Kilroy Realty Corporation Acquires Value-Add Opportunities in Two West Coast …

Kilroy Realty Corporation

/quotes/zigman/171049/quotes/nls/krc 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

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

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 SP 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 .

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.

SOURCE: Kilroy Realty Corporation

        Kilroy Realty Corporation
        Tyler H. Rose
        Executive Vice President
        and Chief Financial Officer
        Michelle Ngo
        Vice President
        and Treasurer

Copyright Business Wire 2012


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