Signs 80,000 Square-Foot Lease with Major Media
Company, Delivers Final Two-Thirds of Kilroy Oyster Point Phase 1
and Sells San Diego Office Property for $37 Million
Kilroy Realty Corporation (NYSE: KRC, “Kilroy”) today said its
strategic focus on creating a young, contemporary and sustainable
portfolio of office, life science and residential properties in
high growth Western and Southwestern markets continued to pay
dividends in 2021, as the company nears year-end with additional
achievements in leasing, development and capital allocation.
Leasing / Operations
- In November, Kilroy signed an eight-year agreement with a major
media company for 80,000 square feet in Los Angeles.
- Year to date office and life science leasing now totals more
than 1.1 million square feet, 70% of which were with new tenants.
Average GAAP and cash rents on these transactions were 22% and 8%
higher than the prior leases, respectively.
- With its strong, consistent leasing performance, Kilroy is
entering the new year with average lease expirations of
approximately 7.5% annually through 2025.
- The average age of Kilroy’s stabilized portfolio was 11 years,
substantially younger than the company’s peer average of 30.
Development
- In late November, Kilroy delivered the remaining 421,000 square
feet of office space across two buildings at its Kilroy Oyster
Point Phase 1 development project, located in South San Francisco,
to fintech giant Stripe. The first building was delivered to
Cytokinetics at the end of September. The entire Phase 1 project, a
$570 million investment totaling 656,000 square feet across three
buildings, was fully leased within two quarters of the project’s
commencement.
- Over the course of 2021, Kilroy added more than $1 billion of
new development to the stabilized portfolio and commenced
construction on more than $1 billion of new development and
redevelopment projects.
- Included among the deliveries was The Jardine, a 193-unit,
luxury residential tower in Hollywood that was completed in April
and is currently just under 75% leased. The company now has a total
of 1,000 residential units that are approximately 90% leased.
Capital Allocation
- In December, Kilroy completed the sale of its 103,000
square-foot Sabre Springs office buildings, located on the I-15
Corridor in North San Diego County, for $37 million, in an
unsolicited transaction.
- The disposition was the last of more than $2 billion in
acquisition and disposition transactions the company completed
during 2021.
- In March, Kilroy sold its recently constructed, fully leased,
750,000 square-foot office campus, The Exchange on 16th, for $1.08
billion. The company redeployed that capital into five off-market
transactions, including both operating properties and sites for
future development.
- Among these transactions was the acquisition of Indeed Tower, a
newly constructed 734,000 square-foot office tower located in the
central business district of Austin, Texas, marking Kilroy’s entry
into the Southwest region.
Sustainability and Wellness
- The company remains the industry leader in sustainability as
measured by accredited organizations and ranking systems, including
the GRESB 2021 Real Estate Assessment, the Dow Jones Sustainability
World Index (DJSI), and the U.S. Environmental Protection Agency’s
(EPA) National Top 100 List of the largest green power users.
- Kilroy’s portfolio also earned the distinction of encompassing
more designated Fitwel buildings than any other organization
outside of the U.S. Government.
“In a year marked by uncertainty and dramatic change, we have
worked very hard to keep our eye on the ball and execute our
strategic initiatives,” said John Kilroy, Chairman and CEO of
Kilroy. “We have expanded into a new, high growth market and we
have substantially broadened our life science platform. We have
enhanced the value of our existing portfolio and have capitalized
on its value in a disciplined fashion to redeploy capital into new,
higher value opportunities. We have maintained a strong balance
sheet. And we have remained deeply committed to leadership in
sustainability.”
About Kilroy Realty Corporation
Kilroy Realty Corporation (NYSE: KRC, the “company”, “Kilroy”)
is a leading U.S. landlord and developer, with operations in San
Diego, Greater Los Angeles, the San Francisco Bay Area, the Pacific
Northwest and Austin, Texas. The company has earned global
recognition for sustainability, building operations, innovation and
design. As pioneers and innovators in the creation of a more
sustainable real estate industry, the company’s approach to modern
business environments helps drive creativity and productivity for
some of the world’s leading technology, entertainment, life science
and business services companies.
