Exhibit 99.1

KILROY
REALTY

CORPORATION

Second Quarter 2001 Supplemental Financial Report

   

Page

Financial Highlights

 

1

Consolidated Balance Sheets

 

2

Consolidated Statements of Operations

 

3

Funds From Operations and Funds Available for Distribution

 

4

Financial Results Excluding Effect of Second Quarter Lease Termination Fee

 

5

Net Operating Income Breakdown

 

6

Same Store Analysis

 

7

Stabilized Portfolio and Occupancy Overview

 

8

Leasing Activity

 

9

Lease Expiration Schedule

 

10

Dispositions

 

11

Stabilized Development

 

12

In-Process and Committed Development Projects

 

13

Future Development Pipeline

 

14

Capital Structure

 

15

Debt Analysis

 

16

Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation's current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation's actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation's business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption "Business Risks" in Kilroy Realty Corporation's annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplement information might not occur.

 Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report
Financial Highlights
(unaudited, $ in thousands, except per share amounts)

       Three Months Ended June 30,
     Six Months Ended June 30,
       2001
     2000
     % Change
     2001
     2000
     % Change
INCOME ITEMS:                              
          Revenues      $  58,234        $  45,336        28.4 %      $  108,601        $  89,106        21.9 %
          Net Operating Income      45,395        34,798        30.5 %      84,404        69,048        22.2 %
          Net Income      15,097        12,804        17.9 %      21,523        22,381        (3.8 %)
          Funds From Operations      28,237        20,153        40.1 %      50,113        40,832        22.7 %
          Funds Available for Distribution      24,095        17,264        39.6 %      43,627        35,737        22.1 %
                                     
          Funds From Operations per share—diluted      $      0.93        $      0.67        38.5 %      $        1.64        $      1.33        23.3 %
          Funds Available for Distribution per share—diluted      0.79        0.57        38.0 %      1.43        1.17        22.7 %
                                     
          Dividend per share      $      0.48        $      0.45        6.7 %      $        0.96        $      0.90        6.7 %
             
RATIOS:                              
          Interest Coverage Ratio(1)      4.0x        3.4x             3.7x        3.7x       
          Fixed Charge Coverage Ratio(2)      3.0x        2.5x             2.8x        2.7x       
          FFO Payout Ratio(3)      51.6 %      67.4 %      (15.8 %)      58.0 %      66.4 %      (8.4 %)
          FAD Payout Ratio(4)      60.4 %      78.7 %      (18.3 %)      66.7 %      75.8 %      (9.1 %)
 
       June 30, 2001
     Dec. 31, 2000
     % Change
ASSETS:               
          Investments in Real Estate before Depreciation      $ 1,583,957        $ 1,496,477        5.8 %
          Total Assets      1,453,841        1,457,169        (0.2 %)
             
CAPITALIZATION:               
          Total Debt      $    723,947        $    723,688        0.0 %
          Total Preferred Stock(5)      155,000        155,000        0.0 %
          Total Market Equity Value(5)      882,558        848,162        4.1 %
          Total Market Capitalization(5)      1,761,505        1,726,850        2.0 %
          Total Debt / Total Market Capitalization      41.1%        41.9%        (0.8 %)

(1) Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense plus loan cost amortization.
(2) Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense plus loan cost amortization and current year paid and accrued preferred dividends.
(3) Calculated as current year dividends paid and accrued to common shareholders divided by Funds From Operations.
(4) Calculated as current year dividends paid and accrued to common shareholders divided by Funds Available for Distribution.
(5) See "Capital Structure" on page 15.  

 

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Consolidated Balance Sheets
(Unaudited, $ in thousands)
 
       June 30,
2001
     December 31,
2000
ASSETS:          
          Land and improvements      $      285,733        $           266,444  
          Buildings and improvements       1,154,660          1,054,995  
          Undeveloped land and construction in progress, net      143,564        162,633  
          Investment in unconsolidated real estate        
12,405
  
     
     
  
                    Total investment in real estate      1,583,957        1,496,477  
          Accumulated depreciation and amortization      (224,157 )      (205,332 )
     
     
  
                    Investment in real estate, net      1,359,800        1,291,145  
             
          Cash and cash equivalents      13,898        17,600  
          Restricted cash      7,222        35,014  
          Tenant receivables, net      30,095        32,521  
          Note receivable from related party         33,274  
          Deferred financing and leasing costs, net      37,455        39,674  
          Prepaid expenses and other assets      5,371        7,941  
     
     
  
