EX-99.1 3 dex991.htm FIRST QUARTER 2003 SUPPLEMENTAL FINANCIAL REPORT First Quarter 2003 Supplemental Financial Report

 

Exhibit 99.1

 

LOGO

 

First Quarter 2003 Supplemental Financial Report

 

Some of the enclosed information presented in this supplemental and on the Company's April 29, 2003 conference call is forward-looking in nature, including information concerning project 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, except to the extent it is required to do so in connection with its ongoing requirements under Federal securities laws to disclose material information. 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, 2002. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplemental information and on the Company’s April 29, 2003 conference call might not occur.


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Table of Contents

 

    

Page


Corporate Data and Financial Highlights

    

Company Background

  

1

Financial Highlights

  

2

Common Stock Data

  

3

Consolidated Balance Sheets

  

4

Consolidated Statements of Operations

  

5

Funds From Operations and Funds Available for Distribution

  

6

Portfolio Data

    

Stabilized Portfolio Occupancy Overview

  

7-10

Same Store Analysis

  

11

Leasing Activity

  

12

Stabilized Portfolio Capital Expenditures

  

13

Lease Expiration Summary and Lease Expirations by Region

  

14-16

Top Ten Office and Top Ten Industrial Tenants

  

17

Summary of Tenants Representing 5.0% or Greater of Annual Base Rental Revenue

  

18

Summary of Leasing at Kilroy Centre Del Mar

  

19

Acquisitions & Dispositions

  

20

Development

    

Stabilized Development

  

21

In-Process and Committed Development and Redevelopment Projects

  

22

Future Development Pipeline

  

23

Debt and Capitalization Data

    

Capital Structure

  

24

Debt Analysis

  

25-26

Non-GAAP Supplemental Measures

  

27-28


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Company Background

 

Kilroy Realty Corporation (NYSE: KRC) owns, develops, and operates office and industrial real estate, primarily in Southern California. The company operates as a self-administered real estate investment trust. As of March 31, 2003, the company's stabilized portfolio consisted of 84 office buildings and 50 industrial buildings, which encompassed an aggregate of 7.1 million and 4.9 million square feet, respectively, and was 92.2% occupied.

 

Board of Directors


  

Senior Management


  

Investor Relations


John B. Kilroy, Sr.

  

Chairman

  

John B. Kilroy, Jr.

  

President and CEO

  

12200 W. Olympic Blvd, Suite 200

John R. D'Eathe

       

Jeffrey C. Hawken

  

Executive VP and COO

  

Los Angeles, CA 90064

William P. Dickey

       

Richard E. Moran Jr.

  

Executive VP and CFO

  

(310) 481-8400

Matthew J. Hart

       

Kathy M. Delgado

  

Sr. VP Marketing and Leasing

  

(310) 481-6580

John B. Kilroy, Jr.

       

John T. Fucci

  

Sr. VP Asset Management

  

Web: www.kilroyrealty.com

Dale F. Kinsella

       

Tyler H. Rose

  

Sr. VP and Treasurer

  

E-mail: investorrelations@kilroyrealty.com

         

Steven R. Scott

  

Sr. VP San Diego Development

    
         

Justin W. Smart

  

Sr. VP Los Angeles Development

    
         

Ann Marie Whitney

  

Sr. VP and Controller

    

 

Equity Research Coverage


A.G. Edwards & Sons, Inc.

 

McDonald Investments Inc.

David AuBuchon

 

(314) 955-5452

 

Anatole Pevnev

 

(216) 263-4783

Banc of America Securities LLC

 

Merrill Lynch & Co., Inc.

Lee Schalop

 

(212) 847-5677

 

Steve Sakwa

 

(212) 449-0335

Credit Suisse First Boston

 

Prudential Securities

Larry Raiman

 

(212) 538-2380

 

Jim Sullivan

 

(212) 778-2515

Deutsche Bank Securities Inc.

 

RBC Capital Markets

Lou Taylor

 

(212) 469-4912

 

Jay Leupp

 

(415) 633-8588

Friedman, Billings, Ramsey & Co., Inc.

 

UBS Warburg

David Loeb

 

(703) 469-1289

 

Sydney Hilzenrath

 

(212) 713-9721

Green Street Advisors

   

Jim Sullivan

 

(949) 640-8780

       

 

1


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Financial Highlights

(unaudited, $ in thousands, except per share amounts)

 

    

Three Months Ended


 
    

03/31/2003


    

12/31/2002


    

09/30/2002


    

06/30/2002


    

03/31/2002


 

INCOME ITEMS (Including Discontinued Operations):

                                            

Revenues

  

$

54,627

 

  

$

52,470

 

  

$

51,111

 

  

$

51,265

 

  

$

52,635

 

Net Straight Line Rent

  

 

1,101

 

  

 

1,260

 

  

 

1,948

 

  

 

(97

)

  

 

1,228

 

Lease Termination Fees

  

 

4,344

 

  

 

872

 

  

 

51

 

  

 

0

 

  

 

1,270

 

Net Operating Income(1)

  

 

41,494

 

  

 

39,519

 

  

 

38,669

 

  

 

39,254

 

  

 

40,416

 

Capitalized Interest and Loan Fees

  

 

3,397

 

  

 

3,359

 

  

 

3,451

 

  

 

3,359

 

  

 

3,837

 

Net Income

  

 

10,929

 

  

 

13,965

 

  

 

7,885

 

  

 

4,957

 

  

 

13,507

 

Funds From Operations(2),(4)

  

 

26,320

 

  

 

24,262

 

  

 

23,170

 

  

 

23,358

 

  

 

27,153

 

Funds Available for Distribution(2), (3), (4)

  

 

22,633

 

  

 

17,843

 

  

 

20,246

 

  

 

23,519

 

  

 

26,954

 

Net Income per share—diluted

  

$

0.40

 

  

$

0.50

 

  

$

0.28

 

  

$

0.18

 

  

$

0.49

 

Funds From Operations per share—diluted

  

$

0.83

 

  

$

0.76

 

  

$

0.72

 

  

$

0.73

 

  

$

0.89

 

Dividend per share

  

$

0.495

 

  

$

0.495

 

  

$

0.495

 

  

$

0.495

 

  

$

0.495

 

RATIOS (Including Discontinued Operations):

                                            

Operating Margins

  

 

74.7

%

  

 

74.4

%

  

 

75.2

%

  

 

76.2

%

  

 

77.0

%

Interest Coverage Ratio(5)

  

 

4.9x

 

  

 

4.2x

 

  

 

4.0x

 

  

 

4.1x

 

  

 

4.3x

 

Fixed Charge Coverage Ratio(6)

  

 

3.4x

 

  

 

3.0x

 

  

 

2.9x

 

  

 

2.9x

 

  

 

3.2x

 

FFO Payout Ratio(7)

  

 

59.9

%

  

 

64.6

%

  

 

68.7

%

  

 

68.0

%

  

 

55.8

%

FAD Payout Ratio(8)

  

 

69.7

%

  

 

87.8

%

  

 

78.6

%

  

 

67.6

%

  

 

56.3

%

    

03/31/2003


    

12/31/2002


    

09/30/2002


    

06/30/2002


    

03/31/2002


 

ASSETS:

                                            

Investments in Real Estate before Depreciation

  

$

1,706,969

 

  

$

1,686,218

 

  

$

1,697,580

 

  

$

1,678,839

 

  

$

1,661,622

 

Total Assets

  

 

1,511,197

 

  

 

1,506,602

 

  

 

1,518,313

 

  

 

1,510,577

 

  

 

1,505,929

 

CAPITALIZATION:

                                            

Total Debt

  

$

776,615

 

  

$

762,037

 

  

$

773,268

 

  

$

761,302

 

  

$

741,186

 

Total Preferred Stock(9)

  

 

155,000

 

  

 

155,000

 

  

 

155,000

 

  

 

155,000

 

  

 

155,000

 

Total Market Equity Value(9)

  

 

700,498

 

  

 

729,685

 

  

 

762,628

 

  

 

860,409

 

  

 

903,565

 

Total Market Capitalization(9)

  

 

1,632,113

 

  

 

1,646,722

 

  

 

1,690,896

 

  

 

1,776,711

 

  

 

1,799,751

 

Total Debt / Total Market Capitalization

  

 

47.6

%

  

 

46.3

%

  

 

45.7

%

  

 

42.8

%

  

 

41.2

%

Total Debt and Preferred / Total Market Capitalization

  

 

57.1

%

  

 

55.7

%

  

 

54.9

%

  

 

51.6

%

  

 

49.8

%


(1) Net operating income is defined as operating revenues (rental income, tenant reimbursements and other property income) less property and related expenses (property expenses, real estate taxes and ground leases) and excludes interest income and expense, depreciation and amortization, and corporate general and administrative expenses.
(2) Please refer to page 6 for a reconciliation of GAAP Net Income to Funds From Operations and Funds Available for Distribution.
(3) Please refer to page 28 for Reconciliation of Funds Available for Distribution to GAAP Net Cash Provided by Operating Activities.
(4) Please refer to page 27 for Management Statements on Funds from Operations and Funds Available for Distribution.
(5) Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense plus loan cost amortization.
(6) 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.
(7) Calculated as current year dividends paid and accrued to common shareholders divided by Funds From Operations.
(8) Calculated as current year dividends paid and accrued to common shareholders divided by Funds Available for Distribution.
(9) See "Capital Structure" on page 24.

