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Kilroy Realty Corporation Continues Seattle Area Expansion with Acquisitions in Lake Union and Bellevue

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Closes Two Acquisitions in Lake Union and Under Contract to Purchase Bellevue Property

LOS ANGELES--(BUSINESS WIRE)--Jun. 4, 2012-- Kilroy Realty Corporation (NYSE: KRC) today announced that it has completed the purchase of two office properties in the Lake Union submarket of Seattle and expects to complete the acquisition of a Bellevue property in the third quarter, subject to customary closing conditions. These acquisitions will nearly double the West Coast real estate investment trust’s office portfolio in high growth submarkets of the Puget Sound Region.

In three separate transactions, KRC has acquired or expects to acquire properties in Lake Union and Bellevue aggregating approximately 837,000 square feet of space for a total purchase price of approximately $330 million.

Since its reentry into the Seattle market in 2010, including these transactions, KRC will acquire approximately 1.7 million square feet of premier office space in the Puget Sound Region and has established a locally-based operating platform with seasoned management to expand and manage its portfolio there. The company’s Seattle portfolio, located in the Eastside markets of Bellevue, Kirkland and Redmond as well as the Lake Union submarket, now represent approximately 10% of KRC’s portfolio on a square-foot basis and account for approximately 13% of its annual net operating income on a pro forma basis.

“Seattle’s Bellevue, Eastside and Lake Union submarkets present a compelling set of characteristics that KRC looks for in its real estate portfolio,” said John Kilroy, Jr., the company’s president and chief executive officer. “These include an economically vibrant core, a unique coastal location, a quality of life valued by fast-growing, knowledge-based businesses and their employees, and a regional approach to development that effectively limits supply.”

“With a knowledgeable and experienced management team now in place,” said Kilroy, “Seattle will continue to play an important role in the expansion of our West Coast real estate franchise and the growth of our brand as the region’s most innovative landlord.”

Lake Union Acquisitions

In two separate transactions, KRC acquired a three-building, 420,000 square-foot office campus located at 701, 801, & 837 N. 34th Street in Seattle’s Fremont neighborhood of Lake Union for approximately $145 million. Lake Union, home to’s two million square-foot headquarters, is a magnet for Seattle’s high-growth, high-tech industry and KRC’s newly acquired campus is well positioned in the submarket on the Lake Union waterfront and immediately adjacent to the Burke Gilman Trail, Seattle's most popular running and biking trail.

Known as Fremont Lake Union Center and Fremont Lake View, the three-building campus is currently 100% leased to a tenant list that includes Adobe, Inc., Tableau Software and Ubermind, a Deloitte software company. KRC purchased the properties at a significant discount to replacement cost and expects to capture significant value as this submarket continues to lead the region in growth and tenant demand with in-place rents well below market. The campus is subject to a long term ground lease and the company will be assuming approximately $34 million of debt as part of the acquisition.

Bellevue Acquisition

KRC is also in escrow to acquire Skyline Tower, a 417,000 square-foot, 24-story, Class A office building in Downtown Bellevue for approximately $186 million. The LEED Silver certified property is located at 10900 Northeast Fourth Street, two blocks from the company’s Key Center office building and one block north of the Bellevue Transit Center. The building, which has spectacular views of the Cascade Mountains and Mount Rainier, is in close proximity to The Bravern and Bellevue Square, two of the area’s most prestigious residential and retail centers.

Skyline Tower is currently 92% leased to a diverse tenant base that includes technology companies Expedia and Valve Corporation. The company will assume an in-place loan of approximately $84 million as part of the acquisition.

“With the purchase of Skyline Tower, KRC will own two of the top Class A multi-tenant office buildings in Downtown Bellevue,” said Mike Shields, senior vice president of KRC’s Pacific Northwest region. “We expect Downtown Bellevue to continue to be a location of choice for both technology and service companies that value high quality amenities, proximity to mass transit, and commuter convenience."

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, results or events. 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 in forward-looking statements, and you should not rely on 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 forward-looking statements, including, among others: risks associated with investment in real estate assets, which are illiquid, and with trends in the real estate industry; competitive market conditions; the ability to complete potential acquisitions and dispositions on announced terms; the ability to successfully operate acquired properties; the availability of cash for debt service and exposure of risk of default under debt obligations; and the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts. These factors are not exhaustive. For a discussion of additional risk factors that could 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, 2011, quarterly report on Form 10-Q for the quarter ended March 31, 2012, 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 date on which they are made. We assumes 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 it is required to do so in connection with ongoing requirements under Federal securities laws.

Kilroy Realty Corporation, a member of the S&P Small Cap 600 Index, is a real estate investment trust active in premier office and industrial submarkets along the West Coast. For over 60 years, the company has owned, developed, acquired and managed real estate assets, consisting primarily of Class A real estate properties in the coastal regions of Los Angeles, Orange County, San Diego, greater Seattle and the San Francisco Bay Area. At March 31, 2012, the company owned 11.8 million rentable square feet of commercial office space and 3.4 million rentable square feet of industrial space. More information is available at

Source: Kilroy Realty Corporation

Kilroy Realty Corporation
Tyler H. Rose
Executive Vice President
and Chief Financial Officer
(310) 481-8484
Michelle Ngo
Vice President
and Treasurer
(310) 481-8581