San Diego experienced positive absorption for the second consecutive quarter, while many of the vacancy rates in our other submarkets were basically flat compared to last quarter. Given the ongoing uncertainties in today's commercial real estate markets, financial strength remains a crucial advantage in both leasing and in acquisitions.

Tenants continue to underwrite landlords for their ability to execute on promises and property maintenance; sellers continue to prefer buyers who come without financing contingencies and who can provide surety of execution.

Now let me give you some details on the four acquisitions we completed in the quarter. In May, we closed on the purchase of 303, 2nd Street, a 732,000 sq. foot office project in the South Financial District of San Francisco for approximately $233 million. The property is currently 89.7% occupied, and we recently signed 37,000 sq. foot lease that brings the project to 94.7% leased. This puts us ahead of our budget in terms of lease-up timing.

As we've mentioned previously, this was a strategic acquisition that allows KRC to diversify its geographic footprint with a significant foothold in the San Francisco market, an area in which we anticipate future growth.

In June, we purchased a 99,000 sq. foot office building in the city of Orange for approximately $22 million. The property which is near Children's Hospital of Orange County came with entitlement rights for additional potential development of office or medical space up to 1 million sq. feet.

It's currently 100% occupied by a single tenant with strong credit quality. Initial cap rate is 7%, but with our contractual rent bump scheduled for next June, the return will jump to 8.6%. Also this June, we completed the acquisition of 272,000 sq. foot office building located in the city of Irvine in Orange County for approximately 103 million.

The building which was completed just three years ago is a premier address, and a best-in-class property, not only within the John Wayne Airport submarket where it's located, but across Orange County. It is a LEED certified silver, by assets rating an airport submarket. The building is currently 96% occupied, with the two largest leases expiring approximately eight years from now. The in place first year cap rate is 6.7%.

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