EX-99.1 3 dex991.htm THIRD QUARTER SUPPLEMENTAL FINANCIAL REPORT Third Quarter Supplemental Financial Report
 
EXHIBIT 99.1
 
KILROY
REALTY
CORPORATION
 
Third Quarter 2001 Supplemental Financial Report
 
 
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 supplement information might not occur.
 
KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
(unaudited, $ in thousands, except per share amounts)
 
  
Three Months Ended September 30,
  
Nine Months Ended September 30,
  
2001
  
2000
  
%
Change
  
2001
  
2000
  
%
Change
INCOME ITEMS:
  
 
  
 
  
 
  
 
  
 
  
 
          Revenues
  
$51,446
  
$47,249
  
8.9
%
  
$160,047
  
$136,355
  
17.4
%
          Net Operating Income
  
38,880
  
35,380
  
9.9
%
  
123,284
  
104,428
  
18.1
%
          Net Income before Net Gains on
               Dispositions
  
7,061
  
9,297
  
(24.1
%)
  
27,225
  
28,212
  
(3.5
%)
          Net Income
  
9,283
  
15,679
  
(40.8
%)
  
30,806
  
38,060
  
(19.1
%)
          Funds From Operations
  
20,512
  
21,067
  
(2.6
%)
  
70,625
  
61,899
  
14.1
%
          Funds Available for Distribution
  
16,753
  
16,420
  
2.0
%
  
60,380
  
52,157
  
15.8
%
          Funds From Operations per share—
               diluted
  
$     0.67
  
$     0.69
  
(3.3
%)
  
$        2.31
  
$        2.02
  
14.5
%
          Funds Available for Distribution per
               share—diluted
  
0.55
  
0.54
  
1.3
%
  
1.98
  
1.71
  
15.9
%
          Dividend per share
  
$     0.48
  
$     0.45
  
6.7
%
  
$        1.44
  
$        1.35
  
6.7
%
RATIOS:
  
 
        
 
          Interest Coverage Ratio (1)
  
3.2
x
  
3.4
x
  
 
  
3.5
x
  
3.6
x
  
 
          Fixed Charge Coverage Ratio (2)
  
2.5
x
  
2.5
x
  
 
  
2.7
x
  
2.6
x
  
 
          FFO Payout Ratio (3)
  
71.3
%
  
64.5
%
  
6.8
%
  
61.9
%
  
65.7
%
  
(3.8
%)
          FAD Payout Ratio (4)
  
87.4
%
  
82.8
%
  
4.6
%
  
72.4
%
  
78.0
%
  
(5.6
%)
 
  
Sept. 30, 2001
  
Dec. 31, 2000
  
% Change
ASSETS:
  
 
  
 
    
 
 
          Investments in Real Estate before
               Depreciation
  
$1,581,637
  
$1,496,477
    
5.7
%
 
          Total Assets
  
1,460,722
  
1,457,169
    
0.2
%
 
CAPITALIZATION:
  
 
  
 
    
 
 
          Total Debt
  
$    722,688
  
$    723,688
    
(0.1
%)
 
          Total Preferred Stock (5)
  
155,000
  
155,000
    
(0.1
%)
 
          Total Market Equity Value (5)
  
760,651
  
848,162
    
(10.3
%)
 
          Total Market Capitalization (5)
  
1,638,339
  
1,726,850
    
(5.1
%)
 
          Total Debt/Total Market Capitalization
  
44.1
%
  
41.9
%
    
2.2
%
 
(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 15.

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
(unaudited, $ in thousands)
 
  
September 30,
2001
    
December 31,
2000
ASSETS:
    
 
      
 
          Land and improvements
    
$    274,569
      
$    266,444
          Buildings and improvements
    
1,136,946
      
1,054,995
          Undeveloped land and construction in progress, net
    
170,122
      
162,633
          Investment in unconsolidated real estate
    
 
      
12,405
    
      
                   Total investment in real estate
    
1,581,637
      
1,496,477
          Accumulated depreciation and amortization
    
(232,029
)
      
(205,332
)
    
      
                   Investment in real estate, net
    
1,349,608
      
1,291,145
          Cash and cash equivalents
    
10,718
      
17,600
          Restricted cash
    
25,800
      
35,014
          Tenant receivables, net
    
32,236
      
32,521
          Note receivable from related party
    
 
      
33,274
          Deferred financing and leasing costs, net
    
37,470
      
39,674
          Prepaid expenses and other assets
    
4,890
      
7,941
    
      
          TOTAL ASSETS
    
$1,460,722
      
$1,457,169
    
      
LIABILITIES AND STOCKHOLDERS’ EQUITY:
    
 
      
 
Liabilities:
    
 
      
