StockSelector.com
  Research, Select, & Monitor Tuesday, August 14, 2018 2:55:31 AM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
Kilroy Realty Corp.$71.62$.09.13%

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 Kilroy Realty Corporation Reports Third Quarter Financial Results
   Wednesday, October 25, 2017 6:15:00 PM ET

Kilroy Realty Corporation (KRC ) today reported financial results for its third quarter ended September 30, 2017.

Third Quarter Highlights

Financial Results

-- Net income available to common stockholders of $0.67 per share

-- Funds from operations ("FFO") available to common stockholders and unitholders of $0.88 per share, including a non-cash charge of $0.04 per share of original issuance costs in connection with the redemption of the Series H preferred stock. Excluding the $0.04 non-cash charge related to the Series H preferred stock redemption in 3Q17 and a property damage settlement of $0.05 per share received in 3Q16, FFO per share increased approximately 6% year over year

-- Revenues of $181.5 million

Stabilized Portfolio

-- Stabilized portfolio was 94.0% occupied and 96.2% leased at September 30, 2017

-- Signed approximately 209,000 square feet of new or renewing leases

Capital Recycling

-- Completed the sale of ten office buildings totaling approximately 675,000 square feet and a 5.0 acre undeveloped land parcel, all located in submarkets of San Diego, for total gross proceeds of $174.5 million, resulting in a $37.7 million gain

Finance

-- Completed an amendment of Kilroy Realty L.P.’s unsecured revolving credit facility and term loan facility to extend the maturity date to July 2022 and increase the size of the revolver to $750.0 million and maintain the term loan facility of $150.0 million

-- On August 15, 2017, redeemed 4,000,000 shares of our 6.375% Series H preferred stock at the contractual redemption price of $25.00 per share for a total cost of $100.0 million in cash

Recent Developments

-- In October, signed a 15-year lease with Dropbox, Inc. for 100% of the office space at The Exchange on 16th. The four-building, 750,000 square-foot development consists of 736,000 square feet of office space and 14,000 square feet of retail space and is currently under construction in the Mission Bay neighborhood of San Francisco. The lease with Dropbox, Inc. will commence in phases beginning in the fourth quarter of 2018 through the fourth quarter of 2019

-- In October, acquired a 1.2 acre development site in the Little Italy neighborhood of downtown San Diego for $19.4 million in cash

Results for the Quarter Ended September 30, 2017

For the third quarter ended September 30, 2017, KRC reported net income available to common stockholders of $66.6 million, or $0.67 per share, compared to $50.6 million, or $0.54 per share, in the third quarter of 2016. Net income in the 2017 third quarter included $37.3 million, or $0.38 per share, of gains from operating property dispositions. Net income in the 2016 third quarter included $18.3 million, or $0.20 per share, of gains from operating property dispositions as well as $5.0 million, or approximately $0.05 per share, of proceeds related to a property damage settlement. FFO in the third quarter of 2017 was $89.5 million, or $0.88 per share, including a non-cash charge of $0.04 per share for the write-off of the original issuance costs in connection with redeeming the Series H preferred stock, compared to $88.5 million, or $0.92 per share, in the prior year’s third quarter, which included approximately $0.05 per share of proceeds related to a property damage settlement. Revenues in the period totaled $181.5 million, compared to $168.3 million in the year-earlier quarter.

All per share amounts in this report are presented on a diluted basis.

Operating and Leasing Activity

At September 30, 2017, KRC’s stabilized portfolio totaled approximately 13.7 million square feet of office space located in Los Angeles, Orange County, San Diego, the San Francisco Bay Area and Greater Seattle and 200 residential units located in the Hollywood submarket of Los Angeles. During the third quarter, the company signed new or renewing leases in the stabilized office portfolio totaling 209,000 square feet of space. At quarter-end, the stabilized office portfolio was 94.0% occupied and 96.2% leased, compared to occupancy of 96.0% at December 31, 2016 and 96.6% at September 30, 2016. At September 30, 2017, our 200-unit residential tower was 72.0% occupied and 74.5% leased.

