EX-99.2 4 dex992.htm PRESS RELEASE DATED OCTOBER 31, 2001 Press Release dated October 31, 2001
 
Exhibit 99.2
 
FOR RELEASE:
October 31, 2001
Contact:
Richard E. Moran Jr.
Executive Vice President
and Chief Financial Officer
(310) 563-5533
or
Tyler H. Rose
Senior Vice President
and Treasurer
(310) 563-5531
 
KILROY REALTY CORPORATION REPORTS
THIRD QUARTER FINANCIAL RESULTS
 
          LOS ANGELES, October 31, 2001 – Kilroy Realty Corporation (NYSE: KRC) today reported funds from operations (FFO) in its third quarter ended September 30, 2001 of $20.5 million, or $0.67 per share, down from $21.1 million, or $0.69 per share in the third quarter of 2000. For the first nine months of 2001, the company said FFO totaled $70.6 million, or $2.31 per share, up from $61.9 million, or $2.02 per share in the year-earlier period.
 
          KRC said net income totaled $9.3 million, or $0.34 per share, for its third quarter ended September 30, 2001, down from $15.7 million, or $0.59 per share, in the third quarter of 2000. Revenues in the third quarter totaled $51.4 million, up from $47.2 million in the prior year’s quarter.
 
          For the first nine months of 2001, the company reported net income of $30.8 million, or $1.13 per share, down from $38.1 million, or $1.42 per share, in the first nine months of 2000. Revenues for the nine-month period totaled $160.0 million, up from $136.4 million in the year-earlier period. All per-share amounts in this report are presented on a diluted basis.
 
          KRC is currently developing or is committed to develop 963,500 square feet of space in Southern California, with completion dates scheduled through 2002. This committed development pipeline, representing a total estimated investment of approximately $243 million, is currently 51% leased or committed.
 
          As part of its program to sell non-core assets, the company sold one office and four industrial buildings in the third quarter, including its only three assets located in the state of Nevada. Total proceeds from the dispositions were approximately $29.4 million.
 
          Some of the information presented in this release is forward-looking in nature within the meaning of the Private Securities Litigation Reform Act of 1995. Although Kilroy Realty Corporation believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that its expectations will be achieved. Certain factors that could cause actual results to differ materially from Kilroy Realty’s expectations are set forth as risk factors in the company’s SEC reports and filings. Included among these factors are changes in general economic conditions including changes in the economic conditions affecting industries in which its principal tenants compete; any failure of the general economy to recover timely from the current economic downturn; Kilroy Realty’s ability to timely lease or re-lease space at current or anticipated rents; changes in interest rates; changes in operating costs, including utility costs; future demand for its debt and equity securities; its ability to refinance its debt on reasonable terms at maturity; its ability to complete current and future development projects on schedule and on budget; the demand for office space in markets in which Kilroy Realty has a presence, and risks detailed from time to time in the company’s SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Many of these factors are beyond Kilroy Realty’s ability to control or predict. Forward-looking statements are not guarantees of performance. For forward-looking statements herein, Kilroy Realty claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
 
          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 primarily in the coastal regions of California and Washington. Principal submarkets for KRC’s current development program include Calabasas, West Los Angeles, El Segundo and coastal San Diego, where the company’s total development pipeline is over $500 million. At September 30, 2001, the company owned 7.1 million square feet of commercial office space and 5.2 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
Ended
September 30, 2001
    
Three Months
Ended
September 30, 2000
    
Nine Months
Ended
September 30, 2001
    
Nine Months
Ended
September 30, 2000
Revenues
      
$51,446
        
$47,249
        
$ 160,047
        
$ 136,355
 
Net income available to common stockholders (1)
      
