LOS ANGELES, May 3, 2000 (PRIMEZONE) -- Kilroy Realty Corporation (NYSE:KRC) today reported financial results for its first quarter ended March 31, 2000, with funds from operations (FFO) of $20.7 million, or $0.66 per share, up 11.9% on a per-share basis from $18.8 million, or $0.59 per share, in the first quarter of 1999. Net income in the first quarter was $9.6 million, or $0.35 per share, compared to $9.9 million, or $0.36 per share, in the year-earlier quarter. Revenues totaled $43.8 million, up from $37.6 million a year ago. All per-share amounts are presented on a diluted basis.
"Market conditions for commercial real estate in Southern California remain strong and steady," said John B. Kilroy, Jr., KRC's president and chief executive officer. "With this healthy backdrop, we continue to execute an ambitious development program that includes a committed pipeline that will add $284 million in new properties to our portfolio over the next three years."
During the first quarter, KRC completed 72,000 square feet of office space in the Del Mar submarket of San Diego for a total investment of approximately $15.6 million. The property was 100% leased on completion. Overall occupancy for the company's portfolio at first quarter's end, including the newly stabilized property, was 97%.
KRC's committed development pipeline of nearly 1.4 million square feet of office space in Southern California is already 88% pre-leased or otherwise committed, with individual properties scheduled for completion at various dates through 2002.
The company repurchased 1,999,300 shares during the first quarter at an average price per share of $20.58. KRC has now completed the repurchase of approximately 2.3 million shares of its announced three-million share repurchase program.
KRC Acquires Note Securing Key El Segundo Office Project
Earlier this week, KRC initiated actions that has put it in a position to potentially acquire the last remaining commercial property developed by Kilroy Industries and still privately held by Kilroy Airport Imperial Co. ("KAICO") which is owned and controlled by the Kilroy family. The project consists of two office buildings, totaling 366,000 square feet, and a parking structure, which are located at the corner of Imperial Highway and Sepulveda Boulevard in El Segundo, a prime gateway location to Los Angeles International Airport. One of the buildings is fully-leased to Hughes Aircraft Company ("Hughes") and the other is vacant.
On May 1, 2000, KRC purchased an outstanding $71 million note on the property held by an institutional lender for a discounted price of $45.3 million. The loan has a principal balance of $61 million and accrued interest of $10 million. In addition, the company has agreed to pay KAICO a total of $3.7 million: $2.3 million in reimbursement of expenditures incurred by KAICO since 1997, and $1.4 million to be paid at a later date for modification to an existing option that Kilroy Realty, L.P. holds to purchase the property. The option to purchase the property is subject to a Hughes right of first offer. In the event that KRC were to acquire the property, the company estimates that it could invest an additional $20 million to $30 million in the property.
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 KRC'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 office and industrial property sectors. For more than 50 years, the company has owned, developed, acquired and managed real estate assets in the coastal regions of California and Washington. Principal submarkets for the company's current development projects include Los Angeles, San Diego and Long Beach where the company's total development program is over $550 million. At March 31, 2000, 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 Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
--------------- ---------------
Revenues $ 43,764 $ 37,550
Net income available to
common stockholders (1) $ 9,578 $ 9,910
Weighted average common
shares outstanding - basic 27,228 27,633
Weighted average common
shares outstanding - diluted 27,229 27,633
Net income per share of
common stock - basic $ 0.35 $ 0.36
Net income per share of
common stock - diluted $ 0.35 $ 0.36
Funds From Operations $ 20,680 $ 18,790
Weighted average common
shares/units outstanding
- basic (2) 31,130 31,913
Weighted average common
shares/units outstanding
- diluted (2) 31,130 31,913
Funds From Operations per
common share/unit - basic (2) $ 0.66 $ 0.59
Funds From Operations per
common share/unit - diluted (2) $ 0.66 $ 0.59
Common shares outstanding
at end of period 26,223 27,629
Common partnership units
outstanding at end of period 3,805 4,673
--------------- ----------------
Total common shares and units
outstanding at end of period 30,028 32,302
March 31, 2000 March 31, 1999
--------------- ----------------
Occupancy rates:
California 96.6% 94.9%
Washington 100.0% 95.3%
Arizona 100.0% 100.0%
Nevada 100.0% 100.0%
--------------- ----------------
Weighted average total 96.8% 95.1%
Total square feet of stabilized
properties owned at end of period:
Office 6,225 5,727
Industrial 6,432 6,152
--------------- ----------------
