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Kilroy Realty Corporation Reports Fourth Quarter Financial Results

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Contact: FOR RELEASE:
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, February 3, 1998 - Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its fourth quarter ended December 31, 1997, with funds from operations of $15.0 million, or $0.54 per share. Net income in the fourth quarter totaled $8.8 million, or $0.36 per share, on revenues of $23.5 million.

For the eleven-month period ended December 31, the company reported funds from operations of $39.1 million, or $1.84 per share which is equivalent to $1.96 per share adjusting for a 12 month period. Net income for the eleven-month period was $22.1 million, or $1.20 per share. Revenues totaled $66.1 million. The Southern California-based real estate investment trust completed its initial public offering of common stock on January 31, 1997.

"We accomplished a great deal in our first 11 months as a public company," said John B. Kilroy, Jr., Kilroy's president and chief executive officer. "We achieved our earnings objectives, added new strength and depth to our management team, and built a sound financial base with two successful equity offerings and a broadened revolving credit agreement. With these resources at hand, we tripled our real estate portfolio, acquiring over $500 million in new office and industrial properties, and established a development pipeline that will contribute significantly to our future growth," Kilroy said.

Kilroy completed $217 million of new acquisitions in the fourth quarter, adding more than 2.3 million square feet of space to the company's office and industrial real estate portfolio. During the eleven months since its IPO, the company has acquired $507 million in commercial properties, tripling Kilroy's portfolio to more than 9.2 million square feet at year-end 1997. The portfolio's year-end occupancy rate was 93%.

Capitalizing on its 50-year history in developing office and industrial properties in the Southern California marketplace, Kilroy also initiated development plans during 1997 on office and industrial projects located in many of the fastest growing submarkets of Los Angeles, Orange and San Diego Counties, including West Los Angeles, Calabasas, Long Beach, Irvine, Anaheim, Del Mar and Sorrento Mesa. During 1997, construction was begun on three of these projects, representing approximately 820,000 square feet of space.

Among the most significant transactions Kilroy completed last year was the acquisition of the principal real estate assets and senior management of the San Diego-based Allen Group. The transaction, to be funded over a three-year period, is valued at more than $300 million. This acquisition of existing real estate, entitled development sites and experienced management significantly expanded Kilroy's commercial real estate franchise in the north coastal areas of San Diego County, one of California's fastest growing markets.

As a result of Kilroy's substantial growth over the past eleven months, the company has established regional offices in San Diego and Orange Counties. Its corporate headquarters remains in the Kilroy Airport Center adjacent to Los Angeles International Airport.

"We've entered 1998 a considerably larger, stronger and more experienced organization," remarked Kilroy. "Our capacity for profitable growth, coupled with the promising opportunities for real estate throughout Southern California today, gives us great confidence that we'll continue to achieve our performance objectives going forward," he said.

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 December 31, 1997, the company owned 4.2 million square feet of commercial office space and 5.0 million square feet of industrial space.

 

 

Kilroy Realty Corporation

Summary Quarterly Results

(in thousands, except per share data)

Period from

Three Months

Three Months

February 1, 1997 to

Ended

Ended

December 31, 1997

December 31, 1997

September 30, 1997

Revenues

$66,129

$22,481

$19,107

Net income available to common sstockholders (1)

$22,060

$8,820

$6,480

Weighted average common shares outstanding (basic)

18,445

24,475

18,932

Weighted average common shares outstanding (diluted)

18,539

14,572

19,027

Net income pershate of common stock (basic)

$1.20

$0.36

$0.34

Net income pershate of common stock (diluted)

$1.19

$0.36

$0.34

Funds from operations

$39,142

$14,952

$11,235

Weighted Average shares outstanding (basic) (2)

21,302

27,683

21,749

Weighted Average shares outstanding (diluted) (2)

21,396

27,780

21,749

Funds from opeerations per share (basic) (2)

$1.84

$0.54

$0.52

Funds from opeerations per share (diluted) (2)

$1.83

$0.54

$0.51

December 31, 1997

September 30, 1997

Occupancy

93.60%

97.20%

California

80.30%

80.90%

Washington (3)

100.00%

100.00%

Arizona

100.00%


N/A


Weighted average total

93.00%

96.00%

(1) Net income after minority interest

(2) Calculated based on average shares outstanding assuming conversion of all partnership units outstanding

