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Kilroy Realty Corporation (NYSE: KRC) announced that the Indeed Tower in Austin, Texas received LEED v4 Platinum certification, ranking it as the second-largest LEED v4 Core & Shell project in the U.S. and fifth-largest globally. Spanning ±730,000 square feet and 36 stories, the tower exemplifies sustainability with features like 85% onsite rainwater management and a 14% reduction in annual energy costs. Acquired for $580 million, Indeed Tower is pivotal to Kilroy's strategy, enhancing its sustainable real estate portfolio valued at approximately $3 billion in ongoing projects.
Acquisition of Indeed Tower for $580 million marks a significant investment in Austin's office market.
The property's sustainable features may lead to reduced operational costs and increased tenant interest.
Negative
Indeed Tower is currently only 57% leased, indicating potential revenue challenges.
The high acquisition cost might strain Kilroy's financial resources if not countered by robust leasing.
Austin’s Tallest Office Property Now Stands Among the World’s Most Sustainable Buildings
** Ranking Second Largest LEED v4 Core & Shell in the U.S. and Fifth Largest in the World **
LOS ANGELES--(BUSINESS WIRE)--
Kilroy Realty Corporation (NYSE: KRC, “Kilroy”) today announced that Indeed Tower in Austin, Texas, has been awarded the highest-level recognition for overall sustainability, LEED v4 Platinum certification under the Core & Shell (CS) rating system created by the U.S. Green Building Council. The achievement positions Indeed Tower as the second-largest LEED v4 CS project in the United States and the fifth-largest LEED v4 CS project globally.
Designed by Page, a global design and architecture firm, Indeed Tower, a ±730,000 square foot property occupying an entire city block, is currently Austin’s tallest office building, rising 36 stories. Kilroy’s $580 million acquisition of Indeed Tower made headlines in June of 2021 as the largest office transaction in the city’s recent history. It also marked the start of strategic expansion for the company, which currently has about ±$3 billion of development projects under construction and has been considering the Austin region for several years.
KILROY IS SETTING THE NEW STANDARD IN SUSTAINABILITY
Kilroy has amassed far-reaching recognition as North America's leader in sustainable real estate development. The company consistently outperforms ESG benchmarks and has held top honors over the last eight years among the world's most accredited organizations and ranking systems (ENERGY STAR, GRESB, Dow Jones Sustainability World Index, Bloomberg Gender Equality World Index, USGBC, Climate Registry, NAREIT). As pioneers in creating a more sustainable real estate industry, Kilroy became the first North American REIT to commit to neutral carbon operations and successfully achieved this ambitious goal in 2020. Furthermore, the company's portfolio encompasses more designated Fitwel buildings than any other organization outside of the U.S. Government.
Given Kilroy's profound commitment to reduce its portfolio's environmental and social impacts, Indeed Tower's sustainable design was an instrumental consideration to the company's investment thesis.
"Indeed Tower demonstrates the successful blend of great design with ambitious sustainability goals," said John Kilroy, Chairman and CEO of Kilroy, "As North America's leader in sustainable real estate, the property embodies Kilroy's unwavering commitment to resilient and sustainable workplace environments."
INDEED TOWER’S SUSTAINABLE FEATURES
LEED is the world's most widely applied green building rating system. LEED CS is the certification for the core and shell of the building along with the surrounding site, and Platinum is the highest level of certification a building may achieve. LEED v4 is designed to up the ante, taking a more performance-based approach to design, operations, and maintenance that calls for measurable results throughout a project's life cycle. To date, Indeed Tower is one of 28 projects globally to earn LEED v4 Platinum CS and one of three based in the U.S.
Indeed Tower is a resilient property confirmed not only by LEED, but also by Austin Energy Green Building's stringent 4-star rating and Fitwel's pending 1-star certification, which recognizes the project's strategies to advance public health and tenant well-being.
The property contains two distinct formations. The eastern portion of the building features high-performance glazing, and the western portion is clad in glass sunshades to reduce peak heat gain and glare. Meanwhile, the office floors include deliberately proportioned floor plates to maximize space planning, penetration of natural light, and views.