Real Estate Development Activity

In addition to The Exchange on 16th, KRC has three other projects currently under construction, including 100 Hooper in San Francisco, 333 Dexter in the South Lake Union submarket of Seattle, and phase one of One Paseo, the company’s mixed-used project located in the Del Mar submarket of San Diego. The four construction projects total approximately 1.8 million square feet of office and PDR space, 237 residential units and 96,000 square feet of retail space, and represent a total estimated investment of approximately $1.4 billion. The office components for The Exchange on 16th and 100 Hooper are 100% leased and the office components of all four projects are 62% leased.

Net Income Available to Common Stockholders / FFO Guidance and Outlook

The company has updated its guidance range of NAREIT-defined FFO per share - diluted for the full year 2017 to $3.40 - $3.44 per share, increasing the midpoint to $3.42 per share. The $0.02 increase of the midpoint from the prior quarter is primarily related to an increase in one-time income partially offset by an increase in bad debt expense. The company’s guidance estimates for the full year 2017, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this press release, reflect management’s views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this press release. These guidance estimates do not include any estimates of possible future gains or losses or the impact on operating results from possible future dispositions since any potential future disposition transactions will ultimately depend on market conditions and other factors, including but not limited to the company’s capital needs and its ability to defer some or all of the taxable gain on the sales. Moreover, the magnitude of gains or losses on sales of depreciable operating properties, if any, will depend on the sales price and depreciated cost basis of the disposed assets at the time of disposition, information that is not known at the time the company provides guidance, and the timing of any gain recognition will depend on the closing of the dispositions, information that is also not known at the time the company provides guidance and may occur after the relevant guidance period. These guidance estimates also do not include the impact on operating results from potential future acquisitions, possible capital markets activity, possible future impairment charges or any events outside of the company’s control.

Conference Call and Audio Webcast

KRC management will discuss earnings guidance for fiscal year 2017 during the company’s October 26, 2017 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://investors.kilroyrealty.com/phoenix.zhtml?c=79637&p=irol-audioarchives . 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 (866) 312-7299. International callers should dial (412) 317-1070. In order to bypass speaking to the operator on the day of the call, please pre-register anytime at http://dpregister.com/10112383 . A replay of the conference call will be available via telephone on October 26, 2017 through November 2, 2017 by dialing (877) 344-7529 and entering passcode 10112383. International callers should dial (412) 317-0088 and enter the same passcode. The replay will also be available on our website at http://investors.kilroyrealty.com/phoenix.zhtml?c=79637&p=irol-audioarchives .

About Kilroy Realty Corporation

Kilroy Realty Corporation (KRC), a publicly traded real estate investment trust and member of the S&P MidCap 400 Index, is one of the West Coast’s premier landlords. The company has over 70 years of experience developing, acquiring and managing office and mixed-use real estate assets. The company provides physical work environments that foster creativity and productivity and serves a broad roster of dynamic, innovation-driven tenants, including technology, entertainment, digital media and health care companies.

At September 30, 2017, the company’s stabilized portfolio totaled approximately 13.7 million square feet of office space located in the coastal regions of Los Angeles, Orange County, San Diego, the San Francisco Bay Area and Greater Seattle and 200 residential units located in the Hollywood submarket of Los Angeles. In addition, KRC had four projects totaling approximately 1.8 million square feet of office space, 237 residential units and 96,000 square feet of retail space under construction.

The company has been recognized by GRESB as the North American leader in office sustainability for the last four years and is listed in the Dow Jones Sustainability World Index. At the end of the third quarter, the company’s stabilized portfolio was 55% LEED certified and 73% of eligible properties were ENERGY STAR certified. 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 the forward-looking statements, and you should not rely on the 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 the forward-looking statements, including, among others: global market and general economic conditions and their effect on our liquidity and financial conditions and those of our tenants; adverse economic or real estate conditions generally, and specifically, in the States of California and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses; our ability to re-lease property at or above current market rates; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or implementations of, applicable laws, regulations or legislation; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; and our ability to maintain our status as a REIT. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. 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, 2016 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 we are required to do so in connection with our ongoing requirements under federal securities laws.

