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Kilroy Realty Corporation Reports Third Quarter Financial Results

Wed, 31 Oct 2012 07:51:26 +0000

Kilroy Realty Corporation Reports Third Quarter Financial Results

LOS ANGELES–(BUSINESS WIRE)– Kilroy Realty Corporation today reported financial results for its third quarter ended September 30, 2012, with a net loss available to common stockholders of $2.8 million, or $0.04 per share, compared to net income available to common stockholders of $10.2 million, or $0.17 per share, in the third quarter of 2011. Revenues from continuing operations in the third quarter totaled $104.3 million, up from $86.4 million in the prior year’s third quarter. Funds from operations (FFO) for the period totaled $43.1 million, or $0.57 per share, compared to $33.9 million, or $0.56 per share, in the year-earlier period. Net loss available to common stockholders and FFO for the third quarter of 2012 included a one-time, non-cash charge of approximately $2.1 million, or $0.03 per share, in conjunction with the redemption of all of the company’s Series A Cumulative Redeemable Preferred Units.

Results for the third quarter of 2012 include $0.01 per share of acquisition-related expenses and also reflect the company’s public offering of 5.75 million shares of common stock sold at a price of $46.10 per share, which closed on August 13, 2012. Net loss available to common stockholders in the third quarter of 2012 also included an increase in depreciation and amortization expense of approximately $10.8 million attributable to depreciation and amortization for the company’s recent acquisition properties.

For the first nine months of 2012, KRC reported net income available to common stockholders of $64.0 million, or $0.92 per share, compared to $10.9 million, or $0.18 per share, in the first nine months of 2011. Revenues from continuing operations in the nine-month period totaled $293.8 million, up from $243.4 million in the same period of 2011. FFO for the first nine months of 2012 totaled $115.6 million, or $1.61 per share, compared to $95.6 million, or $1.62 per share, in the same period of 2011. Net income in the first nine months of 2012 included approximately $72.8 million of net gains from property dispositions. All per share amounts in this report are presented on a diluted basis.

KRC also announced that it has entered into agreements to sell its entire Orange County industrial portfolio and five additional Southern California office buildings. The transactions are expected to close by year-end 2012, subject to customary closing conditions. Accordingly, these assets have been reclassified as properties held for sale and their financial results are accounted for as discontinued operations in the 2012 third-quarter and nine-month financial statements.

At September 30, 2012, the company’s stabilized portfolio, encompassing approximately 12.7 million square feet of office space located in greater Seattle, the San Francisco Bay Area, Los Angeles, Orange County and San Diego, was 91.1% occupied.

As previously announced, KRC completed three operating property acquisitions since the end of the second quarter: Skyline Tower, a 24-story Class A office building in Bellevue, Washington; Sunset Media Center, a 22-story Class A office building in Hollywood; and Tribeca West, a three-story entertainment-oriented office building in West Los Angeles.

In addition, the company completed the acquisition of three development opportunities: 333 Brannan Street, a development site in San Francisco’s SOMA district; Columbia Square, an historic 4.7 acre media campus in Hollywood; and 350 Mission Street, a development site in San Francisco’s South of Market financial district.

Details of all these transactions are available in the News section on the company’s website.

Since the beginning of 2012, KRC has completed the purchase of 13 office buildings in six transactions aggregating approximately 1.7 million square feet of space for an aggregate purchase price of approximately $645 million. The company also has added four individual projects to its development and redevelopment pipeline, acquiring the four projects for an aggregate purchase price of approximately $210 million. The company estimates that its total investment, including land, in these four development and redevelopment projects will aggregate approximately $846 million.

“KRC continues to build the breadth, diversity, value and financial strength of its West Coast real estate operations,” said John Kilroy, Jr., the company’s president and chief executive officer. “We’re leveraging the expertise and local knowledge of our talented management team to acquire top quality properties and development opportunities in the West Coast’s most economically vibrant markets. We’re also pursuing an active disposition program to generate capital from the sale of non-strategic assets and maintain a conservatively leveraged balance sheet in what remains a highly volatile business environment.”

KRC management will discuss updated earnings guidance for fiscal 2012 during the company’s October 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) 680-0879 reservation # 76348175. A replay of the conference call will be available via phone through November 7, 2012 at (888) 286-8010, reservation # 10454808, or via the Internet at the company’s website.

About Kilroy Realty Corporation. Kilroy Realty Corporation, a member of the SP Small Cap 600 Index, is a real estate investment trust active in the office and industrial property sectors along the West Coast. 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 September 30, 2012, the company’s stabilized office portfolio encompassed 12.7 million rentable square feet and its held for sale portfolio encompassed 3.7 million rentable square feet of office and industrial space. More information is available at http://www.kilroyrealty.com.

Forward-Looking Statements. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated in forward-looking statements, and you should not rely on forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in forward-looking statements, including, among others, risks associated with: investment in real estate assets, which are illiquid; trends in the real estate industry; significant competition, which may decrease the occupancy and rental rates of properties; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired properties; the availability of cash for distribution and debt service and exposure of risk of default under debt obligations; adverse changes to, or implementations of, applicable laws, regulations or legislation; and the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts. These factors are not exhaustive. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors included under the caption “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2011 and our other filings with the Securities and Exchange Commission. All forward-looking statements are based on information that was available, and speak only, as of the date on which they are made. We assume no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information or otherwise, except to the extent required in connection with ongoing requirements under Federal securities laws.