 
          Secured debt
    
$    437,688
      
$    432,688
          Unsecured line of credit
    
185,000
      
191,000
          Unsecured term facility
    
100,000
      
100,000
          Accounts payable, accrued expenses and other liabilities
    
48,336
      
33,911
          Accrued distributions
    
14,634
      
13,601
          Rents received in advance and tenant security deposits
    
14,643
      
17,810
    
      
                   Total liabilities
    
800,301
      
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
    
49,573
      
62,485
          Minority interest in Development LLCs
    
14,164
      
11,748
    
      
                   Total minority interests
    
216,238
      
226,734
    
      
Stockholders’ Equity:
    
 
      
 
          Common stock
    
274
      
265
          Additional paid-in capital
    
478,986
      
460,390
          Distributions in excess of earnings
    
(27,623
)
      
(19,230
)
          Accumulated other comprehensive loss
    
(7,454
)
      
 
    
      
                   Total stockholders’ equity
    
444,183
      
441,425
    
      
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
    
$1,460,722
      
$1,457,169
    
      

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
(unaudited, $ in thousands, except per share amounts)
 
  
Three Months Ended September 30,
  
Nine Months Ended September 30,
  
2001
  
2000
  
%
Change
  
2001
 
2000
 
%
Change
REVENUES:
  
 
  
 
  
 
  
 
 
 
 
 
          Rental income
  
$44,992
  
$40,555
  
10.9
%
  
$135,400
 
$117,627
 
15.1
%
          Tenant reimbursements
  
5,901
  
4,748
  
24.3
%
  
17,591
 
14,036
 
25.3
%
          Interest income
  
170
  
1,706
  
(90.0
%)
  
883
 
3,008
 
(70.6
%)
          Other income
  
383
  
240
  
59.6
%
  
6,173
 
1,684
 
266.6
%
  
  
     
 
 
                   Total revenues
  
51,446
  
47,249
  
8.9
%
  
160,047
 
136,355
 
17.4
%
  
  
     
 
 
EXPENSES:
  
 
  
 
  
 
  
 
 
 
 
 
          Property expenses
  
7,911
  
6,217
  
27.2
%
  
22,254
 
17,749
 
25.4
%
          Real estate taxes
  
4,106
  
3,523
  
16.5
%
  
12,480
 
9,959
 
25.3
%
          General and administrative expenses
  
2,949
  
2,890
  
2.0
%
  
9,337
 
8,077
 
15.6
%
          Ground leases
  
379
  
423
  
(10.4
%)
  
1,146
 
1,211
 
(5.4
%)
          Interest expense
  
10,657
  
10,024
  
6.3
%
  
32,060
 
27,800
 
15.3
%
          Depreciation and amortization
  
12,680
  
9,941
  
27.6
%
  
38,634
 
28,909
 
33.6
%
  
  
     
 
 
                   Total expenses
  
38,682
  
33,018
  
17.2
%
  
115,911
 
93,705
 
23.7
%
  
  
     
 
 
INCOME FROM OPERATIONS
  
12,764
  
14,231
  
(10.3
%)
  
44,136
 
42,650
 
3.5
%
          Net gains on dispositions of operating
               properties
  
2,468
  
7,288
  
(66.1
%)
  
4,007
 
11,256
 
(64.4
%)
  
  
     
 
 
INCOME BEFORE MINORITY
     INTERESTS AND CUMULATIVE
     EFFECT OF CHANGE IN
     ACCOUNTING
     PRINCIPLE
  
15,232
  
21,519
  
(29.2
%)
  
48,143
 
53,906
 
(10.7
%)
  
  
     
 
 
MINORITY INTERESTS:
  
 
  
 
  
 
  
 
 
 
 
 
          Distributions on Cumulative Redeemable
               Preferred units
  
(3,375
)
  
(3,375
)
  
0.0
%
  
(10,125
)
 
(10,125
)
 
0.0
%
          Minority interest in earnings of Operating
               Partnership
  
(1,027
)
  
(2,227
)
  
(53.9
%)
  
(3,668
)
 
(5,442
)
 
(32.6
%)
          Minority interest in earnings of
               Development LLCs
  
(1,547
)
  
(238
)
  
550.0
%
  
(2,152
)
 
(279
)
 
671.3
%
  
  
     
 
 
                   Total minority interests
  
(5,949
)
  
(5,840
)
  
1.9
%
  
(15,945
)
 
(15,846
)
 
0.6
%
  
  
     
 
 
NET INCOME BEFORE CUMULATIVE
     EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE
  
9,283
  
15,679
  
(40.8
%)
  
32,198
 
38,060
 
(15.4
%)
CUMULATIVE EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE
  
 
  
 
  
 
  
(1,392
)
 
 
 
(100.0
%)
  
  
     
 
 
NET INCOME
  
$   9,283
  
$15,679
  
(40.8
%)
  
$   30,806
 
$   38,060
 
(19.1
%)
  
  
     
 
 
