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