                                                                                                                                     
                                                                                                                        KILROY REALTY CORPORATION
                                                                                                                      SUMMARY OF QUARTERLY RESULTS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            (unaudited, in thousands, except per share data)
                                                                                                                                                                             
                                                                                                              Three Months Ended September 30,                                                             Nine Months Ended September 30,
                                                                                                      -------------------------------------------------                     ---------------------------------------------------------------------------------------------
                                                                                                           2017            2016                                          2017                                  2016
                                                                                                      --------------                     --------------                     ------------------------------------                     ------------------------------------
Revenues                                                                                                 $ 181,534                          $ 168,348                            $ 541,440                                                $ 473,927
                                                                                                                                                                                                                                      
Net income available to common stockholders (1)                                                          $  66,558                          $  50,582                            $ 122,720                                                $ 251,112
                                                                                                                                                                                                                                      
Weighted average common shares outstanding - basic                                             98,352                             92,227                               98,009                                                   92,221
Weighted average common shares outstanding - diluted                                           98,912                             92,920                               98,591                                                   92,832
                                                                                                                                                                                                                                      
Net income available to common stockholders per share - basic (1)                           $    0.67                          $    0.54                            $    1.24                                                $    2.71
Net income available to common stockholders per share - diluted (1)                         $    0.67                          $    0.54                            $    1.23                                                $    2.69
                                                                                                                                                                                                                                      
Funds From Operations (1)(2)(3)                                                                          $  89,547                          $  88,535                            $ 260,248                                                $ 249,450
                                                                                                                                                                                                                                      
Weighted average common shares/units outstanding - basic (4)                                  101,618                             95,992                              101,353                                                   95,760
Weighted average common shares/units outstanding - diluted (5)                                102,178                             96,686                              101,936                                                   96,371
                                                                                                                                                                                                                                      
Funds From Operations per common share/unit - basic (3)                                     $    0.88                          $    0.92                            $    2.57                                                $    2.60
Funds From Operations per common share/unit - diluted (3)                                   $    0.88                          $    0.92                            $    2.55                                                $    2.59
                                                                                                                                                                                                                                      
Common shares outstanding at end of period                                                                                                                                          98,382                                                   92,272
Common partnership units outstanding at end of period                                                                                                                                2,077                                 2,631  
                                                                                                                                                                            -----------------------------------                      -----------------------------------
   Total common shares and units outstanding at end of period                                                                                                                      100,459                                                   94,903
                                                                                                                                                                                                                                      
                                                                                                                                                                                     September 30, 2017                                       September 30, 2016
                                                                                                                                                                            ------------------------------------                     ------------------------------------
Stabilized office portfolio occupancy rates: (6)
   Los Angeles and Ventura Counties                                                                                                                                                   91.0 %                                                   94.8 %
   Orange County                                                                                                                                                                      94.4 %                                                   97.8 %
   San Diego County                                                                                                                                                                   93.9 %                                                   94.5 %
   San Francisco Bay Area                                                                                                                                                             95.9 %                                                   98.3 %
   Greater Seattle                                                                                                                                                                    95.2 %                                                   98.2 %
                                                                                                                                                                            -----------------------------------                      -----------------------------------
                                                                                                                                                                                      94.0 %                                                   96.6 %
      Weighted average total
                                                                                                                                                                                                                                      
