Kilroy

Where Innovation Works

Press Room Release

Kilroy Realty Corporation Reports 7.5% Increase in Third Quarter FFO Per Share

Printer Friendly Version View printer-friendly version
<< Back

LOS ANGELES, Oct 28, 2002 (BUSINESS WIRE) -- Kilroy Realty Corporation (NYSE:KRC) today reported financial results for its third quarter ended September 30, 2002, with net income of $7.9 million, or $0.28 per share, compared to $9.3 million, or $0.34 per share in the third quarter of 2001. Revenues from continuing operations in the third quarter totaled $51.1 million, compared to $51.3 million in the third quarter of 2001.

For the first nine months of 2002, KRC reported net income of $26.3 million, or $0.95 per share, compared to $30.8 million, or $1.13 per share, in the first nine months of 2001. Revenues from continuing operations in the nine-month period totaled $154.6 million compared to $159.5 million in the same period of 2001.

KRC's funds from operations (FFO) totaled $23.2 million, or $0.72 per share, in the third quarter of 2002, compared to $20.5 million, or $0.67 per share in the prior year's third quarter. For the first nine months of 2002, FFO totaled $73.7 million, or $2.33 per share, compared to $70.6 million, or $2.31 per share, in the same period of 2001.

On Tuesday, October 29, 2002, KRC management will discuss earnings guidance for 2002 and 2003 during its earnings conference call. Based on management's view of current market conditions and certain assumptions with regard to rental rates and other projections a FFO per share range of $3.04 to $3.06 for 2002 will be discussed. In addition, a FFO per share range of $2.75 to $3.00 for 2003 will be discussed.

All per-share amounts in this report are presented on a diluted basis.

In the quarter, KRC completed and stabilized an 89,000 square-foot office property in Del Mar for a total estimated investment of $24 million. At quarter's end, KRC's entire stabilized portfolio was 93% occupied. The company has an additional 608,419 square feet of space currently in lease-up or under construction, representing a total estimated investment of $199 million. These properties currently are 53% leased.

Some of the information presented in this release is forward-looking in nature within the meaning of the Private Securities Litigation Reform Act of 1995. Although Kilroy Realty Corporation believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that its expectations will be achieved. Certain factors that could cause actual results to differ materially from Kilroy Realty's expectations are set forth as risk factors in the company's Securities and Exchange Commission reports and filings. Included among these factors are changes in general economic conditions, including changes in the economic conditions affecting industries in which its principal tenants compete; any failure of the general economy to recover timely from the current economic downturn; Kilroy Realty's ability to timely lease or re-lease space at current or anticipated rents; changes in interest rates; changes in operating costs, including utility costs; future demand for its debt and equity securities; its ability to refinance its debt on reasonable terms at maturity; its ability to complete current and future development projects on schedule and on budget; the demand for office space in markets in which Kilroy Realty has a presence; and risks detailed from time to time in the company's SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Many of these factors are beyond Kilroy Realty's ability to control or predict. Forward-looking statements are not guarantees of performance. For forward-looking statements herein, Kilroy Realty claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Kilroy Realty Corporation, a member of the S&P Small Cap 600 Index, is a Southern California-based real estate investment trust active in the office and industrial property sectors. For more than 50 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of California and Washington. Principal submarkets for KRC's current development program include West Los Angeles, El Segundo and coastal San Diego. At September 30, 2002, the company owned 7.6 million square feet of commercial office space and 5.2 million square feet of industrial space. More information can be found at www.kilroyrealty.com.

