SEATTLE-Kilroy Realty Corp. has completed the purchase of two office properties in the Lake Union submarket of Seattle and expects to complete the acquisition of a Bellevue property in the third quarter, subject to customary closing conditions. According to a prepared statement, these acquisitions will nearly double the West Coast real estate investment trust's office portfolio in high growth submarkets of the Puget Sound Region.
In three separate transactions, KRC has acquired or expects to acquire properties in Lake Union and Bellevue aggregating approximately 837,000 square feet of space for a total purchase price of approximately $330 million. Since its reentry into the Seattle market in 2010, including these transactions, KRC will acquire approximately 1.7 million square feet of office space in the Puget Sound Region and has established a locally-based operating platform with seasoned management to expand and manage its portfolio there.
According to a prepared statement, the company's Seattle portfolio, located in the Eastside markets of Bellevue, Kirkland and Redmond as well as the Lake Union submarket, now represent approximately 10% of KRC's portfolio on a square-foot basis and account for approximately 13% of its annual net operating income on a pro forma basis. “Seattle's Bellevue, Eastside and Lake Union submarkets present a compelling set of characteristics that KRC looks for in its real estate portfolio,” explains John Kilroy Jr., the company's president and chief executive officer. “These include an economically vibrant core, a unique coastal location, a quality of life valued by fast-growing, knowledge-based businesses and their employees, and a regional approach to development that effectively limits supply.” With a knowledgeable and experienced management team now in place, Seattle will continue to play an important role in the expansion of our West Coast real estate franchise and the growth of our brand as the region's most innovative landlord, adds Kilroy.
KRC acquired a three-building, 420,000-square-foot office campus located at 701, 801, & 837 N. 34th St. in Seattle's Fremont neighborhood of Lake Union for approximately $145 million. Known as Fremont Lake Union Center and Fremont Lake View, the three-building campus is currently 100% leased to a tenant list that includes Adobe Inc., Tableau Software and Ubermind, a Deloitte software company.
KRC purchased the properties at a significant discount to replacement cost and expects to capture significant value as this submarket continues to lead the region in growth and tenant demand with in-place rents well below market, according to a prepared statement. The campus is subject to a long term ground lease and the company will be assuming approximately $34 million of debt as part of the acquisition.
KRC is also in escrow to acquire Skyline Tower, a 417,000-square-foot, 24-story, class A office building in Downtown Bellevue for approximately$186 million. The LEED Silver certified property is located at 10900 Northeast Fourth St., two blocks from the company's Key Center office building and one block north of the Bellevue Transit Center.
Skyline Tower is currently 92% leased to a diverse tenant base that includes technology companies Expedia and Valve Corp. The company will assume an in-place loan of approximately $84 million as part of the acquisition, according to a prepared statement.
“With the purchase of Skyline Tower, KRC will own two of the top class A multi-tenant office buildings in Downtown Bellevue,” says Mike Shields, senior vice president of KRC's Pacific Northwest region. “We expect Downtown Bellevue to continue to be a location of choice for both technology and service companies that value high quality amenities, proximity to mass transit, and commuter convenience.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
