in higher interest expense. During the three and six months ended June 30, 2024, we capitalized interest on in-process development projects and future development pipeline projects with an average aggregate cost basis of approximately $1.9 billion and $1.8 billion, respectively, as it was determined these projects qualified for interest and other carrying cost capitalization under GAAP. For the three and six months ended June 30, 2024, we capitalized $20.5 million and $40.3 million, respectively, of interest to our qualifying development and redevelopment projects. In addition, for the three and six months ended June 30, 2024, we capitalized $3.1 million and $5.9 million, respectively, of internal costs to our qualifying development and redevelopment projects and $2.2 million and $4.6 million, respectively, of internal costs to our qualifying capital improvement projects in the stabilized portfolio.

Current wording

Fluctuations in our development activities could cause fluctuations in the average development asset balances qualifying for interest and other carrying cost and internal cost capitalization in future periods. A slowdown in development activities could result in fewer projects qualifying for interest capitalization under GAAP, resulting in higher interest expense. During the three and nine months ended September 30, 2024, we capitalized interest on in-process development and redevelopment projects and future development pipeline projects with an average aggregate cost basis of approximately $1.9 billion as it was determined these projects qualified for interest and other carrying cost capitalization under GAAP. For the three and nine months ended September 30, 2024, we capitalized $20.8 million and $61.1 million, respectively, of interest to our qualifying development and redevelopment projects. In addition, for the three and nine months ended September 30, 2024, we capitalized $3.4 million and $9.3 million, respectively, of internal costs to our qualifying development and redevelopment projects and $2.1 million and $6.7 million, respectively, of internal costs to our qualifying capital improvement projects in the stabilized portfolio.

Previous wording

The timing of any potential future disposition or strategic venture transactions will depend on market conditions and other factors, including but not limited to, our capital needs, the availability of financing for potential buyers (which has been and may continue to be constrained due to current economic and market conditions) and our ability to defer some or all of the taxable gains on the sales. We cannot assure that we will dispose of any additional properties, enter into any additional strategic ventures, or that we will be able to identify and complete acquisitions of suitable replacement properties to effect a Section 1031 Exchange or be able to use other tax deferred structures in connection with our strategy. See the “Liquidity and Capital Resources of the Operating Partnership – Liquidity Sources” section for further information.

Current wording

The timing of any potential future disposition or strategic venture transactions will depend on market conditions and other factors, including but not limited to, our capital needs, the availability of financing for potential buyers (which has been and may continue to be constrained due to current economic and market conditions) and our ability to defer some or all of the taxable gains on the sales. We cannot assure that we will dispose of any additional properties, enter into any additional strategic ventures, or that we will be able to identify and complete acquisitions of suitable replacement properties to effect a

Previous wording

Acquisitions. As part of our growth strategy, which is highly dependent on market conditions and business cycles, among other factors, we continue to evaluate strategic opportunities and remain a disciplined buyer of core, value-add and strategic operating properties, and land. We focus on growth opportunities primarily in markets populated by knowledge and creative-based tenants in a variety of industries, including technology, media, healthcare, life sciences, entertainment, and professional services. Against the backdrop of market volatility, we expect to manage a strong balance sheet and selectively evaluate opportunities that we believe have the potential to either add immediate Net Operating Income to our portfolio or play a strategic role in our future growth. We generally finance our acquisitions through proceeds from the issuance of debt and equity securities, borrowings under our unsecured revolving credit facility, proceeds from our capital recycling program, the assumption of existing debt, and cash flows from operations.

Current wording

Acquisitions. During the nine months ended September 30, 2024, we acquired one operating property, comprised of two buildings, in one transaction for a cash purchase price of $35.0 million. As part of our growth strategy, which is highly dependent on market conditions and business cycles, among other factors, we continue to evaluate strategic opportunities and remain a disciplined buyer of core, value-add and strategic operating properties, and land. We focus on growth opportunities primarily in markets populated by knowledge and creative-based tenants in a variety of industries, including technology, media, healthcare, life sciences, entertainment, and professional services. Against the backdrop of market volatility, we expect to manage a strong balance sheet and selectively evaluate opportunities that we believe have the potential to either add immediate Net Operating Income to our portfolio or play a strategic role in our future growth. We generally finance our acquisitions through proceeds from the issuance of debt and equity securities, borrowings under our unsecured revolving credit facility, proceeds from our capital recycling program, the assumption of existing debt, and cash flows from operations.