KILROY REALTY CORPORATION

SUMMARY QUARTERLY RESULTS

(unaudited, in thousands, except per share data)

Three Months
Ended

September 30, 2012

Three Months
Ended

September 30, 2011

Nine Months
Ended

September 30, 2012

Nine Months
Ended

September 30, 2011

Revenues from continuing operations

$
104,293

$
86,399

$
293,800

$
243,371

Revenues including discontinued operations

$
111,375

$
97,806

$
315,712

$
277,995

Net (loss) income available to common stockholders⁽¹⁾

$
(2,753
)

$
10,195

$
63,988

$
10,912

Weighted average common shares outstanding – basic

71,889

58,355

67,975

56,136

Weighted average common shares outstanding – diluted

71,889

58,355

67,975

56,136

Net (loss) income available to common stockholders per share – basic ⁽¹⁾

$
(0.04
)

$
0.17

$
0.92

$
0.18

Net (loss) income available to common stockholders per share – diluted ⁽¹⁾

$
(0.04
)

$
0.17

$
0.92

$
0.18

Funds From Operations ^{(1), (2), (3)}

$
43,142

$
33,878

$
115,641

$
95,648

Weighted average common shares/units outstanding – basic ⁽⁴⁾

74,850

61,015

70,830

58,774

Weighted average common shares/units outstanding – diluted ⁽⁴⁾

76,185

61,017

71,953

58,961

Funds From Operations per common share/unit – basic ^{(1), (4)}

$
0.58

$
0.56

$
1.63

$
1.63

Funds From Operations per common share/unit – diluted ^{(1), (4)}

$
0.57

$
0.56

$
1.61

$
1.62

Common shares outstanding at end of period:

74,693

58,464

Common partnership units outstanding at end of period

1,827

1,718

Total common shares and units outstanding at end of period

76,520

60,182

September 30, 2012

September 30, 2011
Stabilized office portfolio occupancy rates:⁽⁵⁾

Los Angeles and Ventura Counties

94.3
%

84.1
%
San Diego County

87.8
%

92.6
%
Orange County

95.6
%

91.4
%
San Francisco Bay Area

92.0
%

95.4
%
Greater Seattle

93.2
%

90.2
%
Weighted average total

91.1
%

90.6
%

Total square feet of stabilized office properties owned at end of period:⁽⁵⁾

Los Angeles and Ventura Counties

3,038

2,976

San Diego County

5,183

5,435

Orange County

497

541

San Francisco Bay Area

2,211

1,732

Greater Seattle

1,727

890

Total

12,656

11,574

KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

September 30, 2012

December 31, 2011

ASSETS

REAL ESTATE ASSETS:

Land and improvements

$
562,071

$
537,574

Buildings and improvements

3,169,224

2,830,310

Undeveloped land and construction in progress

668,058

430,806

Total real estate held for investment

4,399,353

3,798,690

Accumulated depreciation and amortization

(725,728
)

(742,503
)
Total real estate held for investment, net

3,673,625

3,056,187

Real estate assets and other assets held for sale, net

166,019

84,156

Cash and cash equivalents

16,113

4,777

Restricted cash

5,884

358

Marketable securities

6,812

5,691

Current receivables, net

7,113

8,395

Deferred rent receivables, net

110,128

101,142

Deferred leasing costs and acquisition-related intangible assets, net

187,307

155,522

Deferred financing costs, net

18,442

18,368

Prepaid expenses and other assets, net

24,398

12,199

TOTAL ASSETS

$
4,215,841

$
3,446,795

LIABILITIES, NONCONTROLLING INTEREST AND EQUITY

LIABILITIES:

Secured debt

$
520,867

$
351,825

Exchangeable senior notes, net

162,885

306,892

Unsecured debt, net

1,130,814

980,569

Unsecured line of credit

27,000

182,000

Accounts payable, accrued expenses and other liabilities

127,472

81,713

Accrued distributions

28,845

22,692

Deferred revenue and acquisition-related intangible liabilities, net

120,407

79,781

Rents received in advance and tenant security deposits

31,728

26,917

Liabilities and deferred revenue of real estate assets held for sale

4,455

13,286

Total liabilities

2,154,473

2,045,675

NONCONTROLLING INTEREST:

7.45% Series A Cumulative Redeemable Preferred units of the Operating Partnership

—

73,638

EQUITY:

Stockholders’ Equity

7.80% Series E Cumulative Redeemable Preferred stock

—

38,425

7.50% Series F Cumulative Redeemable Preferred stock

—

83,157

6.875% Series G Cumulative Redeemable Preferred stock

96,155

—

6.375% Series H Cumulative Redeemable Preferred stock

96,256

—

Common stock

747

588

Additional paid-in capital

2,114,774

1,448,997

Distributions in excess of earnings

(288,765
)

(277,450
)
Total stockholders’ equity

2,019,167

1,293,717

Noncontrolling Interest

Common units of the Operating Partnership

42,201

33,765

Total equity

2,061,368

1,327,482

TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY

$
4,215,841

$
3,446,795

KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

Three Months
Ended

September 30, 2012

Three Months
Ended

September 30, 2011

Nine Months
Ended

September 30, 2012

Nine Months
Ended
September 30, 2011
REVENUES:

Rental income

$
95,405

$
79,673

$
268,228

$
223,853

Tenant reimbursements

8,665

6,387

23,947

17,382

Other property income

223

339

1,625

2,136

Total revenues

104,293

86,399

293,800

243,371

EXPENSES:

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Kilroy Realty Corporation Reports Second Quarter Financial Results

Wed, 01 Aug 2012 23:40:16 +0000

LOS ANGELES, Aug 01, 2012 (BUSINESS WIRE) –
Kilroy Realty Corporation

/quotes/zigman/171049/quotes/nls/krc KRC
-0.27%

today reported
financial results for its second quarter ended June 30, 2012, with a net
loss available to common stockholders of $800,000, or $0.02 per share,
compared to a net loss available to common stockholders of $317,000, or
$0.01 per share, in the second quarter of 2011. Revenues from continuing
operations in the second quarter totaled $103.9 million, up from $88.4
million in the prior year’s second quarter. Funds from operations
(FFO) for the period totaled $39.5 million, or $0.55 per share, compared
to $31.6 million, or $0.52 per share, in the year-earlier period.