Total 12,657 11,879
(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)
March 31, December 31,
2000 1999
---------------- ---------------
ASSETS
INVESTMENT IN REAL ESTATE:
Land and improvements $ 276,318 $ 274,463
Buildings and improvements 959,035 946,130
Undeveloped land and
construction in progress, net 220,472 189,645
---------------- ---------------
Total investment in real estate 1,455,825 1,410,238
Accumulated depreciation
and amortization (182,453) (174,427)
---------------- ---------------
Investment in real estate, net 1,273,372 1,235,811
Cash and cash equivalents 9,301 26,116
Restricted cash 5,361 6,636
Tenant receivables, net 24,760 22,078
Deferred financing and
leasing costs, net 30,306 27,840
Prepaid expenses and
other assets 3,659 2,020
---------------- ---------------
TOTAL ASSETS $ 1,346,759 $ 1,320,501
================ ===============
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES:
Mortgage debt $ 332,842 $ 325,516
Unsecured line of credit 292,500 228,000
Accounts payable and
accrued expenses 25,792 26,260
Accrued distributions 13,513 13,456
Rents received in advance
and tenant security deposits 19,083 20,287
---------------- ---------------
Total liabilities 683,730 613,519
---------------- ---------------
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 44,322 44,022
Common unitholders of the
Operating Partnership 63,468 71,920
Minority interest in
Development LLCs 9,599 9,931
---------------- ---------------
Total minority interests 225,569 234,053
---------------- ---------------
STOCKHOLDERS' EQUITY:
Common stock 262 278
Additional paid-in capital 457,974 491,204
Distributions in excess
of earnings (20,776) (18,553)
---------------- ---------------
Total stockholders' equity 437,460 472,929
---------------- ---------------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 1,346,759 $ 1,320,501
================ ===============
KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
---------------- ----------------
REVENUES:
Rental income $ 37,702 $ 32,818
Tenant reimbursements 4,694 4,123
Interest income 294 400
Other income 1,074 209
---------------- ---------------
Total revenues 43,764 37,550
---------------- ---------------
EXPENSES:
Property expenses 5,458 5,134
Real estate taxes 3,387 3,009
General and administrative expense 2,632 2,314
Ground leases 389 337
Interest expense 7,828 5,759
Depreciation and amortization 9,323 7,217
---------------- ---------------
Total expenses 29,017 23,770
---------------- ---------------
Income from operations before
loss on disposition of operating
property, equity in income of
unconsolidated subsidiary and
minority interests 14,747 13,780
Loss on disposition of
operating property (305)
Equity in income of
unconsolidated subsidiary 7
---------------- ---------------
Income before minority interests 14,449 13,780
---------------- ---------------
Minority interests:
Distributions on Cumulative
Redeemable Preferred units (3,375) (2,334)
Minority interest in earnings
of Operating Partnership (1,372) (1,536)
Minority interest in earnings
of Development LLCs (124)
---------------- ---------------
Total minority interests (4,871) (3,870)
---------------- ---------------
Net income $ 9,578 $ 9,910
================ ===============
Weighted average shares
outstanding - basic 27,228 27,633
Weighted average shares
outstanding - diluted 27,229 27,633
Income per common share - basic $ 0.35 $ 0.36
================ ===============
Income per common share - diluted $ 0.35 $ 0.36
================ ===============
KILROY REALTY CORPORATION
FUNDS FROM OPERATIONS
(unaudited, in thousands, except per share data)
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
---------------- ---------------
Net income $ 9,578 $ 9,910
Adjustments:
Minority interest in
earnings of Operating
Partnership 1,372 1,536
Depreciation and
amortization 9,323 7,217
Loss on disposition of
operating property 305
Other 102 127
---------------- ---------------
Funds From Operations $ 20,680 $ 18,790
================ ===============
Weighted average common
shares/units outstanding - basic 31,130 31,913
Weighted average common
shares/units outstanding - diluted 31,130 31,913
Funds From Operations per common
share/unit - basic $ 0.66 $ 0.59
================ ===============
Funds From Operations per common
share/unit - diluted $ 0.66 $ 0.59
================ ===============
KILROY REALTY CORPORATION
FUNDS AVAILABLE FOR DISTRIBUTION
(unaudited, in thousands, except per share data)
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
----------------- ----------------
Funds From Operations $ 20,680 $ 18,790
Adjustments:
Amortization of deferred
financing costs 206 294
Tenant improvements,
leasing commissions
and recurring capital
expenditures (904) (1,101)
Net effect of
straight-line rents (1,508) (1,389)
---------------- ---------------
Funds Available for Distribution $ 18,474 $ 16,594
================ ===============
Funds Available for Distribution
per common share/unit - basic $ 0.59 $ 0.52
================ ===============
Funds Available for Distribution
per common share/unit - diluted $ 0.59 $ 0.52
================ ===============