Previous wording

As of June 30, 2024, there was approximately $35.2 million of total unrecognized compensation costs related to outstanding nonvested RSUs granted under share-based compensation arrangements. Such amount is based in part upon the estimated future outcome of the performance metrics as of June 30, 2024, and the actual compensation cost ultimately recognized could increase or decrease from this estimate based upon actual performance results. These costs are expected to be recognized over a weighted-average period of 1.8 years. The $35.2 million of unrecognized compensation cost does not reflect the future compensation costs for any share-based awards that may be granted subsequent to June 30, 2024. Share-based compensation expense for potential future awards could be affected by our operating and development performance, financial results, stock price, market conditions, and other factors. For additional information regarding our equity incentive awards, see Note 7 “Share-Based Compensation” to our consolidated financial statements included in this report.

Current wording

As of September 30, 2024, there was approximately $30.3 million of total unrecognized compensation costs related to outstanding nonvested RSUs granted under share-based compensation arrangements. Such amount is based in part upon the estimated future outcome of the performance metrics as of September 30, 2024, and the actual compensation cost ultimately recognized could increase or decrease from this estimate based upon actual performance results. These costs are expected to be recognized over a weighted-average period of 1.7 years. The $30.3 million of unrecognized compensation cost does not reflect the future compensation costs for any share-based awards that may be granted subsequent to September 30, 2024. Share-based compensation expense for potential future awards could be affected by our operating and development performance, financial results, stock price, market conditions, and other factors. For additional information regarding our equity incentive awards, see Note 8 “Share-Based Compensation” to our consolidated financial statements included in this report.

Previous wording

Leasing Activity and Changes in Rental Rates. The amount of net rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, newly developed or redeveloped properties, newly acquired properties with vacant space, and space available from unscheduled lease terminations. The amount of rental income we generate also depends on our ability to maintain or increase rental rates at our properties. Negative trends in one or more of these factors could adversely affect our rental income in future periods. The following tables set forth certain information regarding leasing activity during the three and six months ended June 30, 2024.

Current wording

Leasing Activity and Changes in Rental Rates. The amount of net rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, newly developed or redeveloped properties, newly acquired properties with vacant space, and space available from unscheduled lease terminations. The amount of rental income we generate also depends on our ability to maintain or increase rental rates at our properties. Negative trends in one or more of these factors could adversely affect our rental income in future periods. The following tables set forth certain information regarding leasing activity during the three and nine months ended September 30, 2024.

Previous wording

(3)Calculated as the change between GAAP rents / stated rents for new / renewed leases and the expiring GAAP rents / stated rents for the same space. Space that was vacant when the property was acquired is excluded from our change in rents calculations to provide a more meaningful market comparison.

Current wording

(3)Calculated as the change between the expiring GAAP rent and the new GAAP rent and the expiring cash rent and the new cash rent for the same space. Space that was vacant when the property was acquired is excluded from our change in rents calculations to provide a more meaningful market comparison.

Previous wording

(6)During the three months ended June 30, 2024, 16 new leases totaling 138,219 rentable square feet were signed but not commenced. During the six months ended June 30, 2024, 25 new leases totaling 211,440 rentable square feet were signed but not commenced.

Current wording

(6)During the three months ended September 30, 2024, 12 new leases totaling 73,646 rentable square feet were signed but not commenced. During the nine months ended September 30, 2024, 28 new leases totaling 242,983 rentable square feet were signed but not commenced.

Previous wording

During the six months ended June 30, 2024, we continued to see modest additional increases in physical occupancy at our properties. However, we believe that economic uncertainty and hybrid/remote working arrangements have impacted the timing and volume of leasing and will likely continue to do so in the near future and possibly longer-term. Additionally, decreased demand (including as a result of remote work), increased competition (including sublease space available in the market), and other negative trends or unforeseeable events that impair our ability to timely renew or re-lease space could have negative effects on our future financial condition, results of operations, and cash flows.

Current wording

During the nine months ended September 30, 2024, we continued to see modest additional increases in physical occupancy and increased tour activity at our properties. However, we believe that economic uncertainty and hybrid/remote working arrangements have impacted the timing and volume of leasing and will likely continue to do so in the near future and possibly longer-term. Additionally, decreased demand (including as a result of remote work), increased competition (including sublease space available in the market), and other negative trends or unforeseeable events that impair our ability to timely renew or re-lease space could have negative effects on our future financial condition, results of operations, and cash flows.

Previous wording

(3)Annualized base rent includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures, including full service gross, modified gross, and triple net. Percentages represent percentage of total portfolio annualized contractual base rental revenue. For additional information on tenant improvement and leasing commission costs incurred by the Company for the current reporting period, please see further discussion under the caption “Information on Leases Commenced and Executed.”