$   9,283
        
$15,679
        
$   30,806
        
$   38,060
 
Weighted average common shares outstanding—basic
      
27,359
        
26,455
        
27,080
        
26,647
 
Weighted average common shares outstanding—diluted
      
27,587
        
26,697
        
27,315
        
26,758
 
Net income per share of common stock—basic
      
$    0.34
        
$    0.59
        
$       1.14
        
$       1.43
 
Net income per share of common stock—diluted
      
$    0.34
        
$    0.59
        
$       1.13
        
$       1.42
 
Funds From Operations
      
$20,512
        
$21,067
        
$   70,625
        
$   61,899
 
Weighted average common shares/units outstanding—basic (2)
      
30,421
        
30,203
        
30,303
        
30,457
 
Weighted average common shares/units outstanding—diluted (2)
      
30,648
        
30,444
        
30,538
        
30,568
 
Funds From Operations per common share/unit—basic (2)
      
$    0.67
        
$    0.70
        
$       2.33
        
$       2.03
 
Funds From Operations per common share/unit—diluted (2)
      
$    0.67
        
$    0.69
        
$       2.31
        
$       2.02
 
Common shares outstanding at end of period
                        
27,426
        
26,455
 
Common partnership units outstanding at end of period
                        
3,061
        
3,748
 
                        
        
 
    Total common shares and units outstanding at end of period
                        
30,487
        
30,203
 
              
September 30, 2001
    
September 30, 2000
Occupancy rates:
                        
 
        
 
 
    California
                        
94.6
%
        
96.6
%
 
    Washington
                        
99.3
%
        
100.0
%
 
    Arizona
                        
100.0
%
        
100.0
%
 
    Nevada
                        
 
        
100.0
%
 
                        
        
 
       Weighted average total
                        
94.8
%
        
96.9
%
 
Total square feet of stabilized properties owned at end of period:
                        
 
        
 
 
    Office
                        
7,130
        
8,294
 
    Industrial
                        
5,243
        
5,807
 
                        
        
 
       Total
                        
12,373
        
12,101
 
 
(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,
2001
  
December 31,
2000
ASSETS
    
 
    
 
INVESTMENT IN REAL ESTATE:
    
 
    
 
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 & 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 CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
 
  
Three Months
Ended
September 30,
2001
  
Three Months
Ended
September 30,
2000
  
Nine Months
Ended
September 30,
2001
  
Nine Months
Ended
September 30,
2000
REVENUES:
    
 
      
 
      
 
      
 
 
          Rental income
    
$44,992
      
$40,555
      
$135,400
      
$117,627
 
          Tenant reimbursements
    
5,901
      
4,748
      
17,591
      
14,036
 
          Interest income
    
170
      
1,706
      
883
      
3,008
 
          Other income
    
383
      
240
      
6,173
      
1,684
 
    
      
      
      
 
                   Total revenues
    
51,446
      
47,249
      
160,047
      
136,355
 
    
      
      
      
 
EXPENSES:
    
 
      
 
      
 
      
 
 
          Property expenses
    
7,911
      
6,217
      
22,254
      
17,749
 
          Real estate taxes
    
4,106
      
3,523
      
12,480
      
9,959
 
          General and administrative expenses
    
2,949
      
2,890
      
9,337
      
8,077
 
          Ground leases
    
379
      
423
      
1,146
      
1,211
 
          Interest expense
    
10,657
      
10,024
      
32,060
      
27,800
 
          Depreciation and amortization
    
12,680
      
9,941
      
38,634
      
28,909
 
    
      
      
      
 
                   Total expenses
    
38,682
      
33,018
      
115,911
      
93,705
 
    
      
      
      
 
Income from operations
    
12,764
      
14,231
      
44,136
      
42,650
 
Net gains on dispositions of operating properties
    
2,468
      
7,288
      
4,007
      
11,256
 
    
      
      
      
 
Income before minority interests and cumulative effect
     of change in accounting principle
    
15,232
      
21,519
      
48,143
      
53,906
 
    
      
      
      
 
Minority interests:
    
 
      
 
      
 
      
 
 
          Distributions on Cumulative Redeemable
               Preferred units
    
(3,375
)
      