                      KILROY REALTY CORPORATION
                      SUMMARY QUARTERLY RESULTS
                      -------------------------
           (unaudited, in thousands, except per share data)
                                 Three     Three     Nine      Nine
                                 Months    Months    Months    Months
                                 Ended     Ended     Ended     Ended
                               September September September September
                                  30,       30,       30,       30,
                                 2002      2001      2002      2001
                               --------- --------- --------- ---------
Revenues (including
 discontinued operations)       $51,111   $51,446  $155,011  $160,047
Net income available to common
 stockholders (1)                $7,885    $9,283   $26,349   $30,806
Weighted average common shares
 outstanding -- basic            27,623    27,359    27,449    27,080
Weighted average common shares
 outstanding -- diluted          27,839    27,587    27,733    27,315
Net income per share of common
 stock -- basic                   $0.29     $0.34     $0.96     $1.14
Net income per share of common
 stock -- diluted                 $0.28     $0.34     $0.95     $1.13
Funds From Operations           $23,170   $20,512   $73,680   $70,625
Weighted average common
 shares/units outstanding --
 basic (2)                       31,918    30,421    31,360    30,303
Weighted average common
 shares/units outstanding --
 diluted (2)                     32,134    30,648    31,644    30,538
Funds From Operations per
 common share/unit -- basic (2)   $0.73     $0.67     $2.35     $2.33
Funds From Operations per
 common share/unit -- diluted (2) $0.72     $0.67     $2.33     $2.31
Common shares outstanding at
 end of period                                       27,928    27,426
Common partnership units
 outstanding at end of period                         4,237     3,061
                                                   --------- ---------
   Total common shares and
    units outstanding at end
    of period                                        32,165    30,487
                                                   September September
                                                    30, 2002  30, 2001
                                                   --------- ---------
Occupancy rates:
   Los Angeles                                         86.3%     89.0%
   Orange County                                       97.1%     96.4%
   San Diego                                           93.3%     98.6%
   Other                                               98.3%     98.9%
                                                   --------- ---------
   Weighted average total                              93.1%     94.8%
Total square feet of
 stabilized properties owned
 at end of period:
   Office                                             7,606     7,130
   Industrial                                         5,193     5,243
                                                   --------- ---------
   Total                                             12,799    12,373
(1) Net income after minority interests.
(2) Calculated based on weighted average shares outstanding assuming
conversion of all common limited partnership units outstanding.
        KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS
        -----------------------------------------------------
                       (unaudited, in thousands)
                                            September 30, December 31,
                                                 2002         2001
                                            ------------- ------------
ASSETS
------
INVESTMENT IN REAL ESTATE:
  Land and improvements                        $297,305     $269,366
  Buildings and improvements                  1,290,575    1,140,499
  Undeveloped land and construction in
   progress, net                                109,700      191,129
                                           ------------- ------------
    Total investment in real estate           1,697,580    1,600,994
  Accumulated depreciation and
   amortization                                (270,951)    (241,665)
                                           ------------- ------------
    Investment in real estate, net            1,426,629    1,359,329
 Cash and cash equivalents                        9,878       16,487
 Restricted cash                                  7,348        5,413
 Current receivables, net                         2,779        4,770
 Deferred rent receivables, net                  28,422       27,381
 Deferred leasing costs, net                     30,532       33,120
 Deferred financing costs, net                    6,873        3,948
 Prepaid expenses and other assets                5,852        6,781
                                            ------------- ------------
     TOTAL ASSETS                             $1,518,313   $1,457,229
                                            ============= ============
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
LIABILITIES:
  Secured debt                                 $473,268     $459,587
  Unsecured line of credit                      300,000      155,000
  Unsecured term facility                                    100,000
  Accounts payable, accrued expenses and
   other liabilities                             37,766       53,879
  Accrued distributions                          15,922       14,634
  Rents received in advance, tenant
   security deposits and deferred revenue        20,143       15,955
                                           ------------- ------------
    Total liabilities                           847,099      799,055
                                           ------------- ------------
MINORITY INTERESTS:
  8.075% Series A Cumulative Redeemable
    Preferred unitholders                        73,716       73,716
  9.375% Series C Cumulative Redeemable
    Preferred unitholders                        34,464       34,464
  9.250% Series D Cumulative Redeemable
    Preferred unitholders                        44,321       44,321
  Common unitholders of the Operating
   Partnership                                   68,522       49,176
  Minority interest in Development LLCs                       15,869
                                           ------------- ------------
   Total minority interests                     221,023      217,546
                                           ------------- ------------
STOCKHOLDERS' EQUITY:
  Common stock                                      278          274
  Additional paid-in capital                    503,184      479,295
  Distributions in excess of earnings           (48,020)     (33,163)
  Accumulated net other comprehensive loss       (5,251)      (5,778)
                                           ------------- ------------
    Total stockholders' equity                  450,191      440,628
                                           ------------- ------------
    TOTAL LIABILITIES & STOCKHOLDERS'
     EQUITY                                  $1,518,313   $1,457,229
                                            ============= ============
    KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
    ---------------------------------------------------------------
           (unaudited, in thousands, except per share data)
                              Three    Three      Nine       Nine
                              Months   Months     Months     Months
                              Ended    Ended      Ended      Ended
                            September  September  September  September
                               30,        30,        30,        30,
                              2002       2001       2002       2001
                           ----------  ---------  ---------  ---------
REVENUES:
 Rental income              $45,481      $44,826  $134,872  $134,902
 Tenant reimbursements        5,280        5,882    17,576    17,537