Current wording

(3)Annualized base rent includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures, including full service gross, modified gross, and triple net. Percentages represent percentage of total portfolio annualized contractual base rental revenue. For additional information on tenant improvement and leasing commission costs incurred by the Company for the current reporting period, please see further discussion under the caption “Information on Leases Commenced and Executed.”

Previous wording

(4)Adjusting for leasing transactions executed as of June 30, 2024 but not yet commenced, the 2024, 2025, and 2026 expirations would be reduced by 63,439, 66,321, and 156,785 square feet, respectively.

Current wording

(4)Adjusting for leasing transactions executed as of September 30, 2024 but not yet commenced, the 2024, 2025, and 2026 expirations would be reduced by 7,623, 64,142, and 156,785 square feet, respectively.

Previous wording

In addition to the 2.8 million rentable square feet, or 16.3%, of currently available space in our stabilized portfolio, leases representing approximately 9.3% of the occupied square footage of our stabilized portfolio are scheduled to expire during the remainder of 2024 and in 2025. The leases scheduled to expire during the remainder of 2024 and in 2025 represent approximately 1.3 million rentable square feet, or 7.7% of our total annualized base rental revenue. Adjusting for leases executed as of June 30, 2024 but not yet commenced, the remaining 2024, 2025, and 2026 expirations would be 476,278, 697,116, and 1,839,179 square feet, respectively.

Current wording

In addition to the 2.7 million rentable square feet, or 15.7%, of currently available space in our stabilized portfolio, leases representing approximately 7.4% of the occupied square footage of our stabilized portfolio are scheduled to expire during the remainder of 2024 and in 2025. The leases scheduled to expire during the remainder of 2024 and in 2025 represent approximately 1.0 million rentable square feet, or 6.3% of our total annualized base rental revenue. Adjusting for leases executed as of September 30, 2024 but not yet commenced, the remaining 2024, 2025, and 2026 expirations would be 276,387, 688,190, and 1,738,273 square feet, respectively.

Previous wording

Sublease Space. Of our occupied space as of June 30, 2024, approximately 2.0 million rentable square feet, or 11.6% of the square footage in our stabilized portfolio, was available for sublease, primarily in the San Francisco Bay Area. Of the 11.6% of available sublease space in our stabilized portfolio as of June 30, 2024, approximately 8.1% was vacant space, and the remaining 3.5% was occupied by subtenants. Of the approximately 2.0 million rentable square feet available for sublease as of June 30, 2024, approximately 182,737 rentable square feet representing four leases are scheduled to expire in 2024 and approximately 18,663 rentable square feet representing one lease is scheduled to expire in 2025.

Current wording

Sublease Space. Of our occupied space as of September 30, 2024, approximately 1.8 million rentable square feet, or 10.6% of the square footage in our stabilized portfolio, was available for sublease, primarily in the San Francisco Bay Area. Of the 10.6% of available sublease space in our stabilized portfolio as of September 30, 2024, approximately 8.7% was vacant space, and the remaining 1.9% was occupied by subtenants. Of the approximately 1.8 million rentable square feet available for sublease as of September 30, 2024, approximately 76,031 rentable square feet representing one lease is scheduled to expire in 2024 and approximately 100,795 rentable square feet representing two leases are scheduled to expire in 2025.

Previous wording

As of June 30, 2024, our stabilized portfolio was comprised of 121 office, life science, and mixed-use properties encompassing an aggregate of approximately 17.0 million rentable square feet and 1,001 residential units. Our stabilized portfolio includes all of our properties with the exception of development properties currently committed for construction, under construction, and in the tenant improvement phase, redevelopment projects under construction, undeveloped land, and real estate assets held for sale. We define redevelopment properties as those properties for which we expect to spend significant development and construction costs pursuant to a formal plan to change its use, the intended result of which is a higher economic return on the property. We define properties in the tenant improvement phase as development or redevelopment properties where the project has reached “cold shell condition” and is ready for tenant improvements, which may require additional major base building construction before being placed in service. Projects in the tenant improvement phase are moved into our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities. Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets as the projects or phases of projects are placed in service.

Current wording

As of September 30, 2024, our stabilized portfolio was comprised of 123 office, life science, and mixed-use properties encompassing an aggregate of approximately 17.1 million rentable square feet and 1,001 residential units. Our stabilized portfolio includes all of our properties with the exception of development properties currently committed for construction, under construction, and in the tenant improvement phase, redevelopment projects under construction, undeveloped land, and real estate assets held for sale. We define redevelopment properties as those properties for which we expect to spend significant development and construction costs pursuant to a formal plan to change its use, the intended result of which is a higher economic return on the property. We define properties in the tenant improvement phase as development or redevelopment properties where the project has reached “cold shell condition” and is ready for tenant improvements, which may require additional major base building construction before being placed in service. Projects in the tenant improvement phase are moved into our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities. Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets as the projects or phases of projects are placed in service.