          Weighted average shares outstanding—
               basic
  
27,359
  
26,455
  
 
  
27,080
 
26,647
 
 
          Weighted average shares outstanding—
               diluted
  
27,587
  
26,697
  
 
  
27,315
 
26,758
 
 
NET INCOME PER COMMON SHARE:
  
 
  
 
  
 
  
 
 
 
 
 
          Income per common share—basic
  
$     0.34
  
$     0.59
  
(42.4
%)
  
$        1.14
 
$        1.43
 
(20.3
%)
  
  
     
 
 
          Income per common share—diluted
  
$     0.34
  
$     0.59
  
(42.4
%)
  
$        1.13
 
$        1.42
 
(20.4
%)
  
  
     
 
 
 

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
(unaudited, $ in thousands, except per share amounts)
 
 
   
Three Months Ended September 30,
  
Nine Months Ended September 30,
  
2001
  
2000
  
%
Change
  
2001
  
2000
  
%
Change
FUNDS FROM OPERATIONS:
  
 
  
 
  
 
  
 
  
 
  
 
          Net income
  
$   9,283
  
$15,679
  
(40.8
%)
  
$30,806
  
$38,060
  
(19.1
%)
          Adjustments:
  
 
  
 
  
 
  
 
  
 
  
 
                   Minority interest in earnings of
                        Operating Partnership
  
1,027
  
2,227
  
(53.9
%)
  
3,668
  
5,442
  
(32.6
%)
                   Depreciation and amortization
  
12,123
  
9,941
  
21.9
%
  
37,123
  
28,909
  
28.4
%
                   Net gains on dispositions of
                        operating properties
  
(2,468
)
  
(7,288
)
  
(66.1
%)
  
(4,007
)
  
(11,256
)
  
(64.4
%)
                   Cumulative effect of change in
                        accounting principle
  
 
  
 
  
 
  
1,392
  
 
  
100.0
%
                   Non-cash amortization of
                        restricted stock grants
  
547
  
508
  
7.7
%
  
1,643
  
744
  
120.8
%
  
  
     
  
  
          Funds From Operations
  
$20,512
  
$21,067
  
(2.6
%)
  
$70,625
  
$61,899
  
14.1
%
  
  
     
  
  
          Weighted average common shares/
               units outstanding—basic
  
30,421
  
30,203
  
 
  
30,303
  
30,457
  
 
          Weighted average common shares/
               units outstanding—diluted
  
30,648
  
30,444
  
 
  
30,538
  
30,568
  
 
          Funds From Operations per common
               share/unit—basic
  
$     0.67
  
$     0.70
  
(3.3
%)
  
$     2.33
  
$      2.03
  
14.7
%
  
  
     
  
  
          Funds From Operations per common
               share/unit—diluted
  
$     0.67
  
$     0.69
  
(3.3
%)
  
$     2.31
  
$      2.02
  
14.5
%
  
  
     
  
  
FUNDS AVAILABLE FOR
     DISTRIBUTION:
  
 
  
 
  
 
  
 
  
 
  
 
          Funds From Operations
  
$20,512
  
$21,067
  
(2.6
%)
  
$70,625
  
$61,899
  
14.1
%
          Adjustments:
  
 
  
 
  
 
  
 
  
 
  
 
                   Amortization of deferred
                        financing costs
  
408
  
426
  
(4.2
%)
  
1,188
  
1,119
  
6.2
%
                   Tenant improvements, leasing
                        commissions and recurring
                        capital expenditures
  
(2,240
)
  
(2,462
)
  
(9.0
%)
  
(6,919
)
  
(5,193
)
  
33.2
%
                   Net effect of straight-line rents
  
(1,927
)
  
(2,611
)
  
(26.2
%)
  
(4,514
)
  
(5,668
)
  
(20.4
%)
  
  
     
  
  
          Funds Available for Distribution
  
$16,753
  
$16,420
  
2.0
%
  
$60,380
  
$52,157
  
15.8
%
  
  
     
  
  
          Funds Available for Distribution per
               common share/unit—basic
  
$     0.55
  
$     0.54
  
1.3
%
  
$     1.99
  
$      1.71
  
16.4
%
  
  
     
  
  
          Funds Available for Distribution per
               common share/unit—diluted
  
$     0.55
  
$     0.54
  
1.3
%
  
$     1.98
  
$      1.71
  
15.9
%
  
  
     
  
  

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
 
    
As of
September 30, 2001(1)
% OF TOTAL NOI BY PRODUCT TYPE:
      
 
 
Office:
      
 
 
          Los Angeles
      
40.1
%
 
          Orange County
      
3.9
%
 
          San Diego
      
27.4
%
 
          Other
      
5.7
%
 
      
 
                   Subtotal
      
77.1
%
 
      
 
Industrial:
      
 
 
          Los Angeles
      
3.2
%
 
          Orange County
      
18.5
%
 
          Other
      
1.2
%
 
      
 
                   Subtotal
      
22.9
%
 
      
 
% OF TOTAL NOI BY REGION:
      
 
 
          Los Angeles
      
43.3
%
 
          Orange County
      
22.4
%
 
          San Diego
      
27.4
%
 
          Other
      
6.9
%
 
      
 
                   Total
      
100.0
%
 
      
 
 
(1)
 
Based on Net Operating Income for the nine months ended September 30, 2001.

