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Kilroy Realty Corporation (NYSE: KRC) has expanded its Austin, TX portfolio by acquiring a 2.9-acre development site for $40 million. The site is entitled for approximately 493,000 square feet of Class A office space and is strategically located near key amenities. Following the acquisition, Kilroy's total holdings in Austin will reach about 1.2 million square feet, with construction expected to start in mid-2022 and completion in 2024. The company also appointed Fernando Urrutia as Senior Vice President, Leasing for Austin, enhancing its regional growth prospects.
Positive
Acquisition of a fully entitled 2.9-acre site for $40 million, expanding Kilroy's Austin portfolio.
The site allows for approximately 493,000 square feet of new Class A office development.
Construction planned to commence mid-2022, with delivery expected in 2024, indicating potential for future revenue growth.
Appointment of Fernando Urrutia, a seasoned professional, to oversee leasing, expected to drive growth.
Negative
None.
LOS ANGELES--(BUSINESS WIRE)--
Kilroy Realty Corporation (NYSE: KRC, "Kilroy") announced today that North America’s leader in sustainable real estate has further expanded its Austin, TX portfolio with the off-market acquisition of a 2.9-acre development site in Austin’s Domain submarket. The site is fully entitled for approximately 493,000 square feet of new Class A office development. The transaction represents the company’s ongoing expansion within the Austin market, following last year’s purchase of Indeed Tower.
The site is located near the intersection of Burnett & Braker and is adjacent to numerous amenities, including Austin’s Q2 MLS Stadium, the Domain Mall, and the future McKalla light rail stop which will connect from Northwest Austin through Downtown. The Domain office submarket has long been one of Austin’s most coveted locations for the world’s most innovative companies including Amazon, Meta, Indeed and Expedia. Class A vacancy in this submarket is approximately 1%.
The company acquired the site for a gross purchase price of $40 million. Entitlements have been fully secured and construction could commence as soon as mid-2022, with delivery occurring in 2024. Upon completion, the company will own approximately 1.2 million square feet in Austin.
Also, the company announced that Fernando Urrutia has joined Kilroy, effective March 7, 2022, as Senior Vice President, Leasing for the Austin region where he will oversee Kilroy’s leasing activity and assist in growing the local portfolio. Mr. Urrutia joins Kilroy after 11 years with Lionstone Investments where he covered Austin and other markets in Texas. He had several roles at Lionstone across acquisitions, leasing, and asset management. Most recently he served as Vice President of Acquisitions for the Texas region.
John Kilroy, the company’s Chairman and CEO, stated, “We are thrilled to make another off-market acquisition in Austin and bring a world class development project to the Domain. We are also pleased to be able to add a seasoned professional like Fernando and we are confident that his relationships and expertise will drive additional growth for Kilroy in the region.”
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 December 31, 2021, Kilroy’s stabilized portfolio totaled approximately 15.5 million square feet of primarily office and life science space that was 91.9% 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 88.9%. In addition, the company had one 96,000 square foot in-process life science redevelopment project with total estimated redevelopment costs of $40.0 million and five in-process development projects with an estimated total investment of $2.2 billion, totaling approximately 2.6 million square feet of office and life science space. The in-process development and redevelopment office and life science space was 46% leased.
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 73% LEED certified, 37% Fitwel certified, 76% of eligible office properties were ENERGY STAR certified, and 80% of our eligible stabilized residential units were ENERGY STAR certified as of December 31, 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 third 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.
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, 2021 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.
Eliott Trencher EVP, Chief Investment Officer,
Interim Chief Financial Officer and Treasurer
(310) 481-8587
or
Bill Hutcheson SVP, Investor Relations and Capital Markets
(415) 778-5678
Source: Kilroy Realty Corporation
FAQ
What recent acquisition did Kilroy Realty Corporation (KRC) make in Austin?
Kilroy Realty Corporation announced the acquisition of a 2.9-acre development site in Austin for $40 million.
What is the expected size of the new development by Kilroy in Austin?
The new development is entitled for approximately 493,000 square feet of Class A office space.
When is construction expected to start for Kilroy's new Austin project?
Construction is expected to commence in mid-2022.
Who has been appointed as the Senior Vice President of Leasing for Kilroy in Austin?
Fernando Urrutia has been appointed as Senior Vice President, Leasing for Austin.
What will be the total square footage owned by Kilroy in Austin after the new acquisition?
Kilroy's total holdings in Austin will reach approximately 1.2 million square feet after this acquisition.
