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Kilroy Continues Strong 2021 Performance With Major Leasing, Development and Capital Allocation Activity

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Signs 80,000 Square-Foot Lease with Major Media Company, Delivers Final Two-Thirds of Kilroy Oyster Point Phase 1 and Sells San Diego Office Property for $37 Million

LOS ANGELES, December 10, 2021--(BUSINESS WIRE)--Kilroy Realty Corporation (NYSE: KRC, "Kilroy") today said its strategic focus on creating a young, contemporary and sustainable portfolio of office, life science and residential properties in high growth Western and Southwestern markets continued to pay dividends in 2021, as the company nears year-end with additional achievements in leasing, development and capital allocation.

Leasing / Operations

  • In November, Kilroy signed an eight-year agreement with a major media company for 80,000 square feet in Los Angeles.

  • Year to date office and life science leasing now totals more than 1.1 million square feet, 70% of which were with new tenants. Average GAAP and cash rents on these transactions were 22% and 8% higher than the prior leases, respectively.

  • With its strong, consistent leasing performance, Kilroy is entering the new year with average lease expirations of approximately 7.5% annually through 2025.

  • The average age of Kilroy’s stabilized portfolio was 11 years, substantially younger than the company’s peer average of 30.


  • In late November, Kilroy delivered the remaining 421,000 square feet of office space across two buildings at its Kilroy Oyster Point Phase 1 development project, located in South San Francisco, to fintech giant Stripe. The first building was delivered to Cytokinetics at the end of September. The entire Phase 1 project, a $570 million investment totaling 656,000 square feet across three buildings, was fully leased within two quarters of the project’s commencement.

  • Over the course of 2021, Kilroy added more than $1 billion of new development to the stabilized portfolio and commenced construction on more than $1 billion of new development and redevelopment projects.

    • Included among the deliveries was The Jardine, a 193-unit, luxury residential tower in Hollywood that was completed in April and is currently just under 75% leased. The company now has a total of 1,000 residential units that are approximately 90% leased.

Capital Allocation

  • In December, Kilroy completed the sale of its 103,000 square-foot Sabre Springs office buildings, located on the I-15 Corridor in North San Diego County, for $37 million, in an unsolicited transaction.

  • The disposition was the last of more than $2 billion in acquisition and disposition transactions the company completed during 2021.

  • In March, Kilroy sold its recently constructed, fully leased, 750,000 square-foot office campus, The Exchange on 16th, for $1.08 billion. The company redeployed that capital into five off-market transactions, including both operating properties and sites for future development.

    • Among these transactions was the acquisition of Indeed Tower, a newly constructed 734,000 square-foot office tower located in the central business district of Austin, Texas, marking Kilroy’s entry into the Southwest region.

Sustainability and Wellness

  • The company remains the industry leader in sustainability as measured by accredited organizations and ranking systems, including the GRESB 2021 Real Estate Assessment, the Dow Jones Sustainability World Index (DJSI), and the U.S. Environmental Protection Agency’s (EPA) National Top 100 List of the largest green power users.

  • Kilroy’s portfolio also earned the distinction of encompassing more designated Fitwel buildings than any other organization outside of the U.S. Government.

"In a year marked by uncertainty and dramatic change, we have worked very hard to keep our eye on the ball and execute our strategic initiatives," said John Kilroy, Chairman and CEO of Kilroy. "We have expanded into a new, high growth market and we have substantially broadened our life science platform. We have enhanced the value of our existing portfolio and have capitalized on its value in a disciplined fashion to redeploy capital into new, higher value opportunities. We have maintained a strong balance sheet. And we have remained deeply committed to leadership in sustainability."

About Kilroy Realty Corporation

Kilroy Realty Corporation (NYSE: KRC, the "company", "Kilroy") is a leading U.S. landlord and developer, with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, the Pacific Northwest and Austin, Texas. 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 and productivity for some of the world’s leading technology, entertainment, life science and business services companies.

The company 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.

As of September 30, 2021, Kilroy’s stabilized portfolio totaled approximately 15.2 million square feet of primarily office and life science space that was 91.5% occupied and 93.9% leased. The company also had more than 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 79.9%. In addition, the company had six in-process development projects with an estimated total investment of $2.6 billion, totaling approximately 3.0 million square feet of office and life science space.

A Leader in Sustainability and Commitment to Corporate Social Responsibility

The company is listed on the Dow Jones Sustainability World Index and has been recognized by industry organizations around the world. The company’s stabilized portfolio was 78% LEED certified, 44% Fitwel certified, the highest of any non-government organization, and 72% of eligible properties were ENERGY STAR certified as of September 30, 2021.

The company has been recognized by GRESB as the listed sustainability leader in the Americas for eight of the last nine years. Other honors have included the National Association of Real Estate Investment Trust’s (NAREIT) Leader in the Light award for eight 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 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 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, Texas 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211210005098/en/


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