Other sustainable highlights at Indeed Tower include:
46% of site integrates open space through terraces, large urban plaza, and structured parking
85% rainwater management onsite
100% outdoor water use from non-potable sources
Designed to reduce annual energy costs by 14%, cut down peak energy use by 21.6%, and offset 100% of core & shell power with offsite renewables
30% reduction of potable water through low flow plumbing fixtures and ENERGY STAR appliances, with 1.5 million gallons saved annually
20% reduction of embodied carbon through reuse of existing structure and other material design optimizations
Surrounding landscape: 75% native vegetation, 25% drought-tolerant adapted vegetation alongside preservation of a heritage red oak
“As we expand within our regions and other markets, we believe it’s vitally important to grow and build upon our sustainability goals,” says Jasmine Lomax, Manager of Sustainability and Corporate Social Responsibility at Kilroy. “Kilroy is constantly researching, evolving, and sharing our programs to serve our communities better and positively impact the environments at a public scale. Of course, the end goal is to reduce or eliminate the negative impacts on the environment, but also inspire others to do the same.”
MORE ABOUT THE PROPERTY
Indeed Tower is located in the heart of Austin’s rapidly growing central business district at 200 West Sixth Street, spanning a full city block and surrounded by an abundance of urban amenities. The Class-AA trophy tower includes 21 floors of office space with panoramic views, 12 levels of above-grade parking, and five levels of below-grade parking. The project also comprises ±35,000 square feet of adaptive-reused historic Claudia Taylor Johnson post office building and 17,000 square feet of outdoor green space.
The property is currently 57% leased with office tenants, including Austin-based job search company Indeed.com, the building’s anchor tenant; Brown Advisory, Inc.; Heritage Title Company of Austin, Inc. and Vinson & Elkins, LLP.
Indeed Tower was developed by Trammell Crow Company and Principal Real Estate Investors. Additional project partners include DPR Construction (general contractor), Stantec & LandDev Consulting (civil engineer), Campbell Landscape Architecture, Ten Eyck Landscape Architects, Blum Consulting Engineers (MEP engineer), and Thornton Tomasetti (structural engineer).
ABOUT KILROY
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.
Kilroy 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 June 30, 2021, Kilroy’s stabilized portfolio totaled approximately 14.2 million square feet of primarily office and life science space that was 91.8% occupied and 93.6% leased. The company also had more than 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 71.9%. In addition, Kilroy had seven in-process development projects with an estimated total investment of $2.9 billion, totaling approximately 3.4 million square feet of office and life science space. The office and life science space was 57% leased, which included the June commencement of the KOP 2 project.
A Leader in Sustainability and Commitment to Corporate Social Responsibility
Kilroy is listed on the Dow Jones Sustainability World Index and has been recognized by industry organizations around the world. Kilroy’s stabilized portfolio was 74% LEED certified, 42% Fitwel certified, the highest of any non-government organization, and 72% of eligible properties were ENERGY STAR certified as of June 30, 2021.
The company has been recognized by GRESB, the Global Real Estate Sustainability Benchmark, as the listed sustainability leader in the Americas for six of the last seven years. Other honors have included the National Association of Real Estate Investment Trust’s (NAREIT) Leader in the Light award for six 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 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.
What is the significance of the LEED v4 Platinum certification for Kilroy Realty Corporation?
The LEED v4 Platinum certification positions Indeed Tower as a leader in sustainability, enhancing Kilroy's brand and attracting environmentally-conscious tenants.
How much did Kilroy Realty Corporation pay for the Indeed Tower?
Kilroy Realty Corporation acquired the Indeed Tower for $580 million, making it the largest office transaction in Austin's recent history.
What are the key sustainable features of the Indeed Tower?
The Indeed Tower features 85% onsite rainwater management, 46% open space, and a 14% reduction in annual energy costs, among other sustainable elements.
How does the acquisition of Indeed Tower fit into Kilroy's overall strategy?
The acquisition supports Kilroy's strategic expansion in Austin and their commitment to sustainable real estate development.
What is the current leasing status of the Indeed Tower?
Currently, Indeed Tower is 57% leased, with key tenants including Indeed.com and several other firms.