Results for the second quarter of 2012 include $0.03 per share of
acquisition-related expenses, and the issuance of 575,689 common shares
under the company’s at-the-market stock offering program at a weighted
average price of $46.05, net of selling commissions.

For the first six months of 2012, KRC reported net income available to
common stockholders of $66.7 million, or $1.00 per share, compared to
$717,000, or less than $0.01 per share, in the first half of 2011.
Revenues from continuing operations in the six-month period totaled
$203.3 million, up from $172.2 million in the same period of 2011. FFO
for the first half of 2012 totaled $72.5 million, or $1.04 per share,
compared to $61.8 million, or $1.06 per share, in the first half of
2011. Net income for first half of 2012 included approximately $72.8
million of net gains from property dispositions. All per share amounts
in this report are presented on a diluted basis.

At June 30, 2012, the company’s stabilized portfolio totaled
approximately 15.6 million square feet and was 90.0% occupied. Occupancy
declined from 91.6% in the prior quarter primarily due to the lease
expirations of two tenants in San Diego as well as an industrial tenant
move-out in Orange County.

Since the end of the first quarter, KRC has completed the purchase of
five office buildings in four transactions aggregating approximately 1.2
million square feet of space for an aggregate purchase price of
approximately $410 million. The company also expanded its development
platform into Northern California with the purchase of 690 E.
Middlefield Road in Mountain View, California and 329 Brannan Street in
the SOMA submarket of San Francisco that upon completion are estimated
to have a total investment of approximately $285 million. A summary of
these transactions is as follows:

–
In May, the company purchased 690 E. Middlefield Road in Mountain
View, California for a purchase price of $74.5 million, where it will
develop, own and manage a 341,000 square-foot office campus under a
15-year lease for Synopsys, Inc.

/quotes/zigman/78740/quotes/nls/snps SNPS
-0.63%

, the global leader in
electronic design automation. The Synopsys office campus represents
KRC’s first ground-up development project in the greater San Francisco
Bay Area and will have a projected total investment of approximately
$200 million. The fully entitled office project will include two
five-story Class A office buildings with state-of-the-art
infrastructure and amenities, designed and pre-registered to meet LEED
Gold certification requirements.

–
In June, the company acquired, in two separate transactions, a
three-building office campus located on the waterfront in the Lake
Union submarket of Seattle, Washington. The 420,000 square foot office
project was purchased for approximately $144.6 million and is
currently 99% leased. As part of the acquisition, the Company assumed
a mortgage loan of approximately $34.0 million that bears interest at
a rate of 5.09% and matures in August 2015.

–
In July, the company acquired Skyline Tower, a 417,000 square-foot,
24-story, Class A office building in Bellevue, Washington for
approximately $186 million. The LEED Silver certified property is
located two blocks from the company’s Key Center office building and
one block north of the Bellevue Transit Center. Skyline Tower is
currently 92% leased. As part of the acquisition, the company assumed
a mortgage loan of approximately $84 million that bears interest at a
rate of 6.37% and matures in April 2013.

–
In July, the company acquired 329 Brannan Street, an office
development opportunity in the heart of San Francisco’s SOMA district
for approximately $18.5 million. The site is zoned for approximately
5.0 FAR coverage and the company intends to build a six-level office
building designed to appeal to the area’s growing community of
technology and media companies.

–
In July, the company acquired Sunset Media Center, a 322,000 square
foot, 22-story, Class A office building located in the Hollywood
submarket of Los Angeles, California for a purchase price of
approximately $79 million. The building is currently 87% leased. As
part of the acquisition, the company issued approximately $5 million
in common limited partnership units of Kilroy Realty, L.P. and assumed
a mortgage loan of approximately $54 million that bears interest at a
rate of 5.23% and matures in January 2016.

In late June, KRC obtained a $97.0 million non-recourse mortgage secured
by two office projects. The mortgage has a term of 15 years, maturing on
July 1, 2027, and bears interest at a rate of 4.48%. The company used
the loan proceeds to pay down a portion of the outstanding balance on
its credit facility.

“KRC’s expanding operational footprint and management expertise in top
quality real estate markets up and down the West Coast continue to
generate significant opportunities for profitable growth and long-term
value creation,” said John Kilroy, Jr., the company’s president and
chief executive officer. “With the talent and market knowledge now
represented on our team, we’re well-positioned to compete for and
execute attractive acquisition and development projects from Seattle to
San Diego. Equally important, we will continue to pursue these
opportunities with financial discipline, recognizing that a strong
balance sheet is essential in what remains an uncertain economic
environment.”

KRC management will discuss updated earnings guidance for fiscal 2012
during the company’s August 2, 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) 679-8035 reservation #77332020. A replay of the conference
call will be available via phone through August 9, 2012 at (888)
286-8010, reservation #61086733, or via the Internet at the company’s
website.

About Kilroy Realty Corporation. Kilroy Realty Corporation, a
member of the SP Small Cap 600 Index, is a 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 June 30,
2012, the company owned 12.2 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 .

Forward Looking Statements. This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are based
on our current expectations, beliefs and assumptions, and are not
guarantees of future performance, results or events. Forward-looking
statements are inherently subject to uncertainties, risks, changes in
circumstances, trends and factors that are difficult to predict, many of
which are outside of our control. Accordingly, actual performance,
results and events may vary materially from those indicated in
forward-looking statements, and you should not rely on forward-looking
statements as predictions of future performance, results or events.
Numerous factors could cause actual future performance, results and
events to differ materially from those indicated in forward-looking
statements, including, among others: risks associated with investment in
real estate assets, which are illiquid, and with trends in the real
estate industry; competitive market conditions; the ability to complete
potential acquisitions and dispositions on announced terms; the ability
to successfully operate acquired properties; the availability of cash
for debt service and exposure of risk of default under debt obligations;
government regulations that may affect development, redevelopment and
use of properties; and the ability to successfully complete development
and redevelopment projects on schedule and within budgeted amounts.
These factors are not exhaustive. For a discussion of additional factors
that could materially adversely affect our business and financial
performance, see the factors included under the caption “Risk Factors”
in our annual report on Form 10-K for the year ended December 31, 2011,
quarterly report on Form 10-Q for the quarter ended March 31, 2012, and
our other filings with the Securities and Exchange Commission. All
forward-looking statements are based on currently available information
and speak only as of the date on which they are made. We assume no
obligation to update any forward-looking statement made in this press
release that becomes untrue because of subsequent events, new
information or otherwise, except to the extent required in connection
with ongoing requirements under Federal securities laws.

