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Kilroy Realty Corporation Reports First Quarter Earnings

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LOS ANGELES, April 28, 1999 – Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its first quarter ended March 31, 1999, with funds from operations (FFO) of $18.8 million, or $0.59 per share, up 5.4% on a per-share basis from $16.1 million, or $0.56 per share, in the first quarter of 1998. Net income in the first quarter rose to $9.9 million, or $0.36 per share, up from $8.9 million, or $0.35 per share, in the year-earlier quarter. Revenues for the quarter totaled $37.6 million, compared to $29.0 million a year ago. All per-share amounts are presented on a diluted basis.

"Southern California’s robust economy continues to generate strong tenant interest in commercial real estate," said John B. Kilroy, Jr., Kilroy Realty’s president and chief executive officer. "Occupancy in our existing portfolio remains above 95%, and our properties in lease-up or under construction are 88% leased or committed," he said.

Kilroy Realty is currently in lease-up or is under construction with approximately 1.3 million square feet of office and industrial space, representing a total estimated investment of $140 million. Of the 1.3 million square feet, three properties totaling 694,000 square feet are completed and in lease-up and six properties totaling 620,000 square feet are under construction. Five of the properties under construction are scheduled to be complete by the end of 1999.

In addition, Kilroy Realty has a development pipeline that includes 2.2 million square feet of space in various stages of pre-development and preleasing that will 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, Calabasas, Long Beach Airport, and Orange County.

Year-to-date, Kilroy Realty closed two conventional mortgage loans, raising a total of $105 million in net proceeds that were used to pay down the company’s unsecured line of credit. On March 31, 1999 the company closed a ten-year, $95 million mortgage loan with a 7.2% interest rate that is secured by a portfolio of office properties. On April 23, 1999 the company closed the refinancing of an existing loan on its SeaTac office property with an 18-year mortgage that raised net proceeds of $10 million. This loan carries a 7.15% interest rate.

Some of the information presented in this release is forward-looking in nature, including information concerning development timing and investment amounts. 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. You are cautioned not to place undue reliance on this information and the company does not undertake any responsibility to update this information for any unanticipated events which may cause actual results to differ from those expressed or implied by this information. For further information, please see Kilroy’s Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and its website at www.kilroyrealty.com.

Kilroy Realty Corporation, a Southern California-based real estate investment trust owns, operates and develops office and industrial properties, primarily in California. At March 31, 1999, the company owned 5.7 million square feet of commercial office space and 6.2 million square feet of industrial space.

 

KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

March 31,

December 31,

1999

1998

ASSETS

INVESTMENT IN REAL ESTATE:

Land and improvements

$ 258,062

$ 253,500

Buildings and improvements

849,155

828,425

Undeveloped land and construction in progress, net

176,011

112,359

Total investment in real estate

1,283,228

1,194,284

Accumulated depreciation and amortization

(151,939)

(145,437)

Investment in real estate, net

1,131,289

1,048,847

Cash and cash equivalents

2,463

6,443

Restricted cash

7,457

6,896

Tenant receivables, net

15,814

15,630

Notes receivable from related parties

8,798

Deferred financing and leasing costs, net

17,375

16,168

Prepaid expenses and other assets

4,423

3,146

TOTAL ASSETS

$ 1,178,821

$ 1,105,928

LIABILITIES & STOCKHOLDERS' EQUITY

LIABILITIES:

Mortgage debt

$ 227,836

$ 133,383

Unsecured line of credit

232,000

272,000

Accounts payable and accrued expenses

18,718

18,091

Accrued distributions

13,567

12,895

Rents received in advance and tenant security deposits

13,065

13,160

Total liabilities

505,186

449,529

MINORITY INTERESTS:

8.075% Series A Cumulative Redeemable

Preferred unitholders

73,716

73,718

9.375% Series C Cumulative Redeemable

Preferred unitholders

34,471

34,410

Common unitholders

80,412

72,372

Development LLC joint venture partners

9,733

Total minority interests

198,332

180,500

STOCKHOLDERS' EQUITY:

Common stock

276

276

Additional paid-in capital

488,565

487,467

Distributions in excess of earnings

(13,538)

(11,844)

Total stockholders' equity

475,303

475,899

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$ 1,178,821

$ 1,105,928

 

KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

Three Months

Three Months

Ended

Ended

March 31, 1999

March 31, 1998

REVENUES:

Rental income

$ 32,818

$ 25,460

Tenant reimbursements

4,123

2,823

Interest income

400

474

Other income

209

194

Total revenues

37,550

28,951

EXPENSES:

Property expenses

5,134

3,971

Real estate taxes

3,009

1,686

General and administrative

2,314

1,559

Ground leases

337

305

Interest expense

5,759

4,786

Depreciation and amortization

7,217

5,854

Total expenses

23,770

18,161

Income before equity in loss of unconsolidated

subsidiary and minority interests

13,780

10,790

Equity in loss of unconsolidated subsidiary

(1)

Minority interests:

Dividends on Cumulative Redeemable

Preferred units

(2,334)

(700)

Minority interest in earnings

(1,536)

(1,210)

Net income

$ 9,910

$ 8,879

Weighted average shares outstanding - basic

27,633

25,230

Weighted average shares outstanding - diluted

27,633

25,400

Income per common share - basic

$ 0.36

$ 0.35

Income per common share - diluted

$ 0.36

$ 0.35

 

KILROY REALTY CORPORATION

FUNDS FROM OPERATIONS

(unaudited, in thousands, except per share data)

Three Months

Three Months

Ended

Ended

March 31, 1999

March 31, 1998

Net income

$ 9,910

$ 8,879

Add:

Minority interest in earnings

1,536

1,210

Depreciation and amortization

7,217

5,854

Other

127

118

Funds from operations

$ 18,790

$ 16,061

Weighted average common shares/units outstanding - basic

31,913

28,679

Weighted average common shares/units outstanding - diluted

31,913

28,849

Funds from operations per common share/unit - basic

$ 0.59

$ 0.56

Funds from operations per common share/unit - diluted

$ 0.59

$ 0.56

 

KILROY REALTY CORPORATION

FUNDS AVAILABLE FOR DISTRIBUTION

(unaudited, in thousands, except per share data)

Three Months Three Months

Ended

Ended

March 31, 1999 March 31, 1998

Funds from operations

$ 18,790

$ 16,061

Adjustments:

Amortization of deferred financing costs

294

206

Tenant improvements, leasing commissions

and recurring capital expenditures

(1,101)

(485)

Net effect of straight-line rents

(1,389)

(657)

Funds available for distribution

$ 16,594

$ 15,125

Funds available for distribution per common share/unit - basic

$ 0.52

$ 0.53

Funds available for distribution per common share/unit - diluted

$ 0.52

$ 0.52

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