          TOTAL ASSETS      $   1,453,841        $        1,457,169  
     
     
  
LIABILITIES AND STOCKHOLDERS’ EQUITY:          
Liabilities:          
          Secured debt      $      438,947        $           432,688  
          Unsecured line of credit      185,000        191,000  
          Unsecured term facility      100,000        100,000  
          Accounts payable and accrued expenses      38,554        33,911  
          Accrued distributions      14,558        13,601  
          Rents received in advance and tenant security deposits      16,302        17,810  
     
     
  
                    Total liabilities      793,361        789,010  
     
     
  
Minority Interests:          
          8.075% Series A Cumulative Redeemable Preferred unitholders      73,716        73,716  
          9.375% Series C Cumulative Redeemable Preferred unitholders      34,464        34,464  
          9.250% Series D Cumulative Redeemable Preferred unitholders      44,321        44,321  
          Common unitholders of the Operating Partnership      50,076        62,485  
          Minority interest in Development LLCs      12,177        11,748  
     
     
  
                    Total minority interests      214,754        226,734  
     
     
  
Stockholders’ Equity:          
          Common stock      273        265  
          Additional paid-in capital      474,864        460,390  
          Distributions in excess of earnings      (23,742 )      (19,230 )
          Accumulated other comprehensive loss      (5,669 )      
     
     
  
                    Total stockholders’ equity      445,726        441,425  
     
     
  
          TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY      $1,453,841        $  1,457,169  
     
     
  

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Consolidated Statements of Operations
(Unaudited, $ in thousands, except per share amounts)


       Three Months Ended June 30,
     Six Months Ended June 30,
       2001
     2000
     % Change
     2001
     2000
     % Change
REVENUES:                              
    Rental income      $ 46,029        $ 39,370        16.9 %      $90,408        $77,072        17.3 %
    Tenant reimbursements      6,170        4,594        34.3 %      11,690        9,288        25.9 %
    Interest income      277        1,016        (72.7 %)      713        1,302        (45.2 %)
    Other income      5,758        356        1517.4 %      5,790        1,444        301.0 %
     
     
           
     
        
                    Total revenues      58,234        45,336        28.4 %      108,601        89,106        21.9 %
     
     
           
     
        
EXPENSES:                              
    Property expenses      7,443        6,074        22.5 %      14,338        11,532        24.3 %
    Real estate taxes      4,744        3,049        55.6 %      8,379        6,436        30.2 %
    General and administrative expenses      3,034        2,555        18.7 %      6,388        5,187        23.2 %
    Ground leases      375        399        (6.0 %)      767        788        (2.7 %)
    Interest expense      10,612        9,948        6.7 %      21,403        17,776        20.4 %
    Depreciation and amortization      12,521        9,645        29.8 %      25,954        18,968        36.8 %
     
     
           
     
        
                    Total expenses      38,729        31,670        22.3 %      77,229        60,687        27.3 %
     
     
           
     
        
INCOME FROM OPERATIONS      19,505        13,666        42.7 %      31,372        28,419        10.4 %
    Net gains on dispositions of operating properties      1,234        4,273        (71.1 %)      1,539        3,968        (61.2 %)
     
     
           
     
        
INCOME BEFORE MINORITY INTERESTS
     AND CUMULATIVE EFFECT OF CHANGE
     IN ACCOUNTING PRINCIPLE		      20,739        17,939        15.6 %      32,911        32,387        1.6 %
     
     
           
     
        
MINORITY INTERESTS:                              
    Distributions on Cumulative Redeemable Preferred
         units		      (3,375 )      (3,375 )      0.0 %      (6,750 )      (6,750 )      0.0 %
    Minority interest in earnings of Operating Partnership      (1,796 )      (1,843 )      (2.6 %)      (2,641 )      (3,215 )      (17.9 %)
    Minority interest in earnings of Development LLCs      (471 )      83        (667.5 %)      (605 )      (41 )      1375.6 %
     
     
           
     
        
                    Total minority interests      (5,642 )      (5,135 )      9.9 %      (9,996 )      (10,006 )      (0.1 %)
     
     
           
     
        
NET INCOME BEFORE CUMULATIVE EFFECT
     OF CHANGE IN ACCOUNTING PRINCIPLE		      15,097        12,804        17.9 %      22,915        22,381        2.4 %
CUMULATIVE EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE		                     (1,392 )           (100.0 %)
     
     
           
     
        
NET INCOME      $ 15,097        $ 12,804        17.9 %      $21,523        $22,381        (3.8 %)
     
     
           