(3,375
)
      
(10,125
)
      
(10,125
)
 
          Minority interest in earnings of Operating
               Partnership
    
(1,027
)
      
(2,227
)
      
(3,668
)
      
(5,442
)
 
          Minority interest in earnings of Development
               LLCs
    
(1,547
)
      
(238
)
      
(2,152
)
      
(279
)
 
    
      
      
      
 
                   Total minority interests
    
(5,949
)
      
(5,840
)
      
(15,945
)
      
(15,846
)
 
    
      
      
      
 
Net income before cumulative effect of change in
     accounting principle
    
9,283
      
15,679
      
32,198
      
38,060
 
Cumulative effect of change in accounting principle
    
 
      
 
      
(1,392
)
      
 
 
    
      
      
      
 
Net income
    
$   9,283
      
$15,679
      
$   30,806
      
$   38,060
 
    
      
      
      
 
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
 
Income per common share—basic
    
$     0.34
      
$     0.59
      
$        1.14
      
$        1.43
 
    
      
      
      
 
Income per common share—diluted
    
$     0.34
      
$     0.59
      
$        1.13
      
$        1.42
 
    
      
      
      
 
 
KILROY REALTY CORPORATION
FUNDS FROM OPERATIONS
(unaudited, in thousands, except per share data)
 
    
Three Months
Ended
September 30,
2001
    
Three .Months
Ended
September 30,
2000
  
Nine Months
Ended
September 30,
2001
  
Nine Months
Ended
September 30,
2000
Net income
      
$   9,283
        
$15,679
      
$30,806
      
$38,060
 
       Adjustments:
      
 
        
 
      
 
      
 
 
              Minority interest in earnings of Operating Partnership
      
1,027
        
2,227
      
3,668
      
5,442
 
              Depreciation and amortization
      
12,123
        
9,941
      
37,123
      
28,909
 
              Net gains on dispositions of operating properties
      
(2,468
)
        
(7,288
)
      
(4,007
)
      
(11,256
)
 
              Cumulative effect of change in accounting principle
      
 
        
 
      
1,392
      
 
 
              Non-cash amortization of restricted stock grants
      
547
        
508
      
1,643
      
744
 
      
        
      
      
 
Funds From Operations
      
$20,512
        
$21,067
      
$70,625
      
$61,899
 
      
        
      
      
 
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
      
$    2.33
      
$     2.03
 
      
        
      
      
 
Funds From Operations per common share/unit—diluted
      
$    0.67
        
$    0.69
      
$    2.31
      
$     2.02
 
      
        
      
      
 
 
KILROY REALTY CORPORATION
FUNDS AVAILABLE FOR DISTRIBUTION
(unaudited, in thousands, except per share data)
 
  
Three Months
Ended
September 30,
2001
  
Three Months
Ended
September 30,
2000
  
Nine Months
Ended
September 30,
2001
  
Nine Months
Ended
September 30,
2000
Funds From Operations
    
$20,512
      
$21,067
      
$70,625
      
$61,899
 
       Adjustments:
    
 
      
 
      
 
      
 
 
              Amortization of deferred financing costs
    
408
      
426
      
1,188
      
1,119
 
              Tenant improvements, leasing commissions and recurring capital expenditures
    
(2,240
)
      
(2,462
)
      
(6,919
)
      
(5,193
)
 
              Net effect of straight-line rents
    
(1,927
)
      
(2,611
)
      
(4,514
)
      
(5,668
)
 
    
      
      
      
 
Funds Available for Distribution
    
$16,753
      
$16,420
      
$60,380
      
$52,157
 
    
      
      
      
 
Funds Available for Distribution per common share/unit—basic
    
$    0.55
      
$    0.54
      
$    1.99
      
$    1.71
 
    
      
      
      
 
Funds Available for Distribution per common share/unit—diluted
    
$    0.55
      
$    0.54
      
$    1.98
      
$    1.71