KILROY REALTY CORPORATION SUMMARY QUARTERLY RESULTS (unaudited, in thousands, except per share data) ----------------------------------------------------------------------------------------------------------------------------------- Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 --------------- -------------- --------------- --------------- Revenues from continuing operations $ 103,922 $ 88,390 $ 203,332 $ 172,163 Revenues including discontinued operations $ 103,922 $ 92,064 $ 204,335 $ 180,189 Net (loss) income available to common stockholders(1) $ (800) $ (317) $ 66,740 $ 717 Weighted average common shares outstanding - basic 68,345 57,686 65,997 55,009 Weighted average common shares outstanding - diluted 68,345 57,686 65,997 55,009 Net (loss) income available to common stockholders per share - basic (1) $ (0.02) $ (0.01) $ 1.00 $ 0.00 Net (loss) income available to common stockholders per share - $ (0.02) $ (0.01) $ 1.00 $ 0.00 diluted (1) Funds From Operations (1), (2), (3) $ 39,508 $ 31,643 $ 72,498 $ 61,770 Weighted average common shares/units outstanding - basic (4) 71,226 60,337 68,799 57,634 Weighted average common shares/units outstanding - diluted (4) 72,473 60,817 69,815 58,010 Funds From Operations per common share/unit - basic (1), (4) $ 0.55 $ 0.52 $ 1.05 $ 1.07 Funds From Operations per common share/unit - diluted (1), (4) $ 0.55 $ 0.52 $ 1.04 $ 1.06 Common shares outstanding at end of period: 68,928 58,464 Common partnership units outstanding at end of period 1,718 1,718 ------------- ------------- Total common shares and units outstanding at end of period 70,646 60,182 June 30, 2012 June 30, 2011 ------------------ ------------------ Stabilized portfolio occupancy rates: Office 89.3 % 87.9 % Industrial 92.5 % 97.6 % ----------------- ----------------- Weighted average total 90.0 % 90.2 % Los Angeles and Ventura Counties 88.0 % 84.0 % San Diego County 87.5 % 88.4 % Orange County 92.7 % 96.7 % San Francisco Bay Area 91.4 % 93.1 % Greater Seattle 93.8 % 90.4 % ----------------- ----------------- Weighted average total 90.0 % 90.2 % Total square feet of stabilized properties owned at end of period: Office 12,227 11,466 Industrial 3,413 3,605 ------------- ------------- Total 15,640 15,071

(1) Net (Loss) Income Available to Common Stockholders includes a net gain on dispositions of discontinued operations of $72.8 million for the six months ended June 30, 2012. In addition, Net (Loss) Income Available to Common Stockholders and Funds from Operations for the six months ended June 30, 2012 include a non-cash charge of $4.9 million related to the original issuance cost of the Series E and F Preferred Stock that were redeemed on April 16, 2012. (2) Reconciliation of Net (Loss) 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.

KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited, in thousands) ---------------------------------------------------------------------------------------------------------------- June 30, 2012 December 31, 2011 ----------------------- -------------------- ASSETS --------------------------------------------------------------------------- REAL ESTATE ASSETS: Land and improvements $ 576,433 $ 537,574 Buildings and improvements 3,137,665 2,830,310 Undeveloped land and construction in progress 557,657 430,806 ------------------ ------------------ 4,271,755 3,798,690 Total real estate held for investment Accumulated depreciation and amortization (801,083) (742,503) ---------------------- ------------------- Total real estate held for investment, net 3,470,672 3,056,187 Real estate assets and other assets held for sale, net -- 84,156 Cash and cash equivalents 18,111 4,777 Restricted cash 97 358 Marketable securities 6,546 5,691 Current receivables, net 7,643 8,395 Deferred rent receivables, net 110,689 101,142 Deferred leasing costs and acquisition-related intangible assets, net 168,488 155,522 Deferred financing costs, net 18,919 18,368 Prepaid expenses and other assets, net 46,357 12,199 ------------------ ------------------ TOTAL ASSETS $ 3,847,522 $ 3,446,795 ======= ========= ======= ========= LIABILITIES, NONCONTROLLING INTEREST AND EQUITY --------------------------------------------------------------------------- LIABILITIES: Secured debt $ 381,097 $ 351,825 Exchangeable senior notes, net 161,844 306,892 Unsecured debt, net 1,130,732 980,569 Unsecured line of credit 102,000 182,000 Accounts payable, accrued expenses and other liabilities 98,940 81,713 Accrued distributions 25,975 22,692 Deferred revenue and acquisition-related intangible liabilities, net 108,462 79,781 Rents received in advance and tenant security deposits 31,768 26,917 Liabilities and deferred revenue of real estate assets held for sale -- 13,286 ------------------ ------------------ Total liabilities 2,040,818 2,045,675 ------------------ ------------------ NONCONTROLLING INTEREST: 7.45% Series A Cumulative Redeemable Preferred units of the 73,638 73,638 Operating Partnership EQUITY: Stockholders' Equity 7.80% Series E Cumulative Redeemable Preferred stock -- 38,425 7.50% Series F Cumulative Redeemable Preferred stock -- 83,157 6.875% Series G Cumulative Redeemable Preferred stock 96,155 -- Common stock 689 588 Additional paid-in capital 1,856,431 1,448,997 Distributions in excess of earnings (259,495) (277,450) ---------------------- ------------------- Total stockholders' equity 1,693,780 1,293,717 ------------------ ------------------ Noncontrolling Interest Common units of the Operating Partnership 39,286 33,765 ------------------ ------------------ Total equity 1,733,066 1,327,482 ------------------ ------------------ TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY $ 3,847,522 $ 3,446,795 ======= ========= ======= =========

KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data) ----------------------------------------------------------------------------------------------------------------------------------------------- Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 ------------------ ------------------ --------------- ------------------ REVENUES: Rental income $ 94,265 $ 80,158 $ 184,484 $ 157,155 Tenant reimbursements 9,065 7,130 17,369 13,152 Other property income 592 1,102 1,479 1,856 ---------------- ---------------- ------------- ---------------- Total revenues 103,922 88,390 203,332 172,163 ---------------- ---------------- ------------- ---------------- EXPENSES: Property expenses 21,196 17,356 38,731 34,865 Real estate taxes 8,881 8,127 17,270 16,017 Provision for bad debts -- 120 2 146 Ground leases 615 424 1,417 763 General and administrative expenses 9,251 7,440 18,018 14,000 Acquisition-related expenses 1,813 1,194 3,341 1,666 Depreciation and amortization 40,624 31,378 77,370 59,819 ---------------- ---------------- ------------- ---------------- Total expenses 82,380 66,039 156,149 127,276 ---------------- ---------------- ------------- ---------------- OTHER (EXPENSES) INCOME: Interest income and other net investment (losses) gains (110) 58 374 242 Interest expense (19,155) (21,228) (40,318) (42,104) -------------------- -------------------- ----------------- -------------------- Total other (expenses) income (19,265) (21,170) (39,944) (41,862) INCOME FROM CONTINUING OPERATIONS 2,277 1,181 7,239 3,025 DISCONTINUED OPERATIONS: Income from discontinued operations -- 2,291 900 5,314 Net gain on dispositions of discontinued operations -- -- 72,809 -- ---------------- ---------------- ------------- ---------------- Total income from discontinued operations -- 2,291 73,709 5,314 ---------------- ---------------- ------------- ---------------- NET INCOME 2,277 3,472 80,948 8,339 Net loss (income) attributable to noncontrolling common units of the 20 10 (1,775) (24) Operating Partnership -------------- -------------- ----------- ---- -------------- ---- NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION 2,297 3,482 79,173 8,315 PREFERRED DISTRIBUTIONS AND DIVIDENDS: Distributions on noncontrolling cumulative redeemable preferred (1,397) (1,397) (2,794) (2,794) units of the Operating Partnership Preferred dividends (1,700) (2,402) (4,721) (4,804) Original issuance costs of preferred stock called for redemption -- -- (4,918) -- ---------------- ---------------- ----------------- ---------------- Total preferred distributions and dividends (3,097) (3,799) (12,433) (7,598) NET (LOSS) INCOME AVAILABLE TO COMMON STOCKHOLDERS $ (800) $ (317) $ 66,740 $ 717 ======= ======= ==== ======= ======= ==== ==== ======= ======= ======= Weighted average common shares outstanding - basic 68,345 57,686 65,997 55,009 Weighted average common shares outstanding - diluted 68,345 57,686 65,997 55,009 Net (loss) income available to common stockholders per share - basic $ (0.02) $ (0.01) $ 1.00 $ 0.00 ======= ======= ==== ======= ======= ==== ==== ======= ======= ======= Net (loss) income available to common stockholders per share - $ (0.02) $ (0.01) $ 1.00 $ 0.00 diluted ======= ======= ==== ======= ======= ==== ==== ======= ==== ======= ======= ====

KILROY REALTY CORPORATION FUNDS FROM OPERATIONS (unaudited, in thousands, except per share data) ---------------------------------------------------------------------------------------------------------------------------------------------------- Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 ------------------ ------------------ -------------- -------------- Net (loss) income available to common stockholders $ (800) $ (317) $ 66,740 $ 717 Adjustments: Net (loss) income attributable to noncontrolling common units of the (20) (10) 1,775 24 Operating Partnership Depreciation and amortization of real estate assets 40,328 31,970 76,792 61,029 Net gain on dispositions of discontinued operations -- -- (72,809) -- ---------------- ---------------- ---------------- ---------------- Funds From Operations (1) $ 39,508 $ 31,643 $ 72,498 $ 61,770 ======= ======= ======= ======= ==== ====== ======= ======= Weighted average common shares/units outstanding - basic 71,226 60,337 68,799 57,634 Weighted average common shares/units outstanding - diluted 72,473 60,817 69,815 58,010 Funds From Operations per common share/unit - basic (2) $ 0.55 $ 0.52 $ 1.05 $ 1.07 ======= ======= ======= ======= ==== ====== ======= ======= Funds From Operations per common share/unit - diluted (2) $ 0.55 $ 0.52 $ 1.04 $ 1.06 ======= ======= ======= ======= ==== ====== ======= =======

(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.

SOURCE: Kilroy Realty Corporation

Kilroy Realty Corporation Tyler H. Rose Executive Vice President and Chief Financial Officer (310) 481-8484 or Michelle Ngo Vice President and Treasurer (310) 481-8581

Copyright Business Wire 2012

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Article source: http://www.marketwatch.com/story/kilroy-realty-corporation-reports-second-quarter-financial-results-2012-08-01

Terreno Realty Corporation Declares Quarterly Dividend

Wed, 22 Feb 2012 02:13:15 +0000

SAN FRANCISCO, Feb 21, 2012 (BUSINESS WIRE) –
The Board of Directors of Terreno Realty Corporation

/quotes/zigman/580648/quotes/nls/trno TRNO
-1.59%

declared a regular cash dividend for the quarter ending March 31, 2012
of $0.10 per common share. The dividend will be payable on April 19,
2012 to common stockholders of record at the close of business on April
5, 2012.