     
        
    Weighted average shares outstanding—basic      27,160        26,259             26,938        26,744       
    Weighted average shares outstanding—diluted      27,380        26,348             27,177        26,788       
             
NET INCOME PER COMMON SHARE:                              
    Income per common share—basic      $     0.56        $     0.49        14.3 %      $    0.80        $    0.84        (4.8 %)
     
     
           
     
        
    Income per common share—diluted      $     0.55        $     0.49        12.2 %      $    0.79        $    0.84        (6.0 %)
     
     
           
     
        

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Funds From Operations and Funds Available for Distribution
(Unaudited, $ in thousands, except per share amounts)

 

       Three Months Ended June 30,
     Six Months Ended June 30,
       2001
     2000
     % Change
     2001
     2000
     % Change
FUNDS FROM OPERATIONS:                              
          Net income      $15,097        $12,804        17.9 %      $21,523        $22,381        (3.8 %)
          Adjustments:                              
                    Minority interest in earnings of Operating Partnership      1,796        1,843        (2.6 %)      2,641        3,215        (17.9 %)
                    Depreciation and amortization      12,030        9,645        24.7 %      25,000        18,968        31.8 %
                    Net gains on dispositions of operating properties      (1,234 )      (4,273 )       (71.1 %)      (1,539 )      (3,968 )      (61.2 %)
                    Cumulative effect of change in accounting principle                     1,392             100.0 %
                    Non-cash amortization of restricted stock grants      548        134        309.0 %      1,096        236        364.4 %
     
     
           
     
        
          Funds From Operations      $28,237        $20,153        40.1 %      $50,113        $40,832        22.7 %
     
     
           
     
        
          Weighted average common shares/units outstanding-basic      30,260        30,041             30,243        30,586       
          Weighted average common shares/units outstanding-diluted      30,481        30,131             30,482        30,630       
                                     
          Funds From Operations per common share/unit-basic      $    0.93        $    0.67        39.1 %      $    1.66        $    1.33        24.1 %
     
     
           
     
        
          Funds From Operations per common share/unit-diluted      $    0.93        $    0.67        38.5 %      $    1.64        $    1.33        23.3 %
     
     
           
     
        
FUNDS AVAILABLE FOR DISTRIBUTION:                              
          Funds From Operations      $28,237        $20,153        40.1 %      $50,113        $40,832        22.7 %
          Adjustments:                              
                    Amortization of deferred financing costs      399        487        (18.1 %)      780        693        12.6 %
                    Tenant improvements, leasing commissions and recurring
                        capital expenditures		      (3,668
)
      (1,827 )      100.8 %      (4,679 )      (2,731 )      71.3 %
                    Net effect of straight-line rents      (873 )      (1,549 )      (43.6 %)      (2,587 )      (3,057 )      (15.4 %)
     
     
           
     
        
          Funds Available for Distribution      $24,095        $17,264        39.6 %      $43,627        $35,737        22.1 %
     
     
           
     
        
          Funds Available for Distribution per common share/unit-basic      $    0.80        $    0.57        38.6 %      $    1.44        $    1.17        23.5 %
     
     
           
     
        
          Funds Available for Distribution per common share/unit-diluted      $    0.79        $    0.57        38.0 %      $    1.43        $    1.17        22.7 %
     
     
           
     
        
 
 
Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report
Financial Results Excluding Impact of Second Quarter Lease Termination Fee
(unaudited, $ in thousands, except per share amounts)
                               
                               
        Three Months Ended June 30,   Six Months Ended June 30,  
   
     2001   2000   % Change   2001   2000   % Change  
 FUNDS FROM OPERATIONS: 
                            
  Funds From Operations as reported
     $28,237 $20,153 40.1%   $50,113 $40,832 22.7%  
   Lease termination fee (1)
    (5,352 )          (5,352 )         
   
    
 
     
 
     
  Funds From Operations excluding impact of lease termination fee
     $22,885   $20,153   13.6%   $44,761   $40,832   9.6%  
   
    
 
     
 
     
  Weighted average common shares/units outstanding - diluted
     30,481   30,131       30,482   30,630      
   
                            
  Adjusted Funds From Operations per common share/unit - diluted
     $0.75   $0.67   14.9%   $1.47   $1.33   12.0%  
   
    
 
     
 
     
 FUNDS AVAILABLE FOR DISTRIBUTION: 
                          
  Funds Available for Distribution as reported
     $24,095   $17,264   39.6%   $43,627   $35,737   22.1%  
   Lease termination fee (1)
    (5,352 )          (5,352 )         
   
