EX-99.1 2 dex991.txt FIRST QTR SUPPLEMENTAL FINANCIAL REPORT EXHIBIT 99.1 KILROY REALTY =============== CORPORATION First Quarter 2001 Supplemental Financial Report Page -------- Financial Highlights 1 Consolidated Balance Sheets 2 Consolidated Statements of Operations 3 Funds From Operations and Funds Available for Distribution 4 Net Operating Income Breakdown 5 Same Store Analysis 6 Stabilized Portfolio and Occupancy Overview 7 Leasing Activity 8 Lease Expiration Schedule 9 Dispositions 10 Stabilized Development 11 In-Process and Committed Development Projects 12 Future Development Pipeline 13 Capital Structure 14 Debt Analysis 15 Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation's current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation's actual results, some of which are beyond its 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. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation's business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption "Business Risks" in Kilroy Realty Corporation's annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplemental information might not occur. Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ------------------------------------------------------------------------------- Financial Highlights (unaudited, $ in thousands, except per share amounts)
------------------------------------------------------------------------------------------------------------------ Three Months Ended March 31, ---------------------------------------------------- 2001 2000 % Change ------------------- ------------------ ----------- INCOME ITEMS: ` Revenues $ 50,367 $ 43,771 15.1% Net Operating Income 39,009 34,243 13.9% Net Income 6,426 9,578 (32.9%) Funds From Operations 21,876 20,680 5.8% Funds Available for Distribution 19,532 18,474 5.7% Funds From Operations per share - diluted $ 0.72 $ 0.66 9.1% Funds Available for Distribution per share - diluted 0.64 0.59 8.5% Dividend per share $ 0.48 $ 0.45 6.7% RATIOS: Interest Coverage Ratio(1) 3.3x 4.0x Fixed Charge Coverage Ratio(2) 2.5x 2.8x FFO Payout Ratio(3) 66.4% 65.3% 1.1% FAD Payout Ratio(4) 74.4% 73.1% 1.3% ------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------ Mar. 31, 2001 Dec. 31, 2000 % Change ------------- ---------------- ----------- ASSETS: Investments in Real Estate before Depreciation $1,559,766 $1,496,477 4.2% Total Assets 1,444,475 1,457,169 (0.9%) CAPITALIZATION: Total Debt $ 702,541 $ 723,688 (2.9%) Total Preferred Stock (5) 155,000 155,000 -- Total Market Equity Value (5) 811,186 848,162 (4.4%) Total Market Capitalization (5) 1,668,727 1,726,850 (3.4%) Total Debt / Total Market Capitalization 42.1% 41.9% 0.2% ------------------------------------------------------------------------------------------------------------------
(1) Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense plus loan cost amortization. (2) Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense plus loan cost amortization and current year paid and accrued preferred dividends. (3) Calculated as current year dividends paid and accrued to common shareholders divided by Funds From Operations. (4) Calculated as current year dividends paid and accrued to common shareholders divided by Funds Available for Distribution. (5) See "Capital Structure" on page 14. 1 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Consolidated Balance Sheets (unaudited, $ in thousands)
---------------------------------------------------------------------------------------------------------------------- March 31, December 31, 2001 2000 --------------- --------------- ASSETS: Land and improvements $ 272,013 $ 266,444 Buildings and improvements 1,106,079 1,054,995 Undeveloped land and construction in progress, net 181,674 162,633 Investment in unconsolidated real estate 12,405 ----------- ----------- Total investment in real estate 1,559,766 1,496,477 Accumulated depreciation and amortization (215,176) (205,332) ----------- ----------- Investment in real estate, net 1,344,590 1,291,145 Cash and cash equivalents 19,669 17,600 Restricted cash 6,662 35,014 Tenant receivables, net 28,695 32,521 Note receivable from related party 33,274 Deferred financing and leasing costs, net 35,633 39,674 Prepaid expenses and other assets 9,226 7,941 ----------- ----------- TOTAL ASSETS $ 1,444,475 $ 1,457,169 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities: Secured debt $ 440,541 $ 432,688 Unsecured line of credit 