Kilroy Realty Corporation (NYSE: KRC) today said it has completed the acquisition of a 22-story, Class A office building in the heart of Hollywood, the focus of substantial residential and retail investment in recent years.
Located at 6255 Sunset Boulevard, one block from the famous Sunset and Vine corner, Sunset Media Center sits in an ideal location with great access to a majority of the entertainment studios and users in the market. It boasts immediate adjacency to the Metro Rail Red transit line and numerous amenities. The office building is currently 87% leased, with in-place rents significantly below current market levels. KRC said it paid approximately $79 million for the property, a significant discount to replacement cost, and plans an extensive renovation of the lobby, common areas and tenant spaces, which will include energy efficiency upgrades throughout the building.
The acquisition follows KRC’s strategy for seeking out and acquiring value-add properties that cater to the growing technology, media and entertainment sectors. With limited inventory and an older office stock, Hollywood continues to be an attractive sub-market for value-add opportunities.
“Sunset Media Center is located in the heart of an increasingly desirable ‘live, work, and play’ submarket,” said David Simon, KRC’s executive vice president for the Los Angeles region. “We’ve acquired an opportunity to create meaningful long-term value in this property through well-targeted improvements to the building’s aesthetics, amenities and energy efficiency.”As part of the transaction, the company assumed a secured mortgage loan of approximately $54 million that bears interest at a rate of 5.23% and matures on January 1, 2016, and issued approximately $5 million in common limited partnership units of Kilroy Realty, L.P. About Kilroy Realty Corporation. Kilroy Realty Corporation, a member of the S&P Small Cap 600 Index, is a real estate investment trust active in premier office and industrial submarkets along the West Coast. For over 60 years, the company has owned, developed, acquired and managed real estate assets, consisting primarily of Class A real estate properties in the coastal regions of Los Angeles, Orange County, San Diego, greater Seattle and the San Francisco Bay Area. At March 31, 2012, the company owned 11.8 million rentable square feet of commercial office space and 3.4 million rentable square feet of industrial space. 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, results or events. 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 forward-looking statements, and you should not rely on 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 forward-looking statements, including, among others: risks associated with investment in real estate assets, which are illiquid, and with trends in the real estate industry; competitive market conditions; the ability to complete potential acquisitions and dispositions on announced terms; the ability to successfully operate acquired properties; the availability of cash for debt service and exposure of risk of default under debt obligations; government regulations that may affect development, redevelopment and use of properties; and the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts. These factors are not exhaustive. For a discussion of additional risk factors that could 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, 2011, quarterly report on Form 10-Q for the quarter ended March 31, 2012, 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 assumes 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 it is required to do so in connection with ongoing requirements under Federal securities laws.
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