    
 
     
 
     
  Funds Available for Distribution excluding impact of lease termination fee
     $18,743   $17,264   8.6%   $38,275   $35,737   7.1%  
   
    
 
     
 
     
  Adjusted Funds Available for Distribution per common share/unit - diluted
     $0.61   $0.57   7.0%   $1.26   $1.17 6.8%  
   
    
 
     
 
     
                               
                               
 RATIOS: 
                            
  Interest Coverage Ratio
     3.5x   3.4x       3.4x   3.7x      
  Fixed Charge Coverage Ratio
     2.6x   2.5x       2.6x   2.7x      
  FFO Payout Ratio
     63.6x   67.4%   (3.8%
) 
 65.0%   66.4%   (1.4%
) 
  FAD Payout Ratio
     77.7x   78.7%   (1.0%
) 
 76.0%   75.8%   0.2%  
                               
(1) The lease termination fee of $5.4 million represents the $15.0 million in letters of credit proceeds offset by $9.6 million of accounts receivable and other costs and obligations associated with the lease.                

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Net Operating Income Breakdown

 
As of June 30, 2001(1)
% OF TOTAL NOI BY PRODUCT TYPE:   
Office:     
  Los Angeles  
42.7
%
  Orange County  
3.6
%
  San Diego  
25.7
%
  Other  
5.2
%
   
 
    Subtotal  
77.2
%
   
 
Industrial:  
 
  Los Angeles  
2.9
%
  Orange County  
17.4
%
  Other  
2.5
%
   
 
    Subtotal  
22.8
%
   
 
% OF TOTAL NOI BY REGION:  
 
  Los Angeles  
45.6
%
  Orange County  
21.0
%
  San Diego  
25.7
%
  Other  
7.7
%
   
 
    Total  
100.0
%
 
 

(1) Based on Net Operating Income for the six months ended June 30, 2001.

 

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Same Store Analysis (3)
($ in thousands)

 

       Three Months Ended June 30,
     Six Months Ended June 30,
       2001
     2000
     $ Change
     % Change
     2001
     2000
     $ Change
     % Change
TOTAL SAME STORE PORTFOLIO                                        
Operating Revenues:                                        
Rental income      $35,773      $34,908      $  865        2.5 %      $71,615      $69,345      $2,270        3.3 %
Tenant reimbursements(1)      5,308      4,104      1,204        29.3 %      9,842      8,365      1,477        17.7 %
Other income(2)      363      362      1        0.3 %      417      1,436      (1,019 )      (71.0 %)
     
  
  
             
  
  
        
  Total operating revenues      $41,444      $39,374      $2,070        5.3 %      $81,874      $79,146      $2,728        3.4 %
     
  
  
             
  
  
        
Operating Expenses:
Property expenses(2)      $  5,838      $  5,542      $  296        5.3 %      $11,046      $10,491      $  555        5.3 %
Real estate taxes(1)      3,565      2,644      921        34.8 %      6,571      5,672      899        15.8 %
Ground leases      325      389      (64 )      (16.5 %)      657      770      (113 )      (14.7 %)
     
  
  
             
  
  
        
  Total operating expenses      $  9,728      $  8,575      $1,153        13.4 %      $18,274      $16,933      $1,341        7.9 %
     
  
  
             
  
  
        
Net Operating Income      $31,716      $30,799      $  917        3.0 %      $63,600      $62,213      $1,387        2.2 %
     
  
  
             
  
  
        
 
(1)
The results for the three and six months ended June 30, 2000 include $0.3 million of real estate tax refunds. The results for the three and six months ended June 30, 2001 include $0.6 million in supplemental real estate taxes, and $0.5 million in related tenant reimbursements which represents an estimate of the amount of supplemental real estate taxes collectible from tenants.
 
(2)
The results for the six months ended June 30, 2000 include a net lease termination fee of $0.5 million. The results for the six months ended June 30, 2001 include $140,000 for repairs at the Sea Tac Office Center due to damage resulting from the Seattle earthquake that occurred February 28, 2001. Net of these non-recurring revenues and expenses, the increase in total operating revenues, total operating expenses and net operating income for the six months ended June 30 would have been 4.1%, 7.1% and 3.3%, respectively.
 
(3)
Same store defined as all stabilized properties owned at January 1, 2000 and still owned at June 30, 2001.

