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Kilroy Realty Corporation Reports Third 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, October 29, 1997 - Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its third quarter ended September 30, 1997, with funds from operations (FFO) of $11.2 million, or $0.52 per share on a fully diluted basis. Net income in the third quarter totaled $6.5 million, or $0.34 per share, on revenues of $19.1 million.

For the first eight months of 1997, Kilroy reported FFO of $24.2 million, or $1.28 per share on a fully diluted basis. Net income for the eight-month period was $13.2 million, or $0.82 per share. Revenues totaled $42.6 million. The Southern California-based real estate investment trust completed its initial public offering of common stock on January 31, 1997.

Maintaining an aggressive growth pace, Kilroy acquired $132 million of office and industrial real estate in the third quarter, adding 1.7 million square feet of space to its portfolio. Through September 30, the company completed $291 million in acquisitions, doubling its portfolio to more than 6.9 million square feet of space.

Within its industrial development program, Kilroy began construction during the quarter on a 300,000-square-foot facility located on 15 acres in the master-planned community of Foothill Ranch, the first of three Orange County development projects totaling over 500,000 square feet that the company has announced so far this year. Preleasing of the first two of those projects began in the third quarter, with leases representing 212,000 square feet signed to date. In October, Kilroy also agreed to purchase a 29-acre development site in Anaheim. The company expects to break ground on the first phase of a five-building, 580,000-square-foot complex on the site by year-end.

In addition, Kilroy will commence construction in December on the third phase of the company's successful Kilroy Airport Center Long Beach. The company intends to build a five-story, 140,000-square-foot office building on a site adjacent to its existing 600,000-square-foot commercial office center, which is currently 97% leased.

Kilroy Realty Corporation owns, operates and develops commercial and industrial properties, primarily in California. At September 30, 1997, the company owned 3.1 million square feet of commercial office space and 3.8 million square feet of industrial space.

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

Summary Quarterly Results

(in thousands, except per share data)

Period from

Three Months

Three Months

February 1, 1997 to

Ended

Ended

September 30,1997

September 30, 1997

June 30, 1997

Revenues

$42,648

$19,107

$14,569

Net income available to common sstockholders (1)

$13,240

$6,480

$4,108

Average common shares outstanding

16,162

18,932

14,475

Ner income pershate of common stock

$0.82

$0.34

$0.28

Funds from operations

$24,190

$11,235

$7,996

Weighted Average shares outstanding (2)

18,886

21,749

$17,153.00

Funds from opeerations per share (2)

$1.28

$0.52

$0.47

September 30, 1997

June 30, 1997

Occupancy

California

97.20%

97.40%

Washington (3)

80.90%

82.00%

Arizona

100.00%


100.00%


Weighted average total

96.00%

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)

September 30,

June 30,

1997

1997

ASSETS

RENTAL PROPERTIES

Land

$124,276

$74,259

Buildings and improvements

462,902


376,372


Total rental properties

587,178

450,631

Accumulated depreciation and amortization

(117,552)


(114,334)


Rental properties, net

469,626

336,297

Cash and cash equivalents

74,890

34,296

Restricted cash

4,634

5,724

Tenant receivables, net

3,764

3,759

Investment in subsidiaries

267

216

Escrow deposits

1,179

16,935

Deferred charges and other assets, net

18,184


13,004


TOTAL ASSETS

$572,544



$410,231



LIABILITIES & STOCKHOLDERS' EQUITY

LIABILITIES

Mortage debt

$104,054

$95,663

Line of credit

92,000

Accounts payable and accrued expenses

9,794

5,178

Accrued dividends

10,576

6,701

Deferred rents and tenant security deposits

10,902


11,336


Total liabilities

135,326

210,878

MINORITY INTEREST

45,120

32,495

STOCKHOLDER'S EQUITY

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

authorized: 24,475,000 and 14,475,000 shares

issued and outstanding, respectively

245

145

Additional paid-in capital

397,445

169,300

Retained deficit

(5,592)


(2,587)


Total shareholders' equity

392,098

166,858

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$572,544



$410,231



 

 

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

September 30, 1997

September 30, 1997

June 1997

REVENUES

Rental income

$35,878

$16,418

$12,350

Tenant reimbursements

3,441

1,631

1,104

Interest income

2,875

900

1,104

Other income

454


158


111


Total revenues

42,648

19,107

14,569

EXPENSES

Property expenses

5,999

2,742

2,036

Real estate taxes

1,925

998

574

General and administrative

3,652

1,477

1,450

Ground leases

670

206

279

Interest expense

6,714

2,637

2,546

Depreciation and amortization

8,404


3,660


3,000


Total expenses

27,364

11,702

9,885

Income before equity in income of subsidiary

and minority interests

15,284

7,405

4,684

Equity in income of subsidiary

187

52

192

Minority interest

(2,231)


(977)


(768)


Net income

$13,240

$6,480

$4,108

Average shares outstanding

16,162

18,932

14,475

Income per share of common stock

$0.82



$0.34



$0.28



 

 

Kilroy Realty Corporation

Funds From Operations

(in thousands, except per share data)

Period from

Three Months

Three Months

February 1, 1997 to

Ended

Ended

September 30, 1997

September 30, 1997

June 1997

Net income

$13,240

$6,480

$4,108

Add

Minority Interest

2,231

977

768

Depreciation and amortization

8,404

3,660

3,000

Depreciation and amortization on

unconsolidated subsidiary

8

3

5

Other

307


115


115


Funds from operations

$24,190



$11,235



 

$7,996



Weighted average shares outstanding

18,886

21,749

17,153

Funds from operations per share

$1.28



$0.52



 

$0.47



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

September 30, 1997

September 30, 1997

June 1997

Funds from operations

$24,190

$11,235

$7,996

Adjustments

Amortization of deferred financing costs

625

404

243

Tenant improvements, leasing commissions

and recurring capital expenditures

(806)

(274)

(320)

Net effect of straight-line rents

(289)


(214)


(80)


Funds available for distribution

$23,720



$11,151



$7,839



Funds available for distribution per share

$1.26



$0.51



$0.46