Kilroy Realty Corporation (NYSE: KRC) today announced that it has expanded its market position within Southern California’s improving technology, media and entertainment economy with the $65 million acquisition of Columbia Square, a historic media campus in Hollywood, and the expected early fourth quarter acquisition of Tribeca West, a West Los Angeles entertainment-oriented office property, for $73 million.
Columbia Square is a fully-entitled 4.7 acre site in the heart of Hollywood that includes the opportunity to redevelop three existing historic buildings and to develop a new mixed-use media campus that preserves the historic character, while creating a new state-of-the-art office project, a residential community, and an amenity-rich retail environment. Tribeca West is a 151,000 square-foot office property in West Los Angeles that caters to entertainment production and post-production work.
Together with KRC’s recent Sunset Media Center acquisition in Hollywood and its other Westside properties, including Westside Media Center and Santa Monica Media Center, the company has created a significant platform of media-related properties in Los Angeles that will cater to KRC’s expanding roster of entertainment-oriented tenants, generating marketing synergies for the company across the region.
Columbia Square Acquisition
KRC paid $65 million to acquire Columbia Square, a campus that includes three historic office buildings totaling approximately 96,000 square feet that were the former home of the CBS network’s Los Angeles radio and television operations, and a site that is fully entitled for the development of an office, retail and multi-family mixed-use project under a fifteen-year development agreement. Located at 6121 W. Sunset Blvd., Columbia Square is just two blocks from the storied corner of Sunset and Vine and one block from KRC’s Sunset Media Center. The two campuses are surrounded by significant retail amenities as well as the Metro Redline. Neighbors include the Academy Awards, Grauman’s Chinese Theater, Capitol Records, Live Nation, Time Warner, CNN’s West Coast broadcasting center and prominent motion picture studios.
KRC plans a multi-phase redevelopment and development of the site, including redeveloping the existing historic office buildings, preserving the International Modernist design of Swiss architect, William Lescaze, and developing up to 550,000 square feet of additional office, retail and residential space over the next several years.
Redevelopment and initial office construction is scheduled to begin in mid-2013 with completion of phase one work targeted for 2015. The company estimates its total investment in the project, including land, will total approximately $300 million.
“The Hollywood real estate market is benefiting from revitalization and gentrification, with more than $3 billion of public and private investment in the past several years,” said David Simon, KRC’s executive vice president for the Los Angeles region. “There is very little quality office space available to meet growing demand from entertainment and media tenants. We see significant opportunities to capitalize on the lack of modern office and retail product. What’s more, by expanding our regional portfolio of media-oriented properties, we can deepen our service capabilities and broaden our marketing opportunities with the industry’s major players, while creating potential synergies for the many small and mid-sized entertainment companies whose operations are currently scattered throughout the city.”
Tribeca West Acquisition
KRC is under contract to purchase Tribeca West, a 151,000 square-foot, three-story office campus, for $73 million. Located in the heart of West Los Angeles on Olympic Blvd., between Bundy and Centinela, the campus is the facility-of-choice among many prominent entertainment companies for production and post-production film and video activities. It is fully equipped to provide tenants collaborating on specific projects with office and production space, furniture, equipment, and telecommunications and internet access. The property is currently 96% occupied. As part of the acquisition, KRC will assume an existing secured loan of approximately $41 million. The transaction is expected to close at the beginning of the fourth quarter, subject to customary closing conditions.
About Kilroy Realty Corporation. Kilroy Realty Corporation, a member of the S&P Small Cap 600 Index, is a real estate investment trust active in the office and industrial submarkets along the West Coast. For over 60 years, KRC 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 County, the San Francisco Bay Area and greater Seattle. At June 30, 2012, KRC owned approximately 12.2 million rentable square feet of commercial office space and 3.4 million rentable square feet of industrial space.
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 the Company’s 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 the Company’s 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; significant competition, which may decrease the occupancy and rental rates of properties; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired properties; the availability of cash for distribution and debt service and exposure of risk of default under debt obligations; adverse changes to, or implementations of, applicable laws, regulations or legislation; 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 factors that could materially adversely affect the Company’s business and financial performance, see the factors included under the caption “Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2011 and its other filings with the Securities and Exchange Commission. All forward-looking statements are based on information that was available, and speak only, as of the date on which they are made. The Company 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 required in connection with ongoing requirements under Federal securities laws.