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Stabilized Portfolio and Occupancy Overview

 

      
# of
Buildings
     Square Feet
     Occupancy at:
            Total
     Leased
     Available
    
6/30/2001
    
3/31/2001
     12/31/2000
OCCUPANCY BY PRODUCT TYPE:     
                             
Office:     
                             
Los Angeles     
31
      3,199,985      2,874,741      325,244      89.8 %      96.6 %      97.3 %
Orange County     
13
      624,866      506,369      118,497      81.0 %      71.2 %      73.6 %
San Diego     
37
      2,700,483      2,700,483      —      100.0 %      100.0 %      100.0 %
Other     
6
      709,575      696,528      13,047      98.2 %      98.2 %      98.2 %
     
  
  
  
                          
     Subtotal     
87
      7,234,909      6,778,121      456,788      93.7 %      95.7 %      96.2 %
     
  
  
  
                          
Industrial:     
                             
Los Angeles     
7
      554,490      550,979      3,511      99.4 %      99.9 %      99.8 %
Orange County     
62
      4,393,537      4,199,594      193,943      95.6 %      97.0 %      97.1 %
Other     
6
      657,921      657,921      —      100.0 %      100.0 %      100.0 %
     
  
  
  
                          
     Subtotal     
75
      5,605,948      5,408,494      197,454      96.5 %      97.7 %      97.8 %
     
  
  
  
                          
OCCUPANCY BY REGION:     
                             
Los Angeles     
38
      3,754,475      3,425,720      328,755      91.2 %      97.1 %      97.7 %
Orange County     
75
      5,018,403      4,705,963      312,440      93.8 %      93.8 %      94.2 %
San Diego     
37
      2,700,483      2,700,483      —      100.0 %      100.0 %      100.0 %
Other     
12
      1,367,496      1,354,449      13,047      99.0 %      99.1 %      99.1 %
     
  
  
  
                          
TOTAL PORTFOLIO     
162
      12,840,857      12,186,615      654,242      94.9 %      96.6 %      97.0 %
     
  
  
  
                          
 
     AVERAGE OCCUPANCY – STABILIZED PORTFOLIO
             AVERAGE OCCUPANCY – SAME STORE PORTFOLIO
Office
     Industrial
     Total
       2001
     2000
     % Change
Quarter-to-Date     94.7%       97.1%       95.8%      Quarter-to-Date     95.7%       97.5%       (1.8%)  
Year-to-Date     94.9%       97.1%       96.0%      Year-to-Date     96.1%       97.3%       (1.2%)  
 
 

 

Kilroy Reality Corporation
Second Quarter 2001 Supplemental Financial Report

Leasing Activity
 
Quarter-to-Date

              2nd Generation
            Weighted
Average
Lease
Term (Mo.)
       # of  Leases(1)
     Square Feet(1)
     TI/LC
Per Sq.Ft.
     Maintenance
Capex
Per Sq.Ft.(2)
     Changes
in
Rents(3)
     Changes
in Cash
Rents(4)
     Retention
Rates(5)
       New
     Renewal
     New
     Renewal
Office      10      14      79,068      319,707      $8.61      $0.04      24.3%        14.5%        76.0%        81
Industrial      11      14      28,752      249,168      $2.57      $0.01      20.8%        3.1%        70.9%        70
    
    
    
    
    
    
    
    
    
    
Total      21      28      107,820      568,875      $6.13      $0.03      23.5%        11.5%        74.4%        76
     
  
  
  
  
  
  
     
     
    

 
Year-to-Date  

              2nd Generation
            Weighted
Average
Lease
Term (Mo.)
       # of  Leases(1)
     Square Feet(1)
     TI/LC
Per Sq.Ft.
     Maintenance
Capex
Per Sq.Ft.(2)
     Changes
in
Rents(3)
     Changes
in Cash
Rents(4)
     Retention
Rates(5)
       New
     Renewal
     New
     Renewal
Office      16      22      115,386      406,262      $7.33      $0.07      24.1%        13.9%        63.3%        70
Industrial      18      22      52,682      418,436      $2.44      $0.02      38.9%        18.4%        77.1%        64
    
    
    
    
    
    
    
    
    
    
Total      34      44      168,068      824,698      $4.96      $0.05      28.4%        15.3%        64.8%        67
     
  
  
  
  
  
  
     
     
     
 
(1)
Includes first and second generation space, net of month-to-month leases. Excludes leasing on new construction. First generation space is defined as the space first leased by the Company.
(2)
Calculated over entire stabilized portfolio.
(3)
Calculated as the change between GAAP rents for new/renewed leases and the expiring GAAP rents for the same space.
(4)
Calculated as the change between stated rents for new/renewed leases and the expiring stated rents for the same space.
(5)
Calculated as the percentage of space either renewed or expanded into by existing tenants at lease expiration.
 
