Kilroy Realty Corporation (NYSE: KRC) continued its successful pursuit of value-add office building opportunities in strongly growing West Coast commercial centers, acquiring a rare development site on Brannan Street in San Francisco’s SOMA district and a Class A office tower in greater Seattle’s prestigious Bellevue community. KRC said the development site transaction, which closed last week, represents a unique opportunity to build a state-of the-art office property amid one of downtown San Francisco’s most popular technology and media corridors at a total investment cost notably below recent prices paid by other purchasers for similar assets. In the Seattle transaction, which closed this week, the company said it has purchased a premium quality, multi-tenant office tower, located in a popular high-density submarket that is now experiencing strong demand growth, at a price comfortably below replacement cost. KRC said it plans to significantly enhance the property with a capital improvement and modernization program that will support both property specific and market-based rental rate growth. Brannan Street Development Site Details. KRC paid approximately $18.5 million for the 0.82-acre development site, located at 329 Brannan Street in San Francisco’s SOMA district. The site is zoned for approximately 5.0 FAR coverage and the company intends to build a six-level office building designed to appeal to the area’s growing community of technology and media companies. It is KRC’s second ground-up development project in Northern California. The new building will be LEED Gold certified. Its design will reflect the dominant brick and timber character of the neighborhood, similar to properties at 301 and 250 Brannan Street, which KRC also owns and which are both 100% leased. The new building’s design will incorporate open floor plates, concrete floors, large windows to capture natural light, and multiple common areas—all features popular with the area’s creative workforce. KRC expects to complete entitlements for the development site by year-end 2013 and complete the building in 2015. The company estimates the total cost of the project, including land, will be approximately $80 million.
Seattle High-Rise Acquisition Details. KRC paid approximately $186 million for the 417,000 square-foot, 24-story, Class A office tower known as Skyline Tower located in Bellevue, Washington. The purchase price includes the assumption of an in-place mortgage of approximately $84 million. The loan bears interest at a rate of 6.37% and matures on April 1, 2013.Skyline Tower is a LEED Silver certified property featuring spectacular views of the Cascade and Olympic Mountains and Mount Rainier, and sits in close proximity to Bellevue’s affluent residential and retail neighborhoods. The property, which is two blocks from KRC’s Key Center office tower, is currently 92% leased to a diverse tenant base that includes technology companies Expedia and Valve Corporation. 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.