162,000 191,000 Unsecured term facility 100,000 100,000 Accounts payable and accrued expenses 39,752 33,911 Accrued distributions 14,523 13,601 Rents received in advance, tenant security deposits and deferred revenue 30,909 17,810 ----------- ----------- Total liabilities 787,725 789,010 ----------- ----------- 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 44,321 44,321 Common unitholders of the Operating Partnership 53,440 62,485 Minority interest in Development LLCs 11,707 11,748 ----------- ----------- Total minority interests 217,648 226,734 ----------- ----------- Stockholders' Equity: Common stock 270 265 Additional paid-in capital 470,077 460,390 Distributions in excess of earnings (25,751) (19,230) Accumulated other comprehensive loss (5,494) ----------- ----------- Total stockholders' equity 439,102 441,425 ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,444,475 $ 1,457,169 =========== =========== ----------------------------------------------------------------------------------------------------------------------
2 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Consolidated Statements of Operations (unaudited, $ in thousands, except per share amounts)
------------------------------------------------------------------------------------------------------------------ Three Months Ended March 31, ---------------------------------------------- 2001 2000 % Change -------------- -------------- -------------- REVENUES: Rental income $44,379 $37,702 17.7% Tenant reimbursements 5,520 4,694 17.6% Interest income 436 294 48.3% Other income 32 1,081 (97.0%) ------- ------- Total revenues 50,367 43,771 15.1% ------- ------- EXPENSES: Property expenses 6,895 5,458 26.3% Real estate taxes 3,635 3,387 7.3% General and administrative expenses 3,354 2,632 27.4% Ground leases 392 389 0.8% Interest expense 10,791 7,828 37.9% Depreciation and amortization 13,433 9,323 44.1% ------- ------- Total expenses 38,500 29,017 32.7% ------- ------- INCOME FROM OPERATIONS 11,867 14,754 (19.6%) Net gains (losses) on dispositions of operating properties 305 (305) (200.0%) ------- ------- INCOME BEFORE MINORITY INTERESTS AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 12,172 14,449 (15.8%) ------- ------- MINORITY INTERESTS: Distributions on Cumulative Redeemable Preferred units (3,375) (3,375) 0.0% Minority interest in earnings of Operating Partnership (845) (1,372) (38.4%) Minority interest in earnings of Development LLCs (134) (124) 8.1% ------- ------- Total minority interests (4,354) (4,871) (10.6%) ------- ------- NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 7,818 9,578 (18.4%) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (1,392) (100%) ------- ------- NET INCOME $ 6,426 $ 9,578 (32.9%) ======= ======= Weighted average shares outstanding - basic 26,713 27,228 Weighted average shares outstanding - diluted 26,971 27,229 NET INCOME PER COMMON SHARE: Income per common share - basic $ 0.24 $ 0.35 (31.4%) ======= ======= Income per common share - diluted $ 0.24 $ 0.35 (31.4%) ======= =======
3 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Funds From Operations and Funds Available for Distribution (unaudited, $ in thousands, except per share amounts)
------------------------------------------------------------------------------------------------------------------ Three Months Ended March 31, ---------------------------------------------- 2001 2000 % Change -------------- -------------- -------------- FUNDS FROM OPERATIONS: Net income $ 6,426 $ 9,578 (32.9%) Adjustments: Minority interest in earnings of Operating Partnership 845 1,372 (38.4%) Depreciation and amortization 12,970 9,323 39.1% Net (gains) losses on dispositions of operating properties (305) 305 (200.0%) Cumulative effect of change in accounting principle 1,392 100.0% Non cash amortization of restricted stock grants 548 102 437.3% ------- ------- Funds From Operations $21,876 $20,680 5.8% ======= ======= Weighted average common shares/units outstanding - basic 30,225 31,130 Weighted average common shares/units outstanding - diluted 30,484 31,130 Funds From Operations per common share/unit - basic $ 0.72 $ 0.66 9.1% ======= ======= Funds From Operations per common share/unit - diluted $ 0.72 $ 0.66 9.1% ======= ======= FUNDS AVAILABLE FOR DISTRIBUTION: Funds From Operations $21,876 $20,680 5.8% Adjustments: Amortization of deferred financing costs 381 206 85.0% Tenant improvements, leasing commissions and recurring capital expenditures (1,011) (904) 11.8% Net effect of straight-line rents (1,714) (1,508) 13.7% ------- ------- Funds Available for Distribution $19,532 $18,474 5.7% ======= ======= Funds Available for Distribution per common share/unit - basic $ 0.65 $ 0.59 9.5% ======= ======= Funds Available for Distribution per common share/unit - diluted $ 0.64 $ 0.59 8.5% ======= ======= ------------------------------------------------------------------------------------------------------------------
