Kilroy Realty Corp.
), a real estate investment trust (REIT), has recently acquired
three office properties in Seattle, as part of its long-term
strategy to own high-quality assets at below-replacement costs in
areas that provide strong near-term cash flows and attractive
long-term growth potential.
With the acquisition of approximately 837,000 square feet of
space for an aggregate purchase price of $330 million, the company
has nearly doubled its office space in the high growth submarket of
the Puget Sound Region.
Kilroy purchased a three-building office campus spanning 420,000
square feet in the Lake Union submarket of Seattle for $145
million. The three-building campus, currently 100% leased, is
strategically located in a high-growth area that is home to several
high-tech industries, and is adjacent to the Burke Gilman Trail -
the most popular running and biking trail in the region.
The property is expected to generate healthy revenue for the
company as the Lake Union submarket continues to lead the region in
growth and tenant demand with in-place rents well below market.
In addition, Kilroy is in escrow to purchase 'Skyline Tower' - a
24-story Class A office building spanning 417,000 square feet in
Downtown Bellevue for $186 million. The acquisition is expected to
be complete in third quarter 2012. The LEED (Leadership in Energy
and Environmental Design) Silver certified property, currently 92%
leased, is located in close proximity to 'The Bravern' and
'Bellevue Square' - two of the most prestigious residential and
retail centers in the region.
LEED is an internationally recognized third-party green building
certification system, which ensures that a building was designed
and built for environment-compatibility, providing a healthy work
environment and reducing operating costs. The projects are judged
on six parameters, including Sustainable Sites, Water Efficiency,
Energy & Atmosphere, Materials & Resources, Indoor
Environmental Quality, and Innovation in Design.
The number of points earned by a project determines the level of
LEED Certification it receives, which is currently available in
four progressive levels - Certified: 40 - 49 points; Silver: 50 -
59 points; Gold: 60 - 79 points; and Platinum: 80 points and
Post-acquisition, Kilroy would own two of the leading Class A
multi-tenant office buildings in Downtown Bellevue. The 'Skyline
Tower' property is expected to generate healthy revenue for the
company as the Downtown Bellevue submarket continues to attract
premier technology and service companies with its high quality
amenities and proximity to mass transit facilities.
With the latest transactions, Kilroy has acquired 1.7 million
square feet of premier office space in the Puget Sound Region since
its reentry into the Seattle market in 2010. The company's Seattle
portfolio -- spanning Bellevue, Kirkland, Redmond and the Lake
Union submarkets -- represent about 10% of the total portfolio on a
square-foot basis and approximately 13% of annual net operating
income on a pro forma basis.
Kilroy owns, develops and manages a diverse portfolio of office,
industrial and multi-purpose real estate properties primarily in
the coastal regions of Los Angeles, Orange County, San Diego,
greater Seattle and the San Francisco Bay Area. As of March 31,
2012, the company owned 11.8 million rentable square feet of
commercial office space and 3.4 million rentable square feet of
Kilroy maintains an active multi-year development program
focused on the economically dynamic locations characterized by
strong long-term demand, limited supply, and high barriers to
entry. As such, most of the properties of the company are
concentrated in the coastal submarkets of Southern California that
offer both a vibrant economic backdrop for businesses and a unique
quality of life for their employees.
Currently, we have a Neutral recommendation and a Zacks #3 Rank
for Kilroy that translates into a short-term Hold rating. However,
we have an Outperform recommendation and a Zacks #1 Rank
(short-term Strong Buy rating) for
MPG Office Trust, Inc.
), one of Kilroy's competitors.
KILROY REALTY (KRC): Free Stock Analysis Report
MPG OFFICE TRST (MPG): Free Stock Analysis
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