 
 
 

Kilroy Reality Corporation
Second Quarter 2001 Supplemental Financial Report

Lease Expiration Schedule
($ in thousands)
 
Year of Expiration
     # of Expiring
Leases
     Total
Square Feet(1)
     % of Total
Leased Sq. Ft.
     Annual
Base Rent
     Annual Rent
per Sq. Ft.
OFFICE:
Remaining 2001      32      275,524        4.5 %      $    4,999      $18.14
2002      63      498,125        8.1 %      9,224      18.52
2003      57      453,551        7.4 %      7,809      17.22
2004      55      795,102        12.9 %      17,683      22.24
2005      51      885,903        14.4 %      16,178      18.26
2006      37      593,864        9.6 %      14,224      23.95
2007      16      659,998        10.7 %      12,738      19.30
2008        8      391,302        6.3 %      8,660      22.13
2009      10      687,213        11.1 %      17,281      25.15
2010 and beyond      18      921,887        15.0 %      26,659      28.92
   
 
   
   
   
     Subtotal               347      6,162,469        100.0 %      $135,455      $21.98
   
 
   
   
   
INDUSTRIAL:
Remaining 2001      37      237,198        4.4 %      $    1,989      $  8.39
2002      59      339,641        6.3 %      3,119      9.18
2003      53      745,075        13.7 %      5,185      6.96
2004      21      564,287        10.4 %      4,092      7.25
2005      16      756,702        13.9 %      5,758      7.61
2006      10      590,638        10.9 %      4,572      7.74
2007        3      164,595        3.0 %      1,396      8.48
2008        5      839,712        15.5 %      6,268      7.46
2009        7      505,976        9.3 %      3,654      7.22
2010 and beyond        7      686,422        12.6 %      7,715      11.24
   
 
   
   
   
     Subtotal               218      5,430,246        100.0 %      $  43,748      $  8.06
   
 
   
   
   
TOTAL PORTFOLIO:                        
Remaining 2001     
   69
      512,722        4.4 %      $    6,988      $13.63
2002      122      837,766        7.2 %      12,343      14.73
2003      110      1,198,626        10.3 %      12,994      10.84
2004        76      1,359,389        11.7 %      21,775      16.02
2005        67      1,642,605        14.3 %      21,936      13.35
2006        47      1,184,502        10.2 %      18,796      15.87
2007        19      824,593        7.1 %      14,134      17.14
2008        13      1,231,014        10.6 %      14,928      12.13
2009        17      1,193,189        10.3 %      20,935      17.55
2010 and beyond        25      1,608,309        13.9 %      34,374      21.37
     
  
     
     
     Total      565      11,592,715 (1)      100.0 %      $179,203      $15.46
     
  
     
     
 
(1) Excludes space leased under month-to-month leases at June 30, 2001.
 
 

Kilroy Reality Corporation
Second Quarter 2001 Supplemental Financial Report

2001 Dispositions
($ in thousands)
 
Project
     Location
     Type
     Month of
Disposition
     Square
Feet
     Sales
Price
1st QUARTER:                         
6828 Nancy Ridge Drive      San Diego, CA      Industrial      February      39,669      $  3,300
                       
  
2nd QUARTER:                         
199 & 201 N. Sunrise Avenue      Roseville, CA      Industrial      April      162,203      $15,400
                       
  
TOTAL YEAR-TO-DATE DISPOSITIONS                     201,872      $18,700
                       
  
 
 
 

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Stabilized Development
($ in thousands)
 
Project
     Location
     Type
     Start
Date
     Completion
Date
     Rentable
Square Feet
     Total Est.
Investment
     Occupancy
1st QUARTER:                                 
None                                 
               
2nd QUARTER:                                   
Pacific Technology Center      San Diego, CA      Office      1Q 2000      2Q 2001      67,995      $12,190      100 %
Sorrento Rim Business Park II      San Diego, CA      Office      2Q 2000      2Q 2001      102,875      25,342      100 %
                             
  
        
    Subtotal                          170,870      $37,532     
                             
  
        
TOTAL YEAR-TO-DATE
     STABILIZED DEVELOPMENT		                          170,870      $37,532      100 %
                             
  
        
 
Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Business Risks“ in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions, the forward-looking events contained contained in this supplement information might not occur.
 