4 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Net Operating Income Breakdown -------------------------------------------------------------------------------- As of March 31, 2001 (1) ------------------ % OF TOTAL NOI BY PRODUCT TYPE: Office: Los Angeles 38.4% Orange County 3.3% San Diego 27.8% Other 5.6% ----- Subtotal 75.1% ----- Industrial: Los Angeles 3.0% Orange County 18.4% Other 3.5% ----- Subtotal 24.9% ----- % OF TOTAL NOI BY REGION: Los Angeles 41.4% Orange County 21.7% San Diego 27.8% Other 9.1% ----- Total 100.0% ===== -------------------------------------------------------------------------------- (1) Based on Net Operating Income for the quarter ended March 31, 2001. 5 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Same Store Analysis /(2)/ ($ in thousands) ------------------------------------------------------------------------------- Three Months Ended March 31, -------------------------------------------- 2001 2000 $ Change % Change ------- ------- -------- -------- TOTAL SAME STORE PORTFOLIO Operating Revenues: Rental income $36,245 $34,830 $ 1,415 4.1% Tenant reimbursements 4,602 4,323 279 6.5% Other income 54 1,073 (1,019) (95.0%) ------- ------- ------- Total operating revenues/(1)/ $40,901 $40,226 $ 675 1.7% ------- ------- ------- Operating Expenses: Property expenses/(1)/ $ 5,297 $ 5,012 $ 285 5.7% Real estate taxes 3,049 3,074 (25) (0.8%) Ground leases 332 381 (49) (12.9%) ------- ------- ------- Total operating expenses $ 8,678 $ 8,467 $ 211 2.5% ------- ------- ------- Net Operating Income $32,223 $31,759 $ 464 1.5% ======= ======= ======= -------------------------------------------------------------------------------- (1) The results for the three months ended March 31, 2000 include a lease termination fee of $0.5 million after the write off of the accrued straight-line rent on the old lease. The results for the three months ended March 31, 2001 include a $140,000 accrual for estimated repairs at the Sea Tac Office Center due to damage resulting from the Seattle earthquake. Net of these non-recurring revenues and expenses, the increase in total operating revenues, total operating expenses and net operating income would have been as follows: ---------------------------------------------------------------- Three Months Ended March 31, ------------------- Total operating revenues 2.9% Total operating expenses 0.8% Net Operating Income 3.5% ---------------------------------------------------------------- (2) Same store defined as all stabilized properties owned at January 1, 2000 and still owned at March 31, 2001. 6 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Stabilized Portfolio and Occupancy Overview
------------------------------------------------------------------------------------------------------------------------------- # of Square Feet Occupancy at: ------------------------------------ ---------------------------------------- Buildings Total Leased Available 03/31/2001 12/31/2000 12/31/1999 ------------ ----------- ---------- ----------- ------------- ------------ ----------- OCCUPANCY BY PRODUCT TYPE: Office: Los Angeles 31 3,199,985 3,091,586 108,399 96.6% 97.3% 97.4% Orange County 13 624,866 444,856 180,010 71.2% 73.6% 85.9% San Diego 35 2,529,613 2,529,613 100.0% 100.0% 99.1% Other 6 709,575 696,550 13,025 98.2% 98.2% 98.7% - ---------- ---------- ------- Subtotal 85 7,064,039 6,762,605 301,434 95.7% 96.2% 96.4% -- ---------- ---------- ------- Industrial: Los Angeles 7 554,490 553,904 586 99.9% 99.8% 99.2% Orange County 62 4,393,537 4,263,032 130,505 97.0% 97.1% 96.4% Other 8 820,124 820,124 100.0% 100.0% 97.2% - ---------- ---------- ------- Subtotal 77 5,768,151 5,637,060 131,091 97.7% 97.8% 96.9% -- ---------- ---------- ------- OCCUPANCY BY REGION: Los Angeles 38 3,754,475 3,645,490 108,985 97.1% 97.7% 97.7% Orange County 75 5,018,403 4,707,888 310,515 93.8% 94.2% 94.7% San Diego 35 2,529,613 2,529,613 100.0% 100.0% 