The company is a publicly traded real estate investment trust
(“REIT”) and member of the S&P MidCap 400 Index with more than
seven decades of experience developing, acquiring and managing
office, life science and mixed-use projects.
As of September 30, 2021, Kilroy’s stabilized portfolio totaled
approximately 15.2 million square feet of primarily office and life
science space that was 91.5% occupied and 93.9% leased. The company
also had more than 1,000 residential units in Hollywood and San
Diego, which had a quarterly average occupancy of 79.9%. In
addition, the company had six in-process development projects with
an estimated total investment of $2.6 billion, totaling
approximately 3.0 million square feet of office and life science
space.
A Leader in Sustainability and Commitment to Corporate Social
Responsibility
The company is listed on the Dow Jones Sustainability World
Index and has been recognized by industry organizations around the
world. The company’s stabilized portfolio was 78% LEED certified,
44% Fitwel certified, the highest of any non-government
organization, and 72% of eligible properties were ENERGY STAR
certified as of September 30, 2021.
The company has been recognized by GRESB as the listed
sustainability leader in the Americas for eight of the last nine
years. Other honors have included the National Association of Real
Estate Investment Trust’s (NAREIT) Leader in the Light award for
eight consecutive years and ENERGY STAR Partner of the Year for
eight years as well as ENERGY STAR’s highest honor of Sustained
Excellence, for the past six years.
A big part of the company’s foundation is its commitment to
enhancing employee growth, satisfaction and wellness while
maintaining a diverse and thriving culture. For the second year in
a row, the company has been named to Bloomberg’s Gender Equality
Index—recognizing companies committed to supporting gender equality
through policy development, representation, and transparency.
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 or implied in
the forward-looking statements, and you should not rely on the
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 the forward-looking statements, including, among
others: global market and general economic conditions and their
effect on our liquidity and financial conditions and those of our
tenants; adverse economic or real estate conditions generally, and
specifically, in the States of California, Texas and Washington;
risks associated with our investment in real estate assets, which
are illiquid, and with trends in the real estate industry; defaults
on or non-renewal of leases by tenants; any significant downturn in
tenants’ businesses; our ability to re-lease property at or above
current market rates; costs to comply with government regulations,
including environmental remediation; the availability of cash for
distribution and debt service and exposure to risk of default under
debt obligations; increases in interest rates and our ability to
manage interest rate exposure; the availability of financing on
attractive terms or at all, which may adversely impact our future
interest expense and our ability to pursue development,
redevelopment and acquisition opportunities and refinance existing
debt; a decline in real estate asset valuations, which may limit
our ability to dispose of assets at attractive prices or obtain or
maintain debt financing, and which may result in write-offs or
impairment charges; significant competition, which may decrease the
occupancy and rental rates of properties; potential losses that may
not be covered by insurance; the ability to successfully complete
acquisitions and dispositions on announced terms; the ability to
successfully operate acquired, developed and redeveloped
properties; the ability to successfully complete development and
redevelopment projects on schedule and within budgeted amounts;
delays or refusals in obtaining all necessary zoning, land use and
other required entitlements, governmental permits and
authorizations for our development and redevelopment properties;
increases in anticipated capital expenditures, tenant improvement
and/or leasing costs; defaults on leases for land on which some of
our properties are located; adverse changes to, or enactment or
implementations of, tax laws or other applicable laws, regulations
or legislation, as well as business and consumer reactions to such
changes; risks associated with joint venture investments, including
our lack of sole decision-making authority, our reliance on
co-venturers’ financial condition and disputes between us and our
co-venturers; environmental uncertainties and risks related to
natural disasters; our ability to maintain our status as a REIT;
and uncertainties regarding the impact of the COVID-19 pandemic,
and restrictions intended to prevent its spread, on our business
and the economy generally. These factors are not exhaustive and
additional factors could adversely affect our business and
financial performance. 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, 2020 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 dates 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 we are required to do so in connection with
our ongoing requirements under federal securities laws.
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version on businesswire.com: https://www.businesswire.com/news/home/20211210005098/en/
Tyler H. Rose President (310) 481-8484 or Michelle Ngo Chief
Financial Officer and Treasurer (310) 481-8581
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