Total square feet of stabilized office properties owned at end of
period: (6)
   Los Angeles and Ventura Counties                                                                                                                                                  4,182                                                    3,633
   Orange County                                                                                                                                                                       272                                                      272
   San Diego County                                                                                                                                                                  2,044                                                    2,643
   San Francisco Bay Area                                                                                                                                                            5,157                                                    4,992
   Greater Seattle                                                                                                                                                                   2,066                                 2,066  
                                                                                                                                                                            -----------------------------------                      -----------------------------------
      Total                                                                                                                                                                         13,721                                                   13,606
________________________
(1)         Net income available to common stockholders includes gains on sales
                               of depreciable operating properties of $37.3 million and $39.5
                               million for the three and nine months ended September 30, 2017,
                               respectively, and $18.3 million and $164.3 million for the three and
                               nine months ended September 30, 2016, respectively. Net income
                               available to common stockholders and Funds From Operations include a
                               gain on sale of land of $0.4 million for the three and nine months
                               ended September 30, 2017 and a loss on sale of land of $0.3 million
                               for the nine months ended September 30, 2016.
(2)                            Reconciliation of Net income available to common stockholders to
                               Funds From Operations available to common stockholders and
                               unitholders and management statement on Funds From Operations are
                               included after the Consolidated Statements of Operations.
(3)                            Reported amounts are attributable to common stockholders, common
                               unitholders, and restricted stock unitholders.
(4)                            Calculated based on weighted average shares outstanding including
                               participating share-based awards (i.e. nonvested stock and certain
                               time based restricted stock units) and assuming the exchange of all
                               common limited partnership units outstanding.
(5)                            Calculated based on weighted average shares outstanding including
                               participating and non-participating share-based awards (i.e.
                               nonvested stock and time based restricted stock units), dilutive
                               impact of stock options and contingently issuable shares and
                               assuming the exchange of all common limited partnership units
                               outstanding.
(6)                            Occupancy percentages and total square feet reported are based on
                               the company’s stabilized office portfolio for the periods presented.
                               Occupancy percentages and total square feet shown for September 30,
                               2016 include the office properties that were sold subsequent to
                               September 30, 2016.
                               
 
                                                                                    KILROY REALTY CORPORATION
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         (in thousands)
                                                                                                                  
                                                                                                       September 30, 2017                                           December 31, 2016
                                                                                             ---------------------------------------                     ---------------------------------------
                                                                                                           (unaudited)
ASSETS
-----------------------------------------------------------------------
REAL ESTATE ASSETS:
   Land and improvements                                                                           $ 1,076,172                                                 $ 1,108,971
   Buildings and improvements                                                                        4,871,667                                                   4,938,250
   Undeveloped land and construction in progress                                                     1,292,017                                1,013,533  
                                                                                             --------------------------------------                      --------------------------------------
                                                                                                     7,239,856                                                   7,060,754
      Total real estate assets held for investment
   Accumulated depreciation and amortization                                                        (1,216,358 )                                                (1,139,853 )
                                                                                             --------------------------------------                      --------------------------------------
      Total real estate assets held for investment, net                                              6,023,498                                                   5,920,901
                                                                                                                                                          
Real estate assets and other assets held for sale, net                                          --                                                       9,417
Cash and cash equivalents                                                                               64,954                                                     193,418
Restricted cash                                                                                        179,276                                                      56,711
Marketable securities                                                                                   18,851                                                      14,773
Current receivables, net                                                                                18,626                                                      13,460
Deferred rent receivables, net                                                                         238,959                                                     218,977
Deferred leasing costs and acquisition-related intangible assets, net                                  185,420                                                     208,368
Prepaid expenses and other assets, net                                                                 108,715                                   70,608  
                                                                                             --------------------------------------                      --------------------------------------
      TOTAL ASSETS                                                                                 $ 6,838,299                              $ 6,706,633  
                                                                                             ======= ========= ====================                      ======= ========= ====================
                                                                                                                                                          
LIABILITIES AND EQUITY
-----------------------------------------------------------------------
LIABILITIES:
   Secured debt, net                                                                               $   465,828                                                 $   472,772
   Unsecured debt, net                                                                               1,909,381                                                   1,847,351
   Unsecured line of credit                                                                             60,000                                              --
   Accounts payable, accrued expenses and other liabilities                                            271,405                                                     202,391
   Accrued dividends and distributions                                                                  43,324                                                     222,306
   Deferred revenue and acquisition-related intangible liabilities, net                                145,556                                                     150,360
   Rents received in advance and tenant security deposits                                               46,925                                                      52,080
   Liabilities and deferred revenue of real estate assets held for sale                         --                                       56  
                                                                                             --------------------------------------                      --------------------------------------
      Total liabilities                                                                              2,942,419                                2,947,316  
                                                                                             --------------------------------------                      --------------------------------------
                                                                                                                                                          
