Kilroy

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Press Room Release

Kilroy Realty Corporation Reports 14% Increase In Third Quarter FFO Per Share

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Contact:
Richard E. Moran Jr. Tyler H. Rose
Executive Vice President Senior Vice President
and Chief Financial Officer and Treasurer
(310) 563-5533 (310) 563-5531

LOS ANGELES, October 29, 1998 – Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its third quarter ended September 30, 1998, with funds from operations (FFO) of $18.4 million, or $0.58 per share, up from $11.2 million, or $0.51 per share, in the third quarter of 1997. Net income in the third quarter rose to $10.0 million, or $0.36 per share, up from $6.5 million, or $0.34 per share, in the year-earlier quarter. Revenues for the period totaled $34.5 million, compared to $19.1 million a year ago.

For the first nine months of 1998, Kilroy reported FFO of $52.3 million, or $1.71 per share. Net income in the nine-month period totaled $28.6 million, or $1.07 per share. Revenues were $97.0 million. In the year-earlier stub period from February 1 to September 30, 1997, the company reported FFO of $24.2 million, or $1.28 per share. Net income for the period was $13.2 million, or $0.81 per share. Revenues totaled $42.6 million. Kilroy completed its initial public offering of common stock on January 31, 1997. All per-share amounts are presented on a diluted basis.

"Led by job growth in the southern half of our state, California’s economic growth continues its strong relative performance compared with the rest of the country," said John B. Kilroy, Jr., the company’s president and chief executive officer. Kilroy noted that the strength of the Company’s targeted submarkets is evident in the success of the company’s leasing program. Occupancy of the company’s stabilized portfolio increased from 92% at the end of the second quarter to 95% at the end of the third quarter. Leasing for the company’s development program was also strong, with projects scheduled for 1998 completion 94% preleased at the end of the third quarter.

Kilroy Realty is currently building approximately 1.7 million square feet of office and industrial space representing a total estimated investment of $127 million. An additional 2.9 million square feet of space is in various stages of pre-development and is scheduled to be built over the next several years on a phased basis. Principal submarkets for the company’s development projects include coastal San Diego, West Los Angeles, Burbank, the northwestern Los Angeles Interstate 101 Corridor, Long Beach, and Orange County.

Some of the information presented in this release is forward-looking in nature. Although the information is based on the company’s current best judgment, actual results could vary from expectations stated here. Numerous factors will affect Kilroy’s actual results, some of which are beyond the company’s control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. For further information, please see Kilroy’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.

Kilroy Realty Corporation, a Southern California-based real estate investment trust owns, operates and develops office and industrial properties, primarily in California. At September 30, 1998, the company owned 5.4 million square feet of commercial office space and 5.7 million square feet of industrial space.

 

KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share data)

September 30,

December 31,

1998

1997

ASSETS

INVESTMENT IN REAL ESTATE:

Land and improvements

$ 236,474

$ 177,118

Buildings and improvements

767,677

622,901

Land and construction in progress

128,007

34,671

Total investment in real estate

1,132,158

834,690

Accumulated depreciation and amortization

(139,170)

(121,780)

Investment in real estate, net

992,988

712,910

Cash and cash equivalents

27,311

8,929

Restricted cash

6,296

5,680

Tenant receivables, net

12,802

7,367

Notes receivable from related parties

6,655

Escrow deposits

401

5,114

Deferred financing and leasing costs, net

13,019

13,053

Prepaid expenses and other assets

4,198

4,601

TOTAL ASSETS

$ 1,063,670

$ 757,654

LIABILITIES & STOCKHOLDERS' EQUITY

LIABILITIES:

Mortgage debt

$ 133,920

$ 131,363

Line of credit

270,000

142,000

Accounts payable and accrued expenses

14,307

9,711

Accrued distributions

12,811

10,804

Rents received in advance and tenant security deposits

13,836

11,441

Total Liabilities

444,874

305,319

COMMITMENTS AND CONTINGENCIES

MINORITY INTERESTS:

8.075% Series A Cumulative Redeemable

Preferred unitholders

73,718

Common unitholders

68,680

55,185

Total minority interests

142,398

55,185

STOCKHOLDERS' EQUITY:

