Kilroy Realty Corporation (NYSE: KRC) today announced that it has acquired a fully entitled, 12-acre land site in Sunnyvale, California where it will develop, own and manage a 587,000-square-foot office complex for LinkedIn Corporation, operator of the world’s largest professional network on the internet, under a 12-year lease agreement.
KRC will invest approximately $315 million to develop a state-of-the-art office project, which will feature three mid-rise Class A office buildings and a parking structure, all designed and pre-certified to meet LEED silver requirements. The development is located along two major arteries, Maude and Mathilda Avenues, bisecting Sunnyvale and just one mile from Caltrain, providing both high visibility in this prominent Silicon Valley submarket and convenient access to multiple forms of transportation, including the nearby Central Expressway. Sunnyvale, with a Class A total vacancy rate of less than 5%, is a highly sought after location for tenants seeking to cluster around major technology firms, including Apple, Yahoo!, AMD and now, LinkedIn.
KRC expects to complete the LinkedIn complex in the second half of 2014 adding to the company’s under construction Bay Area development pipeline, which now includes four projects aggregating approximately 1.5 million square feet. The four projects represent a total estimated investment of approximately $800 million and are all 100% pre-leased to leading technology companies, including salesforce.com, Synopsys, and Audience, in addition to LinkedIn.
“We’re delighted to partner with LinkedIn in the creation of a new LEED-certified office facility,” said John Kilroy, Jr., KRC’s president and chief executive officer. “This is another opportunity for us to create significant value for our shareholders through the development of the highest quality real estate at superior returns.”
Eli Khouri, KRC’s chief investment officer, said: “This transaction is the fourth of its kind in 2012 where KRC has agreed to develop, from the ground up, new state-of-the-art buildings for leading technology companies in the Bay Area. These types of opportunities have arisen from KRC’s strategy of acquiring superior locations in the best submarkets where we can offer superb space to the region’s premier tenants.”
“We were highly impressed with all the professionals we dealt with at LinkedIn, and we look forward to our continued collaboration in delivering their new office location,” said Mike Sanford, senior vice president and head of KRC’s northern California region.
Sherman Chan and Bob Steinbock, both senior vice presidents at CBRE, acted as investment brokers in the transaction.
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.
Tyler H. Rose
Executive Vice President and Chief Financial Officer
Senior Vice President, Northern California Region
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