(3) Occupancy gives pro forma effect for the signing of the Boeing lease on June 20, 1997

 

Kilroy Realty Corporation Consolidated Balance Sheet

(unaudited in thousands)

December 31,

September 30,

1997

1997

ASSETS

RENTAL PROPERTIES

Land

$202,707

$124,276

Buildings and improvements

631,983


462,902


Total rental properties

834,690

587,178

Accumulated depreciation and amortization

(121,780)


(117,552)


Rental properties, net

712,910

469,626

Cash and cash equivalents

8,929

74,890

Restricted cash

5,680

4,634

Tenant receivables, net

7,367

3,764

Escrow deposits

5,114

1,179

Deferred charges and other assets, net

17,654


18,451


TOTAL ASSETS

$757,654



$572,544



LIABILITIES & STOCKHOLDERS' EQUITY

LIABILITIES

Mortage debt

$131,363

$104.05

Line of credit

142,000

Accounts payable and accrued expenses

9,711

9,794

Accrued dividends

10,804

10,576

Deferred rent and tenant security deposits

11,441


10,902


Total liabilities

305,319


135,326


MINORITY INTEREST

55,185


45,120


STOCKHOLDER'S EQUITY

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

shares authorized: 24,475,000 shares

issued and outstanding

245

245

Additional paid-in capital

403,163

397,445

Distributions in excess of earnings

(6,258)


(5,592)


Total stockholders' equity

397,150


392,098


TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$757,654



$572,544



 

 

Kilroy Realt Corporation Consolidated Statement of Operations

(unaudited, in thousands, except per share data)

Period from

Three Months

Three Months

February 1, 1997 to

Ended

Ended

December 31, 1997

December 31, 1997

September 30, 1997

REVENUES

Rental income

$56,069

$20,191

$16,418

Tenant reimbursements

5,600

2,159

1,631

Interest income

3,571

696

900

Other income

889


435


158


Total revenues

66,129


23,481


19,107


EXPENSES

Property expenses

8,770

2,771

2,724

Real estate taxes

3,048

1,123

998

General and administrative

4,949

1,297

1,477

Ground leases

938

268

206

Interest expense

9,738

3,024

2,637

Depreciation and amortization

13,236


4,832


3,660


Total expenses

40,679


13,315


11,702


Income before equity in income (loss) of

subsidiary and minority interests

25,450

10,166

7,405

Equity in income of subsidiary

23

(164)

52

Minority interest

(3,413)


(1,182)


(977)


Net income

$22,060



 

$8,820



$6,480



Weighted average shares outstanding (basic)

18,445

24,475

18,932

Weighted average shares outstanding (diluted)

18,539

24,572

19,027

Income per share of common stock (basic)

$1.20



$0.36



$0.34



Income per share of common stock (diluted)

$1.19



$0.36



$0.34



 

Kilroy Realty Corporation

Funds From Operations

(in thousands, except per share data)

Period from

Three Months

Three Months

February 1, 1997 to

Ended

Ended

December 31, 1997

December 31, 1997

September 30, 1997

Net income

$22,060

$8,820

$6,480

Add

Minority Interest

3,413

1,182

977

Depreciation and amortization

13,236

4,832

3,660

Depreciation and amortization on

unconsolidated subsidiary

11

3

3

Other

422


115


115


Funds from operations

$39,142



$14,952



$11,235



 

Weighted average shares outstanding (basic)

21,302

27,683

21,749

Weighted average shares outstanding (diluted)

31,396

27,780

21,846

Funds from operations per share/unit (basic)

$1.84



 

$0.54



$0.52



Funds from operations per share/unit (diluted)

$1.83



$0.54



$0.51



Kilroy Realty Corporation

Funds Available for Distribution

(in thousands, except per share data)

Period from

Three Months

Three Months

February 1, 1997 to

Ended

Ended

December 31, 1997

December 31, 1997

September 30, 1997

Funds from operations

$39,142

$14,952

$11,235

Adjustments

Amortization of deferred financing costs

949

141

404

Tenant improvements, leasing commissions

and recurring capital expenditures

(1,193)

(387)

(274)

Net effect of straight-line rents

(698)


(409)


(214)


Funds available for distribution

$38,200



$14,297



 

$11,151



Funds available for distribution per share/unit (basic)

$1.79



 

$0.52



$0.51



Funds available for distribution per share/unit (diluted)

$1.79



$0.51



$0.51