Boeing to Vacate Kilroy Building in El Segundo

Kilroy Realty Corp., which cut its 2002 earnings estimates because of a tenant’s financial problems, said Tuesday that its largest tenant, Boeing Co., plans to vacate a Kilroy building in El Segundo.

The world’s biggest airplane maker, which cut 30,000 jobs over the last year, plans to leave the 248,000-square-foot building in February, said John Kilroy Jr., the developer’s president and chief executive. Boeing’s satellite business, which has been hit by lower demand, has been based there.

Boeing leases 1.1 million square feet from Kilroy, representing 10.3% of the company’s annual base rental revenue.

Kilroy’s shares fell 44 cents to $21.06 on the New York Stock Exchange and are down 20% this year. Kilroy’s third-quarter net income fell 15% to $7.9 million, or 28 cents a share, from $9.3 million, or 34 cents, in the same period last year.

In July, Kilroy cut its forecast saying financial troubles at another tenant, Peregrine Systems Inc., might lead to lower occupancy. The software company has since rejected three of its five leases in Kilroy buildings in the San Diego area.

Kilroy is negotiating with Boeing to renew a lease that expires at the end of the year on 211,000 square feet of space next to the Seattle-Tacoma International Airport. Boeing said it would vacate that space.

The realty firm plans to take the El Segundo building “out of service and renovate” it, Kilroy said.