Kilroy Realty Corporation (NYSE: KRC) today said it has completed the purchase of a 13.8 acre Class A office campus in the premier, coastal Del Mar sub-market of San Diego for approximately $126 million. The campus, known as The Heights, includes a three-story office building, a three-story life science building, which together total approximately 219,000 square feet and a subterranean parking structure. Additionally, the campus includes a land site that is fully entitled for a state-of-the-art 90,000-square-foot office building to be LEED certified.
The two existing buildings, both LEED Silver certified and built in 2004 with steel frame construction, are 100% leased to five tenants, including Neurocrine Bioscience (NASDAQ: NBIX) and Knobbe Martens Olson & Bear, one of the nation’s largest intellectual property law firms. The campus features amenities that attract knowledge-based tenants, including ample parking, a sports court and on-site fitness center, abundant outdoor common and gathering areas as well as an amphitheater.
In its own right, The Heights is a highly attractive, well-located and scalable campus and is also immediately adjacent to KRC’s future development project One Paseo. The company expects to garner significant synergies from owning and operating both projects.
“The Heights encompasses all the characteristics we seek in an acquisition,” said John Kilroy, Jr., the company’s chairman, president and chief executive officer. “It has a strong initial cash return in the mid 6% range, high-quality tenants, strong submarket fundamentals, adjacency to transportation as well as a wide range of retail amenities and the upside potential of additional development. Together, both The Heights and One Paseo will complete our vision of developing a remarkable, urban, mixed-use, live, work and play environment in one of the best and consistently highest demand coastal submarkets of San Diego.”About Kilroy Realty Corporation. Kilroy Realty Corporation, a member of the S&P MidCap 400 Index, is a real estate investment trust active in major West Coast markets. For over 65 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of Los Angeles, Orange County, San Diego, the San Francisco Bay Area and greater Seattle. At June 30, 2013, KRC owned approximately 13.5 million rentable square feet of commercial office 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. 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; trends in the real estate industry; significant competition, which may decrease the occupancy and rental rates of properties; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired properties; the availability of cash for distribution and debt service and exposure of risk of default under debt obligations; adverse changes to, or implementations of, applicable laws, regulations or legislation; 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 factors that could materially 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, 2012 and our other filings with the Securities and Exchange Commission. All forward-looking statements are based on information that was available, and speak only, as of the date on which they are made. We assume 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 required in connection with ongoing requirements under Federal securities laws.