Kilroy

Where Innovation Works

Press Room Release

Kilroy Realty Corporation Reports 10% Increase in Third Quarter FFO Per Share

Printer Friendly Version View printer-friendly version
<< Back

Southern California-based REIT Initiates Construction

On New 100,000 Square-Foot Technology Center in San Diego

LOS ANGELES, Nov. 3 /PRNewswire/ -- Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its third quarter ended September 30, 1999, with funds from operations (FFO) of $20.7 million, or $0.64 per share, up 10.3% on a per-share basis from $18.4 million, or $0.58 per share, in the third quarter of 1998. Net income in the third quarter rose to $10.9 million, or $0.39 per share, up from $10.0 million, or $0.36 per share, in the year-earlier quarter. Revenues in the period totaled $40.2 million, compared to $34.5 million a year ago.

In the first nine months of 1999, the company reported FFO of $59.7 million, or $1.85 per share, up 8.2% on a per-share basis from $52.3 million, or $1.71 per share for the first nine months of 1998. Net income in the nine-month period increased to $31.6 million, or $1.14 per share, up from $28.6 million, or $1.07 per share, in the comparable period of 1998. Revenues in the nine months totaled $117.1 million, up from $97.8 million in 1998. All per-share amounts are presented on a diluted basis.

"California's remarkable economy continues to generate robust job growth and strong tenant demand for commercial real estate in our submarkets," said John B. Kilroy, Jr., the company's president and chief executive officer. "More than 81% of the office and industrial space in our committed development pipeline is already preleased or committed, and occupancy in our stabilized portfolio remains above 95%," he said.

Kilroy noted that, year-to-date, the company has delivered and stabilized over 600,000 square feet of new office and industrial space in Southern California, in locations ranging from San Diego north to Long Beach. All of the new properties are 100% occupied.

In October, KRC initiated construction on its newest office project -- a 100,000-square-foot, low-rise technology center located in the Rancho Bernardo area of San Diego. The property, already 50% committed, is scheduled for completion in late 2000. It represents a total estimated investment of approximately $17 million.

With the addition of this new project, Kilroy Realty currently has nearly 1.7 million square feet of office and industrial space under construction, committed for construction, or in active lease-up, representing a total estimated investment of $254 million.

In addition, the company has a future development pipeline of approximately 1.3 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.

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 KRC'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 is a Southern California-based real estate investment trust active in the commercial office and industrial property sectors. Principal submarkets for the company's development projects include Los Angeles, San Diego, Long Beach and Orange County, where the company's total development program exceeds $480 million. At September 30, 1999, the company owned 6.2 million square feet of commercial office space and 6.4 million square feet of industrial space. More information on Kilroy Realty 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
                                    Sept. 30,  Sept. 30,  Sept. 30,  Sept. 30,
                                      1999       1998       1999        1998

    Revenues                          $40,202   $34,519   $117,053   $97,794

    Net income available to common
     stockholders (1)                 $10,911    $9,985    $31,617   $28,649

    Weighted average common shares
     outstanding - basic               27,658    27,648     27,640    26,770
    Weighted average common shares
     outstanding - diluted             27,677    27,648     27,675    26,865

    Net income per share of common
     stock - basic                      $0.39     $0.36      $1.14     $1.07
    Net income per share of common
     stock - diluted                    $0.39     $0.36      $1.14     $1.07

    Funds From Operations             $20,693   $18,351    $59,686   $52,306

    Weighted average common shares/
     units outstanding - basic (2)     32,302    31,641     32,174    30,579

    Weighted average common shares/
     units outstanding - diluted (2)   32,321    31,641     32,208    30,673

    Funds From Operations per common
     share/unit - basic (2)             $0.64     $0.58      $1.86     $1.71

    Funds From Operations per common
     share/unit - diluted (2)           $0.64     $0.58      $1.85     $1.71

    Common shares outstanding at end
     of period                                              27,894    27,639
    Common partnership units
     outstanding at end of period                            4,408     3,993
        Total common shares and units
         outstanding at end of period                       32,302    31,632


                                                  September 30,   September 30,
                                                      1999            1998
    Occupancy rates:
     California                                        95.1%          95.1%
     Washington                                        99.5%          86.7%
     Arizona                                          100.0%         100.0%
     Nevada                                           100.0%         100.0%
      Weighted average total                           95.5%          94.9%

    Total square feet of stabilized
     properties owned at end of period:
      Office                                           6,209          5,406
      Industrial                                       6,351          5,656
       Total                                          12,560         11,062

    (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,
                                                     1999            1998

    ASSETS
    INVESTMENT IN REAL ESTATE:
     Land and improvements                          $279,499       $253,500
     Buildings and improvements                      935,152        828,425
     Undeveloped land and construction
      in progress, net                               139,392        112,359
       Total investment in real estate             1,354,043      1,194,284
     Accumulated depreciation and amortization      (165,000)      (145,437)
       Investment in real estate, net              1,189,043      1,048,847

    Cash and cash equivalents                          6,857          6,443
    Restricted cash                                    7,451          6,896
    Tenant receivables, net                           17,006         15,630
    Notes receivable from related parties                             8,798
    Deferred financing and leasing costs, net         22,160         16,168
    Prepaid expenses and other assets                  2,403          3,146