 

2


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Common Stock Data (NYSE: KRC)

 

    

For the Three Months Ended


    

03/31/2003


  

12/31/2002


  

09/30/2002


  

06/30/2002


  

03/31/2002


High Price

  

$

23.76

  

$

23.64

  

$

26.65

  

$

29.64

  

$

28.30

Low Price

  

$

20.74

  

$

20.25

  

$

22.05

  

$

26.30

  

$

25.01

Closing Price

  

$

22.10

  

$

23.05

  

$

23.71

  

$

26.75

  

$

28.21

Dividend per share—annualized

  

$

1.98

  

$

1.98

  

$

1.98

  

$

1.98

  

$

1.98

                                    

Closing common shares (in 000's)(1)

  

 

27,475

  

 

27,420

  

 

27,928

  

 

27,744

  

 

27,572

Closing partnership units (in 000's)(1)

  

 

4,222

  

 

4,237

  

 

4,237

  

 

4,421

  

 

4,458

    

  

  

  

  

    

 

31,697

  

 

31,657

  

 

32,165

  

 

32,165

  

 

32,030

    

  

  

  

  


(1) As of the end of the period.

 

3


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Consolidated Balance Sheets

(unaudited, $ in thousands)

 

    

03/31/2003


    

12/31/2002


    

09/30/2002


    

06/30/2002


    

03/31/2002


 

ASSETS:

                                            

Land and improvements

  

$

282,030

 

  

$

288,228

 

  

$

297,305

 

  

$

285,585

 

  

$

277,842

 

Buildings and improvements, net

  

 

1,258,593

 

  

 

1,289,525

 

  

 

1,290,575

 

  

 

1,220,923

 

  

 

1,179,214

 

Undeveloped land and construction in progress, net

  

 

166,346

 

  

 

108,465

 

  

 

109,700

 

  

 

172,331

 

  

 

204,566

 

    


  


  


  


  


Total investment in real estate

  

 

1,706,969

 

  

 

1,686,218

 

  

 

1,697,580

 

  

 

1,678,839

 

  

 

1,661,622

 

Accumulated depreciation and amortization

  

 

(290,365

)

  

 

(278,503

)

  

 

(270,951

)

  

 

(259,676

)

  

 

(248,702

)

    


  


  


  


  


Investment in real estate, net

  

 

1,416,604

 

  

 

1,407,715

 

  

 

1,426,629

 

  

 

1,419,163

 

  

 

1,412,920

 

Cash and cash equivalents

  

 

7,787

 

  

 

15,777

 

  

 

9,878

 

  

 

12,663

 

  

 

10,432

 

Restricted cash

  

 

7,479

 

  

 

6,814

 

  

 

7,348

 

  

 

5,811

 

  

 

5,984

 

Current receivables, net

  

 

2,821

 

  

 

3,074

 

  

 

2,779

 

  

 

3,041

 

  

 

2,921

 

Deferred rent receivables, net

  

 

30,567

 

  

 

29,466

 

  

 

28,422

 

  

 

26,470

 

  

 

26,568

 

Deferred leasing costs, net

  

 

32,145

 

  

 

31,427

 

  

 

30,532

 

  

 

30,313

 

  

 

32,972

 

Deferred financing costs, net

  

 

5,394

 

  

 

6,221

 

  

 

6,873

 

  

 

7,596

 

  

 

9,236

 

Prepaid expenses and other assets

  

 

8,400

 

  

 

6,108

 

  

 

5,852

 

  

 

5,520

 

  

 

4,896

 

    


  


  


  


  


TOTAL ASSETS

  

$

1,511,197

 

  

$

1,506,602

 

  

$

1,518,313

 

  

$

1,510,577

 

  

$

1,505,929

 

    


  


  


  


  


LIABILITIES AND STOCKHOLDERS’ EQUITY:

                                            

Liabilities:

                                            

Secured debt

  

$

514,115

 

  

$

507,037

 

  

$

473,268

 

  

$

455,302

 

  

$

457,186

 

Unsecured line of credit

  

 

262,500

 

  

 

255,000

 

  

 

300,000

 

  

 

306,000

 

  

 

284,000

 

Accounts payable, accrued expenses and other liabilities

  

 

43,110

 

  

 

43,917

 

  

 

37,766

 

  

 

39,016

 

  

 

49,745

 

Accrued distributions

  

 

15,776

 

  

 

15,670

 

  

 

15,922

 

  

 

15,891

 

  

 

15,163

 

Rents received in advance, tenant security deposits and deferred revenue

  

 

19,434

 

  

 

24,310

 

  

 

20,143

 

  

 

16,737

 

  

 

14,593

 

    


  


  


  


  


Total liabilities

  

 

854,935

 

  

 

845,934

 

  

 

847,099

 

  

 

832,946

 

  

 

820,687

 

    


  


  


  


  


Minority Interests:

                                            

8.075% Series A Cumulative Redeemable Preferred unitholders

  

 

73,716

 

  

 

73,716

 

  

 

73,716

 

  

 

73,716

 

  

 

73,716

 

9.375% Series C Cumulative Redeemable Preferred unitholders

  

 

34,464

 

  

 

34,464

 

  

 

34,464

 

  

 

34,464

 

  

 

34,464

 

9.250% Series D Cumulative Redeemable Preferred unitholders

  

 

44,321

 

  

 

44,321

 

  

 

44,321

 

  

 

44,321

 

  

 

44,321

 

Common unitholders of the Operating Partnership

  

 

67,000

 

  

 

68,196

 

  

 

68,522

 

  

 

72,415

 

  

 

74,477

 

    


  


  


  


  


Total minority interests

  

 

219,501

 

  

 

220,697

 

  

 

221,023

 

  

 

224,916

 

  

 

226,978

 

    


  


  


  


  


Stockholders’ Equity:

                                            

Common stock

  

 

273

 

  

 

273

 

  

 

278

 

  

 

277

 

  

 

275

 

Additional paid-in capital

  

 

493,244

 

  

 

493,116

 

  

 

503,184

 

  

 

499,196

 

  

 

494,354

 

Distributions in excess of earnings

  

 

(50,384

)

  

 

(47,629

)

  

 

(48,020

)

  

 

(42,079

)

  

 

(33,305

)

Accumulated net other comprehensive loss

  

 

(6,372

)

  

 

(5,789

)

  

 

(5,251

)

  

 

(4,679

)

  

 

(3,060

)

    


  


  


  


  


Total stockholders’ equity

  

 

436,761

 

  

 

439,971

 

  

 

450,191

 

  

 

452,715

 

  

 

458,264

 

    


  


  


  


  


TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

  

$

1,511,197

 

  

$

1,506,602

 

  

$

1,518,313

 

  

$

1,510,577

 

  

$

1,505,929

 

    


  


  


  


  


 

4


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Consolidated Statements of Operations

(unaudited, $ in thousands, except per share amounts)

 

    

Three Months Ended March 31,


 
    

2003


    

2002


    

% Change


 

REVENUES:

                        

Rental income, net

  

$

44,264

 

  

$

43,928

 

  

0.8

%

Tenant reimbursements

  

 

5,779

 

  

 

5,431

 

  

6.4

%

Interest income

  

 

46

 

  

 

285

 

  

(83.9

%)

Other income

  

 

4,538

 

  

 

1,436

 

  

216.0

%

    


  


      

Total revenues

  

 

54,627

 

  

 

51,080

 

  

6.9

%

    


  


      

EXPENSES:

                        

Property expenses

  

 

8,834

 

  

 

7,410

 

  

19.2

%

Real estate taxes

  

 

3,934

 

  

 

3,712

 

  

6.0

%

General and administrative expenses

  

 

3,858

 

  

 

2,968

 

  

30.0

%

Ground leases

  

 

319

 

  

 

383

 

  

(16.7

%)

Interest expense

  

 

7,744

 

  

 

9,325

 

  

(17.0

%)

Depreciation and amortization

  

 

13,948

 

  

 

12,583

 

  

10.8

%

    


  


      

Total expenses

  

 

38,637

 

  

 

36,381

 

  

6.2

%

    


  


      

INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS

  

 

15,990

 

  

 

14,699

 

  

8.8

%

    


  


      

MINORITY INTERESTS:

                        

Distributions on Cumulative Redeemable Preferred units

  

 

(3,375

)

  

 

(3,375

)

  

0.0

%

Minority interest in earnings of Operating Partnership attributable to continuing operations

  

 

(1,686

)

  

 

(1,429

)

  

18.0

%

Recognition of previously reserved Development LLC preferred return

           

 

3,908

 

  

(100.0

%)

Minority interest in earnings of Development LLCs

           

 

(1,024

)

  

(100.0

%)

    


  


      

Total minority interests

  

 

(5,061

)

  

 

(1,920

)

  

163.6

%

    


  


      

INCOME FROM CONTINUING OPERATIONS

  

 

10,929

 

  

 

12,779

 

  

(14.5

%)

DISCONTINUED OPERATIONS:(1)

                        

Revenues from discontinued operations

           

 

1,555

 

  

(100.0

%)

Expenses from discontinued operations

           

 

(746

)

  

(100.0

%)

Net gain on disposition of discontinued operations

                        

Minority interest attributable to discontinued operations

           

 

(81

)

  

(100.0

%)

    


  


      

Total discontinued operations

           

 

728

 

  

(100.0

%)

    


  


      

NET INCOME

  

$

10,929

 

  

$

13,507

 

  

(19.1

%)

    


  


      

Weighted average shares outstanding—basic

  

 

27,221

 

  

 

27,256

 

      

Weighted average shares outstanding—diluted

  

 

27,430

 

  

 

27,550

 

      

NET INCOME PER COMMON SHARE:

                        

Net income per common share—basic

  

$

0.40

 

  

$

0.50

 

  

(20.0

%)

    


  


      

Net income per common share—diluted

  

$

0.40

 

  

$

0.49

 

  

(18.4

%)

    


  


      

(1) In accordance with SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", effective for financial statements issued after December 15, 2001, the net income and the net gain on disposition of properties sold subsequent to December 31, 2001 are reflected in the consolidated statement of operations as discontinued operations for all periods presented.