99.2% Other 14 1,529,699 1,516,674 13,025 99.1% 99.1% 97.8% -- ---------- ---------- ------- TOTAL PORTFOLIO 162 12,832,190 12,399,665 432,525 96.6% 97.0% 96.7% === ========== ========== ======= -------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------- --------------------------------------------------------- AVERAGE OCCUPANCY - STABILIZED PORTFOLIO (1) AVERAGE OCCUPANCY - SAME STORE PORTFOLIO --------------------------------------------------- --------------------------------------------------------- Three Months Ended March 31, Three Months Ended March 31, ----------------------------- ------------------------------ 2001 2000 % Change 2001 2000 % Change ---- ---- --------- ---- ---- --------- Office 96.0% 96.5% (0.5%) Office 95.1% 96.6% (1.5%) Industrial 97.8% 97.1% 0.7% Industrial 97.9% 97.6% 0.3% ------ ----- ------- ---- ----- ----- Total 96.8% 96.8% 0.0% Total 96.5% 97.1% (0.6%) ===== ===== ======= ==== ===== ===== ------------------------------------------------- ---------------------------------------------------------
(1) Represents the average occupancy for the properties in the stabilized portfolio for each period, respectively. 7 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report =============================================================================== Leasing Activity
Quarter to Date ------------------------------------------------------------------------------------------------------------------------------------ 2nd Generation Weighted ---------------------------------------------------- Maintenance Average # of Leases/(1)/ Square Feet/(1)/ TI/LC Capex Changes in Changes in Retention Lease ---------------- ----------------- New Renewal New Renewal Per Sq.Ft. Per Sq.Ft./(2)/ Rents/(3)/ Cash Rents/(4)/ Rates/(5) Term (Mo.) --- ------- --- ------- ---------- --------------- ---------- --------------- --------- ---------- Office 6 8 36,318 86,555 $2.42 $0.03 23.0% 16.8% 36.1% 34 Industrial 7 8 23,930 169,268 $2.26 $0.01 63.8% 40.2% 88.5% 55 - - ------ ------- ----- ----- ----- ----- ----- -- Total 13 16 60,248 255,823 $2.31 $0.02 47.2% 30.7% 59.3% 47 == == ====== ======= ===== ===== ===== ===== ===== == ------------------------------------------------------------------------------------------------------------------------------------
(1) Includes first and second generation space, net of month-to-month leases. Excludes leasing on new construction. First generation space is defined as the space first leased by the Company. (2) Calculated over entire stabilized portfolio. (3) Calculated as the change between GAAP rents for new/renewed leases and the expiring GAAP rents for the same space. (4) Calculated as the change between stated rents for new/renewed leases and the expiring stated rents for the same space. (5) Calculated as the percentage of space either renewed or expanded into by existing tenants at lease expiration. 8 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Lease Expiration Schedule ($ in thousands)
-------------------------------------------------------------------------------------------------------------------------- # of Expiring Total % of Total Annual Annual Rent Year of Expiration Leases Square Feet/(1)/ Leased Sq. Ft. Base Rent per Sq. Ft. ------------------ ----------------- ------------------------------------ ----------------- ----------------- OFFICE: Remaining 2001 50 654,785 10.6% $ 9,318 $14.23 2002 59 472,594 7.6% 8,756 18.53 2003 53 365,557 5.9% 7,463 20.42 2004 50 771,081 12.4% 17,313 22.45 2005 52 919,251 14.8% 16,890 18.37 2006 29 573,446 9.3% 13,604 23.72 2007 15 630,304 10.2% 12,097 19.19 2008 8 391,302 6.3% 8,661 22.13 2009 9 682,104 11.0% 16,155 23.68 2010 and beyond 12 733,706 11.8% 27,945 38.09 --- --------- ----- -------- Subtotal 337 6,194,130 100.0% $138,202 $22.31 --- --------- ----- -------- INDUSTRIAL: Remaining 2001 59 576,754 10.3% $ 4,084 $ 7.08 2002 54 323,788 5.8% 3,019 9.32 2003 48 760,939 13.6% 5,455 7.17 2004 17 542,795 9.7% 3,917 7.22 2005 15 746,635 13.3% 5,676 7.60 2006 8 621,390 11.1% 4,930 7.93 2007 3 164,595 2.9% 1,396 8.48 2008 5 839,712 15.0% 6,268 7.46 2009 9 530,036 9.4% 3,996 7.54 2010 and beyond 5 503,978 9.0% 6,489 12.88 --- --------- ----- -------- Subtotal 223 5,610,622 100.0% $ 45,230 $ 8.06 --- --------- ----- -------- TOTAL PORTFOLIO: Remaining 2001 109 1,231,539 10.4% $ 13,402 $10.88 2002 113 796,382 6.7% 11,775 14.79 2003 101 1,126,496 9.5% 12,918 11.47 2004 67 1,313,876 11.1% 21,230 16.16 2005 67 1,665,886 14.1% 22,566 13.55 2006 37 1,194,836 10.1% 18,534 15.51 2007 18 794,899 6.7% 13,493 16.97 2008 13 1,231,014 10.4% 14,929 12.13 2009 18 1,212,140 10.3% 20,151 16.62 2010 and beyond 17 1,237,684 10.5% 34,434 27.82 --- --------- ----- -------- Total 560 11,804,752/(1)/ 100.0% $183,432 $15.54 === ========= ===== ======== --------------------------------------------------------------------------------------------------------------------------