Terreno Realty Corporation is an acquirer, owner and operator of
industrial real estate located in six major coastal U.S. markets: Los
Angeles; Northern New Jersey/New York City; San Francisco Bay Area;
Seattle; Miami; and Washington, D.C./Baltimore.

Additional information about Terreno Realty Corporation is available on
the company’s web site at
www.terreno.com .

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the federal securities laws. We caution investors that
forward-looking statements are based on management’s beliefs and on
assumptions made by, and information currently available to, management.
When used, the words “anticipate”, “believe”, “estimate”, “expect”,
“intend”, “may”, “might”, “plan”, “project”, “result”, “should”, “will”,
and similar expressions which do not relate solely to historical matters
are intended to identify forward-looking statements. These statements
are subject to risks, uncertainties, and assumptions and are not
guarantees of future performance, which may be affected by known and
unknown risks, trends, uncertainties, and factors that are beyond our
control, including risks related to our ability to meet our estimated
forecasts related to stabilized cap rates and those risk factors
contained in our Annual Report on Form 10-K for the year ended December
31, 2010 and our other public filings. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated,
estimated, or projected. We expressly disclaim any responsibility to
update our forward-looking statements, whether as a result of new
information, future events, or otherwise.

SOURCE: Terreno Realty Corporation

Terreno Realty Corporation W. Blake Baird, 415-655-4580 Michael A. Coke, 415-655-4580

Copyright Business Wire 2012

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Article source: http://www.marketwatch.com/story/terreno-realty-corporation-declares-quarterly-dividend-2012-02-21

Kilroy Realty Corporation Reports Fourth Quarter Financial Results

Tue, 31 Jan 2012 06:33:49 +0000

LOS ANGELES–(EON: Enhanced Online News)–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

Kilroy Realty Corporation Reports Third Quarter Financial Results

Wed, 02 Nov 2011 16:54:13 +0000

LOS ANGELES, Nov 01, 2011 (BUSINESS WIRE) –
Kilroy Realty Corporation

/quotes/zigman/171049/quotes/nls/krc KRC
+2.28%

today reported
financial results for its third quarter ended September 30, 2011, with
net income available to common stockholders of $10.2 million, or $0.17
per share, compared to a net loss available to common stockholders of
$126,000, or $0.01 per share, in the third quarter of 2010. Revenues
from continuing operations in the third quarter totaled $97.3 million,
up from $79.3 million in the prior year’s third quarter. Funds from
operations (FFO) for the period totaled $33.9 million, or $0.56 per
share, compared to $29.7 million, or $0.54 per share, in the
year-earlier period.

For the first nine months of 2011, KRC reported net income available to
common stockholders of $10.9 million, or $0.18 per share, compared to
$3.0 million, or $0.04 per share, in the first nine months of 2010.
Revenues from continuing operations in the nine-month period totaled
$276.4 million, up from $217.5 million in the same period of 2010. FFO
in the first nine months of 2011 totaled $95.6 million, or $1.62 per
share, compared to $77.2 million, or $1.51 per share, in the first nine
months of 2010. Net income available to common stockholders for the
three and nine months ended September 30, 2011 included a net gain from
property dispositions of $12.6 million, or $0.22 per share. Results for
the nine months ended September 30, 2010 included a one-time charge of
$4.6 million, or $0.09 per share, from the early extinguishment of debt.
All per share amounts in this report are presented on a diluted basis.

KRC signed new and renewing leases on approximately 530,000 square feet
of office and industrial space during the third quarter, bringing the
year to date leasing total to 1.2 million square feet. At
September 30, 2011, the company’s stabilized portfolio totaled 15.2
million square feet and was 92.8% occupied.

During the third quarter, KRC acquired a 311,545 square foot, 12-story
office building located at 201 Third Street in the South of Market
district of San Francisco for approximately $103.3 million. The property
is currently 90% occupied. The company also sold a two-building
RD/office facility located in the Sorrento Mesa submarket of San Diego.
The 90,558 square foot complex was sold for approximately $24 million,
resulting in a net gain of $12.6 million.

Through the first nine months of 2011, KRC has completed the acquisition
of six office projects, consisting of 9 buildings, adding just under 1.5
million square feet to its stabilized portfolio. The aggregate purchase
price of these transactions is approximately $516 million.

KRC remains in various stages of negotiations on three additional office
acquisitions that would have an aggregate estimated purchase price of
approximately $199 million, including the assumption of approximately
$55 million of secured debt. Two of these projects are in Northern
California and one is in Southern California. The company is also in
various stages of negotiations on the disposition of four Southern
California properties that would generate aggregate estimated proceeds
of approximately $205 million. No assurances can be made that the
company will complete the pending acquisitions and dispositions.

“We’re making strong progress on all fronts,” said John B. Kilroy, Jr.,
KRC’s president and chief executive officer. “We are on track to lease
more square footage in 2011 than in all of 2010. We continue to find
opportunities to acquire well-located, high quality assets at
economically advantageous prices, building the long-term value of our
portfolio. And there is good momentum with our capital recycling plans,
as we see good demand for our disposition properties.”

KRC management will discuss updated earnings guidance for fiscal 2011
during the company’s November 2, 2011 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 #58493051. A replay of the
conference call will be available via phone through November 9, 2011 at
(888) 286-8010, reservation #95754685, or via the Internet at the
company’s website.