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

In-Process and Committed Development Projects
($ in thousands)
 
Project
     Location
     Type
     Estimated
Construction Period
     Est.
Stabilization
Date(2)
     Rentable
Square
Feet
     Total
Estimated
Investment
     %
Committed (3)
     Start Date
     Compl. Date
PROJECTS IN LEASE-UP:                                      
     Calabasas Park Centre—Phase II      Calabasas, CA      Office      2Q 2000      1Q 2001      1Q 2002      98,706      $  21,166      58 %
     Calabasas Park Centre—Phase III(4)      Calabasas, CA      Office      3Q 2000      1Q 2001      3Q 2001      11,789      2,676      100 %
     Innovation Corporate Center—Lot 8      San Diego, CA      Office      2Q 2000      2Q 2001      2Q 2002      46,759      9,093      51 %
     Innovation Corporate Center—Lot 12      San Diego, CA      Office      2Q 2000      2Q 2001      2Q 2002      70,617      11,926      0 %
     Peregrine Systems Corporate Ctr—Bld 3(1),(5)      Del Mar, CA      Office      2Q 2000      2Q 2001      4Q 2001      129,752      27,168      100 %
                                   
  
        
          Subtotal                               357,623      $  72,029      62 %
                                   
  
        
PROJECTS UNDER CONSTRUCTION:                                        
     Imperial & Sepulveda      El Segundo, CA      Office      1Q 2001      4Q 2001      4Q 2002      133,678      $  35,752      0 %
     Pacific Corporate Center—Lots 25 & 27      San Diego, CA      Office      2Q 2001      1Q 2002      1Q 2003      68,400      13,907      0 %
     Sorrento Gateway—Lot 4(1)      San Diego, CA      Office      2Q 2001      1Q 2002      1Q 2002      60,662      15,888      100 %
     Westside Media Center—Phase III      West LA, CA      Office      4Q 2000      1Q 2002      1Q 2003      151,000      53,527      0 %
                                   
  
        
          Subtotal                               413,740      $119,074      15 %
                                   
  
        
TOTAL PROJECTS IN LEASE UP AND UNDER CONSTRUCTION                           771,363      $191,103      37 %
                                   
  
        
COMMITTED DEVELOPMENT:                                      
     Brobeck, Phleger & Harrison Expansion      Del Mar, CA      Office      3Q 2001      3Q 2002      3Q 2002      89,168      $  22,910      100 %
     Peregrine Systems Corporate Ctr—Bld 4(1)      Del Mar, CA      Office      3Q 2001      4Q 2002      2Q 2003      114,780      26,050      100 %
                                   
  
        
                                203,948      $  48,960      100 %
                                   
  
        
TOTAL IN-PROCESS AND COMMITTED DEVELOPMENT PROJECTS:                           975,311      $240,063      50 %
                                   
  
        

(1)
Project is being developed by a Development LLC in which the Company holds a 50% managing interest. The estimated investment figure includes the capital required to purchase the remaining 50% interest in the project.
(2)
Based on management’s estimation of the earlier of stabilized occupancy (95%) or one year from the date of substantial completion.
(3)
Includes executed leases, calculated on a square footage basis.
(4)
This project is 100% leased to one tenant. It is expected that the tenant will take occupancy of 100% of the space during the third quarter of 2001.
(5)
This project is 100% leased to one tenant. The tenant occupied 82% of the project at June 30, 2001 under a staged move-in plan.
It is expected that the tenant will take occupancy of the remaining space during the fourth quarter of 2001.
 
Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Business Risks“ in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions the forward-looking events contained in this supplemental information might not occur.
 

Kilroy Reality Corporation
Second Quarter 2001 Supplemental Financial Report

Future Development Pipeline
($ in thousands)
 
Project
     Location
     Type
     Rentable
Square
Feet
     Total
Estimated
Investment
SAN DIEGO COUNTY:     
     Innovation Corporate Center—Lot 2      San Diego, CA      Office      51,187      $    9,681
     Innovation Corporate Center—Lot 4      San Diego, CA      Office      75,000      13,150
     Innovation Corporate Center—Lot 9      San Diego, CA      Office      65,867      11,803
     Innovation Corporate Center—Lot 10      San Diego, CA      Office      37,405      7,554
     Pacific Corporate Center—Lots 3, 4 & 6      San Diego, CA      Office      225,000      44,128
     Pacific Corporate Center—Lot 8      San Diego, CA      Office      116,157      24,992
     San Diego Corporate Center—Lot 7      Del Mar, CA      Office      207,842      62,200
     Santa Fe Summit—Phase I      San Diego, CA      Office      150,000      32,243
     Santa Fe Summit—Phase II      San Diego, CA      Office      150,000      33,958
     Sorrento Gateway—Lot 1      San Diego, CA      Office      54,878      11,052
     Sorrento Gateway—Lot 2(1)      San Diego, CA      Office      70,000      13,730
     Sorrento Gateway—Lot 3(1)      San Diego, CA      Office      56,800      11,064
     Sorrento Gateway—Lot 7(1)      San Diego, CA      Office      57,000      11,484
                 