EQUITY:
   Stockholders’ Equity
      6.875% Series G Cumulative Redeemable Preferred stock                                     --                                                      96,155
      6.375% Series H Cumulative Redeemable Preferred stock                                     --                                                      96,256
      Common stock                                                                                         984                                                         932
      Additional paid-in capital                                                                     3,797,546                                                   3,457,649
      Distributions in excess of earnings                                                             (108,667 )                                                  (107,997 )
                                                                                             --------------------------------------                      --------------------------------------
         Total stockholders’ equity                                       3,689,863                                                   3,542,995
   Noncontrolling Interests
      Common units of the Operating Partnership                                                         77,911                                                      85,590
      Noncontrolling interests in consolidated property partnerships                                   128,106                                  130,732  
                                                                                             --------------------------------------                      --------------------------------------
         Total noncontrolling interests                                                                206,017                                  216,322  
                                                                                             --------------------------------------                      --------------------------------------
         Total equity                                                                                3,895,880                                3,759,317  
                                                                                             --------------------------------------                      --------------------------------------
      TOTAL LIABILITIES AND EQUITY                                                                 $ 6,838,299                              $ 6,706,633  
                                                                                             ======= ========= ====================                      ======= ========= ====================
                                                                                                                                                                            
                                                                                                                                                                               
                                                                                                                                              KILROY REALTY CORPORATION
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                        CONSOLIDATED STATEMENTS OF OPERATIONS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                  (unaudited, in thousands, except per share data)
                                                                                                                                                                                                                       
                                                                                                                                 Three Months Ended September 30,                                                                                     Nine Months Ended September 30,
                                                                                                  -----------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------
                                                                                                                  2017                                   2016                                                      2017                                   2016
                                                                                                  -------------------------------------                     -------------------------------------                     -------------------------------------                     -------------------------------------
REVENUES
                                                                                                        $ 159,954                                                 $ 146,539                                                 $ 475,527                                                 $ 423,947
   Rental income
   Tenant reimbursements                                                                                   19,665                                                    16,406                                                    58,228                                                    43,948
   Other property income                                                                                    1,915                                  5,403                                  7,685                                  6,032  
                                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
                                                                                                          181,534                                168,348                                541,440                                473,927  
      Total revenues
                                                                                                  --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      --------------  --------------------
                                                                                                                                                                                                                                                                                 
EXPENSES
   Property expenses                                                                                       33,070                                                    30,050                                                    97,615                                                    85,236
   Real estate taxes                                                                                       16,371                                                    14,501                                                    50,878                                                    39,378
   Provision for bad debts                                                                                  1,036                                            --                                                     2,743                                            --
   Ground leases                                                                                            1,562                                                       909                                                     4,751                                                     2,506
   General and administrative expenses                                                                     14,514                                                    13,533                                                    43,750                                                    40,949
   Acquisition-related expenses                                                                    --                                                       188                                            --                                                       964
   Depreciation and amortization                                                                           62,567                                 56,666                                185,737                                160,452  
                                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
      Total expenses                                                                                      129,120                                115,847                                385,474                                329,485  
                                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                                                 
OTHER (EXPENSES) INCOME
   Interest income and other net investment gains                                                           1,526                                                       538                                                     3,629                                                     1,120
   Interest expense                                                                                       (16,151 )                                                 (14,976 )                                                 (51,476 )                                                 (41,189 )
                                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
      Total other (expenses) income                                                                       (14,625 )                                                 (14,438 )                                                 (47,847 )                                                 (40,069 )
                                                                                                                                                                                                                                                                                 
