Kilroy Realty Corp.
), a real estate investment trust (REIT), has recently sold an
entire portfolio of industrial assets and two small office
properties spanning 3.7 million square feet to an unnamed seller.
The asset sale was part of the long-term strategy of the company
to divest its non-core industrial properties and instead
concentrate on its core office segment.
KILROY REALTY (KRC): Free Stock Analysis
MPG OFFICE TRST (MPG): Free Stock Analysis
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The company has already sold 44 properties in two tranches to two
institutional buyers for approximately $355 million. Kilroy
expects to record $185 million as profit from the transaction in
the fourth quarter of 2012. Moving forward, the company intends
to invest the proceeds from the deal to acquire and develop
high-quality office space primarily in the West Coast region.
Earlier in the month, Kilroy had also amended its existing
unsecured credit facility to extend the debt maturity as well as
reduce its interest burden. The modified credit facility with a
borrowing capacity of $500 million is currently scheduled to
mature in April 2017. All these strategic efforts were aimed to
increase its liquidity and relieve its debt burden.
The amended credit facility bears an annual interest at LIBOR
plus 1.45% and a facility fee of 30 basis points, as determined
by the present credit ratings of the company. The existing credit
facility had an interest rate of LIBOR plus 1.75% and a facility
fee of 0.35%, representing a significant dip in the funded
interest outflow. However, the other terms and conditions of the
erstwhile credit facility were kept unchanged.
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 September
30, 2012, the company owned 12.7 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. We also
have a Neutral recommendation and a Zacks #3 Rank for
MPG Office Trust, Inc.
), one of the competitors of Kilroy.