  
          Subtotal                1,317,136      $287,039
                 
  
TOTAL FUTURE DEVELOPMENT PIPELINE                1,317,136      $287,039
                 
  
 
(1)
Project is being developed by a Development LLC in which the Company holds a 50% interest. The estimated investment figure includes the capital required to purchase the remaining 50% interest in the project.
 
Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation’s business and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Business Risks“ in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplement information might not occur.
 
 

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Capital Structure
At June 30, 2001
($ in thousands)
 
       Shares/Units
at June 30, 2001
     Aggregate
Principal
Amount or
$ Value
Equivalent
     % of Total
Market
Capitalization
DEBT:
Secured Debt           $    438,947     
           24.9%
  
Unsecured Line of Credit           185,000     
           10.5%
  
Unsecured Term Facility           100,000     
           5.7%
  
        
  
 
     Total Debt           $    723,947     
           41.1%
  
        
  
 
EQUITY:
8.075% Series A Cumulative Redeemable Preferred Units(1)      1,500,000      $      75,000     
           4.3%
  
9.375% Series C Cumulative Redeemable Preferred Units(1)      700,000      35,000     
           2.0%
  
9.250% Series D Cumulative Redeemable Preferred Units(1)      900,000      45,000     
           2.5%
  
Common Units Outstanding(2)      3,062,854      89,129     
           5.1%
  
Common Shares Outstanding(2)      27,265,614      793,429     
           45.0%
  
        
  
 
     Total Equity           $1,037,558     
           58.9%
  
        
  
 
TOTAL MARKET CAPITALIZATION           $1,761,505     
           100.0%
  
        
  
 

(1)  
Value based on $50.00 per share liquidation preference.
 
(2)  
Valued based on closing share price of $29.10 at June 30, 2001.
 

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Debt Analysis
At June 30, 2001
($ in thousands)

SECURED DEBT AND UNSECURED TERM FACILITY PRINCIPAL REPAYMENT SCHEDULE

2001

2002

2003

2004

 

2005

Thereafter
Total

$

12,175

$

6,148

$

173,678

$

127,719

$

16,965

$
202,262

$
538,947

TOTAL DEBT COMPOSITION
        % of
Total Debt
 

Weighted Average
       
Interest Rate

Maturity

Secured vs. Unsecured Debt:
 

Secured Debt   

 

60.6

 %  

6.9

 %  

5.3
 

Unsecured Debt

 

39.4

 %  

7.6

 %  

2.0
       
 
 
 
 
 

Floating vs. Fixed Rate Debt:           

 

Fixed Rate Debt (1),(2),(4)

 

77.1

 %  

7.5

 %  

4.6
 

Floating Rate Debt (3)

 

22.9

 %  

6.0

 %  

2.0
       
 
 
 

Total Debt 

 
 
 

7.2

 %  

4.0
       
 
 
 
 

UNSECURED LINE OF CREDIT
Total Line
  Outstanding Balance
  Expiration Date

$400,000
$185,000
November 2002

CAPITALIZED INTEREST
Quarter-to-Date

Year-to-Date

$3.4 million
$6.7 million

(1)  

The Company currently has an interest-rate swap agreement to fix LIBOR on $150 million of its floating rate debt at 6.95% which expires in February 2002.
(2)   The Company currently has an interest-rate swap agreement to fix LIBOR on $150 million of its floating rate debt at 5.48% which expires in November 2002.
(3)  

The Company, through one of its Development LLCs, currently has an interest-rate cap agreement to cap LIBOR on its floating rate construction debt at 8.5% which expires in April 2002. The notional amount of the cap increases over the life of the agreement as the balance of the related construction loan increases. At June 30, 2001, the notional amount of the cap agreement was approximately $54.4 million.

(4)  

The percentage of fixed rate debt to total debt does not take into consideration the portion of floating rate debt capped by the Company's interest-rate cap agreement. Including the effects of the interest-rate cap agreement, the Company had fixed or capped approximately 84.7% of its total outstanding debt at June 30, 2001.