Some of the information presented in this release is forward looking in
nature within the meaning of the Private Securities Litigation Reform
Act of 1995. Although KRC believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, there
can be no assurance that its expectations will be achieved. Certain
factors that could cause actual results to differ materially from KRC’s
expectations are set forth as risk factors in the company’s Securities
and Exchange Commission reports and filings. Included among these
factors are changes in general economic conditions, including changes in
the economic conditions affecting industries in which its principal
tenants compete; its ability to timely lease or re-lease space at
current or anticipated rents; changes in interest rates; changes in
operating costs, including utility costs; future demand for its debt and
equity securities; its ability to refinance its debt on reasonable terms
at maturity; its ability to complete potential acquisitions and
potential dispositions on the terms or by the dates currently
contemplated; its ability to complete current and future development
projects on schedule and on budget; its ability to successfully operate
properties; the demand for office space in markets in which KRC has a
presence; and risks detailed from time to time in the company’s
Securities and Exchange Commission reports and filings, including
quarterly reports on Form 10-Q, current reports on Form 8-K and annual
reports on Form 10-K. Many of these factors are beyond KRC’s ability to
control or predict. Forward-looking statements are not guarantees of
performance. For forward-looking statements herein, KRC claims the
protection of the safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995. The company
assumes no obligation to update or supplement forward-looking statements
that become untrue because of subsequent events.

Kilroy Realty Corporation, 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 September 30, 2011, the
company owned 11.6 million rentable square feet of commercial office
space and 3.6 million rentable square feet of industrial space. More
information is available at
www.kilroyrealty.com .

KILROY REALTY CORPORATION SUMMARY QUARTERLY RESULTS (unaudited, in thousands, except per share data) ------------------------------------------------------------------------------------------------------------------------------------ Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, 2011 September 30, 2010 September 30, 2011 September 30, 2010 ---------------- ---------------- ---------------- ---------------- Revenues from continuing operations $ 97,337 $ 79,276 $ 276,434 $ 217,469 Revenues including discontinued operations $ 97,806 $ 79,804 $ 277,995 $ 219,039 Net income (loss) available to common stockholders $ 10,195 $ (126) $ 10,912 $ 2,977 Weighted average common shares outstanding - basic 58,355 52,274 56,136 48,562 Weighted average common shares outstanding - diluted 58,355 52,274 56,136 48,565 Net income (loss) available to common stockholders per share - basic $ 0.17 $ (0.01) $ 0.18 $ 0.04 Net income (loss) available to common stockholders per share - $ 0.17 $ (0.01) $ 0.18 $ 0.04 diluted Funds From Operations (1), (2) $ 33,878 $ 29,690 $ 95,648 $ 77,154 Weighted average common shares/units outstanding - basic (3) 61,015 54,778 58,774 51,106 Weighted average common shares/units outstanding - diluted (3) 61,017 54,782 58,961 51,109 Funds From Operations per common share/unit - basic (3) $ 0.56 $ 0.54 $ 1.63 $ 1.51 Funds From Operations per common share/unit - diluted (3) $ 0.56 $ 0.54 $ 1.62 $ 1.51 Common shares outstanding at end of period 58,464 52,350 Common partnership units outstanding at end of period 1,718 1,723 --------------- --------------- Total common shares and units outstanding at end of period 60,182 54,073 September 30, 2011 September 30, 2010 ---------------- ---------------- Stabilized portfolio occupancy rates: Office 90.6 % 84.8 % Industrial 100.0 % 90.6 % ------------------ ------------------ Weighted average total 92.8 % 86.4 % Los Angeles and Ventura Counties 85.1 % 90.2 % San Diego County 92.6 % 82.2 % Orange County 98.8 % 88.3 % San Francisco Bay Area 95.4 % 89.4 % Greater Seattle 90.2 % -- ------------------ --------------- Weighted average total 92.8 % 86.4 % Total square feet of stabilized properties owned at end of period: Office 11,574 9,810 Industrial 3,605 3,654 --------------- --------------- Total 15,179 13,464

(1) Reconciliation of Net Income (Loss) Available to Common Stockholders to Funds From Operations and management statement on Funds From Operations are included after the Consolidated Statements of Operations. (2) Reported amounts are attributable to common stockholders and common unitholders. (3) Calculated based on weighted average shares outstanding including participating share-based awards and assuming the exchange of all common limited partnership units outstanding.

KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited, in thousands) ------------------------------------------------------------------------------------------------------ September 30, 2011 December 31, 2010 ------------------- ------------------ ASSETS ----------------------------------------------------------------------- REAL ESTATE ASSETS: Land and improvements $ 537,973 $ 491,333 Buildings and improvements 2,881,504 2,435,173 Undeveloped land and construction in progress 328,785 290,365 ----------------- ---------------- Total real estate held for investment 3,748,262 3,216,871 Accumulated depreciation and amortization (732,162) (672,429) ------------------ ----------------- Total real estate assets, net 3,016,100 2,544,442 Cash and cash equivalents 15,481 14,840 Restricted cash 25,436 1,461 Marketable securities 5,213 4,902 Current receivables, net 6,860 6,258 Deferred rent receivables, net 103,668 89,052 Deferred leasing costs and acquisition-related intangible assets, net 155,757 131,066 Deferred financing costs, net 19,638 16,447 Prepaid expenses and other assets, net 19,531 8,097 ----------------- ---------------- TOTAL ASSETS $ 3,367,684 $ 2,816,565 ====== ========= ===== ========= LIABILITIES, NONCONTROLLING INTEREST AND EQUITY ----------------------------------------------------------------------- LIABILITIES: Secured debt, net $ 473,997 $ 313,009 Exchangeable senior notes, net 305,115 299,964 Unsecured senior notes, net 980,487 655,803 Unsecured line of credit -- 159,000 Accounts payable, accrued expenses and other liabilities 93,050 68,525 Accrued distributions 22,565 20,385 Deferred revenue and acquisition-related intangible liabilities, net 95,120 79,322 Rents received in advance and tenant security deposits 29,369 29,189 ----------------- ---------------- Total liabilities 1,999,703 1,625,197 ----------------- ---------------- NONCONTROLLING INTEREST: 7.45% Series A cumulative redeemable preferred units of the 73,638 73,638 Operating Partnership 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 585 523 Additional paid-in capital 1,435,580 1,211,498 Distributions in excess of earnings (296,476) (247,252) ------------------ ----------------- Total stockholders' equity 1,261,271 1,086,351 ----------------- ---------------- Noncontrolling Interest Common units of the Operating Partnership 33,072 31,379 ----------------- ---------------- Total equity 1,294,343 1,117,730 ----------------- ---------------- TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY $ 3,367,684 $ 2,816,565 ====== ========= ===== =========

KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data) --------------------------------------------------------------------------------------------------------------------------------------- Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, 2011 September 30, 2010 September 30, 2011 September 30, 2010 ---------------- ---------------- ---------------- ---------------- REVENUES: Rental income $ 89,306 $ 72,135 $ 252,102 $ 196,883 Tenant reimbursements 7,683 6,156 21,469 18,261 Other property income 348 985 2,863 2,325 -------------- -------------- --------------- --------------- Total revenues 97,337 79,276 276,434 217,469 -------------- -------------- --------------- --------------- EXPENSES: Property expenses 19,361 15,802 54,548 42,255 Real estate taxes 8,360 7,582 24,878 20,035 Provision for bad debts (5) (857) 141 (843) Ground leases 503 336 1,266 648 General and administrative expenses (1) 6,355 7,273 20,355 21,096 Acquisition-related expenses 1,163 354 2,829 1,624 Depreciation and amortization 36,152 29,951 97,513 74,405 -------------- -------------- --------------- --------------- Total expenses 71,889 60,441 201,530 159,220 -------------- -------------- --------------- --------------- OTHER (EXPENSES) INCOME: Interest income and other net investment gains 30 337 272 703 Interest expense (24,051) (15,853) (66,155) (40,897) Loss on early extinguishment of debt -- -- -- (4,564) -------------- -------------- --------------- ------------------ Total other (expenses) income (24,021) (15,516) (65,883) (44,758) INCOME FROM CONTINUING OPERATIONS 1,427 3,319 9,021 13,491 DISCONTINUED OPERATIONS: Net income from discontinued operations 308 350 1,053 1,011 Net gain on dispositions of discontinued operations 12,555 -- 12,555 -- -------------- -------------- --------------- --------------- Total income from discontinued operations 12,863 350 13,608 1,011 -------------- -------------- --------------- --------------- NET INCOME 14,290 3,669 22,629 14,502 Net (income) loss attributable to noncontrolling common units of the (296) 4 (320) (128) Operating Partnership ------------ ---- ------------ ------------- --- ------------- --- NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION 13,994 3,673 22,309 14,374 PREFERRED DISTRIBUTIONS AND DIVIDENDS: Distributions on noncontrolling cumulative redeemable preferred (1,397) (1,397) (4,191) (4,191) units of the Operating Partnership Preferred dividends (2,402) (2,402) (7,206) (7,206) ------------------ ------------------ ------------------ ------------------ (3,799) (3,799) (11,397) (11,397) Total preferred distributions and dividends NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ 10,195 $ (126) $ 10,912 $ 2,977 ====== ====== ====== ====== ==== ====== ======= ====== ======= Weighted average common shares outstanding - basic 58,355 52,274 56,136 48,562 Weighted average common shares outstanding - diluted 58,355 52,274 56,136 48,565 Net income (loss) available to common stockholders per share - basic $ 0.17 $ (0.01) $ 0.18 $ 0.04 ====== ====== ====== ====== ==== ====== ======= ====== ======= Net income (loss) available to common stockholders per share - $ 0.17 $ (0.01) $ 0.18 $ 0.04 diluted ====== ====== ==== ====== ====== ==== ====== ======= === ====== ======= ===

(1) For the three months ended September 30, 2011, general and administrative expenses was reduced by a $0.5 million mark to market adjustment related to our deferred compensation plan liability. This reduction was offset by a related reduction in interest income and other net investment gains resulting from the mark to market of the marketable securities held for our deferred compensation plan.

KILROY REALTY CORPORATION FUNDS FROM OPERATIONS (unaudited, in thousands, except per share data) -------------------------------------------------------------------------------------------------------------------------------------------- Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, 2011 September 30, 2010 September 30, 2011 September 30, 2010 ---------------- ---------------- ---------------- ------------------ Net income (loss) available to common stockholders $ 10,195 $ (126) $ 10,912 $ 2,977 Adjustments: Net income (loss) attributable to noncontrolling common units of the 296 (4) 320 128 Operating Partnership Depreciation and amortization of real estate assets 35,942 29,820 96,971 74,049 Net gain on dispositions of discontinued operations (12,555) -- (12,555) -- ------------------ -------------- ------------------ -------------------- Funds From Operations (1) $ 33,878 $ 29,690 $ 95,648 $ 77,154 ====== ====== ====== ====== ====== ====== ========= ========= Weighted average common shares/units outstanding - basic 61,015 54,778 58,774 51,106 Weighted average common shares/units outstanding - diluted 61,017 54,782 58,961 51,109 Funds From Operations per common share/unit - basic (2) $ 0.56 $ 0.54 $ 1.63 $ 1.51 ====== ====== ====== ====== ====== ====== ========= ========= Funds From Operations per common share/unit - diluted (2) $ 0.56 $ 0.54 $ 1.62 $ 1.51 ====== ====== ====== ====== ====== ====== ========= =========

(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, 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. 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.

SOURCE: Kilroy Realty Corporation

Kilroy Realty Corporation Tyler H. Rose Executive Vice President and Chief Financial Officer (310) 481-8484 or Michelle Ngo Vice President and Treasurer (310) 481-8581

Copyright Business Wire 2011

/quotes/zigman/171049/quotes/nls/krc

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Article source: http://www.marketwatch.com/story/kilroy-realty-corporation-reports-third-quarter-financial-results-2011-11-01