 
KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
($ in thousands)
 
 
Three Months Ended September 30,
  
Nine Months Ended September 30,
 
2001
 
2000
 
$ Change
  
% Change
  
2001
 
2000
 
$ Change
  
% Change
TOTAL SAME STORE
     PORTFOLIO
       
 
      
 
          
 
      
 
 
Operating Revenues:
       
 
      
 
          
 
      
 
 
          Rental income
 
$34,798
 
$34,065
   
$733
      
2.2
%
    
$106,816
 
$103,808
   
$3,008
      
2.9
%
 
          Tenant reimbursements
 
4,618
 
4,343
   
275
      
6.3
%
    
14,529
 
12,769
   
1,760
      
13.8
%
 
          Other income
 
44
 
156
   
(112
)
      
(71.8
%)
    
461
 
1,591
   
(1,130
)
      
(71.0
%)
 
 
 
   
           
 
   
        
                   Total operating
                        revenues
 
$39,460
 
$38,564
   
$896
      
2.3
%
    
$121,806
 
$118,168
   
$3,638
      
3.1
%
 
 
 
   
           
 
   
        
Operating Expenses:
       
 
      
 
          
 
      
 
 
          Property expenses
 
$   5,525
 
$   5,023
   
$502
      
10.0
%
    
$   16,667
 
$   15,574
   
$1,093
      
7.0
%
 
          Real estate taxes
 
3,175
 
2,859
   
316
      
11.1
%
    
9,787
 
8,577
   
1,210
      
14.1
%
 
          Ground leases
 
329
 
362
   
(33
)
      
(9.1
%)
    
986
 
1,132
   
(146
)
      
(12.9
%)
 
 
 
   
           
 
   
        
                   Total operating
                        expenses
 
$   9,029
 
$   8,244
   
$785
      
9.5
%
    
$   27,440
 
$   25,283
   
$2,157
      
8.5
%
 
 
 
   
           
 
   
        
Net Operating Income
 
$30,431
 
$30,320
   
$111
      
0.4
%
    
$   94,366
 
$   92,885
   
$1,481
      
1.6
%
 
 
 
   
           
 
   
        
 
(1)
 
Same store defined as all stabilized properties owned at January 1, 2000 and still owned at September 30, 2001.

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
 
     
Square Feet
  
Occupancy at:
  
# of
Buildings
  
Total
  
Leased
  
Available
  
9/30/01
  
6/30/01
  
12/31/00
STABILIZED PORTFOLIO:
             
 
  
 
  
 
OCCUPANCY BY PRODUCT TYPE:
        
 
  
 
  
 
Office:
                  
 
  
 
  
 
          Los Angeles
    
31
    
3,172,793
  
2,776,633
  
396,160
  
87.5
%
  
89.8
%
  
97.3
%
          Orange County
    
12
    
546,850
  
507,982
  
38,868
  
92.9
%
  
81.0
%
  
73.6
%
          San Diego
    
37
    
2,700,483
  
2,661,483
  
39,000
  
98.6
%
  
100.0
%
  
100.0
%
          Other
    
6
    
709,575
  
698,515
  
11,060
  
98.4
%
  
98.2
%
  
98.2
%
    
    
  
  
        
                   Subtotal
    
86
    
7,129,701
  
6,644,613
  
485,088
  
93.2
%
  
93.7
%
  
96.2
%
    
    
  
  
        
Industrial:
                  
 
  
 
  
 
          Los Angeles
    
7
    
554,490
  
539,606
  
14,884
  
97.3
%
  
99.4
%
  
99.8
%
          Orange County
    
62
    
4,393,537
  
4,253,978
  
139,559
  
96.8
%
  
95.6
%
  
97.1
%
          Other
    
2
    
295,417
  
295,417
  
—  
  
100.0
%
  
100.0
%
  
100.0
%
    
    
  
  
        
                   Subtotal
    
71
    
5,243,444
  
5,089,001
  
154,443
  
97.1
%
  
96.5
%
  
97.8
%
    
    
  
  
        
OCCUPANCY BY REGION:
             
 
  
 
  
