Kilroy Realty Corporation Reports First Quarter Financial Results
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LOS ANGELES, April 27 -- Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its first quarter ended March 31, 1998, with funds from operations (FFO) of $16.1 million, or $0.56 per share on a diluted basis. Net income in the first quarter totaled $8.9 million, or $0.35 per share on a diluted basis, on revenues of $29.0 million.
In the year-earlier stub period from February 1 to March 31, 1997, Kilroy reported FFO of $5.0 million, or $0.29 per share on a diluted basis. Net income for the period was $2.7 million, or $0.18 per share on a diluted basis. Revenues totaled $9.0 million. The company completed its initial public offering of common stock on January 31, 1997.
``Southern California commercial real estate markets are experiencing the best conditions we've seen in 30 years,'' said John B. Kilroy, Jr., the company's president and chief executive officer. ``And we're now at a point in the cycle where we expect development to become an increasingly important part of our growth plans,'' he said.
During the first quarter, Kilroy completed $133 million of acquisitions, adding 1.1 million square feet of space to the company's office and industrial real estate portfolio. In addition, in April the company acquired the Pacific Corporate Center complex in San Diego for $64.3 million. The project includes 411,339 square feet of existing space and two development sites on which Kilroy has announced plans to build three new buildings totaling 240,000 square feet.
Overall, Kilroy's Southern California development program includes 1.3 million square feet of space under construction and over three million square feet in planned development. In addition to San Diego County, the principal submarkets for the company's development projects include the Westside of 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, owns, operates and develops office and industrial properties, primarily in California. At March 31, 1998, the company owned 4.9 million square feet of commercial office space and 5.5 million square feet of industrial space. At quarter's end, the company's portfolio was 92.3% leased.
KILROY REALTY CORPORATION SUMMARY QUARTERLY RESULTS (unaudited, in thousands, except per share data) Three Months Period from Ended February 1, 1997 to March 31, 1998 March 31, 1997 Revenues $ 28,951 $ 8,972 Net income available to common stockholders (a) $ 8,879 $ 2,652 Weighted average common shares outstanding (Basic) 25,230 14,475 Weighted average common shares outstanding (Diluted) 25,400 14,586 Net income per share of common stock (Basic) $ 0.35 $ 0.18 Net income per share of common stock (Diluted) $ 0.35 $ 0.18 Funds from operations $ 16,061 $ 4,959 Weighted average common shares/units outstanding (Basic) (b) 28,679 17,127 Weighted average common shares/units outstanding (Diluted) (b) 28,849 17,238 Funds from operations per common share/unit (Basic) (b) $ 0.56 $ 0.29 Funds from operations per common share/unit (Diluted) (b) $ 0.56 $ 0.29 March 31, 1998 March 31, 1997 Occupancy rates California 92.5% 98.4% Washington 82.4% 37.3% Arizona 100.0% 100.0% Nevada 100.0% N/A Weighted average total 92.3% 88.8% (a) Net income after minority interests (b) Calculated based on average shares outstanding assuming conversion of all common partnership units outstanding KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited, in thousands, except share data) March 31, December 31, 1998 1997 ASSETS INVESTMENT IN REAL ESTATE: Land and improvements $216,650 $177,118 Buildings and improvements 721,513 622,901 Land and construction in progress 40,828 34,671 Total investment in real estate 978,991 834,690 Accumulated depreciation and amortization (127,075) (121,780) Investment in real estate, net 851,916 712,910 Cash and cash equivalents 13,526 8,929 Restricted cash 4,914 5,680 Tenant receivables, net 6,887 7,367 Escrow deposits 16,439 5,114 Deferred financing and leasing costs, net 14,389 13,053 Prepaid expenses and other assets 4,638 4,601 TOTAL ASSETS $ 912,709 $ 757,654 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES: Mortgage debt $ 134,959 $ 131,363 Line of credit 162,000 142,000 Accounts payable and accrued expenses 9,378 9,711 Accrued distributions 12,413 10,804 Rents received in advance and tenant security deposits 12,538 11,441 Total Liabilities 331,288 305,319 COMMITMENTS AND CONTINGENCIES MINORITY INTERESTS: 8.075% Series A Cumulative Redeemable Preferred Unitholders 59,077 Common Unitholders 66,338 55,185 Total minority interests 125,415 55,185 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 30,000,000 shares authorized, none issued and outstanding Common stock, $.01 par value, 150,000,000 shares authorized, 26,746,585 and 24,475,000 shares issued and outstanding 267 245 Additional paid-in capital 463,951 403,163 Distributions in excess of earnings (8,212) (6,258) Total Stockholders' Equity 456,006 397,150 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 912,709 $ 757,654 KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data) Three Months Period from Ended February 1, 1997 to March 31, 1998 March 31, 1997 REVENUES: Rental income $ 25,460 $ 7,110 Tenant reimbursements 2,823 706 Interest income 474 971 Other income 194 185 Total revenues 28,951 8,972 EXPENSES: Property expenses 3,971 1,239 Real estate taxes 1,686 353 General and administrative 1,559 725 Ground leases 305 185 Interest expense 4,786 1,531 Depreciation and amortization 5,854 1,744 Total expenses 18,161 5,777 Income before equity in loss of subsidiary and minority interest 10,790 3,195 Equity in loss of subsidiary (1) (57) Minority Interests: Dividend on cumulative redeemable preferred units (700) Minority Interest in earnings (1,210) (486) Net Income $ 8,879 $ 2,652 Weighted average shares outstanding (Basic) 25,230 14,475 Weighted average shares outstanding (Diluted) 25,400 14,586 Income per common share (Basic) $ 0.35 $ 0.18 Income per common share (Diluted) $ 0.35 $ 0.18 KILROY REALTY CORPORATION FUNDS FROM OPERATIONS (unaudited, in thousands, except per share data) Three Months Period from Ended February 1, 1997 to March 31, 1998 March 31, 1997 Net income $8,879 $2,652 Add: Minority interest in earnings 1,210 486 Depreciation and amortization 5,854 1,744 Other 118 77 Funds from operations $16,061 $4,959 Weighted average common shares/ units outstanding (Basic) 28,679 17,127 Weighted average common shares/ units outstanding (Diluted) 28,849 17,238 Funds from operations per common share/unit (Basic) $0.56 $0.29 Funds from operations per common share/unit (Diluted) $0.56 $0.29 KILROY REALTY CORPORATION FUNDS AVAILABLE FOR DISTRIBUTION (unaudited, in thousands, except per share data) Three Months Period from Ended February 1, 1997 to March 31, 1998 March 31, 1997 Funds from operations $16,061 $4,959 Adjustments: Amortization of deferred financing costs 206 161 Tenant improvements, leasing commissions and recurring capital expenditures (485) (212) Net effect of straight-line rents (657) 5 Funds available for distribution $15,125 $4,913 Funds available for distribution per common share/unit (Basic) $0.53 $0.29 Funds available for distribution per common share/unit (Diluted) $0.52 $0.29