Preferred stock, $.01 par value, 30,000,000 shares

authorized, none issued and outstanding

8.075% Series A Cumulative Redeemable Preferred Stock,

$.01 par value, 1,700,000 shares authorized, none

issued and outstanding

Common stock, $.01 par value, 150,000,000

shares authorized, 27,639,210 and 24,475,000

shares issued and outstanding

276

245

Additional paid-in capital

486,956

403,163

Distributions in excess of earnings

(10,834)

(6,258)

Total Stockholders' Equity

476,398

397,150

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$ 1,063,670

$ 757,654

 

KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

Three Months

Three Months

Nine Months

Period from

Ended

Ended

Ended

February 1, 1997 to

September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997

REVENUES:

Rental income

$ 30,369

$ 16,418

$ 84,817

$ 35,878

Tenant reimbursements

3,768

1,631

10,041

3,441

Interest income

308

900

1,191

2,875

Other income

74

158

941

454

Total revenues

34,519

19,107

96,990

42,648

EXPENSES:

Property expenses

4,775

2,724

13,812

5,999

Real estate taxes

2,800

998

6,554

1,925

General and administrative

1,797

1,477

5,499

3,652

Ground leases

259

206

854

670

Interest expense

5,263

2,637

14,642

6,714

Depreciation and amortization

6,740

3,660

19,159

8,404

Total expenses

21,634

11,702

60,520

27,364

Income before equity in income (loss) of

subsidiary and minority interests

12,885

7,405

36,470

15,284

Equity in income (loss) of subsidiary

1

52

(24)

187

Minority Interests:

Dividend on cumulative redeemable

preferred units

(1,450)

(3,704)

Minority interest in earnings

(1,451)

(977)

(4,093)

(2,231)

Net Income

$ 9,985

$ 6,480

$ 28,649

$ 13,240

Weighted average shares outstanding (Basic)

27,648

18,932

26,770

16,162

Weighted average shares outstanding (Diluted)

27,648

19,026

26,865

16,246

Income per common share (Basic)

$ 0.36

$ 0.34

$ 1.07

$ 0.82

Income per common share (Diluted)

$ 0.36

$ 0.34

$ 1.07

$ 0.81

 

 

KILROY REALTY CORPORATION

FUNDS FROM OPERATIONS

(unaudited, in thousands, except per share data)

Three Months

Three Months

Nine Months

Period from

Ended

Ended

Ended

February 1, 1997 to

September 30, 1998

September 30, 1997

September 30, 1998

September 30, 1997

Net income

$ 9,985

$ 6,480

$ 28,649

$ 13,240

Add:

Minority interest in earnings

1,451

977

4,093

2,231

Depreciation and amortization

6,740

3,660

19,159

8,404

Other

175

118

405

315

Funds from operations

$ 18,351

$ 11,235

$ 52,306

$ 24,190

Weighted average common shares/units outstanding (Basic)

31,641

21,749

30,579

18,886

Weighted average common shares/units outstanding (Diluted)

31,641

21,843

30,673

18,966

Funds from operations per common share/unit (Basic)

$ 0.58

$ 0.52

$ 1.71

$ 1.28

Funds from operations per common share/unit (Diluted)

$ 0.58

$ 0.51

$ 1.71

$ 1.28

 

KILROY REALTY CORPORATION

FUNDS AVAILABLE FOR DISTRIBUTION

(unaudited, in thousands, except per share data)

Three Months

Three Months

Nine Months

Period from

Ended

Ended

Ended

February 1, 1997 to

September 30, 1998

September 30, 1997

September 30, 1998

September 30, 1997

Funds from operations

$ 18,351

$ 11,235

$ 52,306

$ 24,190

Adjustments:

Amortization of deferred financing costs

203

404

708

625

Tenant improvements, leasing commissions

and recurring capital expenditures

(826)

(274)

(2,248)

(806)

Net effect of straight-line rents

(1,411)

(214)

(2,983)

(289)

Funds available for distribution

$ 16,317

$ 11,151

$ 47,783

$ 23,720

Funds available for distribution per common share/unit (Basic)

$ 0.52

$ 0.51

$ 1.56

$ 1.26

Funds available for distribution per common share/unit (Diluted)

$ 0.52

$ 0.51

$ 1.56

$ 1.25

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