Kilroy Realty to Expand Into Austin, Texas and Grow Its West Coast Footprint With Three Strategic Acquisitions

Company Release - 6/16/2021 6:51 PM ET

Approximately $670 Million in Three Off-Market Transactions Including Austin’s Recently Completed Indeed Tower

LOS ANGELES--(BUSINESS WIRE)-- Kilroy Realty Corporation (NYSE: KRC) today said it has reached agreement in three separate off-market transactions totaling approximately $670 million to acquire Indeed Tower in Austin, Texas, a land site adjacent to its 2100 Kettner development project in San Diego and the ground lease under its Key Center office tower in Bellevue, Washington. All three transactions are expected to close by the end of the third quarter and are subject to certain closing conditions.

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Indeed Tower (Photo: Business Wire)

Indeed Tower (Photo: Business Wire)

Indeed Tower (Austin, Texas)

The $580 million acquisition of Indeed Tower, the brand-new, premier Austin office project, will bring immediate financial and strategic benefits to the company, including the opportunity to grow earnings and create value through additional lease-up, the creation of a platform for future growth in the region and the enhancement of the company’s already strong tenant credit profile.

Indeed Tower, completed in May 2021, is a LEED Platinum targeted, 36-story office project totaling approximately 730,000 square feet located in the heart of Austin’s central business district (“CBD”). It is ideally situated on a full city block at the intersection of 6th and Colorado and includes a unique 35,000 square foot historic post office building that can accommodate a variety of uses as well as a private park. The acquisition will establish the company’s presence in the vibrant, rapidly growing Austin CBD where the company will be the fifth largest owner of Class A office product.

The project, subject to a long-term ground lease, is currently 57% leased with 42% of the space leased through 2034 to, a subsidiary of the Japanese publicly traded company, Recruit Holdings, an A3 rated company. The building features 30,000 square foot floor plates, 10,000 square feet of ground floor food and beverage space and 30,000 square feet of outdoor deck space. With a walk score of 99, the project is surrounded by abundant amenities, including 175 restaurants and retail stores, 8,000 hotel rooms, 7,000 residential units, 60 plus event venues and is walking distance to the popular 10-mile Lady Bird Lake. Austin CBD, the live musical capital of the world, is also home to a growing number of well-established technology companies, including, Facebook, Google and Box.

“I can’t overstate how well Indeed Tower fits with our strategic and property objectives. It is arguably the best building in Austin, is in one of the best locations, provides us with scale that will support future growth, is anchored by an investment grade technology tenant and provides a value-add opportunity through lease-up in an office market that is strengthening,” said John Kilroy, the company’s chairman and chief executive officer.

The company has posted a presentation in the Investor Section of its website with additional details on the acquisition. It can be found by using the following link:

Eastdil Secured and Allen Matkins advised the company on the transaction.

2045 Pacific Highway (San Diego, California)

The company is also in escrow to purchase a land site directly adjacent to its 2100 Kettner project in the Little Italy neighborhood of San Diego for $42 million. The company plans to develop up to 275,000 square feet of office space on the full city block site that is within walking distance to San Diego Bay and will include panoramic water views. The opportunity will enhance the company’s position in the downtown area by providing flexibility and scale for large and growing tenants at its newly constructed 220,000 square foot 2100 Kettner development.

Key Center Ground Lease (Bellevue, Washington)

The company’s third acquisition is the $47 million purchase of the ground lease underlying its 488,000 square foot Key Center project in Bellevue. The current ground lease has a remaining term of approximately 72 years and the purchase would eliminate the company’s ground rent obligation which is projected to increase significantly in the next few years.

About Kilroy Realty Corporation. Kilroy Realty Corporation (NYSE: KRC, the “company”, “KRC”) is a leading West Coast landlord and developer, with a major presence in San Diego, Greater Los Angeles, the San Francisco Bay Area, and the Pacific Northwest. 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, productivity and employee retention for some of the world’s leading technology, entertainment, life science and business services companies.

KRC 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.

KRC’s stabilized portfolio totals approximately 14.0 million square feet of primarily office and life science space. The company also has 1,000 residential units currently in Hollywood and San Diego. In addition, as of March 31, 2021, KRC had five in-process development projects with an estimated total investment of $1.5 billion, totaling approximately 1.8 million square feet of office and life science space. The office and life science space was 88% leased.

A Leader in Sustainability and Commitment to Corporate Social Responsibility

KRC is listed on the Dow Jones Sustainability World Index and has been recognized by industry organizations around the world. KRC’s stabilized portfolio was 67% LEED certified, 41% Fitwel certified, the highest of any non-government organization, and 71% of eligible properties were ENERGY STAR certified as of March 31, 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

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.

Tyler H. Rose
(310) 481-8484
Michelle Ngo
Senior Vice President,
Chief Financial Officer and Treasurer
(310) 481-8581

Source: Kilroy Realty Corporation