INCOME FROM OPERATIONS BEFORE GAINS (LOSS) ON SALES OF REAL ESTATE                                         37,789                                                    38,063                                                   108,119                                                   104,373
   Net gain (loss) on sale of land                                                                            449                                            --                                                       449                                                      (295 )
   Gains on sale of depreciable operating properties                                                       37,250                                 18,312                                 39,507                                164,302  
                                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
NET INCOME                                                                                                 75,488                                 56,375                                148,075                                268,380  
                                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                                                 
   Net income attributable to noncontrolling common units of the                                           (1,394 )                                                  (1,453 )                                                  (2,633 )                                                  (5,892 )
   Operating Partnership
   Net income attributable to noncontrolling interests in consolidated                                     (2,984 )                                                  (1,027 )                                                  (9,359 )                                                  (1,438 )
   property partnerships
                                                                                                  --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      --------------  --------------------
      Total income attributable to noncontrolling interests                                                (4,378 )                                                  (2,480 )                                                 (11,992 )                                                  (7,330 )
                                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                                                 
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION                                                       71,110                                 53,895                                136,083                                261,050  
                                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                                                 
   Preferred dividends                                                                                       (808 )                                                  (3,313 )                                                  (5,774 )                                                  (9,938 )
   Original issuance costs of redeemed preferred stock                                                     (3,744 )                                          --                                 (7,589 )                                          --  
                                                                                                  ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
                                                                                                           (4,552 )                                                  (3,313 )                                                 (13,363 )                                                  (9,938 )
      Total preferred dividends
                                                                                                  --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      --------------  --------------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS                                                             $  66,558                              $  50,582                              $ 122,720                              $ 251,112  
                                                                                                  ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                                                 
Weighted average common shares outstanding - basic                                            98,352                                                    92,227                                                    98,009                                                    92,221
Weighted average common shares outstanding - diluted                                          98,912                                                    92,920                                                    98,591                                                    92,832
                                                                                                                                                                                                                                                                                 
Net income available to common stockholders per share - basic                              $    0.67                              $    0.54                              $    1.24                              $    2.71  
                                                                                                  ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
Net income available to common stockholders per share - diluted                            $    0.67                              $    0.54                              $    1.23                              $    2.69  
                                                                                                  ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                      
                                                                                                                                        KILROY REALTY CORPORATION
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          FUNDS FROM OPERATIONS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            (unaudited, in thousands, except per share data)
                                                                                                                                                                                                              
                                                                                                                            Three Months Ended September 30,                                                                               Nine Months Ended September 30,
                                                                                                 ---------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------
                                                                                                               2017                               2016                                                   2017                                 2016
                                                                                                 ---------------------------------                     ---------------------------------                     ----------------------------------                     ------------------------------------
Net income available to common stockholders                                                         $ 66,558                                              $ 50,582                                              $ 122,720                                                $ 251,112
   Adjustments:
      Net income attributable to noncontrolling common units of the                                    1,394                                                 1,453                                                  2,633                                                    5,892
      Operating Partnership
      Net income attributable to noncontrolling interests in consolidated                              2,984                                                 1,027                                                  9,359                                                    1,438
      property partnerships
      Depreciation and amortization of real estate assets                                             61,141                                                55,460                                                181,875                                                  157,587
      Gains on sales of depreciable real estate                                                      (37,250 )                                             (18,312 )                                              (39,507 )                                               (164,302 )
      Funds From Operations attributable to noncontrolling interests in                               (5,280 )                                              (1,675 )                                              (16,832 )                                                 (2,277 )
      consolidated property partnerships
                                                                                                 ----------  --------------------                      ----------  --------------------                      -----------  --------------------                      -------------  --------------------
Funds From Operations(1)(2)(3)                                                                      $ 89,547                           $ 88,535                           $ 260,248                             $ 249,450  
                                                                                                 ==== ====== ====================                      ==== ====== ====================                      ==== ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                     
Weighted average common shares/units outstanding - basic (4)                            101,618                                                95,992                                                101,353                                                   95,760
Weighted average common shares/units outstanding - diluted (5)                          102,178                                                96,686                                                101,936                                                   96,371
                                                                                                                                                                                                                                                                     
Funds From Operations per common share/unit - basic (2)                                $   0.88                           $   0.92                           $    2.57                             $    2.60  
                                                                                                 ==== ====== ====================                      ==== ====== ====================                      ==== ======= ====================                      ====== ======= ====================
Funds From Operations per common share/unit - diluted (2)                              $   0.88                           $   0.92                           $    2.55                             $    2.59  
                                                                                                 ==== ====== ====================                      ==== ====== ====================                      ==== ======= ====================                      ====== ======= ====================
________________________
(1)        We calculate Funds From Operations available to common stockholders
                              and common unitholders ("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. Our calculation of FFO includes the amortization of
                              deferred revenue related to tenant-funded tenant improvements and
                              excludes the depreciation of the related tenant improvement assets.
                              We also add back net income attributable to noncontrolling common
                              units of the Operating Partnership because we report FFO
                              attributable to common stockholders and common unitholders.
                               