 
          Los Angeles
    
38
    
3,727,283
  
3,316,239
  
411,044
  
89.0
%
  
91.2
%
  
97.7
%
          Orange County
    
74
    
4,940,387
  
4,761,960
  
178,427
  
96.4
%
  
93.8
%
  
94.2
%
          San Diego
    
37
    
2,700,483
  
2,661,483
  
39,000
  
98.6
%
  
100.0
%
  
100.0
%
          Other
    
8
    
1,004,992
  
993,932
  
11,060
  
98.9
%
  
99.0
%
  
99.1
%
    
    
  
  
        
TOTAL STABILIZED
     PORTFOLIO
    
157
    
12,373,145
  
11,733,614
  
639,531
  
94.8
%
  
94.9
%
  
97.0
%
RENOVATION PROJECT:
             
 
  
 
  
 
Office:
                  
 
  
 
  
 
          Orange County
    
1
    
78,016
  
—  
  
78,016
  
 
  
 
  
 
    
    
  
  
        
TOTAL PORTFOLIO
    
158
    
12,451,161
  
11,733,614
  
717,547
  
 
  
 
  
 
    
    
  
  
        
 
AVERAGE OCCUPANCY—STABILIZED
PORTFOLIO
    
AVERAGE OCCUPANCY—SAME STORE
PORTFOLIO
  
Office
  
Industrial
  
Total
       
2001
  
2000
    
% Change
Quarter-to-Date
  
93.4
%
    
96.8
%
    
94.9
%
    
Quarter-to-Date
  
95.6
%
  
96.6
%
      
(1.0
%)
 
Year-to-Date
  
94.7
%
    
97.4
%
    
95.9
%
    
Year-to-Date
  
95.9
%
  
97.1
%
      
(1.2
%)
 

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
 
Quarter-to-Date
 
  
# of Leases(1)
  
Square Feet(1)
  
2nd Generation
       
        
TI/LC
Per
    
Maintenance
Capex Per
  
Changes
in
  
Changes
in Cash
  
Retention
    
Weighted
Average
Lease
  
New
    
Renewal
  
New
  
Renewal
  
Sq. Ft.
    
Sq. Ft.(2)
  
Rents(3)
  
Rents(4)
  
Rates(5)
    
Term (Mo.)
Office
    
9
      
12
  
26,371
  
59,719
    
$8.65
      
$0.07
    
31.0
%
      
9.2
%
      
69.6
%
      
59
Industrial
    
10
      
15
  
105,516
  
92,637
    
$2.09
      
$0.04
    
28.8
%
      
10.2
%
      
74.8
%
      
33
    
      
  
  
    
      
    
      
      
      
         Total
    
19
      
27
  
131,887
  
152,356
    
$3.89
      
$0.06
    
30.3
%
      
9.6
%
      
72.7
%
      
41
    
      
  
  
    
      
    
      
      
      
 
Year-to-Date
 
  
# of Leases(1)
  
Square Feet(1)
  
2nd Generation
       
        
TI/LC
Per
    
Maintenance
Capex Per
  
Changes
in
  
Changes
in Cash
  
Retention
    
Weighted
Average
Lease
  
New
    
Renewal
  
New
  
Renewal
  
Sq. Ft
    
Sq. Ft.(2)
  
Rents(3)
  
Rents(4)
  
Rates(5)
    
Term (Mo.)
Office
    
25
      
34
  
141,757
  
465,981
  
$7.50
    
$0.14
    
22.2
%
      
13.1
%
      
64.1
%
      
68
Industrial
    
28
      
37
  
158,198
  
511,073
  
$2.34
    
$0.06
    
36.9
%
      
16.0
%
      
76.7
%
      
55
    
      
  
  
  
    
    
      
      
      
         Total
    
53
      
71
  
299,955
  
977,054
  
$4.73
    
$0.10
    
26.6
%
      
14.0
%
      
70.1
%
      
61
    
      
  
  
  
    
    
      
      
      
(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.

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
($ in thousands)
 
Year of Expiration
    
# of Expiring
Leases
  
Total Square
Feet(1),(2)
    
% of Total
Leased Sq. Ft.
  
Annual
Base Rent
  
Annual Rent
per Sq. Ft.
OFFICE:
           
 
      
 
           
          Remaining 2001
      
12
    
163,255
      
2.5
%
    
$     2,404
    
$14.73
 
          2002
      
67
    
505,993
      
7.7
%
    
9,113
    
18.01
 
          2003
      
59
    
707,879
      
10.8
%
    
10,834
    
15.30
 
          2004
      
53
    
787,303
      
12.0
%
    
17,608
    
22.36
 
          2005
      
54
    
921,986
      
14.0
%
    
16,259
    
17.63
 
          2006
      
38
    
589,205
      
9.0
%
    
14,042
    
23.83
 
          2007
      
15
    
594,618
      
9.1
%
    
11,340
    
19.07
 
          2008
      
9
    
443,052
      
6.7
%
    
9,840
    
22.21
 
          2009
      
9
    
682,104
      
10.4
%
    
16,155
    
23.68
 
          2010 and beyond
      
21
    
1,169,142
      
17.8
%
    
35,454
    
30.32
 
      
    
