Kilroy Realty Corporation (NYSE:KRC) today said it will break ground in July on a fourth new office project in San Diego County, boosting the company's development in the region to more than one million square feet. The four projects under development are 85% pre-leased. When completed, they will increase the company's San Diego portfolio to more than five million square feet.
KRC's newest development project is a six-story, 143,000 rentable square-foot Class A office building at the company's Sabre Springs office campus, located at the intersection of Interstate 15 and State Route 56 east of Del Mar in coastal San Diego. The campus currently includes two six-story Class A office buildings totaling approximately 282,000 square feet that are 99.5% leased. KRC expects to complete construction of the new building in the fourth quarter of 2007 for a total investment of approximately $65 million. Upon completion, Kilroy Sabre Springs will total approximately 425,000 square feet in three, six-story Class A office buildings.
KRC acquired the Sabre Springs office campus in late 2004 as part of its development-driven growth strategy in high-value, well-located markets of coastal San Diego. When acquired, it was the last available freeway-fronting, Class A project with development rights located in the Sabre Springs submarket. Since then, the location has become increasingly attractive to businesses seeking convenient access to both residential enclaves along the coast and rapidly expanding housing markets to the east.
KRC's three other active San Diego development projects (under construction or ready to commence construction) include:
-- Santa Fe Summit, Phase I - a four-building, 465,000 square-foot regional campus located along the 56 corridor, which is under development for Intuit Inc. (NASDAQ:INTU);
-- Pacific Corporate Center, Phase IV - a 318,000 square-foot office and manufacturing building to be constructed on one of KRC's land sites in Sorrento Mesa. Coupled with an adjacent 93,000 square-foot KRC office building, the new project will serve as a state-of-the-art R&D facility for Cardinal Health (NYSE:CAH); and
-- Innovation Corporate Center, Phase IV - a 75,000 square-foot office building under development for Accredited Home Lenders (NASDAQ:LEND).
"With our intense focus on building long-term value through well-located, high quality development, KRC has become the largest suburban owner/developer in San Diego County," said John B. Kilroy, Jr., the company's president and chief executive officer. "Our development pipeline in the region now exceeds two million square feet and holds the potential to generate profitable development opportunities for our stockholders for years to come."
Some of the information presented in this release is forward looking in nature within the meaning of the Private Securities Litigation Reform Act of 1995. Although Kilroy Realty Corporation believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that its expectations will be achieved. Certain factors that could cause actual results to differ materially from KRC's expectations are set forth as risk factors in the company's Securities and Exchange Commission reports and filings. Included among these factors are changes in general economic conditions, including changes in the economic conditions affecting industries in which its principal tenants compete; KRC's ability to timely lease or re-lease space at current or anticipated rents; changes in interest rates; changes in operating costs, including utility costs; future demand for its debt and equity securities; its ability to refinance its debt on reasonable terms at maturity; its ability to complete current and future development projects on schedule and on budget; the demand for office space in markets in which KRC has a presence; and risks detailed from time to time in the company's SEC reports, including quarterly reports on Form 10-Q, current reports on Form 8-K and annual reports on Form 10-K. Many of these factors are beyond KRC's ability to control or predict. For forward-looking statements herein, KRC claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Kilroy Realty Corporation, a member of the S&P Small Cap 600 Index, is a Southern California-based real estate investment trust active in the office and industrial property sectors. For more than 50 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of California and Washington. Kilroy Realty Corporation currently has an in-process development pipeline of approximately one million square feet of office space in San Diego County. At March 31, 2006, the company owned 7.9 million rentable square feet of commercial office space and 4.4 million rentable square feet of industrial space. More information is available at www.kilroyrealty.com.