Stock is at heart of divorce spat for Reit chief.

John Kilroy Jr. likes collecting trophies.

Whether in the construction of a premier property like the Westside Media Center or competitive yacht racing, the 54-year-old president and chief executive of Kilroy Realty Corp. appears to embrace challenge and competition.

But none would seem to carry the stakes of a long-running legal battle with his ex-wife, Robin Kilroy, to finalize the financial terms of their 1995 divorce.

The two are tangled in a dispute over the complex structure of Kilroy's 1997 initial public offering and the definition of community property that Robin Kilroy said could net her as much as $12 million in company stock.

Along the way, the two have committed accusations of greed and accounting irregularities to paper in court filings.

"It's not a nice divorce, but what divorce is?" said Robin Kilroy "Everything is disputable."

At the heart of the dispute are shares granted to Robin Kilroy as part of the Kilroy IPO.

She has argued in court filings that, among other assets, at least 858,111 more Kilroy shares should have been considered community property Based on the Sept. 11 closing price of $28.52, a 50-50 split of community property would be worth $12.2 million to her.

Unable to persuade a lower court judge, who ruled against her on all counts, she appealed.

In a brief arguing against overturning the L.A. Superior Court ruling, John Kilroy Jr. called her arguments "smoke and mirrors for which there is neither factual nor legal support. Stripped to its bare essentials, Appellant's case is all about greed."

Robin Kilroy replied in a court filing by saying, "John's motives are hardly eleemosynary in nature, as illustrated by the fact that he and his forensic accountants repeatedly juggled the facts and figures to come up with ever-decreasing amounts of community property."

On Aug. 27, a three-judge panel in the 2nd Appellate District ruled against her largest claims, although it did send one issue back to Superior Court for review.

In its ruling, the panel supported Kilroy's assertion that his ex-wife should be allocated 173,494 shares as part of the IPO. Those shares had a value of nearly $5 million on Sept. 11.

"We do not believe that any issues remaining in the divorce action, especially after the successful result we achieved in the appellate court, will have any material impact on John Kilroy Jr.'s ownership interest in Kilroy Realty Corp.," said Susan Carter, a partner at Wasser Cooperman & Carter, who returned a call placed to Kilroy. She declined further comment.

Quiet start

The Kilroys were married in 1980 and led a life largely out of the public eye, marked only by occasional visits to charitable events.

John Kilroy has served as a trustee of Viewpoint School, a private non-profit school in Calabasas, and the Jefferson Center for Character Education, a Mission Viejo organization that teaches moral values in public and private schools from kindergarten through 12th grade.

If not public, neither were their lives low-key.

The couple had three children, who they began to raise in a beachfront Malibu home. Robin Kilroy shopped for herself and two daughters from Sandra Johnson, a Beverly Hills couturiere catering to the wealthy, according to a 1993 Los Angeles Times feature about the designer.

Kilroy, who started in the real estate business his father founded in 1947 by sweeping out a warehouse when he was 10, joined full time in 1971 after graduating from USC. He rose through the ranks to become chief executive in 1991.

During their marriage, he took to the seas. He and the crew of his 40-foot yacht, Samba Pa Ti, have won several Fan" 40 class World Championships, according to several news reports.

By the time the couple separated in 1995, for what court documents called "irreconcilable differences," they had borrowed $45 million from Kilroy Industries, a predecessor to Kilroy Realty, "to acquire personal residences and to fund their lifestyle," according to papers filed by Kilroy as part of the divorce proceeding.

Loans head south

The loans came back to haunt them, however, when the Southern California real estate market tanked in the early 1990s. Kilroy Industries, which had leased many of its South Bay properties with aerospace industry tenants, was especially hard hit when that sector all but dissolved.

The company borrowed to stay afloat, and the couple worried about having to file for personal bankruptcy if the business was forced to seek protection, court documents say. How to resolve the financial dilemma was a source of disagreement between them, according to Kilroy's brief.

"She told him that he was wasting his life trying to save KI because eventually it was going to go bankrupt, and she urged him to move on and become involved in a different business," the brief says of Robin Kilroy.

Instead, he opted to restructure the family business as a REIT and go public, according to his brief.

It would not be an easy process.

Robin Kilroy said the couple sold their Malibu home for $8 million in 1995, and by the time they separated a year later, Kilroy Industries was in technical default on several mortgages and loans. The senior Kilroy borrowed $30 million from "close personal friends," according to his son's appellate brief, to help weather the crisis.

In court papers, Kilroy said he loaned the company hundreds of thousands of dollars for legal and accounting fees, expenses and other costs associated with the IPO. He renegotiated leases, acquired "additional properties and personally guaranteed more than $28 million in loans from underwriter Prudential Securities, his brief says.

The IPO was a success. The company raised $287.5 million, which was used to pay down debt and buy more properties.

Today, Kilroy Realty has a market capitalization of $789 million. Kilroy earned $2.9 million, $1.6 million and $1.7 million in salary and bonus in each of the last three years, respectively. He controls more than 1.7 million shares, 6 percent of the company, and is the largest individual shareholder.

Though they agreed to divorce, finalizing the financial terms of the split were delayed so Kilroy could "resolve certain pressing business issues," according to a declaration by Robin Kilroy's attorney, Kenneth Young, a partner at Kaufman Young Spiegel Robinson & Kenerson LLP.

In May 1998, Kilroy agreed to pay Robin Kilroy $45,000 in monthly spousal and child support, according to a declaration by Robin Kilroy. The former couple agreed to split the tuition, uninsured medical expenses, therapy and dental expenses of their children, according to court documents.

Three months after their May 2000 agreement to dissolve the marriage, leaving financial differences to be resolved later, Kilroy remarried, according to Robin Kilroy's declaration.

Unable to agree on financial settlement, the couple went to trial in June 2001. With the favorable ruling for Kilroy, Robin Kilroy appealed.

"It's obvious because there's an appeal after nine years, it's not going well in my favor," she said.

Today, John and Robin Kilroy live "down the street" from one another, Robin Kilroy said.

She said she is involved in her church and recently obtained a pilot's license, though she has not yet purchased a plane.

Most of all, she said, "I've raised my kids," adding that the $45,000-a-month child and spousal support is still "under negotiation."

"It's not been that easy," she said. "I'd like to get it over."