      
    
      
                   Subtotal
      
337
    
6,564,537
      
100.0
%
    
$143,049
    
$21.79
 
      
    
      
    
      
INDUSTRIAL:
           
 
      
 
           
          Remaining 2001
      
7
    
99,794
      
2.0
%
    
$         640
    
$   6.41
 
          2002
      
31
    
354,760
      
7.2
%
    
3,006
    
8.47
 
          2003
      
29
    
691,508
      
14.0
%
    
4,408
    
6.37
 
          2004
      
23
    
542,819
      
11.0
%
    
4,161
    
7.67
 
          2005
      
15
    
755,742
      
15.2
%
    
5,748
    
7.61
 
          2006
      
9
    
567,750
      
11.5
%
    
4,432
    
7.81
 
          2007
      
2
    
87,013
      
1.7
%
    
791
    
9.09
 
          2008
      
4
    
736,764
      
14.9
%
    
5,729
    
7.78
 
          2009
      
7
    
505,976
      
10.2
%
    
3,654
    
7.22
 
          2010 and beyond
      
6
    
611,165
      
12.3
%
    
6,860
    
11.22
 
      
    
      
    
      
                   Subtotal
      
133
    
4,953,291
      
100.0
%
    
$   39,429
    
$   7.96
 
      
    
      
    
      
TOTAL PORTFOLIO:
           
 
      
 
           
          Remaining 2001
      
19
    
263,049
      
2.3
%
    
$     3,044
    
$11.57
 
          2002
      
98
    
860,753
      
7.5
%
    
12,119
    
14.08
 
          2003
      
88
    
1,399,387
      
12.2
%
    
15,242
    
10.89
 
          2004
      
76
    
1,330,122
      
11.5
%
    
21,769
    
16.37
 
          2005
      
69
    
1,677,728
      
14.6
%
    
22,007
    
13.12
 
          2006
      
47
    
1,156,955
      
10.0
%
    
18,474
    
15.97
 
          2007
      
17
    
681,631
      
5.9
%
    
12,131
    
17.80
 
          2008
      
13
    
1,179,816
      
10.2
%
    
15,569
    
13.20
 
          2009
      
16
    
1,188,080
      
10.3
%
    
19,809
    
16.67
 
          2010 and beyond
      
27
    
1,780,307
      
15.5
%
    
42,314
    
23.77
 
      
    
      
    
      
                   Total
      
470
    
11,517,828
(1),(2)
      
100.0
%
    
$182,478
    
$15.84
 
      
    
      
    
      
 
(1)
 
Excludes space leased under month-to-month leases and vacant space at September 30, 2001.
(2)
 
Excludes expirations at 184-220 Technology Drive which the Company sold in October 2001.

 
KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
 
    
Total
Square Feet(1), (2)
    
Square Feet
Renewed/Re-leased
  
Remaining
Square Feet
    
% of Total
Renewed/Re-leased
2001
                               
 
 
Expirations through 9/30/01
      
1,376,999
        
1,157,561
      
219,438
        
84.1
%
 
4th Qtr 2001 Expirations
      
263,049
        
212,541
      
50,508
        
80.8
%
 
      
        
      
        
 
          Total 2001 Expirations
      
1,640,048
        
1,370,102
      
269,946
        
83.5
%
 
      
        
      
        
 
2002
      
860,753
        
135,805
      
724,948
        
15.8
%
 
      
        
      
        
 
(1)
 
Excludes space leased under month-to-month leases at September 30, 2001.
(2)
 
Excludes expirations at 184-220 Technology Drive which the Company sold in October 2001.

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
($ in thousands)
 
Project
  
Location
  
Type
  
Month of
Disposition
  
Square
Feet
  
Sales
Price
1st QUARTER:
              
          6828 Nancy Ridge Drive
  
San Diego, CA
  
Industrial
  
February
  
39,669
  
$   3,300
           
  
2nd QUARTER:
              
          199 & 201 N. Sunrise Avenue
  
Roseville, CA
  
Industrial
  
April
  
162,203
  
$15,400
           
  
3rd QUARTER:
              
          4880 Santa Rosa Road
  
Camarillo, CA
  
Office
  
August
  
41,131
  
$   6,580
          1900 Aerojet Way
  
Las Vegas, NV
  
Industrial
  
August
  
106,717
  
5,067
          795 Trademark Drive
  
Reno, NV
  
Industrial
  
September
  
75,257
  
7,296
          41093 County Center Drive
  
Temecula, CA
  
Industrial
  
September
  
77,582
  
5,395
          1840 Aerojet Way
  
Las Vegas, NV
  
Industrial
  
September
  
102,948
  
5,100
           
  
                   Subtotal
           
403,635
  
$29,438
           
  
TOTAL YEAR-TO-DATE DISPOSITIONS
           
605,507
  
$48,138
           
  