/(1)/ Excludes space leased under month-to-month leases at March 31, 2001. 9 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ 2001 Dispositions ($ in thousands)
-------------------------------------------------------------------------------------------------------------------------------- Month of Square Sales Project Location Type Disposition Feet Price ---------------------------------------------------------------- ---------------- ---------------- --------------- ------------ 1st QUARTER: 6828 Nancy Ridge Drive San Diego, CA Industrial February 39,669 $3,300 ------ ------ TOTAL YEAR-TO-DATE DISPOSITIONS 39,669 $3,300 ====== ====== --------------------------------------------------------------------------------------------------------------------------------
10 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Stabilized Development ($ in thousands)
-------------------------------------------------------------------------------------------------------------------------------- Completion Rentable Total Est. Project Location Type Start Date Date Square Feet Investment Occupancy ----------------------------- ------------- ----------- -------------- ---------------------------- -------------- ----------- 1st QUARTER: None TOTAL YEAR-TO-DATE STABILIZED DEVELOPMENT --------------------------------------------------------------------------------------------------------------------------------
Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation's current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation's actual results, some of which are beyond its 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. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation's business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption "Business Risks" in Kilroy Realty Corporation's annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions, the forward-looking events contained contained in this supplemental information might not occur. 11 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report -------------------------------------------------------------------------------- In-Process and Committed Development Projects ($ in thousands)
--------------------------------------------------------------------------------------------------------------------- Estimated Est. Rentable Construction Period Stabilization Square ---------------------- Project Location Type Start Date Compl. Date Date/(2)/ Feet --------------------------------------------- ------------- ------ ---------- ----------- ------------- -------- PROJECTS IN LEASE-UP: Calabasas Park Centre - Phase II Calabasas, CA Office 2Q 2000 1Q 2001 1Q 2002 98,706 Calabasas Park Centre - Phase III Calabasas, CA Office 3Q 2000 1Q 2001 1Q 2002 11,789 --------- Subtotal 110,495 --------- PROJECTS UNDER CONSTRUCTION: Imperial & Sepulveda(4) El Segundo, CA Office 1Q 2001 4Q 2001 4Q 2002 133,678 Innovation Corporate Center - Lot 8 San Diego, CA Office 2Q 2000 2Q 2001 2Q 2002 46,759 Innovation Corporate Center - Lot 12 San Diego, CA Office 2Q 2000 2Q 2001 2Q 2002 70,617 Pacific Technology Center San Diego, CA Office 1Q 2000 2Q 2001 2Q 2001 67,995 Peregrine Systems Corporate Ctr - Bld 3/(1)/ Del Mar, CA Office 2Q 2000 2Q 2001 4Q 2001 129,752 Sorrento Rim Business Park II San Diego, CA Office 2Q 2000 2Q 2001 2Q 2001 102,875 Westside Media Center - Phase III West LA, CA Office 4Q 2000 1Q 2002 1Q 2003 151,000 --------- Subtotal 702,676 --------- TOTAL PROJECTS IN LEASE UP AND UNDER CONSTRUCTION 813,171 --------- COMMITTED DEVELOPMENT: Brobeck, Phleger & Harrison Expansion Del Mar, CA Office 3Q 2001 3Q 2002 3Q 2002 89,168 Pacific Corporate Center - Lots 25 & 27 San Diego, CA Office 2Q 2001 1Q 2002 1Q 2003 68,400 Sorrento Gateway - Lot 4(1) San Diego, CA Office 2Q 2001 2Q 2002 2Q 2002 60,662 --------- Subtotal 218,230 --------- TOTAL IN-PROCESS AND COMMITTED DEVELOPMENT PROJECTS: 1,031,401 ========= % Committed/(3)/ Total ------------------------ Estimated % % Project