 

 

 

5


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Funds From Operations and Funds Available for Distribution

(unaudited, $ in thousands, except per share amounts)

 

    

Three Months Ended March 31,


 
    

2003


    

2002


    

% Change


 

FUNDS FROM OPERATIONS:(1)

                        

Net Income

  

$

10,929

 

  

$

13,507

 

  

(19.1

%)

Adjustments:

                        

Minority interest in earnings of Operating Partnership

  

 

1,686

 

  

 

1,510

 

  

11.7

%

Depreciation and amortization(2)

  

 

13,705

 

  

 

12,136

 

  

12.9

%

Net gains on dispositions of operating properties

                        
    


  


      

Funds From Operations

  

$

26,320

 

  

$

27,153

 

  

(3.1

%)

    


  


      

Weighted average common shares/units outstanding—basic

  

 

31,453

 

  

 

30,317

 

      

Weighted average common shares/units outstanding—diluted

  

 

31,662

 

  

 

30,611

 

      
                          

FFO per common share/unit—basic

  

$

0.84

 

  

$

0.90

 

  

(6.7

%)

    


  


      

FFO per common share/unit—diluted

  

$

0.83

 

  

$

0.89

 

  

(6.7

%)

    


  


      

FUNDS AVAILABLE FOR DISTRIBUTION:(1),(3)

                        

Funds From Operations

  

$

26,320

 

  

$

27,153

 

  

(3.1

%)

Adjustments:

                        

Amortization of deferred financing costs

  

 

507

 

  

 

778

 

  

(34.8

%)

Non-cash amortization of restricted stock grants(4)

  

 

994

 

  

 

586

 

  

69.6

%

Tenant improvements, leasing commissions and recurring capital expenditures

  

 

(4,087

)

  

 

(335

)

  

1120.0

%

Net effect of straight-line rents(5)

  

 

(1,101

)

  

 

(1,228

)

  

(10.3

%)

    


  


      

Funds Available for Distribution

  

$

22,633

 

  

$

26,954

 

  

(16.0

%)

    


  


      

(1) See page 27 for Management Statements on Funds From Operations and Funds Available for Distribution.
(2) Excludes depreciation and amortization not related to real estate.
(3) See page 28 for Reconciliation of Funds Available for Distribution to GAAP Net Cash Provided by Operating Activities.
(4) Beginning January 1, 2003, non-cash amortization of restricted stock grants is added back for purposes of calculating FAD. Prior year FAD amounts have been restated to conform with current year presentation.
(5) This amount represents the straight-line rent income recognized during the period net of a reserve for bad debts.

 

6


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Stabilized Portfolio Occupancy Overview

 

    

# of Buildings


  

Portfolio Breakdown


    

Square Feet


  

Occupancy at:


 
       

NOI


    

Sq. Ft.


    

Total


  

03/31/2003


    

12/31/2002


    

09/30/2002


 

OCCUPANCY BY PRODUCT TYPE:

                                            

Office:

                                            

Los Angeles

  

29

  

33.8

%

  

24.7

%

  

2,942,907

  

85.7

%

  

88.3

%

  

87.5

%

Orange County

  

10

  

3.6

%

  

3.9

%

  

468,385

  

88.1

%

  

88.5

%

  

89.8

%

San Diego

  

39

  

34.0

%

  

24.6

%

  

2,934,415

  

89.6

%

  

93.1

%

  

93.3

%

Other

  

6

  

6.3

%

  

5.9

%

  

709,354

  

96.1

%

  

96.3

%

  

97.6

%

    
  

  

  
                    

Subtotal

  

84

  

77.7

%

  

59.1

%

  

7,055,061

  

88.5

%

  

91.1

%

  

91.0

%

    
  

  

  
                    

Industrial:

                                            

Los Angeles

  

4

  

1.4

%

  

3.2

%

  

388,805

  

70.7

%

  

70.7

%

  

79.3

%

Orange County

  

44

  

19.7

%

  

35.2

%

  

4,196,741

  

99.9

%

  

100.0

%

  

98.1

%

Other

  

2

  

1.2

%

  

2.5

%

  

295,417

  

100.0

%

  

100.0

%

  

100.0

%

    
  

  

  
                    

Subtotal

  

50

  

22.3

%

  

40.9

%

  

4,880,963

  

97.6

%

  

97.7

%

  

96.2

%

    
  

  

  
                    

OCCUPANCY BY REGION:

                                            

Los Angeles

  

33

  

35.2

%

  

27.9

%

  

3,331,712

  

83.9

%

  

86.4

%

  

86.3

%

Orange County

  

54

  

23.3

%

  

39.1

%

  

4,665,126

  

98.7

%

  

98.8

%

  

97.1

%

San Diego

  

39

  

34.0

%

  

24.6

%

  

2,934,415

  

89.6

%

  

93.1

%

  

93.3

%

Other

  

8

  

7.5

%

  

8.4

%

  

1,004,771

  

97.2

%

  

97.4

%

  

98.3

%

    
  

  

  
                    

TOTAL STABILIZED PORTFOLIO

  

134

  

100.0

%

  

100.0

%

  

11,936,024

  

92.2

%

  

93.7

%

  

93.1

%

    
  

  

  
                    
                                              
                                              

 

AVERAGE OCCUPANCY—STABILIZED PORTFOLIO

 

    

Office


    

Industrial


    

Total


 

Quarter-to-Date

  

88.6

%

  

97.7

%

  

92.2

%

 

7


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Stabilized Portfolio Occupancy Overview

 

    

City/Submarket


    

# of Buildings


  

Square Feet


  

Occupancy


 

Office:

                       

Los Angeles, California

                       

23925 Park Sorrento

  

Calabasas

    

1

  

11,789

  

100.0

%

23975 Park Sorrento

  

Calabasas

    

1

  

100,592

  

100.0

%

24025 Park Sorrento

  

Calabasas

    

1

  

102,264

  

100.0

%

26541 Agoura Road

  

Calabasas

    

1

  

90,878

  

100.0

%

5151—5155 Camino Ruiz

  

Camarillo

    

4

  

265,372

  

79.8

%

185 S. Douglas Street

  

El Segundo

    

1

  

62,150

  

29.3

%

Kilroy Airport Center, El Segundo

  

El Segundo

    

3

  

706,302

  

98.3

%

525 N. Brand Blvd.

  

Glendale

    

1

  

46,043

  

100.0

%

Kilroy Airport Center, Long Beach

  

Long Beach

    

7

  

949,198

  

80.2

%

12200 W. Olympic Blvd.

  

Los Angeles

    

1

  

151,019

  

42.8

%

12312 W. Olympic Blvd.

  

Los Angeles

    

1

  

78,000

  

100.0

%

1633 26th Street

  

Santa Monica

    

1

  

44,915

  

100.0

%

2100 Colorado Avenue

  

Santa Monica

    

3

  

94,844

  

100.0

%

3130 Wilshire Blvd.

  

Santa Monica

    

1

  

88,338

  

66.4

%

501 Santa Monica Blvd.

  

Santa Monica

    

1

  

70,045

  

89.7

%

2829 Townsgate Road

  

Thousand Oaks

    

1

  

81,158

  

98.8

%

           
  
  

Total Los Angeles Office

         

29

  

2,942,907

  

85.7

%

                         

Orange County, California

                       

4175 E. La Palma Avenue

  

Anaheim

    

1

  

43,228

  

50.2

%

8101 Kaiser Blvd.

  

Anaheim

    

1

  

60,177

  

82.4

%

Anaheim Corp. Center

  

Anaheim

    

4

  

157,758

  

93.5

%

601 Valencia

  

Brea

    

1

  

60,891

  

89.2

%

9451 Toledo Way

  

Irvine

    

1

  

27,200

  

100.0

%

111 Pacifica

  

Irvine Spectrum

    

1

  

67,381

  

90.2

%

2501 Pullman

  

Santa Ana

    

1

  

51,750

  

100.0

%

           
  
  

Total Orange County Office

         

10

  

468,385

  

88.1

%

 

8


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Stabilized Portfolio Occupancy Overview

 

    

City/Submarket


    

# of Buildings


  

Square Feet


  

Occupancy


 

Office:

                       

San Diego, California

                       

5770 Armada Drive

  

Carlsbad

    

1

  

81,712

  

100.0

%

12340 El Camino Real

  

Del Mar

    

1

  

89,168

  

0.0

%

12348 High Bluff Drive

  

Del Mar

    

1

  

40,274

  

17.6

%

12390 El Camino Real

  

Del Mar

    

1

  

72,332

  

100.0

%

3579 / 3611 / 3661 / 3811 Valley Centre Drive

  

Del Mar

    

4

  

423,874

  

57.0

%

12225 / 12235 El Camino Real

  

Del Mar

    

2

  

115,513

  

100.0

%

6215 / 6220 Greenwich Drive

  

Governor Park

    

2

  

212,214

  

100.0

%

15051 Ave of Science

  

Rancho Bernardo

    

1

  

70,617

  

100.0

%

15073 Ave of Science

  

Rancho Bernardo

    

1

  

46,759

  

100.0

%

15378 Ave of Science

  

Rancho Bernardo

    

1

  

68,910

  

100.0

%

15435 / 15445 Innovation Drive

  

Rancho Bernardo

    

2

  

103,000

  

100.0

%

4939 / 4955 Directors Place

  

Sorrento Mesa

    

2

  

136,908

  

100.0

%

5005 / 5010 Wateridge Vista Drive

  

Sorrento Mesa

    

2

  

172,778

  

100.0

%

10243 Genetic Center

  

Sorrento Mesa

    

1

  

102,875

  

100.0

%

10390 Pacific Center Court

  

Sorrento Mesa

    

1

  

68,400

  

100.0

%

6055 Lusk Avenue

  

Sorrento Mesa

    

1

  

93,000

  

100.0

%

6260 Sequence Drive

  

Sorrento Mesa

    

1

  

130,000

  

100.0

%

6290 Sequence Drive

  

Sorrento Mesa

    

2

  

152,415

  

100.0

%

6340 / 6350 Sequence Drive

  

Sorrento Mesa

    

2

  

199,000

  

100.0

%

Pacific Corporate Center

  

Sorrento Mesa

    

6

  

332,542

  

100.0

%

4690 Executive Drive

  

University Towne Center

    

1

  

50,929

  

100.0

%

9455 Towne Center Drive

  

University Towne Center

    

1

  

45,195

  

100.0

%

9785 / 9791 Towne Center Drive

  

University Towne Center

    

2

  

126,000

  

100.0

%

           
  
  

Total San Diego Office

         

39

  

2,934,415

  

89.6

%

Other

                       

3750 University Avenue

  

Riverside, CA

    

1

  

124,986

  

100.0

%

4351 Latham Avenue

  

Riverside, CA

    

1

  

21,357

  

100.0

%

4361 Latham Avenue

  

Riverside, CA

    

1

  

30,581

  

100.0

%

Kilroy Airport Center, Sea-Tac

  

Seattle, WA

    

3

  

532,430

  

94.8

%

           
  
  

Total Other Office

         

6

  

709,354

  

96.1

%

Total Office

         

84

  

7,055,061

  

88.5

%

           
  
  

 

9


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Stabilized Portfolio Occupancy Overview

 

    

City/Submarket


    

# of Buildings


  

Square Feet


  

Occupancy


 

Industrial

                       

Los Angeles, California

                       

2031 E. Mariposa Avenue

  

El Segundo

    

1

  

192,053

  

100.0

%

2260 E. El Segundo Blvd.

  

El Segundo

    

1

  

113,820

  

0.0

%

2265 E. El Segundo Blvd.

  

El Segundo

    

1

  

76,570

  

100.0

%

2270 E. El Segundo Blvd.

  

El Segundo

    

1

  

6,362

  

100.0

%

           
  
  

Total Los Angeles Industrial

         

4

  

388,805

  

70.7

%

Orange County, California

                       

1000 E. Ball Road

  

Anaheim

    

1

  

100,000

  

100.0

%

1230 S. Lewis Road

  

Anaheim

    

1

  

57,730

  

100.0

%

1250 N. Tustin Avenue

  

Anaheim

    

1

  

84,185

  

100.0

%

3125 E. Coronado Street

  

Anaheim

    

1

  

144,000

  

100.0

%

3130-3150 Miraloma

  

Anaheim

    

1

  

144,000

  

100.0

%

3250 E. Carpenter

  

Anaheim

    

1

  

41,225

  

100.0

%

3340 E. La Palma Avenue

  

Anaheim

    

1

  

153,320

  

100.0

%

5115 E. La Palma Avenue

  

Anaheim

    

1

  

286,139

  

100.0

%

5325 E. Hunter Avenue

  

Anaheim

    

1

  

109,449

  

100.0

%

Anaheim Tech Center

  

Anaheim

    

5

  

593,992

  

100.0

%

La Palma Business Center

  

Anaheim

    

2

  

144,090

  

100.0

%

Brea Industrial Complex

  

Brea

    

7

  

276,278

  

100.0

%

Brea Industrial-Lambert Road

  

Brea

    

2

  

178,811

  

100.0

%

1675 MacArthur

  

Costa Mesa

    

1

  

50,842

  

100.0

%

25202 Towne Center Drive

  

Foothill Ranch

    

1

  

303,533

  

100.0

%

12400 Industry Street

  

Garden Grove

    

1

  

64,200

  

100.0

%

12681 / 12691 Pala Drive

  

Garden Grove

    

1

  

84,700

  

100.0

%

12752-12822 Monarch Street

  

Garden Grove

    

1

  

277,037

  

100.0

%

7421 Orangewood Avenue

  

Garden Grove

    

1

  

82,602

  

100.0

%

Garden Grove Industrial Complex

  

Garden Grove

    

6

  

275,971

  

98.2

%

17150 Von Karman

  

Irvine

    

1

  

157,458

  

100.0

%

2055 S.E. Main Street

  

Irvine

    

1

  

47,583

  

100.0

%

9401 Toledo Way

  

Irvine

    

1

  

244,800

  

100.0

%

1951 E. Carnegie Avenue

  

Santa Ana

    

1

  

100,000

  

100.0

%

2525 Pullman

  

Santa Ana

    

1

  

107,130

  

100.0

%

14831 Franklin Avenue

  

Tustin

    

1

  

36,256

  

100.0

%

2911 Dow Avenue

  

Tustin

    

1

  

51,410

  

100.0

%

           
  
  

Total Orange County Industrial

         

44

  

4,196,741

  

99.9

%

Other

                       

5115 N. 27th Avenue

  

Phoenix, AZ

    

1

  

130,877

  

100.0

%

3735 Imperial Highway

  

Stockton, CA

    

1

  

164,540

  

100.0

%

           
  
  

Total Other Industrial

         

2

  

295,417

  

100.0

%

Total Industrial

         

50

  

4,880,963

  

97.6

%

           
  
  

 

10


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Same Store Analysis(1)

($ in thousands)

 

    

Same Store Analysis (GAAP Basis)


 
    

Three Months Ended March 31,


 
    

2003


    

2002


    

% Change


 

Total Same Store Portfolio

                        

Number of properties

  

 

127

 

  

 

127

 

      

Square Feet

  

 

11,391,898

 

  

 

11,391,898

 

      

Percent of Stabilized Portfolio

  

 

95.4

%

  

 

91.6

%

      

Average Occupancy

  

 

92.4

%

  

 

95.4

%

      

Operating Revenues:

                        

Rental income

  

$

40,253

 

  

$

41,440

 

  

(2.9

%)

Tenant reimbursements

  

 

5,303

 

  

 

4,888

 

  

8.5

%

Other income

  

 

272

 

  

 

1,332

 

  

(79.6

%)

    


  


      

Total operating revenues

  

 

45,828

 

  

 

47,660

 

  

(3.8

%)

    


  


      

Operating Expenses:

                        

Property expenses

  

 

7,983

 

  

 

7,017

 

  

13.8

%

Real estate taxes

  

 

3,509

 

  

 

3,516

 

  

(0.2

%)

Ground leases

  

 

309

 

  

 

383

 

  

(19.3

%)

    


  


      

Total operating expenses

  

 

11,801

 

  

 

10,916

 

  

8.1

%

    


  


      

GAAP Net Operating Income

  

$

34,027

 

  

$

36,744

 

  

(7.4

%)

    


  


      
    

Same Store Analysis (Cash Basis)


 
    

Three Months Ended March 31,


 
    

2003


    

2002


    

% Change


 

Total operating revenues

  

 

44,632

 

  

 

45,861

 

  

(2.7

%)

Total operating expenses

  

 

11,801

 

  

 

10,916

 

  

8.1

%

    


  


      

Cash Net Operating Income

  

$

32,831

 

  

$

34,945

 

  

(6.0

%)

    


  


      

(1) Same store defined as all stabilized properties owned at January 1, 2002 and still owned at March 31, 2003.

 

11


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Leasing Activity

 

Quarter-to-Date

 

    

# of Leases(1)


 

Square Feet(1)


 

TI/LC Per Sq.Ft.


    

Maintenance Capex Per Sq.Ft.(2)


    

Changes in Rents(3)


      

Changes in Cash Rents(4)


    

Retention Rates(5)


      

Weighted Average Lease Term (Mo.)


    

New


    

Renewal


 

New


 

Renewal


                        

Office

  

10

    

7

 

128,723

 

241,478

 

$

11.31

    

$

0.01

    

6.2

%

    

0.5

%

  

71.9

%

    

48

Industrial

  

1

    

1

 

5,000

 

25,718

 

$

4.66

    

$

0.00

    

48.0

%

    

35.8

%

  

72.0

%

    

16

    
    
 
 
 

    

    

    

  

    

Total

  

11

    

8

 

133,723

 

267,196

 

$

10.80

    

$

0.00

    

9.0

%

    

3.0

%

  

71.9

%

    

45

    
    
 
 
 

    

    

    

  

    

(1) Represents leasing activity for leases commencing during the period shown, net of month-to-month leases. Excludes leasing on new construction.
(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.

 

12


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Stabilized Portfolio Capital Expenditures

($ in thousands)

 

        
        

Non-Recurring Capital Expenditures:


    
    

Q1 2003


Capital Improvements

  

$

0

Tenant Improvements & Leasing Commissions

  

 

0

    

Total

  

$

0

    

 

Recurring Capital Expenditures:


    
    

Q1 2003


Capital Improvements

      

Office

  

$

46

Industrial

  

 

0

    

    

 

46

Tenant Improvements & Leasing Commissions(1)

      

Office

  

 

4,016

Industrial

  

 

25

    

    

 

4,041

Total

      

Office

  

 

4,062

Industrial

  

 

25

    

    

$

4,087

    


(1) Represents cash paid and leasing costs incurred for leases commencing during the period shown.

 

13


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Lease Expiration Summary Schedule

($ in thousands)

 

Year of Expiration


    

# of Expiring Leases


  

Total Square

Feet(1)


    

%Total Leased Sq. Ft.


    

Annual Base Rent


  

Annual Rent per Sq. Ft.(2)


OFFICE:

                                  

Remaining 2003

    

41

  

252,033

    

4.1

%

  

$

5,449

  

$

21.62

2004

    

56

  

652,049

    

10.5

%

  

 

14,967

  

 

22.95

2005

    

62

  

697,160

    

11.3

%

  

 

13,305

  

 

19.08

2006

    

46

  

686,827

    

11.1

%

  

 

15,458

  

 

22.51

2007

    

47

  

867,679

    

14.0

%

  

 

15,000

  

 

17.29

2008

    

18

  

788,716

    

12.8

%

  

 

15,857

  

 

20.10

2009

    

11

  

735,917

    

11.9

%

  

 

15,937

  

 

21.66

2010

    

9

  

248,546

    

4.0

%

  

 

5,475

  

 

22.03

2011

    

8

  

397,583

    

6.4

%

  

 

7,555

  

 

19.00

2012 and beyond

    

13

  

857,657

    

13.9

%

  

 

24,472

  

 

28.53

      
  
    

  

      

Subtotal

    

311

  

6,184,167

    

100.0

%

  

$

133,475

  

$

21.58

      
  
    

  

      

INDUSTRIAL:

                                  

Remaining 2003

    

10

  

360,002

    

7.6

%

  

$

2,056

  

$

5.71

2004

    

15

  

486,786

    

10.3

%

  

 

3,344

  

 

6.87

2005

    

14

  

691,060

    

14.7

%

  

 

5,117

  

 

7.40

2006

    

9

  

578,802

    

12.3

%

  

 

4,359

  

 

7.53

2007

    

9

  

496,391

    

10.5

%

  

 

3,401

  

 

6.85

2008

    

7

  

850,407

    

18.0

%

  

 

5,732

  

 

6.74

2009

    

7

  

505,976

    

10.7

%

  

 

3,189

  

 

6.30

2010

    

1

  

33,130

    

0.7

%

  

 

283

  

 

8.54

2011

    

4

  

386,606

    

8.2

%

  

 

2,592

  

 

6.70

2012 and beyond

    

2

  

327,402

    

7.0

%

  

 

3,101

  

 

9.47

      
  
    

  

      

Subtotal

    

78

  

4,716,562

    

100.0

%

  

$

33,174

  

$

7.03

      
  
    

  

      

TOTAL PORTFOLIO:

                                  

Remaining 2003

    

51

  

612,035

    

5.6

%

  

$

7,505

  

$

12.26

2004

    

71

  

1,138,835

    

10.5

%

  

 

18,311

  

 

16.08

2005

    

76

  

1,388,220

    

12.7

%

  

 

18,422

  

 

13.27

2006

    

55

  

1,265,629

    

11.6

%

  

 

19,817

  

 

15.66

2007

    

56

  

1,364,070

    

12.5

%

  

 

18,401

  

 

13.49

2008

    

25

  

1,639,123

    

15.0

%

  

 

21,589

  

 

13.17

2009

    

18

  

1,241,893

    

11.4

%

  

 

19,126

  

 

15.40

2010

    

10

  

281,676

    

2.6

%

  

 

5,758

  

 

20.44

2011

    

12

  

784,189

    

7.2

%

  

 

10,147

  

 

12.94

2012 and beyond

    

15

  

1,185,059

    

10.9

%

  

 

27,573

  

 

23.27

      
  
    

  

      

Total

    

389

  

10,900,729

    

100.0

%

  

$

166,649

  

$

15.29

      
  
    

  

      

(1) Excludes space leased under month-to-month leases and vacant space at March 31, 2003.
(2) Reflects annualized rent calculated on a straight-line basis.

 

14


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Lease Expiration Schedule Detail by Region

($ in thousands)

 

      

Los Angeles County


    

Orange County


Year of Expiration


    

# of Expiring Leases


  

Total Square Feet(1)


    

% of Total Regional Sq. Ft.


    

Annual Base Rent


    

Annual Rent per Sq. Ft.(2)


    

# of Expiring Leases


  

Total Square Feet(1)


    

% of Total Regional Sq. Ft.


    

Annual Base Rent


    

Annual Rent per Sq. Ft.(2)


OFFICE:

                                                                         

Remaining 2003

    

16

  

143,292

    

5.8

%

  

$

3,353

    

$

23.40

    

13

  

45,811

    

11.2

%

  

$

763

    

$

16.66

2004

    

33

  

450,908

    

18.3

%

  

 

11,726

    

 

26.01

    

9

  

119,726

    

29.3

%

  

 

1,646

    

 

13.75

2005

    

32

  

213,669

    

8.7

%

  

 

5,827

    

 

27.27

    

9

  

53,419

    

13.1

%

  

 

1,054

    

 

19.73

2006

    

31

  

348,521

    

14.1

%

  

 

9,131

    

 

26.20

    

4

  

25,610

    

6.3

%

  

 

594

    

 

23.19

2007

    

21

  

153,176

    

6.2

%

  

 

3,916

    

 

25.57

    

6

  

31,542

    

7.7

%

  

 

514

    

 

16.30

2008

    

9

  

291,393

    

11.8

%

  

 

8,751

    

 

30.03

    

4

  

119,110

    

29.1

%

  

 

2,135

    

 

17.92

2009

    

7

  

425,076

    

17.2

%

  

 

10,272

    

 

24.17

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

2010

    

6

  

70,154

    

2.8

%

  

 

2,027

    

 

28.89

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

2011

    

5

  

203,225

    

8.2

%

  

 

2,665

    

 

13.11

    

1

  

13,381

    

3.3

%

  

 

305

    

 

22.79

2012 and beyond

    

5

  

170,637

    

6.9

%

  

 

3,796

    

 

22.25

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

      
  
    

  

             
  
    

  

        

Subtotal

    

165

  

2,470,051

    

100.0

%

  

$

61,464

    

$

24.88

    

46

  

408,599

    

100.0

%

  

$

7,011

    

$

17.16

      
  
    

  

             
  
    

  

        

INDUSTRIAL:

                                                                         

Remaining 2003

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

    

10

  

360,002

    

8.7

%

  

 

2,056

    

 

5.71

2004

    

1

  

76,570

    

27.9

%

  

 

554

    

 

7.24

    

14

  

410,216

    

9.9

%

  

 

2,790

    

 

6.80

2005

    

1

  

192,053

    

69.8

%

  

 

2,027

    

 

10.55

    

13

  

499,007

    

12.0

%

  

 

3,090

    

 

6.19

2006

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

    

8

  

414,262

    

10.0

%

  

 

3,179

    

 

7.67

2007

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

    

9

  

496,391

    

12.0

%

  

 

3,401

    

 

6.85

2008

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

    

7

  

850,407

    

20.5

%

  

 

5,732

    

 

6.74

2009

    

1

  

6,362

    

2.3

%

  

 

101

    

 

15.88

    

6

  

499,614

    

12.0

%

  

 

3,088

    

 

6.18

2010

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

    

1

  

33,130

    

0.8

%

  

 

283

    

 

8.54

2011

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

    

3

  

255,729

    

6.2

%

  

 

1,800

    

 

7.04

2012 and beyond

    

—  

  

—  

    

0.0

%

  

 

—  

    

 

—  

    

2

  

327,402

    

7.9

%

  

 

3,101

    

 

9.47

      
  
    

  

             
  
    

  

        

Subtotal

    

3

  

274,985

    

100.0

%

  

$

2,682

    

$

9.75

    

73

  

4,146,160

    

100.0

%

  

$

28,520

    

$

6.88

      
  
    

  

             
  
    

  

        

TOTAL PORTFOLIO:

                                                                         

Remaining 2003

    

16

  

143,292

    

5.2

%

  

$

3,353

    

$

23.40

    

23

  

405,813

    

8.9

%

  

$

2,819

    

$

6.95

2004

    

34

  

527,478

    

19.2

%

  

 

12,280

    

 

23.28

    

23

  

529,942

    

11.6

%

  

 

4,436

    

 

8.37

2005

    

33

  

405,722

    

14.8

%

  

 

7,854

    

 

19.36

    

22

  

552,426

    

12.1

%

  

 

4,144

    

 

7.50

2006

    

31

  

348,521

    

12.7

%

  

 

9,131

    

 

26.20

    

12

  

439,872

    

9.7

%

  

 

3,773

    

 

8.58

2007

    

21

  

153,176

    

5.6

%

  

 

3,916

    

 

25.57

    

15

  

527,933

    

11.6

%

  

 

3,915

    

 

7.42

2008

    

9

  

291,393

    

10.6

%

  

 

8,751

    

 

30.03

    

11

  

969,517

    

21.3

%

  

 

7,867

    

 

8.11

2009

    

8

  

431,438

    

15.7

%

  

 

10,373

    

 

24.04

    

6

  

499,614

    

11.0

%

  

 

3,088

    

 

6.18

2010

    

6

  

70,154

    

2.6

%

  

 

2,027

    

 

28.89

    

1

  

33,130

    

0.7

%

  

 

283

    

 

8.54

2011

    

5

  

203,225

    

7.4

%

  

 

2,665

    

 

13.11

    

4

  

269,110

    

5.9

%

  

 

2,105

    

 

7.82

2012 and beyond

    

5

  

170,637

    

6.2

%

  

 

3,796

    

 

22.25

    

2

  

327,402

    

7.2

%

  

 

3,101

    

 

9.47

      
  
    

  

             
  
    

  

        

Total

    

168

  

2,745,036

    

100.0

%

  

$

64,146

    

$

23.37

    

119

  

4,554,759

    

100.0

%

  

$

35,531

    

$

7.80

      
  
    

  

             
  
    

  

        

(1) Excludes space leased under month-to-month leases and vacant space at March 31, 2003.
(2) Reflects annualized rent calculated on a straight-line basis.

 

15


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Lease Expiration Schedule Detail by Region

($ in thousands)

 

      

San Diego County


    

Other


Year of Expiration


    

# of Expiring Leases


  

Total Square Feet(1)


    

% of Total Regional Sq. Ft.


    

Annual Base Rent


    

Annual Rent per Sq. Ft.(2)


    

# of Expiring Leases


    

Total Square Feet(1)


    

% of Total Regional Sq. Ft.


    

Annual Base Rent


    

Annual Rent

per Sq. Ft.(2)


OFFICE:

                                                                           

Remaining 2003

    

1

  

28,331

    

1.1

%

  

$

610

    

$

21.53

    

11

    

34,599

    

5.1

%

  

$

723

    

$

20.90

2004

    

1

  

50,929

    

1.9

%

  

 

960

    

 

18.85

    

13

    

30,486

    

4.5

%

  

 

635

    

 

20.83

2005

    

4

  

304,454

    

11.6

%

  

 

3,824

    

 

12.56

    

17

    

125,618

    

18.6

%

  

 

2,600

    

 

20.70

2006

    

3

  

190,209

    

7.2

%

  

 

3,209

    

 

16.87

    

8

    

122,487

    

18.1

%

  

 

2,524

    

 

20.61

2007

    

7

  

538,591

    

20.5

%

  

 

7,721

    

 

14.34

    

13

    

144,370

    

21.4

%

  

 

2,849

    

 

19.73

2008

    

3

  

165,665

    

6.3

%

  

 

2,708

    

 

16.35

    

2

    

212,548

    

31.5

%

  

 

2,263

    

 

10.65

2009

    

3

  

305,378

    

11.6

%

  

 

5,530

    

 

18.11

    

1

    

5,463

    

0.8

%

  

 

135

    

 

24.71

2010

    

3

  

178,392

    

6.8

%

  

 

3,448

    

 

19.33

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2011

    

2

  

180,977

    

6.9

%

  

 

4,585

    

 

25.33

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2012 and beyond

    

8

  

687,020

    

26.1

%

  

 

20,676

    

 

30.10

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

      
  
    

  

             
    
    

  

        

Subtotal

    

35

  

2,629,946

    

100.0

%

  

$

53,271

    

$

20.26

    

65

    

675,571

    

100.0

%

  

$

11,729

    

$

17.36

      
  
    

  

             
    
    

  

        

INDUSTRIAL:

                                                                           

Remaining 2003

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2004

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2005

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2006

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

1

    

164,540

    

55.7

%

  

 

1,180

    

 

7.17

2007

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2008

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2009

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2010

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2011

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

1

    

130,877

    

44.3

%

  

 

792

    

 

6.05

2012 and beyond

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

      
  
    

  

             
    
    

  

        

Subtotal

    

—  

  

—  

    

—  

 

  

 

—  

    

 

—  

    

2

    

295,417

    

100.0

%

  

 

1,972

    

 

6.68

      
  
    

  

             
    
    

  

        

TOTAL PORTFOLIO:

                                                                           

Remaining 2003

    

1

  

28,331

    

1.1

%

  

$

610

    

$

21.53

    

11

    

34,599

    

3.6

%

  

$

723

    

$

20.90

2004

    

1

  

50,929

    

1.9

%

  

 

960

    

 

18.85

    

13

    

30,486

    

3.1

%

  

 

635

    

 

20.83

2005

    

4

  

304,454

    

11.6

%

  

 

3,824

    

 

12.56

    

17

    

125,618

    

12.9

%

  

 

2,600

    

 

20.70

2006

    

3

  

190,209

    

7.2

%

  

 

3,209

    

 

16.87

    

9

    

287,027

    

29.5

%

  

 

3,704

    

 

12.90

2007

    

7

  

538,591

    

20.5

%

  

 

7,721

    

 

14.34

    

13

    

144,370

    

14.9

%

  

 

2,849

    

 

19.73

2008

    

3

  

165,665

    

6.3

%

  

 

2,708

    

 

16.35

    

2

    

212,548

    

21.9

%

  

 

2,263

    

 

10.65

2009

    

3

  

305,378

    

11.6

%

  

 

5,530

    

 

18.11

    

1

    

5,463

    

0.6

%

  

 

135

    

 

24.71

2010

    

3

  

178,392

    

6.8

%

  

 

3,448

    

 

19.33

    

—  

    

—  

    

—  

 

  

 

—  

    

 

—  

2011

    

2

  

180,977

    

6.9

%

  

 

4,585

    

 

25.33

    

1

    

130,877

    

13.5

%

  

 

792

    

 

6.05

2012 and beyond

    

8

  

687,020

    

26.1

%

  

 

20,676

    

 

30.10

    

—  

    

—  

    

0.0

%

  

 

—  

    

 

—  

      
  
    

  

             
    
    

  

        

Total

    

35

  

2,629,946

    

100.0

%

  

$

53,271

    

$

20.26

    

67

    

970,988

    

100.0

%

  

$

13,701

    

$

14.11

      
  
    

  

             
    
    

  

        

(1) Excludes space leased under month-to-month leases and vacant space at March 31, 2003.
(2) Reflects annualized rent calculated on a straight-line basis.

 

16


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Top Ten Office and Top Ten Industrial Tenants

($ in thousands)

 

Tenant Name


  

Annual Base Rental Revenues(1)


  

Rentable Square Feet


    

Percentage of Total Annual Base Rental Revenues


      

Percentage of Total Rentable Square Feet


 

Office Properties:

                             

The Boeing Company

  

$

13,949

  

781,358

    

7.9

%

    

6.5

%

Peregrine Systems, Inc.(2)

  

 

7,044

  

241,747

    

4.0

%

    

2.0

%

DirecTV, Inc.

  

 

6,686

  

182,463

    

3.8

%

    

1.5

%

Diversa Corporation

  

 

4,731

  

136,908

    

2.7

%

    

1.1

%

Epson America, Inc.

  

 

4,251

  

166,575

    

2.4

%

    

1.4

%

Epicor Software Corporation

  

 

3,477

  

172,778

    

2.0

%

    

1.4

%

Newgen Results Corporation

  

 

3,445

  

102,875

    

1.9

%

    

0.9

%

Scan Health Plan

  

 

3,430

  

119,219

    

1.9

%

    

1.0

%

Intuit, Inc.

  

 

3,218

  

215,171

    

1.8

%

    

1.8

%

TRW, Inc.

  

 

3,054

  

117,406

    

1.7

%

    

1.0

%

    

  
    

    

Total Office Properties

  

$

53,285

  

2,236,500

    

30.1

%

    

18.6

%

    

  
    

    

Industrial Properties:

                             

Celestica California, Inc.

  

$

2,496

  

303,533

    

1.4

%

    

2.5

%

Qwest Communications Corporation

  

 

2,427

  

244,800

    

1.4

%

    

2.1

%

Mattel, Inc.

  

 

2,024

  

192,053

    

1.1

%

    

1.6

%

Packard Hughes Interconnect

  

 

1,705

  

157,458

    

1.0

%

    

1.3

%

Targus, Inc.

  

 

1,485

  

266,093

    

0.8

%

    

2.2

%

NBTY Manufacturing, LLC

  

 

1,461

  

286,139

    

0.8

%

    

2.4

%

United Plastics Group, Inc.

  

 

1,221

  

188,000

    

0.7

%

    

1.6

%

Kraft Foods, Inc.

  

 

1,184

  

164,540

    

0.7

%

    

1.4

%

Extron Electronics

  

 

960

  

157,730

    

0.5

%

    

1.3

%

Ricoh Electronics

  

 

809

  

100,000

    

0.5

%

    

0.8

%

    

  
    

    

Total Industrial Properties

  

$

15,772

  

2,060,346

    

8.9

%

    

17.2

%

    

  
    

    


(1) Reflects annualized rent calculated on a straight-line basis.
(2) See additional disclosure of Peregrine leases in “Summary of Leasing at Kilroy Centre Del Mar” on page 19.

 

17


KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Summary of Tenants Representing 5.0% or Greater of Annual Base Rental Revenue

($ in thousands)

 

The Boeing Company


  

Rentable

Square Feet


  

Annual Base Rental Revenues(1)


  

Lease

Expiration

Date


Boeing Satellite Systems

                

2260 E. Imperial Highway, El Segundo

  

293,261

  

$

7,499

  

July 31, 2004

1231 N. Miller Street, Anaheim

  

113,242

  

 

684

  

March 31, 2009

2240 E. Imperial Highway, El Segundo

  

101,564

  

 

1,729

  

January 31, 2006

2250 E. Imperial Highway, El Segundo

  

7,791

  

 

272

  

November 30, 2004

    
  

    
    

515,858

  

 

10,184

    
    
  

    

Boeing Airplane-on-Ground Division

                

17930 Pacific Highway, Seattle

  

211,139

  

 

2,232

  

December 31, 2007

    
  

    

Boeing Capital Corporation

                

3780 Kilroy Airport Way, Long Beach

  

43,636

  

 

1,231

  

September 30, 2005

    
  

    

Boeing Realty Corporation

                

3760 Kilroy Airport Way, Long Beach

  

10,725

  

 

302

  

August 31, 2005

    
  

    

Total

  

781,358

  

$

13,949

    
    
  

    

(1) Reflects annualized rent calculated on a straight-line basis.

 

18


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Summary of Leasing at Kilroy Centre Del Mar

($ in thousands)

 

   

Rentable Square Feet


    

% Leased by Peregrine


    

% Leased by Other Tenants


    

Total % Leased


   

Tenant Name


  

Annual Base Rental Revenues(1)


Building 1—3579 Valley Centre Drive(2)

 

52,375

           

100

%

  

100

%

 

Paul, Hastings, Janofsky &

    Walker LLP

  

$

1,608

Building 2—3611 Valley Centre Drive

 

129,680

    

100

%(3)

         

100

%

 

Peregrine Systems, Inc.

  

 

3,779

Building 3—3661 Valley Centre Drive(4)

 

129,752

           

100

%

  

100

%

 

Fair, Isaac & Company

  

 

3,854

Building 4—3721 Valley Centre Drive(5)

 

114,780

           

100

%

  

100

%

 

Memec

  

 

2,994

Building 5—3811 Valley Centre Drive

 

112,067

    

42

%(3)

  

58

%

  

100

%

 

Peregrine Systems, Inc. (6)

  

 

3,265

   
    

  

             

Total

 

538,654

    

33

%

  

68

%

             

$

15,500

   
    

  

             


(1) Reflects annualized rent calculated on a straight-line basis.
(2) This lease is scheduled to commence when tenant improvements are complete, which is estimated to be in the third quarter of 2003.
(3) Peregrine Systems, Inc. has indicated that it may reject some or all of the space it occupies in these buildings.
(4) This lease is scheduled to commence when tenant improvements are complete, which is estimated to be in the third quarter of 2003.
(5) The annual base rental revenues shown reflect the revenue for the 80% of the building that Memec currently occupies. This building is currently in the Company's development lease-up portfolio.
(6) This building is 100% leased to Peregrine Systems, Inc.; however, the Company has executed subleases of 64,946 rentable square feet which represent approximately $2.1 million of the annual base rental revenues for this building.

 

19


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Acquisitions & Dispositions

($ in thousands)

 

ACQUISITIONS & DISPOSITIONS:

 

Project


    

Location


  

Type


    

Month of Disposition


    

Square Feet


  

Sales Price


1st QUARTER:

                              

NONE

                              

 

20


KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Stabilized Development

($ in thousands)

 

Project


    

Location


  

Type


    

Start Date


    

Completion

Date


    

Rentable

Square Feet


    

Total Est.

Investment


    

% Leased


1st QUARTER:

                                              

NONE

                                              

 

21


KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


In-Process and Committed Development and Redevelopment Projects

($ in thousands)

 

DEVELOPMENT PROJECTS:

 

Project


  

Location


  

Type


  

Estimated

Construction Period


  

Est.

Stabilization Date(1)


  

Rentable

Square Feet


  

Total

Estimated Investment


  

Total

Spent as of 3/31/2003


  

% Leased


      

%
Committed (2)


 
        

Start Date


  

Compl. Date


                   

PROJECTS IN LEASE-UP:

                                                      

12100 W. Olympic Blvd.

  

West LA, CA

  

Office

  

4Q 2000

  

2Q 2002

  

2Q 2003

  

151,000

  

$

59,839

  

$

47,496

  

48

%(3)

    

61

%

999 Sepulveda Blvd.

  

El Segundo, CA

  

Office

  

1Q 2001

  

3Q 2002

  

3Q 2003

  

133,678

  

 

44,411

  

 

37,053

  

0

%

    

0

%

3721 Valley Centre Drive

  

Del Mar, CA

  

Office

  

3Q 2001

  

3Q 2002

  

3Q 2003

  

114,780

  

 

30,378

  

 

29,692

  

100

%

    

100

%

                             
  

  

               

Subtotal

                           

399,458

  

 

134,628

  

 

114,241

  

47

%

    

52

%

                             
  

  

               

PROJECTS UNDER CONSTRUCTION:

                                                 

12400 High Bluff

  

Del Mar, CA

  

Office

  

2Q 2002

  

3Q 2003

  

3Q 2004

  

208,961

  

 

61,523

  

 

47,986

  

84

%

    

84

%

                             
  

  

               

Subtotal

                           

208,961

  

 

61,523

  

 

47,986

  

84

%

    

84

%

                             
  

  

               

TOTAL PROJECTS IN LEASE UP AND UNDER CONSTRUCTION

                 

608,419

  

 

196,151

  

 

162,227

  

60

%

    

63

%

                             
  

  

               

COMMITTED PROJECTS:

                                                      

None

                                                           

TOTAL IN-PROCESS AND COMMITTED PROJECTS:

                 

608,419

  

$

196,151

  

$

162,227

  

60

%

    

63

%

                             
  

  

               

 

REDEVELOPMENT PROJECTS:

 

Project


  

Location


  

Pre and Post Redevelopment Type


  

Estimated

Construction Period


  

Est.

Stabilization Date(1)


  

Rentable

Square Feet


    

Total Estimated

Incremental Redevelopment Costs


  

Total

Spent as of 3/31/2003


  

% Leased


        

Start Date


  

Compl. Date


                

PROJECTS IN LEASE-UP:

                                        

1700 Carnegie

  

Santa Ana, CA

  

R&D to Office

  

4Q 2001

  

3Q 2002

  

3Q 2003

  

78,016

    

$

6,678

  

$

4,297

  

17%

                             
    

  

    

Subtotal

                           

78,016

    

 

6,678

  

 

4,297

  

17%

                             
    

  

    

PROJECTS UNDER CONSTRUCTION:

                                        

5717 Pacific Center Blvd.

  

Sorrento Mesa, CA

  

Office to Biotech

  

1Q 2003

  

3Q 2003

  

3Q 2003

  

67,995

    

 

9,819

  

 

57

  

0%

10421 Pacific Science Center

  

Sorrento Mesa, CA

  

Office to Biotech

  

1Q 2003

  

3Q 2003

  

3Q 2003

  

78,797

    

 

6,973

  

 

55

  

100%

909 Sepulveda Blvd.

  

El Segundo, CA

  

Office

  

1Q 2003

  

1Q 2004

  

1Q 2005

  

248,148

    

 

25,190

  

 

413

  

0%

                             
    

  

    

Subtotal

                           

394,940

    

 

41,982

  

 

525

  

20%

                             
    

  

    

TOTAL PROJECTS IN LEASE UP AND UNDER CONSTRUCTION

                 

472,956

    

 

48,660

  

 

4,822

  

19%

                             
    

  

    

COMMITTED PROJECTS:

                                        

None

                                                  

TOTAL IN-PROCESS AND COMMITTED PROJECTS:

                 

472,956

    

$

48,660

  

$

4,822

  

19%

                             
    

  

    

(1) Based on management's estimation of the earlier of stabilized occupancy (95%) or one year from the date of substantial completion.
(2) Percentage committed includes executed leases and signed letters of intent, calculated on a square footage basis.
(3) Certain aspects of a lease representing 23% of the project are subject to governmental approval.

 

22


KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Future Development Pipeline

($ in thousands)

 

Project


 

Location


 

Type


  

Total

Site

Acreage


 

Estimated Rentable Square Feet


 

Total Estimated Investment


  

Total

Spent as of

03/31/2003


SAN DIEGO COUNTY:

                             

Innovation Corporate Center—Lot 2

 

Rancho Bernardo, CA

 

Office

  

3.0

 

51,187

 

$

10,619

  

$

2,968

Innovation Corporate Center—Lot 4

 

Rancho Bernardo, CA

 

Office

  

3.4

 

75,000

 

 

14,221

  

 

3,585

Innovation Corporate Center—Lot 9

 

Rancho Bernardo, CA

 

Office

  

3.2

 

65,867

 

 

13,462

  

 

3,541

Innovation Corporate Center—Lot 10

 

Rancho Bernardo, CA

 

Office

  

2.2

 

37,405

 

 

8,580

  

 

2,430

Pacific Corporate Center—Lots 3, 4 & 6

 

Sorrento Mesa, CA

 

Office

  

10.9

 

225,000

 

 

52,337

  

 

13,715

Pacific Corporate Center—Lot 8

 

Sorrento Mesa, CA

 

Office

  

5.0

 

95,000

 

 

27,815

  

 

6,958

Santa Fe Summit—Phase I

 

56-Corridor, CA

 

Office

  

7.6

 

150,000

 

 

35,079

  

 

6,926

Santa Fe Summit—Phase II

 

56-Corridor, CA

 

Office

  

7.6

 

150,000

 

 

33,994

  

 

6,926

Sorrento Gateway—Lot 1

 

Sorrento Mesa, CA

 

Office

  

3.4

 

61,000

 

 

17,549

  

 

3,900

Sorrento Gateway—Lot 2

 

Sorrento Mesa, CA

 

Office

  

4.4

 

80,000

 

 

25,714

  

 

7,154

Sorrento Gateway—Lot 3

 

Sorrento Mesa, CA

 

Office

  

3.4

 

60,000

 

 

20,231

  

 

5,032

Sorrento Gateway—Lot 7

 

Sorrento Mesa, CA

 

Office

  

4.1

 

57,000

 

 

19,174

  

 

6,452

            
 
 

  

TOTAL FUTURE DEVELOPMENT PIPELINE

          

58.2

 

1,107,459

 

$

278,775

  

$

69,587

            
 
 

  

 

23


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Capital Structure

At March 31, 2003

($ in thousands)

 

    

Shares/Units at
March 31, 2003


  

Aggregate

Principal

Amount or

$ Value

Equivalent


    

% of Total

Market
Capitalization


 

DEBT:

                    

Secured Debt

       

$

514,115

    

31.5

%

Unsecured Line of Credit

       

 

262,500

    

16.4

%

         

    

Total Debt

       

$

776,615

    

47.6

%

         

    

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

    

2.8

%

Common Units Outstanding (2)

  

4,221,752

  

 

93,301

    

5.7

%

Common Shares Outstanding (2)

  

27,474,983

  

 

607,197

    

37.2

%

         

    

Total Equity

       

$

855,498

    

52.4

%

         

    

TOTAL MARKET CAPITALIZATION

       

$

1,632,113

    

100.0

%

         

    


(1) Value based on $50.00 per share liquidation preference.
(2) Valued based on closing share price of $22.10 at March 31, 2003.

