Real Estate Investment Trusts

Profit at Kilroy Realty Corp. almost tripled in the second quarter as it reached a payment agreement with a major, financially troubled tenant and the real estate market improved. Kilroy, a West Los Angeles real estate investment trust that owns West Coast office and industrial properties, earned $13.4 million, or 49 cents a share, in the quarter ended June 30, compared with $5 million, or 18 cents, in the same period a year ago, the company reported late Monday. Revenue rose to $51.

Los Angeles real estate mogul Robert F. Maguire capped a tumultuous drive to take his company public Tuesday, raising nearly $700 million in an initial public stock offering of Maguire Properties Inc. The company sold 36.5 million shares at $19 each, at the low end of the range Maguire was seeking. It will begin trading today on the New York Stock Exchange under the symbol MPG.

Catellus Development Corp., one of California's largest landowners and builders, said Tuesday that first-quarter profit fell 26% as property sales decreased. San Francisco-based Catellus said earnings dropped to $23.4 million, or 26 cents a share, from $31.5 million, or 35 cents, a year earlier.

Kilroy Realty Corp., a West Los Angeles real estate investment trust, reported that profit dipped 19% in the first quarter. Kilroy, which owns West Coast office and industrial properties, earned $10.9 million, or 40 cents a share, compared with $13.5 million, or 49 cents, in the year-earlier period, the company said late Monday. Revenue rose 7% to $54.6 million in the period ended March 31. Kilroy's funds from operations, a key measure of profitability for REITs, fell to $26.

Catellus Development Corp., said to be the largest private landowner in California thanks to a corporate lineage that dates to the earliest days of railroad service in the West, is headed down a new track. The San Francisco-based company said Monday that it intended to become a real estate investment trust, a move that would eliminate most of its tax liability and give shareholders their first-ever cash dividend.

Arden Realty Inc., a Los Angeles real estate investment trust, said Wednesday that fourth-quarter profit fell 26.5% as office rents continued to dip and concessions to tenants increased. Arden, the largest office landlord in Southern California with more than 18.5 million square feet, earned $16.3 million, or 26 cents a share, in the three months ended Dec. 31. In the same period a year earlier it earned $22.2 million, or 35 cents a share. Revenue was flat at $106.9 million, compared with $106.

Shares of real estate investment trusts have fallen this week on concerns that President Bush's plan to repeal the tax investors pay on dividends may dim the allure of the REITs, investors and analysts said. The Bloomberg index of 144 REITs is off 2.4% since Monday. Among the losers have been shares of Equity Office Properties Trust, the largest office building owner in the U.S.; Equity Residential, the largest apartment owner; and Simon Property Group, the biggest mall owner.

An affiliate of Chicago-based investment advisor RREEF, one of the nation's most active real estate investment managers, bought a 780,000-square-foot portfolio of mostly office buildings in Cypress and Anaheim for a combined price estimated at about $107 million. RREEF, which declined to comment on the sale, purchased the fully leased buildings from an investment fund managed by Newport Beach-based Layton-Belling & Associates. They include Mitsubishi Electric's U.S.

Shopping mall owner Macerich Co., which announced a $662-million agreement to buy the largest mall operator in Phoenix last week, also will expand its holdings in Ventura County with the purchase of The Oaks shopping center in Thousand Oaks. The Santa Monica-based real estate investment trust will pay about $150 million for the popular 1-million-square-foot Conejo Valley property, Macerich's Chief Executive Arthur Coppola said Monday.

Shares of real estate investment trusts delivered bigger gains than the broader stock market for the second consecutive year in 2001, but REITs will be hard pressed to perform as well in 2002 as they did last year. REIT stocks will remain a stable investment, analysts believe, but the recession is bound to catch up with an industry that relies on rents paid by tenants in the office and industrial buildings, shopping centers, apartment complexes and other commercial properties owned by REITs.