 
KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
($ in thousands)
 
Project
 
Location
 
Type
 
Start Date
 
Completion
Date
  
Rentable
Square Feet
 
Total Est.
Investment
  
Occupancy
1st QUARTER:
                             
 
 
          None
                             
 
 
2nd QUARTER:
                             
 
 
     Pacific Technology
          Center
 
San Diego, CA
 
Office
 
1Q 2000
   
2Q 2001
      
67,995
     
$12,133
      
100
%
 
     Sorrento Rim Business
          Park II
 
San Diego, CA
 
Office
 
2Q 2000
   
2Q 2001
      
102,875
     
25,376
      
100
%
 
                
     
        
                   Subtotal
                
170,870
     
$37,509
      
 
 
                
     
        
3rd QUARTER:
                             
 
 
     Calabasas Park Centre—
          Phase III
 
Calabasas, CA
 
Office
 
3Q 2000
   
1Q 2001
      
11,789
     
$   2,715
      
100
%
 
                
     
        
TOTAL YEAR-TO-DATE STABILIZED DEVELOPMENT
      
182,659
     
$40,224
      
100
%
 
                
     
        
 
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 supplement information might not occur.

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
($ in thousands)
 
     
Estimated
Construction
Period
             
Project
 
Location
 
Type
 
Start
Date
 
Compl.
Date
  
Est.
Stabilization
Date(2)
  
Rentable
Square
Feet
  
Total
Estimated
Investment
    
%
Committed(3)
PROJECTS IN LEASE-UP:
                               
 
 
       Calabasas Park Centre—
           Phase II
 
Calabasas, CA
 
Office
 
2Q 2000
 
1Q 2001
  
1Q 2002
    
98,706
      
$   21,540
        
66
%
 
       Innovation Corporate
           Center—Lot 8
 
San Diego, CA
 
Office
 
2Q 2000
 
2Q 2001
  
2Q 2002
    
46,759
      
9,362
        
65
%
 
       Innovation Corporate
           Center—Lot 12
 
San Diego, CA
 
Office
 
2Q 2000
 
2Q 2001
  
2Q 2002
    
70,617
      
12,239
        
0
%
 
       Peregrine Systems Corporate
           Ctr—Bld 3 (1),(4)
 
Del Mar, CA
 
Office
 
2Q 2000
 
2Q 2001
  
4Q 2001
    
129,752
      
27,453
        
100
%
 
               
      
          
              Subtotal
               
345,834
      
$   70,594
        
65
%
 
               
      
          
PROJECTS UNDER
    CONSTRUCTION:
                               
 
 
       Brobeck, Phleger & Harrison
           Expansion
 
Del Mar, CA
 
Office
 
3Q 2001
 
3Q 2002
  
3Q 2002
    
89,168
      
$   22,731
        
100
%
 
       Imperial & Sepulveda
 
El Segundo, CA
 
Office
 
1Q 2001
 
4Q 2001
  
4Q 2002
    
133,678
      
38,422
        
0
%
 
       Pacific Corporate Center—
           Lots 25 & 27
 
San Diego, CA
 
Office
 
2Q 2001
 
1Q 2002
  
1Q 2003
    
68,400
      
14,241
        
0
%
 
       Peregrine Systems Corporate
           Ctr—Bld 4 (1)
 
Del Mar, CA
 
Office
 
3Q 2001
 
4Q 2002
  
2Q 2003
    
114,780
      
26,399
        
100
%
 
       Sorrento Gateway—
           Lot 4 (1)
 
San Diego, CA
 
Office
 
2Q 2001
 
1Q 2002
  
1Q 2002
    
60,662
      
15,833
        
100
%
 
       Westside Media Center—
           Phase III
 
West LA, CA
 
Office
 
4Q 2000
 
1Q 2002
  
1Q 2003
    
151,000
      
54,809
        
0
%
 
               
      
          
              Subtotal
               
617,688
      
$172,436
        
43
%
 
               
      
          
TOTAL PROJECTS IN LEASE UP AND UNDER CONSTRUCTION
       
963,522
      
$243,030
        
51
%
 
               
      
          
COMMITTED DEVELOPMENT:
                       
 
 
       None
                               
 
 
TOTAL IN-PROCESS AND COMMITTED DEVELOPMENT PROJECTS:
       
963,522
      
$243,030
        
51
%
 
               
      
          
 
(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)
 
This project is 100% leased to one tenant. The tenant occupied 91% of the project at September 30, 2001 under a staged move-in plan. It is expected that the tenant will take occupancy of the remaining space during the fourth quarter of 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.