Previous wording

(2)Annualized base rental revenue includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases and expense reimbursement revenue. Excludes month-to-month leases and vacant space as of June 30, 2024.

Current wording

(2)Annualized base rental revenue includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases and expense reimbursement revenue. Excludes month-to-month leases and vacant space as of September 30, 2024.

Previous wording

(1)Excludes development projects in the tenant improvement phase, our in-process development and redevelopment projects, and future development projects.

Current wording

(1)Excludes development and redevelopment projects in the tenant improvement phase, our in-process development and redevelopment projects, and future development projects.

Previous wording

•A decrease in Net Operating Income of $29.7 million attributable to the Same Store Properties, which was driven by the following activity:

Current wording

•An increase in Net Operating Income of $2.7 million, or 1.5%, attributable to the Same Store Properties, which was driven by the following activity:

Previous wording

•A decrease in total operating revenues of $23.7 million primarily due to:

Current wording

•An increase in total operating revenues of $5.3 million, or 1.9%, primarily due to:

Previous wording

•$4.5 million net decrease in non-recurring revenue items primarily related to $2.2 million lower revenue from certain tenants on a cash basis of revenue recognition in 2024 and $3.1 million of 2023 tenant restoration fees, partially offset by $0.8 million of 2024 settlement fee income; and

Current wording

•$4.6 million net increase in non-recurring revenue items primarily related to bankruptcy and tenant restoration income of $4.9 million in 2024 and higher revenue from certain tenants on cash basis of revenue recognition of $0.9 million in 2024, partially offset by tenant restoration income $1.2 million in 2023; and

Previous wording

•An increase in property and related expenses of $6.1 million primarily due to higher insurance, janitorial, contract services, and security expenses due to cost increases and one building that was previously tenant-managed becoming landlord-managed; partially offset by

Current wording

•A net increase in property and related expenses of $2.6 million, or 3.0%, primarily due to utilities, security expenses, contract services, and repairs and maintenance of $3.8 million due to cost increases, which includes $1.2 million related to the aforementioned building that was previously tenant-managed becoming landlord-managed, partially offset by $1.2 million of property tax refunds; and

Previous wording

General and administrative expenses decreased $3.7 million, or 16.4%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 primarily due to a decrease in share-based compensation expense.

Current wording

General and administrative expenses decreased $6.7 million, or 27.0%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to a decrease in share-based compensation expense.

Previous wording

Leasing costs increased $0.8 million, or 59.8%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to an increase in leasing overhead during the three months ended June 30, 2024.

Current wording

Leasing costs increased $0.5 million, or 27.1%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to an increase in leasing overhead during the three months ended September 30, 2024.

Previous wording

•A decrease of $11.4 million attributable to the Same Store Properties primarily due to an in-place lease intangible asset becoming fully amortized in the second quarter of 2023; partially offset by

Current wording

•An increase of $4.4 million attributable to the Same Store Properties primarily due to an early lease termination in the third quarter of 2024; and

Previous wording

Gross interest expense, before the effect of capitalized interest and deferred financing costs, increased $11.4 million, or 24.9%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, due to an increase in the average outstanding debt balance and an increase in the weighted average interest rate for the three months ended June 30, 2024.

Current wording

Gross interest expense, before the effect of capitalized interest and deferred financing costs, increased $7.3 million, or 14.7%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, due to an increase in the average outstanding debt balance and an increase in the weighted average interest rate for the three months ended September 30, 2024.

Previous wording

Capitalized interest and deferred financing costs increased $1.0 million, or 5.4%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 primarily due to an increase in the weighted average interest and loan fee amortization rate during the three months ended June 30, 2024. In the event of an extended cessation of development or redevelopment activities to get any of these projects ready for its intended use, such projects could potentially no longer qualify for capitalization of interest or other carrying costs, resulting in higher amounts being expensed.

Current wording

Capitalized interest and deferred financing costs increased $0.8 million, or 3.8%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to an increase in the weighted average interest and loan fee amortization rate during the three months ended September 30, 2024. In the event of an extended cessation of development or redevelopment activities to get any of these projects ready for its intended use, such projects could potentially no longer qualify for capitalization of interest or other carrying costs, resulting in higher amounts being expensed.