Investment Leased LOI Total --------------------------------------------------- ---------- -------- ------------- PROJECTS IN LEASE-UP: Calabasas Park Centre - Phase II $20,844 19% 30% 49% Calabasas Park Centre - Phase III 2,498 100% 0% 100% ------- Subtotal $23,342 28% 27% 54% ------- PROJECTS UNDER CONSTRUCTION: Imperial & Sepulveda(4) $35,263 0% 0% 0% Innovation Corporate Center - Lot 8 8,853 51% 0% 51% Innovation Corporate Center - Lot 12 11,694 0% 0% 0% Pacific Technology Center 12,068 100% 0% 100% Peregrine Systems Corporate Ctr - Bld 3/(1)/ 27,389 100% 0% 100% Sorrento Rim Business Park II 25,290 100% 0% 100% Westside Media Center - Phase III 53,449 0% 0% 0% -------- Subtotal $174,006 46% 0% 46% -------- TOTAL PROJECTS IN LEASE UP AND UNDER CONSTRUCTION $197,348 44% 4% 47% ======== COMMITTED DEVELOPMENT: Brobeck, Phleger & Harrison Expansion $ 22,819 100% 0% 100% Pacific Corporate Center - Lots 25 & 27 14,085 0% 0% 0% Sorrento Gateway - Lot 4(1) 15,835 100% 0% 100% -------- Subtotal $ 52,739 69% 0% 69% -------- TOTAL IN-PROCESS AND COMMITTED DEVELOPMENT PRROJECTS: $250,087 49% 3% 52% ======== --------------------------------------------------------------------------------------------------------------------------------
(1) Project is being developed by a Development LLC in which the Company holds a 50% managing interest. The estimated investment figure includes the capital required to purchase the remaining 50% interest in the project. (2) Based on management's estimation of the earlier of stabilized occupancy (95%) or one year from the date of substantial completion. (3) Includes executed leases and signed letters of intent, calculated on a square footage basis. (4) The Company owned a 25% tenancy in common interest in this project through January 9, 2001 and acquired the remaining 75% interest in this project on January 9, 2001. Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation's current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation's actual results, some of which are beyond its 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. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation's business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption "Business Risks" in Kilroy Realty Corporation's annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions the forward-looking events contained in this supplemental information might not occur. 12 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Future Development Pipeline ($ in thousands)
-------------------------------------------------------------------------------------------------------------- Total Rentable Estimated Project Location Type Square Feet Investment ------------------------------------------------- -------------------- --------- ------------- ---------- SAN DIEGO COUNTY: Innovation Corporate Center - Lot 2 San Diego, CA Office 51,187 $ 9,568 Innovation Corporate Center - Lot 4 San Diego, CA Office 75,000 12,880 Innovation Corporate Center - Lot 9 San Diego, CA Office 65,867 11,519 Innovation Corporate Center - Lot 10 San Diego, CA Office 37,405 7,405 Pacific Corporate Center - Lots 3, 4 & 6 San Diego, CA Office 225,000 43,220 Pacific Corporate Center - Lot 8 San Diego, CA Office 116,157 23,815 Peregrine Systems Corporate Ctr - Bld. 4/(1)/ Del Mar, CA Office 118,061 26,907 Santa Fe Summit - Phase I San Diego, CA Office 150,000 31,764 Santa Fe Summit - Phase II San Diego, CA Office 150,000 33,056 Sorrento Gateway - Lot 1 San Diego, CA Office 54,878 11,075 Sorrento Gateway - Lot 2/(1)/ San Diego, CA Office 70,000 13,752 Sorrento Gateway - Lot 3/(1)/ San Diego, CA Office 56,800 11,125 Sorrento Gateway - Lot 7/(1)/ San Diego, CA Office 57,000 11,334 --------- -------- Subtotal 1,227,355 $247,420 --------- -------- TOTAL FUTURE DEVELOPMENT PIPELINE 1,227,355 $247,420 ========= ======== --------------------------------------------------------------------------------------------------------------
(1) Project is being developed by a Development LLC in which the Company holds a 50% interest. The estimated investment figure includes the capital required to purchase the remaining 50% interest in the project. Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation's current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation's actual results, some of which are beyond its 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. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation's business and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption "Business Risks" in Kilroy Realty Corporation's annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplemental information might not occur. 13 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Capital Structure At March 31, 2001 ($ in thousands)
