LOS ANGELES--(BUSINESS WIRE)--Kilroy Realty Corporation (NYSE: KRC) today announced it has completed the acquisition of a 1.37-acre five parcel land site in Seattle’s central business district for a purchase price of $133 million.
Currently home to a 31,000 square foot building fully leased to Bank of America, the historic 47,000 square foot 10-story Lloyd Building, three surface parking lots and a parking structure, the site is just blocks from Amazon’s main corporate headquarters, the iconic Pike Place Market and Seattle’s retail core anchored by the newly renovated Pacific Place. The specific parcel addresses are 500 and 600 Olive Way, 601 Stewart Street, 1825 7th Avenue and 1818 6th Avenue.
The company plans to seek entitlements to develop a state-of-the-art mixed-use project consisting of approximately 900,000 square feet of office, including the full restoration of the Lloyd Building, and approximately 25,000 square feet of street-level food and beverage retail as well as underground parking. The Lloyd Building is currently approximately 75% leased under numerous short-term leases. In-place zoning on the 1825 7th Avenue parcel allows for approximately 575,000 square feet of residential development, for which the company is evaluating various options. The proposed project will target the highest levels of sustainability, including carbon neutral operations.
The project site offers multiple transportation options, including the South Lake Union Trolley, bus, convenient freeway access and is located across from Westlake Station, Seattle’s most-used light rail station.
Additionally, the location is extremely well positioned between the retail core, Denny Triangle, and South Lake Union, which have grown to become premier destinations for technology, biotechnology, education and creative firms that include Facebook, HBO, Zillow, Google, Redfin and Kaiser Permanente, among many others.
KRC recently leased its 635,000 square-foot 333 Dexter office development project in South Lake Union to a Fortune 50 technology company and its stabilized portfolio in Seattle is approximately 98% leased. With the recent full building lease execution at 9455 Towne Centre Drive in the UTC submarket of San Diego, the office and life science component of the company’s $2.1 billion of development projects under construction is now approximately 90% leased.
“We are excited to add another prime development opportunity to our portfolio in one of the country’s most vibrant and dynamic markets,” said John Kilroy, KRC’s Chairman and CEO. “We are strong believers in Seattle and hope to continue to grow in this market over time. This opportunity fits our investment thesis well: extremely well-located, unsurpassed transportation options and surrounded by world-class tenants and amenities.”
About Kilroy Realty Corporation. Kilroy Realty Corporation (KRC), a publicly traded real estate investment trust and member of the S&P MidCap 400 Index, is one of the West Coast’s premier landlords. The company has over 70 years of experience developing, acquiring and managing office and mixed-use real estate assets. The company provides physical work environments that foster creativity and productivity and serves a broad roster of dynamic, innovation-driven tenants, including technology, entertainment, digital media and health care companies.
At September 30, 2019, the company’s stabilized portfolio totaled approximately 13.3 million square feet of office space located in the coastal regions of Los Angeles, San Diego, the San Francisco Bay Area and Greater Seattle and 200 residential units located in the Hollywood submarket of Los Angeles. The stabilized portfolio was 92.1% occupied and 97.3% leased. In addition, KRC had six projects totaling approximately 2.3 million square feet of office and life science space and 564 residential units under construction. KRC also completed 237 residential units, with a third of the units leased, and had two projects in the tenant improvement phase, The Exchange on 16th, totaling approximately 750,000 square feet, with the office space fully leased to Dropbox, and 96,000 square feet of retail at One Paseo, which was 100% leased.
The company’s commitment and leadership position in sustainability has been recognized by various industry groups across the world. In September 2019, the company was recognized by GRESB as the sustainability leader in the Americas across all asset classes for the fifth time. Other sustainability accolades include NAREIT’s Leader in the Light award for the past six years and the EPA’s highest honor of ENERGY STAR Partner of the Year Sustained Excellence award for the past four years. The company is listed in the Dow Jones Sustainability World Index. At the end of the third quarter, the company’s stabilized portfolio was 61% LEED certified and 72% of eligible properties were ENERGY STAR certified. 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 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; and our ability to maintain our status as a REIT. 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, 2018 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.