Previous wording

Net income attributable to noncontrolling interests in consolidated property partnerships decreased $3.1 million or 23.1%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily due to the expiration of a lease that had restoration fee income during the first quarter of 2023 at one property held in a consolidated property partnership. The amounts reported for the six months ended June 30, 2024 and 2023 are comprised of the noncontrolling interest’s share of net income for 100 First Street Member, LLC and 303 Second Street Member, LLC and the noncontrolling interest’s share of net income for Redwood City Partners, LLC. See Note 1 “Organization, Ownership and Basis of Presentation” to our consolidated financial statements included in this report for additional information.

Current wording

Net income attributable to noncontrolling interests in consolidated property partnerships decreased $0.7 million, or 12.3%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to lower rental income driven by a temporary decrease in occupancy during the third quarter of 2024 at one property held in a consolidated property partnership and a lease expiration payment received during the third quarter of 2023 at another property held in a consolidated property partnership. The amounts reported for the three months ended September 30, 2024 and 2023 are comprised of the noncontrolling interest’s share of net income for 100 First Street Member, LLC and 303 Second Street Member, LLC and the noncontrolling interest’s share of net income for Redwood City Partners, LLC. See Note 1 “Organization, Ownership and Basis of Presentation” to our consolidated financial statements included in this report for additional information.

Previous wording

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

Current wording

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

Previous wording

The following table summarizes our Net Operating Income, as defined, for our total portfolio for the six months ended June 30, 2024 and 2023.

Current wording

The following table summarizes our Net Operating Income, as defined, for our total portfolio for the nine months ended September 30, 2024 and 2023.

Previous wording

The following tables summarize our Net Operating Income, as defined, for our total portfolio for the six months ended June 30, 2024 and 2023.

Current wording

The following tables summarize our Net Operating Income, as defined, for our total portfolio for the nine months ended September 30, 2024 and 2023.

Previous wording

Net Operating Income decreased $28.3 million, or 7.0%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily resulting from:

Current wording

Net Operating Income decreased $25.0 million, or 4.2%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily resulting from:

Previous wording

•A decrease in Net Operating Income of $10.9 million attributable to the Same Store Properties, which was driven by the following activity:

Current wording

•A decrease in Net Operating Income of $27.0 million, or 4.7%, attributable to the Same Store Properties, which was driven by the following activity:

Previous wording

•A decrease in total operating revenues of $7.1 million primarily due to:

Current wording

•A decrease in total operating revenues of $18.4 million, or 2.2%, primarily due to:

Previous wording

•$6.3 million decrease from lease expirations; partially offset by

Current wording

•$24.1 million decrease from lease expirations net of lease termination income; and

Previous wording

•$14.0 million net decrease in non-recurring revenue items primarily related to $5.6 million of revenue adjustments for tenant credit worthiness considerations and lower revenue from certain tenants on a cash basis of revenue recognition in 2024 and $10.0 million of 2023 tenant restoration fees, partially offset by $1.6 million of 2024 settlement fee income; and

Current wording

•$10.5 million net decrease in non-recurring revenue items primarily related to a net $5.9 million of revenue adjustments for tenant credit worthiness considerations and lower revenue from certain tenants on a cash basis of revenue recognition in 2024, and $11.2 million of 2023 tenant restoration income, partially offset by $6.6 million of 2024 bankruptcy and tenant restoration income; partially offset by

Previous wording

•An increase in property and related expenses of $3.8 million primarily due to higher insurance, janitorial, contract services, and security expenses due to cost increases and one building that was previously tenant-managed becoming landlord-managed; partially offset by

Current wording

•A net increase in property and related expenses of $8.6 million, or 3.5%, primarily due to higher insurance, janitorial, contract services, and security expenses of $10.6 million due to cost increases, which includes $4.6 million related to the aforementioned building that was previously tenant-managed becoming landlord-managed, partially offset by $2.0 million of property tax refunds; and

Previous wording

General and administrative expenses decreased $10.1 million, or 21.6%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily due to a decrease in share-based compensation expense.

Current wording

General and administrative expenses decreased $16.8 million, or 23.5%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to a decrease in share-based compensation expense.

Previous wording

Leasing costs increased $1.7 million, or 63.0%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to an increase in leasing overhead during the six months ended June 30, 2024.

Current wording

Leasing costs increased $2.2 million, or 48.4%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to an increase in leasing overhead during the nine months ended September 30, 2024.

Previous wording

Depreciation and amortization decreased $3.2 million, or 3.6%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to the following:

Current wording

Depreciation and amortization decreased $2.2 million, or 0.8%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to the following: