LOS ANGELES–()–Kilroy Realty Corporation (NYSE: KRC) today reported
financial results for its fourth quarter ended December 31, 2011, with
net income available to common stockholders of $39.9 million, or $0.68
per share, compared to $1.5 million, or $0.02 per share, in the fourth
quarter of 2010. Revenues from continuing operations in the fourth
quarter totaled $101.5 million, up from $79.3 million in the prior
year’s fourth quarter. Funds from operations (FFO) for the period
totaled $40.5 million, or $0.66 per share, compared to $29.5 million, or
$0.54 per share, in the year-earlier period.
“Our ongoing focus on leasing, portfolio enhancement and financial
strength really paid off in 2011”
For its fiscal year ended December 31, 2011, KRC reported net income
available to common stockholders of $50.8 million, or $0.87 per share,
compared to $4.5 million, or $0.07 per share, in fiscal year 2010.
Revenues from continuing operations in 2011 totaled $367.1 million, up
from $287.4 million in 2010. FFO for the year totaled $136.2 million, or
$2.29 per share, compared to $106.6 million, or $2.05 per share, in 2010.
Results for the fourth quarter and fiscal year ended December 31, 2011
include the receipt of a $3.7 million, or $0.06 per share, cash payment
under a bankruptcy claim related to a 2009 tenant default. Net income
for the fourth quarter and fiscal year ended December 31, 2011 includes
approximately $39.0 million and $51.6 million, respectively, of net
gains from property dispositions. In addition, results for the fiscal
year ended December 31, 2010 include a $4.6 million, or $0.09 per share,
charge for the early extinguishment of debt. All per share amounts in
this report are presented on a diluted basis.
During the fourth quarter of 2011, the company sold a 192,000
square-foot industrial building located in the El Segundo submarket of
Los Angeles for a sales price of approximately $42.2 million bringing
total 2011 disposition proceeds to $66.1 million. In addition, on
January 30, 2012, the company closed on the disposition of two office
properties in San Diego at a sales price of approximately $146.1 million
or $576 per square foot.
Also during the fourth quarter, the company completed the acquisition of
two office properties totaling just over 484,000 square feet, for an
aggregate purchase price of approximately $121.5 million. Both
properties are located in the South of Market (SOMA) district of San
Francisco, one of the top performing real estate markets in the country.
301 Brannan Street is 66.1% occupied and 100% leased. 370 Third Street
is 8.9% occupied and 36.8% leased, and is currently undergoing
redevelopment.
For 2011, KRC completed the acquisition of eight office projects
encompassing 11 buildings and approximately two million square feet for
an aggregate investment of $637.8 million. These properties are located
in the high-growth, gateway markets of San Francisco, San Diego, and
greater Seattle.
KRC reported its strongest annual leasing performance in the company’s
history as a publicly traded company during 2011. For the year, KRC
signed new and renewing leases on 2.6 million square feet of office and
industrial space. At December 31, 2011, the company’s stabilized
portfolio totaled approximately 14.8 million square feet and was 92.4%
occupied.
“Our ongoing focus on leasing, portfolio enhancement and financial
strength really paid off in 2011,” said John Kilroy, Jr., KRC’s
president and chief executive officer. “We successfully extended the KRC
franchise into the high potential, high value West Coast markets of San
Francisco and Seattle. We implemented an effective capital recycling
program to finance a portion of our acquisitions. We achieved the
strongest annual leasing performance in our history as a public company.
And the impact is apparent in our 2011 financial results, with
year-over-year increases in both FFO and same-store net operating
income, and a strong total return to shareholders.”
KRC management will discuss updated earnings guidance for fiscal 2012
during the company’s January 31, 2012 earnings conference call. The call
will begin at 10:00 a.m. Pacific time and last approximately one hour.
Those interested in listening via the Internet can access the conference
call at http://www.kilroyrealty.com.
Please go to the website 15 minutes before the call and register. It may
be necessary to download audio software to hear the conference call.
Those interested in listening via telephone can access the conference
call at 888-679-8034, reservation #51740166. A replay of the conference
call will be available via phone through February 7, 2012 at
888-286-8010, reservation #17959731, or via the Internet at the
company’s website.
Kilroy Realty Corporation, a member of the SP Small Cap 600 Index, is a
Southern California-based real estate investment trust active in the
office and industrial property sectors. For over 60 years, the company
has owned, developed, acquired and managed real estate assets primarily
in the coastal regions of Los Angeles, Orange County, San Diego, greater
Seattle and the San Francisco Bay Area. At December 31, 2011, the
company owned 11.4 million rentable square feet of commercial office
space and 3.4 million rentable square feet of industrial space. More
information is available at http://www.kilroyrealty.com.
KILROY REALTY CORPORATION
SUMMARY QUARTERLY RESULTS
(unaudited, in thousands, except per share data)
Three Months
Three Months
Ended
Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
December 31,
2011
2010
2011
2010
Revenues from continuing operations (1)
$
101,458
$
79,309
$
367,131
$
287,396
Revenues including discontinued operations(1)
$
105,138
$
82,941
$
383,131
$
301,980
Net income available to common stockholders(1)
$
39,910
$
1,535
$
50,819
$
4,512
Weighted average common shares outstanding – basic
58,440
52,274
56,717
49,497
Weighted average common shares outstanding – diluted
58,440
52,274
56,717
49,497
Net income available to common stockholders per share – basic(1)
$
0.68
$
0.02
$
0.87
$
0.07
Net income available to common stockholders per share – diluted (1)
$
0.68
$
0.02
$
0.87
$
0.07
Funds From Operations (1), (2), (3)
$
40,528
$
29,485
$
136,173
$
106,639
Weighted average common shares/units outstanding – basic (4)
61,108
54,786
59,362
52,033
Weighted average common shares/units outstanding – diluted (4)
61,110
54,802
59,549
52,049
Funds From Operations per common share/unit – basic (1), (4)
$
0.66
$
0.54
$
2.29
$
2.05
Funds From Operations per common share/unit – diluted (1), (4)
$
0.66
$
0.54
$
2.29
$
2.05
Common shares outstanding at end of period
58,820
52,350
Common partnership units outstanding at end of period
1,718
1,723
Total common shares and units outstanding at end of period
60,538
54,073
December 31,
December 31,
2011
2010
Stabilized portfolio occupancy rates: (5)
Office
90.1
%
87.5
%
Industrial
100.0
%
93.9
%
Weighted average total
92.4
%
89.1
%
Los Angeles and Ventura Counties
83.5
%
89.9
%
San Diego County
92.5
%
86.4
%
Orange County
99.1
%
93.5
%
San Francisco Bay Area
93.3
%
84.3
%
Greater Seattle
89.9
%
100.0
%
Weighted average total
92.4
%
89.1
%
Total square feet of stabilized properties owned at end of period: (5)
Office
11,421
10,395
Industrial
3,413
3,603
Total
14,834
13,998
(1) Results for the three months and year ended December 31, 2011
include the receipt of a $3.7 million cash payment under a bankruptcy
claim related to a 2009 tenant default.
(2) Reconciliation of Net Income Available to Common Stockholders to
Funds From Operations and management statement on Funds From Operations
are included after the Consolidated Statements of Operations.
(3) Reported amounts are attributable to common stockholders and common
unitholders.
(4) Calculated based on weighted average shares outstanding including
participating share-based awards and assuming the exchange of all common
limited partnership units outstanding.
(5) The Company’s stabilized portfolio excludes two office buildings
classified as held for sale as of December 31, 2011.
KILROY REALTY CORPORATION CONSOLIDATED
BALANCE SHEETS
(unaudited, in thousands)
December 31,
December 31,
2011
2010
ASSETS
REAL ESTATE ASSETS:
Land and improvements
$
537,574
$
491,333
Buildings and improvements
2,830,310
2,435,173
Undeveloped land and construction in progress
430,806
290,365
Total real estate held for investment
3,798,690
3,216,871
Accumulated depreciation and amortization
(742,503
)
(672,429
)
Total real estate held for investment, net
3,056,187
2,544,442
Real estate assets and other assets held for sale, net
84,156
—
Cash and cash equivalents
4,777
14,840
Restricted cash
358
1,461
Marketable securities
5,691
4,902
Current receivables, net
8,395
6,258
Deferred rent receivables, net
101,142
89,052
Deferred leasing costs and acquisition-related intangible assets, net
155,522
131,066
Deferred financing costs, net
18,368
16,447
Prepaid expenses and other assets, net
12,199
8,097
TOTAL ASSETS
$
3,446,795
$
2,816,565
LIABILITIES, NONCONTROLLING INTEREST AND
EQUITY
LIABILITIES:
Secured debt, net
$
351,825
$
313,009
Exchangeable senior notes, net
306,892
299,964
Unsecured senior notes, net
980,569
655,803
Unsecured line of credit
182,000
159,000
Accounts payable, accrued expenses and other liabilities
81,713
68,525
Accrued distributions
22,692
20,385
Deferred revenue and acquisition-related intangible liabilities, net
79,781
79,322
Rents received in advance and tenant security deposits
26,917
29,189
Liabilities and deferred revenue of real estate assets held for sale
13,286
—
Total liabilities
2,045,675
1,625,197
NONCONTROLLING INTEREST:
7.45% Series A cumulative redeemable preferred units of the
Operating Partnership
73,638
73,638
EQUITY:
Stockholders’ Equity
7.80% Series E Cumulative Redeemable Preferred stock
38,425
38,425
7.50% Series F Cumulative Redeemable Preferred stock
83,157
83,157
Common stock
588
523
Additional paid-in capital
1,448,997
1,211,498
Distributions in excess of earnings
(277,450
)
(247,252
)
Total stockholders’ equity
1,293,717
1,086,351
Noncontrolling Interest
Common units of the Operating Partnership
33,765
31,379
Total equity
1,327,482
1,117,730
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY
$
3,446,795
$
2,816,565
KILROY REALTY CORPORATION CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Three Months
Three Months
Ended
Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
December 31,
2011
2010
2011
2010
REVENUES:
Rental income
$
89,504
$
73,112
$
332,489
$
261,534
Tenant reimbursements
7,492
5,576
27,976
22,918
Other property income
4,462
621
6,666
2,944
Total revenues
101,458
79,309
367,131
287,396
EXPENSES:
Property expenses
18,761
15,358
72,869
56,389
Real estate taxes
8,422
7,102
32,521
26,342
Provision for bad debts
503
129
644
16
Ground leases
513
336
1,779
984
General and administrative expenses
7,793
6,867
28,148
27,963
Acquisition-related expenses
1,224
624
4,053
2,248
Depreciation and amortization
38,022
28,225
133,220
99,611
Total expenses
75,238
58,641
273,234
213,553
OTHER (EXPENSES) INCOME:
Interest income and other net investment gains
299
261
571
964
Interest expense
(23,254
)
(19,044
)
(89,409
)
(59,941
)
Loss on early extinguishment of debt
—
—
—
(4,564
)
Total other (expenses) income
(22,955
)
(18,783
)
(88,838
)
(63,541
)
INCOME FROM CONTINUING OPERATIONS
3,265
1,885
5,059
10,302
DISCONTINUED OPERATIONS:
Income from discontinued operations
2,566
2,550
10,843
8,635
Net gain on dispositions of discontinued operations
39,032
949
51,587
949
Total income from discontinued operations
41,598
3,499
62,430
9,584
NET INCOME
44,863
5,384
67,489
19,886
Net income attributable to noncontrolling common units of the
Operating Partnership
(1,154
)
(50
)
(1,474
)
(178
)
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
43,709
5,334
66,015
19,708
PREFERRED DISTRIBUTIONS AND DIVIDENDS:
Distributions on noncontrolling cumulative redeemable preferred
units of the Operating Partnership
(1,397
)
(1,397
)
(5,588
)
(5,588
)
Preferred dividends
(2,402
)
(2,402
)
(9,608
)
(9,608
)
Total preferred distributions and dividends
(3,799
)
(3,799
)
(15,196
)
(15,196
)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
39,910
$
1,535
$
50,819
$
4,512
Weighted average common shares outstanding – basic
58,440
52,274
56,717
49,497
Weighted average common shares outstanding – diluted
58,440
52,274
56,717
49,497
Net income available to common stockholders per share – basic
$
0.68
$
0.02
$
0.87
$
0.07
Net income available to common stockholders per share – diluted
$
0.68
$
0.02
$
0.87
$
0.07
KILROY REALTY CORPORATION FUNDS FROM
OPERATIONS
(unaudited, in thousands, except per share data)
Three Months
Three Months
Ended
Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
December 31,
2011
2010
2011
2010
Net income available to common stockholders
$
39,910
$
1,535
$
50,819
$
4,512
Adjustments:
Net income attributable to noncontrolling common units of the
Operating Partnership
1,154
50
1,474
178
Depreciation and amortization of real estate assets
38,496
28,849
135,467
102,898
Net gain on dispositions of discontinued operations
(39,032
)
(949
)
(51,587
)
(949
)
Funds From Operations (1)
$
40,528
$
29,485
$
136,173
$
106,639
Weighted average common shares/units outstanding – basic
61,108
54,786
59,362
52,033
Weighted average common shares/units outstanding – diluted
61,110
54,802
59,549
52,049
Funds From Operations per common share/unit – basic (2)
$
0.66
$
0.54
$
2.29
$
2.05
Funds From Operations per common share/unit – diluted (2)
$
0.66
$
0.54
$
2.29
$
2.05
(1) The company calculates FFO in accordance with the White Paper on FFO
approved by the Board of Governors of NAREIT. The White Paper defines
FFO as net income or loss calculated in accordance with GAAP, excluding
extraordinary items, as defined by GAAP, gains and losses from sales of
depreciable real estate and impairment write-downs associated with
depreciable real estate, 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.
Management believes that FFO is a useful supplemental measure of the
company’s operating performance. The exclusion from FFO of gains and
losses from the sale of operating real estate assets allows investors
and analysts to readily identify the operating results of the assets
that form the core of the company’s activity and assists in comparing
those operating results between periods. Also, because FFO is generally
recognized as the industry standard for reporting the operations of
REITs, it facilitates comparisons of the company’s operating performance
to other REITs. However, other REITs may use different methodologies to
calculate FFO, and accordingly, the company’s FFO may not be comparable
to all other REITs.
Implicit in historical cost accounting for real estate assets in
accordance with GAAP is the assumption that the value of real estate
assets diminishes predictably over time. Since real estate values have
historically risen or fallen with market conditions, many industry
investors and analysts have considered presentations of operating
results for real estate companies using historical cost accounting alone
to be insufficient. Because FFO excludes depreciation and amortization
of real estate assets, management believes that FFO along with the
required GAAP presentations provides a more complete measurement of the
company’s performance relative to its competitors and a more appropriate
basis on which to make decisions involving operating, financing and
investing activities than the required GAAP presentations alone would
provide.
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 and could
materially impact the company’s results from operations.
(2) Reported amounts are attributable to common stockholders and common
unitholders.
Article source: http://eon.businesswire.com/news/eon/20120130006587/en