 

24


KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Debt Analysis

At March 31, 2003

($ in thousands)

 

TOTAL DEBT COMPOSITION

    

% of

Total Debt


    

Weighted Average


       

Interest Rate


    

Maturity


Secured vs. Unsecured Debt:

                  

Secured Debt

  

66.2

%

  

6.2

%

  

4.8

Unsecured Debt

  

33.8

%

  

3.3

%

  

2.0

Floating vs. Fixed Rate Debt:

                  

Fixed Rate Debt(1),(2)

  

62.1

%

  

6.7

%

  

5.0

Floating Rate Debt

  

37.9

%

  

2.9

%

  

1.9

           

  

Total Debt

         

5.2

%

  

3.8

           

  

Total Debt Including Loan Fees

         

5.7

%

    
           

    

 

UNSECURED LINE OF CREDIT

Total Line


 

Outstanding Balance


  

Expiration Date


$425,000

 

$262,500

  

March 2005

 

CAPITALIZED INTEREST & LOAN FEES

Quarter-to-Date


  

Year-to-Date


$3.4

  

$3.4


(1) Includes the impact of the interest-rate swap agreements listed on page 26.
(2) 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 agreements listed on page 26. Including the effects of the interest-rate cap agreements, the Company had fixed or capped approximately 75.0% of its total outstanding debt at March 31, 2003.

 

 

 

25


 

KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Debt Analysis

At March 31, 2003

($ in thousands)

 

DEBT MATURITY SCHEDULE

Floating/Fixed Rate


  

Effective
Rate


    

Maturity
Date


    

Remaining

2003


  

2004


  

2005


  

2006


  

2007


  

After 2007


  

Total


Unsecured Debt:

                                                              

Floating

  

2.77

%

  

3/15/2005

 

                

$

262,500

                       

$

262,500

Secured Debt:

                                                              

Floating

  

3.06

%

  

10/29/2003

 

  

 

75,671

                                     

 

75,671

Floating

  

3.09

%

  

6/29/2004

 

  

 

261

  

 

20,489

                              

 

20,750

Floating

  

3.19

%

  

9/29/2004

(1)

         

 

25,304

                              

 

25,304

Fixed

  

8.35

%

  

1/31/2005

 

  

 

1,281

  

 

1,837

  

 

72,982

                       

 

76,100

Fixed

  

8.45

%

  

12/1/2005

 

  

 

436

  

 

625

  

 

10,349

                       

 

11,410

Floating

  

2.68

%

  

12/23/2005

(2)

                

 

29,000

                       

 

29,000

Floating

  

3.03

%

  

1/1/2006

 

                       

 

31,000

                

 

31,000

Fixed

  

6.51

%

  

8/12/2007

 

  

 

154

  

 

218

  

 

232

  

 

248

  

 

17,049

         

 

17,901

Fixed

  

7.21

%

  

8/12/2007

 

  

 

108

  

 

154

  

 

166

  

 

178

  

 

4,325

         

 

4,931

Fixed

  

7.20

%

  

4/1/2009

 

  

 

1,377

  

 

1,954

  

 

2,099

  

 

2,256

  

 

2,423

  

 

78,079

  

 

88,188

Fixed

  

6.70

%

  

1/10/2012

 

  

 

688

  

 

973

  

 

1,040

  

 

1,112

  

 

1,189

  

 

74,063

  

 

79,065

Fixed

  

8.21

%

  

10/1/2013

 

  

 

291

  

 

416

  

 

452

  

 

490

  

 

532

  

 

4,143

  

 

6,324

Fixed

  

8.26

%

  

11/1/2014

 

  

 

521

  

 

748

  

 

813

  

 

883

  

 

960

  

 

18,161

  

 

22,086

Fixed

  

7.15

%

  

5/1/2017

 

  

 

830

  

 

1,178

  

 

1,266

  

 

1,359

  

 

1,459

  

 

20,293

  

 

26,385

    

         

  

  

  

  

  

  

    

4.82

%

         

 

81,618

  

 

53,896

  

 

118,399

  

 

37,526

  

 

27,937

  

 

194,739

  

 

514,115

    

         

  

  

  

  

  

  

Effect of SWAPS

  

0.40

%

                                                       
    

         

  

  

  

  

  

  

Total

  

5.22

%

         

$

81,618

  

$

53,896

  

$

380,899

  

$

37,526

  

$

27,937

  

$

194,739

  

$

776,615

    

         

  

  

  

  

  

  


(1) Maturity date does not reflect the one-year extension option.
(2) Maturity date does not reflect the two one-year extension options.

 

HEDGING INSTRUMENTS

Notional

Amount


  

Instrument


 

Rate


 

Maturity


50,000

  

Cap

 

4.25%

 

01/2005

50,000

  

Cap

 

4.25%

 

01/2005

50,000

  

Swap

 

4.46%

 

01/2005

50,000

  

Swap

 

2.57%

 

11/2005

25,000

  

Swap

 

2.98%

 

12/2006

25,000

  

Swap

 

2.98%

 

12/2006


            

$250,000

            

 

26


KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Management Statements on Non-GAAP Supplemental Measures

 

Included on this page are management’s statements regarding certain non-GAAP financial measures provided in this supplemental financial report and, with respect to Funds from Operations (“FFO”), in the Company’s earnings release on April 28, 2003, and the reasons why management believes that these measures provide useful information to investors about the Company's financial condition and results of operations.

 

Funds from Operations:

 

Management believes that Funds From Operations ("FFO") is a useful supplemental measure of the Company's operating performance. The Company computes FFO in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). The White Paper defines FFO as net income or loss computed in accordance with generally accepted accounting principles ("GAAP"), excluding extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable operating property, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships and joint ventures. Other real estate investment trusts (“REITs”) may use different methodologies for calculating FFO and, accordingly, the Company's FFO may not be comparable to other REITs.

 

Because FFO excludes depreciation and amortization, gains and losses from property dispositions, and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective not immediately apparent from net income. In addition, management believes that FFO provides useful information to the investment community about the Company's financial performance when compared to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs.

 

However, FFO should not be viewed as an alternative measure of the Company’s operating performance since it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties, which are significant economic costs that could materially impact the Company’s results of operations.

 

Funds Available for Distribution:

 

Management believes that Funds Available for Distribution ("FAD") is a useful supplemental measure of the Company's liquidity. The Company computes FAD by adding to FFO the non-cash amortization of deferred financing costs and restricted stock compensation, and then subtracting tenant improvements, leasing commissions, and recurring capital expenditures, and eliminating the net effect of straight-line rents. FAD provides an additional perspective on the Company’s ability to fund cash needs and make distributions to shareholders by adjusting for the effect of these non-cash items included in FFO, as well as recurring capital expenditures and leasing costs. Management also believes that FAD provides useful information to the investment community about the Company's financial position as compared to other REITs since FAD is a liquidity measure used by other REITs. However, other REITs may use different methodologies for calculating FAD and, accordingly, the Company's FAD may not be comparable to other REITs.

 

27


KILROY REALTY CORPORATION

First Quarter 2003 Supplemental Financial Report


Reconciliation of Funds Available for Distribution to GAAP Net Cash Provided by Operating Activities

(unaudited, $ in thousands)

 

    

Three Months Ended

March 31,


 
    

2003


    

2002


 

Funds Available for Distribution

  

$

22,633

 

  

$

26,954

 

Adjustments:

                 

Tenant improvements, leasing commissions and recurring capital expenditures

  

 

4,087

 

  

 

335

 

Depreciation for furniture, fixtures and equipment

  

 

243

 

  

 

191

 

Provision for uncollectible tenant receivables

  

 

348

 

  

 

439

 

Changes in assets and liabilities (1)

  

 

(8,913

)

  

 

(5,750

)

Adjustments related to the minority interest in Development LLCs (2)

                 

Minority interest in earnings of Development LLCs

           

 

(2,884

)

Depreciation and amortization of building and improvements and leasing costs

           

 

539

 

Net effect of straight-line rents and deferred rent receivables

           

 

1,781

 

Non-cash amortization of deferred financing costs

           

 

36

 

    


  


Net cash provided by operating activities

  

$

18,398

 

  

$

21,641

 

    


  



(1) Includes changes in the following assets and liabilities: current receivables; deferred leasing costs; prepaid expenses and other assets; accounts payable, accrued expenses and other liabilities; rents received in advance, security deposits and deferred revenue; and other.
(2) FFO and FAD do not reflect the minority interest in Development LLCs share of these adjustments. The Company acquired the minority interest in the Development LLCs in March 2002.

 

 

28