       TOTAL ASSETS                               $1,244,920     $1,105,928

    LIABILITIES & STOCKHOLDERS' EQUITY
    LIABILITIES:
     Mortgage debt                                  $236,667       $133,383
     Unsecured line of credit                        290,000        272,000
     Accounts payable and accrued expenses            16,334         16,791
     Accrued distributions                            13,567         12,895
     Rents received in advance and tenant
      security deposits                               16,222         14,460
       Total liabilities                             572,790        449,529

    MINORITY INTERESTS:
     8.075% Series A Cumulative Redeemable
      Preferred unitholders                           73,716         73,718
     9.375% Series C Cumulative Redeemable
      Preferred unitholders                           34,464         34,410
     Common unitholders                               75,646         72,372
     Development LLCs                                  9,766
       Total minority interests                      193,592        180,500

    STOCKHOLDERS' EQUITY:
     Common stock                                        279            276
     Additional paid-in capital                      493,409        487,467
     Distributions in excess of earnings             (15,150)       (11,844)
       Total stockholders' equity                    478,538        475,899

        TOTAL LIABILITIES &
         STOCKHOLDERS' EQUITY                     $1,244,920     $1,105,928


       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
                                Sept. 30,   Sept. 30,    Sept. 30,  Sept. 30,
                                  1999         1998        1999        1998

    REVENUES:
     Rental income                $34,959    $30,369     $101,941   $84,817
     Tenant reimbursements          4,214      3,768       12,530    10,845
     Interest income                  239        308          860     1,191
     Other income                     790         74        1,722       941
       Total revenues              40,202     34,519      117,053    97,794

    EXPENSES:
     Property expenses              5,054      4,732       15,517    13,769
     Real estate taxes              3,108      2,800        8,969     7,358
     General and administrative
      expenses                      2,266      1,797        6,781     5,499
     Ground leases                    331        302        1,002       897
     Interest expense               6,501      5,263       18,420    14,642
     Depreciation and
      amortization                  7,900      6,740       22,577    19,159
       Total expenses              25,160     21,634       73,266    61,324

    Income from operations before
     gain on sale of operating
     properties, equity in (loss)
     income of unconsolidated
     subsidiary and minority
     interests                     15,042     12,885       43,787    36,470
    Gain on sale of operating
     properties                        75                      75
    Equity in (loss) income of
     unconsolidated subsidiary         (8)         1          (22)      (24)
    Income before minority
     interests                     15,109     12,886       43,840    36,446

    Minority interests:
     Distributions on Cumulative
      Redeemable Preferred units   (2,334)    (1,450)      (7,003)   (3,704)
     Minority interest in
      earnings                     (1,830)    (1,451)      (5,186)   (4,093)
     Minority interest in
      Development LLCs                (34)                    (34)
       Total minority interests    (4,198)    (2,901)     (12,223)   (7,797)

    Net income                    $10,911     $9,985      $31,617   $28,649

    Weighted average shares
     outstanding - basic           27,658     27,648       27,640    26,770
    Weighted average shares
     outstanding - diluted         27,677     27,648       27,675    26,865

    Income per common share
     - basic                        $0.39      $0.36        $1.14     $1.07
    Income per common share
     - diluted                      $0.39      $0.36        $1.14     $1.07


                          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
                                    Sept. 30,  Sept. 30,  Sept. 30, Sept. 30,
                                      1999       1998       1999      1998

    Net income                       $10,911    $9,985    $31,617   $28,649

    Adjustments:
     Minority interest in
      earnings                         1,830     1,451      5,186     4,093
     Depreciation and
      amortization                     7,900     6,740     22,577    19,159
     Gain on sale of operating
      properties                         (75)                 (75)
     Other                               127       175        381       405
    Funds From Operations            $20,693   $18,351    $59,686   $52,306

    Weighted average common
     shares/units outstanding
     - basic                          32,302    31,641     32,174    30,579
    Weighted average common
     shares/units outstanding
     - diluted                        32,321    31,641     32,208    30,673

    Funds From Operations per
     common share/unit - basic         $0.64     $0.58      $1.86     $1.71
    Funds From Operations per
     common share/unit - diluted       $0.64     $0.58      $1.85     $1.71


                          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
                                    Sept. 30   Sept. 30, Sept. 30,  Sept. 30,
                                      1999       1998      1999       1998

    Funds From Operations            $20,693   $18,351    $59,686   $52,306

     Adjustments:
      Amortization of deferred
       financing costs                   257       203        820       708
      Tenant improvements, leasing
       commissions and recurring
       capital expenditures           (1,324)     (826)    (3,274)   (2,248)
      Net effect of straight-line
       rents                          (1,957)   (1,411)    (4,566)   (2,983)
    Funds Available for
     Distribution                    $17,669   $16,317    $52,666   $47,783

    Funds Available for Distribution
     per common share/unit - basic     $0.55     $0.52      $1.64     $1.56
    Funds Available for Distribution
     per common share/unit - diluted   $0.55     $0.52      $1.64     $1.56

SOURCE  Kilroy Realty Corporation