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
($ in thousands)
 
Project
  
Location
  
Type
  
Rentable
Square
Feet
  
Total
Estimated
Investment
SAN DIEGO COUNTY:
           
          Innovation Corporate Center—Lot 2
  
San Diego, CA
  
Office
  
51,187
  
$   10,156
          Innovation Corporate Center—Lot 4
  
San Diego, CA
  
Office
  
75,000
  
13,835
          Innovation Corporate Center—Lot 9
  
San Diego, CA
  
Office
  
65,867
  
12,544
          Innovation Corporate Center—Lot 10
  
San Diego, CA
  
Office
  
37,405
  
7,987
          Pacific Corporate Center—Lots 3, 4 & 6
  
San Diego, CA
  
Office
  
225,000
  
48,036
          Pacific Corporate Center—Lot 8
  
San Diego, CA
  
Office
  
95,000
  
19,547
          San Diego Corporate Center—Lot 7
  
Del Mar, CA
  
Office
  
207,842
  
64,053
          Santa Fe Summit—Phase I
  
San Diego, CA
  
Office
  
150,000
  
33,089
          Santa Fe Summit—Phase II
  
San Diego, CA
  
Office
  
150,000
  
35,045
          Sorrento Gateway—Lot 1
  
San Diego, CA
  
Office
  
55,933
  
10,869
          Sorrento Gateway—Lot 2(1)
  
San Diego, CA
  
Office
  
70,000
  
14,176
          Sorrento Gateway—Lot 3(1)
  
San Diego, CA
  
Office
  
56,800
  
11,527
          Sorrento Gateway—Lot 7(1)
  
San Diego, CA
  
Office
  
57,000
  
11,986
        
  
                   Subtotal
        
1,297,034
  
$292,850
        
  
TOTAL FUTURE DEVELOPMENT PIPELINE
        
1,297,034
  
$292,850
        
  
 
(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 supplement information might not occur.

KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
At September 30, 2001
($ in thousands)
 
  
Shares/Units
at Sept. 30, 2001
  
Aggregate
Principal
Amount or $
Value
Equivalent
    
% of Total
Market
Capitalization
DEBT:
                
 
 
          Secured Debt
         
$    437,688
      
26.7
%
 
          Unsecured Line of Credit
         
185,000
      
11.3
%
 
          Unsecured Term Facility
         
100,000
      
6.1
%
 
         
      
 
                   Total Debt
         
$    722,688
      
44.1
%
 
         
      
 
EQUITY:
                
 
 
          8.075% Series A Cumulative Redeemable Preferred Units (1)
    
  1,500,000
    
$       75,000
      
4.6
%
 
          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)
    
  3,060,954
    
76,371
      
4.7
%
 
          Common Shares Outstanding (2)
    
27,426,071
    
684,280
      
41.8
%
 
         
      
 
                   Total Equity
         
$    915,651
      
55.9
%
 
         
      
 
TOTAL MARKET CAPITALIZATION
         
$1,638,339
      
100.0
%
 
         
      
 
 
(1)
 
Value based on $50.00 per share liquidation preference.
(2)
 
Valued based on closing share price of $24.95 at September 30, 2001.

 
KILROY REALTY CORPORATION
Third Quarter 2001 Supplemental Financial Report
At September 30, 2001
($  in thousands)
 
SECURED DEBT AND UNSECURED TERM FACILITY PRINCIPAL REPAYMENT SCHEDULE
 
2001
  
2002
  
2003
  
2004
  
2005
    
Thereafter
  
Total
$10,669
  
$6,148
  
$173,925
  
$127,719
  
$16,965
    
$202,262
  
$537,688
 
TOTAL DEBT COMPOSITION
 
  
% of
Total Debt
    
Weighted Average
       
Interest Rate
  
Maturity
Secured vs. Unsecured Debt:
    
 
        
 
        
          Secured Debt
    
60.6
%
        
6.7
%
      
5.0
 
          Unsecured Debt
    
39.4
%
        
7.5
%
      
1.8
 
Floating vs. Fixed Rate Debt:
    
 
        
 
        
          Fixed Rate Debt (1),(2),(4)
    
77.1
%
        
7.5
%
      
4.3
 
          Floating Rate Debt (3)
    
22.9
%
        
5.4
%
      
1.8
 
             
      
 
Total Debt
    
 
        
7.0
%
      
3.7
 
             
      
 
 
UNSECURED LINE OF CREDIT
 
Total Line
 
Outstanding Balance
 
Expiration Date
$400,000
 
$185,000
 
November 2002
 
CAPITALIZED INTEREST
 
Quarter-to-Date
  
Year-to-Date
$3.1 million
  
$9.8 million
 
(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)
 
The Company currently has an interest-rate swap agreement to fix LIBOR on $150 million of its floating rate debt at 5.48% which expires in November 2002.
(3)
 
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. At September 30, 2001, the notional amount of the cap agreement was approximately $57.0 million.
(4)
 
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 84.8% of its total outstanding debt at September 30, 2001.