Kilroy Realty Corporation (NYSE: KRC) today announced that it has closed on the purchase of Westlake Terry, a two building 320,399 square-foot, Class A office property in the high growth Seattle submarket of South Lake Union for approximately $170 million. The LEED Gold certified property was built in 2007 and occupies a full city block at 320 Westlake Avenue North and 321 Terry Avenue North. The property is ideally located on one of Seattle's main mass transit arterials, Westlake Avenue, as well as directly adjacent to the South Lake Union Transit Line.
Westlake Terry is currently 100% leased to a diverse tenant base that includes Group Health Cooperative and Microsoft Corporation, which collectively account for more than 85% of the property.
“Westlake Terry encompasses all the compelling characteristics that we seek to include in our portfolio – strong submarket fundamentals, adjacency to transportation and abundant amenities as well as proximity to an anchor corporate user,” said John Kilroy, Jr., the company’s president and chief executive officer. “In today’s environment where core pricing has been extremely aggressive, it is our platform and franchise that have provided us with a competitive advantage to allow us to unlock the value of this acquisition and achieve an in-place cap rate in the mid 6% range on a fully-leased premier asset.”
“We expect South Lake Union to continue to be a vibrant, highly desirable market that offers all the amenities and a quality of lifestyle that tenants seek, evidenced by the growing corporate user base in the market,” said Mike Shields, senior vice president of KRC’s Pacific Northwest region. KRC now owns approximately 2.1 million square feet of premier office space in the Puget Sound Region, including the Eastside submarkets of Bellevue, Kirkland and Redmond and the Lake Union submarket in Seattle. The Pacific Northwest portfolio represents approximately 13% of KRC’s overall annual net operating income on a pro forma basis.
As part of the acquisition, the company assumed an in-place loan of approximately $84 million that bears interest at 6.05%.
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 property sector along the West Coast. For over 60 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of Los Angeles, Orange County, San Diego, greater Seattle and the San Francisco Bay Area. At September 30, 2012, the company's stabilized office portfolio encompassed 12.7 million rentable square feet. More information is available at http://www.kilroyrealty.com.
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 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; 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 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 and our 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. 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 required in connection with ongoing requirements under Federal securities laws.