                              We believe that FFO is a useful supplemental measure of our
                              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 our 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 operating performance to other
                              REITs. However, other REITs may use different methodologies to
                              calculate FFO, and accordingly, our 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, we believe that
                              FFO along with the required GAAP presentations provides a more
                              complete measurement of our performance relative to our 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 our
                              operating performance because 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 our properties, which are significant economic costs
                              and could materially impact our results from operations.
                               
(2)                           Reported amounts are attributable to common stockholders, common
                              unitholders, and restricted stock unitholders.
                               
(3)                           FFO available to common stockholders and unitholders includes
                              amortization of deferred revenue related to tenant-funded tenant
                              improvements of $4.2 million and $3.6 million for the three months
                              ended September 30, 2017 and 2016, respectively, and $12.4 million
                              and $9.7 million for the nine months ended September 30, 2017 and
                              2016, respectively.
                               
(4)                           Calculated based on weighted average shares outstanding including
                              participating share-based awards (i.e. nonvested stock and certain
                              time based restricted stock units) and assuming the exchange of all
                              common limited partnership units outstanding.
                               
(5)                           Calculated based on weighted average shares outstanding including
                              participating and non-participating share-based awards (i.e.
                              nonvested stock and time based restricted stock units), dilutive
                              impact of stock options and contingently issuable shares and
                              assuming the exchange of all common limited partnership units
                              outstanding.
                               
                                                                             
                                                                                  KILROY REALTY CORPORATION
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
                                                                                 / FFO GUIDANCE AND OUTLOOK
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      (unaudited, in thousands, except per share data)
                                                                                                  
                                                                                                                                      Full Year Range at
                                                                                                                                      September 30, 2017
                                                                                                 -------------------------------------------------------------------------------------
                                                                                                               Low End                              High End
Net income available to common stockholders per share - diluted                                      $    1.55                                                $    1.59
                                                                                                                                                          
Weighted average common shares outstanding - diluted(1)                                                100,000                                                  100,000
                                                                                                                                                          
Net income available to common stockholders                                                          $ 155,000                                                $ 159,000
   Adjustments:
      Net income attributable to noncontrolling common units of the                                      3,100                                                    3,700
      Operating Partnership
      Net income attributable to noncontrolling interests in consolidated                               11,500                                                   13,500
      property partnerships
      Depreciation and amortization of real estate assets                                              238,500                                                  238,500
      Gains on sales of depreciable real estate                                                        (39,500 )                                                (39,500 )
      Funds From Operations attributable to noncontrolling interests in                                (22,000 )                                                (24,000 )
      consolidated property partnerships
                                                                                                 ------------  --------------------                      -------------  --------------------
Funds From Operations(2)(3)                                                                          $ 346,600                             $ 351,200  
                                                                                                 ===== ======= ====================                      ====== ======= ====================
                                                                                                                                                          
Weighted average common shares/units outstanding - diluted (3)                            102,000                                                  102,000
                                                                                                                                                          
Funds From Operations per common share/unit - diluted (2)(3)                            $    3.40                             $    3.44  
                                                                                                 ===== ======= ====================                      ====== ======= ====================
________________________
(1)        Calculated based on estimated weighted average shares outstanding
                              including participating share-based awards (i.e. nonvested stock and
                              certain time based restricted stock units).
 
(2)                           See management statement for FFO on previous page.
 
(3)                           Calculated based on estimated weighted average shares outstanding
                              including participating share-based awards (i.e. nonvested stock and
                              certain time based restricted stock units) and assuming the exchange
                              of all estimated common limited partnership units outstanding.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20171025006480r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20171025006480/en/

SOURCE: Kilroy Realty Corporation

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


Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2018 StockSelector.com. All rights reserved.