 Interest income                 80          170       451       883
 Other income                   211          383     1,678     6,173
                       ------------- ------------ --------- ---------
     Total revenues          51,052       51,261   154,577   159,495
                       ------------- ------------ --------- ---------
EXPENSES:
 Property expenses            7,931        7,879    23,148    22,193
 Real estate taxes            4,061        4,087    11,938    12,425
 General and
  administrative
  expenses                    2,966        2,796     9,582     8,870
 Ground leases                  319          379     1,035     1,146
 Interest expense             8,966       10,605    27,025    31,879
 Depreciation and
  amortization               14,744       12,838    46,060    39,079
                       ------------- ------------ --------- ---------
     Total expenses          38,987       38,584   118,788   115,592
                       ------------- ------------ --------- ---------
Income from continuing
 operations before net
 gains on dispositions       12,065       12,677    35,789    43,903
Net gains on
 dispositions of
 operating properties                      2,468       896     4,007
                       ------------- ------------ --------- ---------
Income from continuing
 operations before
 minority interests          12,065       15,145    36,685    47,910
                       ------------- ------------ --------- ---------
Minority interests:
 Distributions on
  Cumulative Redeemable
  Preferred units            (3,375)      (3,375)  (10,125)  (10,125)
 Minority interest in
  earnings of Operating
  Partnership
  attributable to
  continuing operations      (1,184)      (1,018)   (3,656)   (3,643)
 Recognition of
  previously reserved
  Development LLC
  preferred return                                   3,908
 Minority interest in
  earnings of
  Development LLCs                        (1,547)   (1,024)   (2,152)
                       ------------- ------------ --------- ---------
     Total minority
      interests              (4,559)      (5,940)  (10,897)  (15,920)
                       ------------- ------------ --------- ---------
Income from continuing
  operations                   7,506        9,205    25,788    31,990
Discontinued operations:
 Revenues from discontinued
  operations                      59          185       434       552
 Expenses from discontinued
  operations                     (95)         (98)     (264)     (319)
 Net gain on disposition of
  discontinued operations        470                    470
 Minority interest in
  earnings of Operating
  Partnership attributable to
  discontinued operations        (55)          (9)      (79)      (25)
                        ------------- ------------ --------- ---------
     Total discontinued
     operations                  379           78       561       208
                        ------------- ------------ --------- ---------
Net income before
 cumulative effect of
 change in
 accounting principle          7,885        9,283    26,349    32,198
Cumulative effect of
 change in accounting
 principle                                                     (1,392)
                       ------------- ------------ --------- ---------
Net income                    $7,885       $9,283   $26,349   $30,806
                       ============= ============ ========= =========
Weighted average
 shares outstanding --
 basic                        27,623       27,359    27,449    27,080
Weighted average
 shares outstanding --
  diluted                     27,839       27,587    27,733    27,315
Net Income per common
 share -- basic                $0.29        $0.34     $0.96     $1.14
                       ============= ============ ========= =========
Net Income per common
 share -- diluted              $0.28        $0.34     $0.95     $1.13
                       ============= ============ ========= =========
                      KILROY REALTY CORPORATION
                        FUNDS FROM OPERATIONS
                      -------------------------
           (unaudited, in thousands, except per share data)
                              Three      Three      Nine       Nine
                              Months     Months     Months     Months
                              Ended      Ended      Ended      Ended
                            September  September  September  September
                               30,        30,        30,        30,
                              2002       2001       2002       2001
                            ---------  ---------  ---------  ---------
Net income                   $7,885      $9,283    $26,349    $30,806
Adjustments:
 Minority interest in
  earnings of Operating
  Partnership                 1,239       1,027      3,735      3,668
 Depreciation and
  amortization               14,516      12,123     44,962     37,123
 Net gains on dispositions
  of operating properties      (470)     (2,468)    (1,366)    (4,007)
 Cumulative effect of
  change in accounting
  principle                                                     1,392
 Non-cash amortization of
  restricted stock grants                   547                 1,643
                            ---------  ---------  ---------  ---------
Funds From Operations       $23,170     $20,512    $73,680    $70,625
                            =========  =========  =========  =========
Weighted average common
 shares/units outstanding --
 basic                       31,918      30,421     31,360     30,303
Weighted average common
 shares/units outstanding --
 diluted                     32,134      30,648     31,644     30,538
Funds From Operations per
 common share/unit -- basic   $0.73       $0.67      $2.35      $2.33
                            =========  =========  =========  =========
Funds From Operations per
 common share/unit -- diluted $0.72       $0.67      $2.33      $2.31
                            =========  =========  =========  =========
                      KILROY REALTY CORPORATION
                   FUNDS AVAILABLE FOR DISTRIBUTION
                   --------------------------------
           (unaudited, in thousands, except per share data)
                              Three      Three      Nine       Nine
                              Months     Months     Months     Months
                              Ended      Ended      Ended      Ended
                            September  September  September  September
                               30,        30,        30,        30,
                              2002       2001       2002       2001
                            ---------  ---------  ---------  ---------
Funds From Operations       $23,170     $20,512    $73,680    $70,625
Adjustments:
 Amortization of deferred
  financing costs               457         408      1,677      1,188
 Tenant improvements,
  leasing commissions and
   recurring capital
   expenditures              (2,394)     (2,240)    (4,031)    (6,919)
 Net effect of
  straight-line rents        (1,948)     (1,927)    (3,079)    (4,514)
                           ---------  ----------  ---------  ---------
Funds Available for
 Distribution               $19,285     $16,753    $68,247    $60,380
                           =========  ==========  =========  =========
Funds Available for
 Distribution per common
 share/unit -- basic           $0.60      $0.55      $2.18      $1.99
                            =========  =========  =========  =========
Funds Available for
 Distribution per common
 share/unit -- diluted         $0.60      $0.55      $2.16      $1.98
                            =========  =========  =========  =========

CONTACT:
Kilroy Realty Corporation
Richard E. Moran Jr., 310/481-8483
Tyler H. Rose, 310/481-8484

URL: http://www.businesswire.com
Today's News On The Net - Business Wire's full file on the Internet with Hyperlinks to your home page.

Copyright (C) 2002 Business Wire. All rights reserved.