---------------------------------------------------------------------------------------------------------------------------- Aggregate Principal Amount or % of Total Shares/Units $ Value Market at March 31, 2001 Equivalent Capitalization ----------------------- ---------------- -------------- DEBT: Secured Debt $ 440,541 26.4% Unsecured Line of Credit 162,000 9.7% Unsecured Term Facility 100,000 6.0% ---------- ------ Total Debt $ 702,541 42.1% ---------- ------ EQUITY: 8.075% Series A Cumulative Redeemable Preferred Units/(1)/ 1,500,000 $ 75,000 4.5% 9.375% Series C Cumulative Redeemable Preferred Units/(1)/ 700,000 35,000 2.1% 9.250% Series D Cumulative Redeemable Preferred Units/(1)/ 900,000 45,000 2.7% Common Units Outstanding/(2)/ 3,282,309 87,999 5.3% Common Shares Outstanding/(2)/ 26,974,526 723,187 43.3% ---------- ------ Total Equity $ 966,186 57.9% ---------- ------ TOTAL MARKET CAPITALIZATION $1,668,727 100.0% ========== ====== ----------------------------------------------------------------------------------------------------------------------------
(1) Value based on $50.00 per share liquidation preference. (2) Valued based on closing share price of $26.81 at March 31, 2001. 14 Kilroy Realty Corporation First Quarter 2001 Supplemental Financial Report ================================================================================ Debt Analysis At March 31, 2001 ($ in thousands)
------------------------------------------------------------------------------------------------------------------ SECURED DEBT AND UNSECURED TERM FACILITY PRINCIPAL REPAYMENT SCHEDULE ------------------------------------------------------------------------------------------------------------------ 2001 2002 2003 2004 2005 Thereafter Total ------------------------------------------------------------------------------------------------------------------ $4,302 $6,148 $183,145 $127,719 $16,965 $202,262 $540,541 ------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------ TOTAL DEBT COMPOSITION ------------------------------------------------------------------------------------------ Weighted Average % of ---------------- Total Debt Interest Rate Maturity ---------- ------------- -------- Secured vs. Unsecured Debt: Secured Debt 62.7% 7.4% 5.6 Unsecured Debt 37.3% 7.8% 2.3 Floating vs. Fixed Rate Debt: Fixed Rate Debt(1),(2) 78.4% 7.6% 4.9 Floating Rate Debt(3),(4),(5) 21.6% 7.2% 2.4 --- --- Total Debt 7.6% 4.4 === === ------------------------------------------------------------------------------------------
----------------------------------------------------------------- UNSECURED LINE OF CREDIT ----------------------------------------------------------------- Total Line Outstanding Balance Expiration Date -------------- ----------------------------- ------------------ $400,000 $162,000 November 2002 -----------------------------------------------------------------
(1) The Company currently has an interest-rate swap agreement to fix LIBOR on $150 million of its floating rate debt at 6.95% which expires in February 2002. (2) In January 2001, the Company entered into an interest-rate swap agreement to fix LIBOR on $150 million of its floating rate debt at 5.48% starting in January 2001 and expiring in November 2002. (3) In January 2001, the Company terminated an interest rate cap agreement which had capped LIBOR on $150M of its floating rate debt at 6.5%. (4) The Company, through one of its Development LLCs, currently has an interest-rate cap agreement to cap LIBOR on its floating rate construction debt at 8.5% which expires in April 2002. The notional amount of the cap increases over the life of the agreement as the balance of the related construction loan increases. At March 31, 2001, the notional amount of the cap agreement was approximately $48.1 million. (5) The percentage of fixed rate debt to total debt does not take into consideration the portion of floating rate debt capped by the Company's interest-rate cap agreement. Including the effects of the interest-rate cap agreement, the Company had fixed or capped approximately 85.2% of its total outstanding debt at March 31, 2001. 15