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Kilroy Signs Three New Leases Totaling 330,000 Square Feet of Office-to-Life Science Redevelopments in San Diego
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Kilroy Realty Corporation (NYSE: KRC) announced three new leases totaling 330,000 square feet with biotech companies in San Diego. This includes Tandem Diabetes Care (~182,000 sq ft), DermTech (~96,000 sq ft), and Sorrento Therapeutics (~52,000 sq ft). The leases represent a shift of commercial office space into state-of-the-art life science facilities, supporting Kilroy's investment in this sector. The company also plans a 600,000 sq ft project to meet increasing demand in the area, where vacancy rates in prime locations are below 2% and rents have risen over 20% year-over-year.
Positive
Secured three new leases with reputable biotech firms, enhancing portfolio.
Totaling 330,000 square feet, expanding presence in the life science sector.
Plans to develop a 600,000 square foot project to cater to growing demand.
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None.
Long-Term Leases Represent Demand for State-of-the-Art Facilities in Burgeoning Submarkets
SAN DIEGO--(BUSINESS WIRE)--
Kilroy Realty Corporation (NYSE: KRC, "Kilroy") today announced three new leases totaling 330,000 square feetwith publicly traded life science and biotech companies in San Diego. Tandem Diabetes Care (~182,000 square feet), DermTech (~96,000 square feet), and Sorrento Therapeutics (~52,000 square feet) lease transactions involve the redevelopment of commercial office space into three state-of-the-art life science/lab facilities and support Kilroy's significant investment in broadening its life science portfolio.
Kilroy also plans for a ~600,000 square foot project (Santa Fe Summit) with tech office/life science flexibility on the 56 Corridor to meet the growing demand for space among life science companies in San Diego.
"We are thrilled to welcome these high-caliber companies to our portfolio," said Nelson Ackerly, senior vice president of Kilroy. "Our new partnerships are a testament to the quality and flexibility of our properties in the context of their life after initial tenancy. We invest in assets within desirable locations that can support a variety of uses."
Strength of the Life Science Market in San Diego
As a top-three life science market in the United States, the race among biotech and life science firms to secure quality real estate in San Diego is booming from traditionally concentrated clusters into other well-established, highly sought-after areas.
"Vacancy rates in Torrey Pines and University Town Center (UTC) are less than 2% and 0.5% respectively, and rents are at all-time highs, up over 20% year-over-year," said Nelson Ackerly. "With this record demand for state-of-the-art research and development space, life science companies have firmly set their sights on Del Mar Heights and the 56-Corridor."
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, 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.
