Recently, Kilroy Realty Corp. (KRC - Free Report) acquired a Class A office campus – The Heights – in San Diego for approximately $126 million. The move depicts company’s aim to strengthen its presence in high-end markets, through premium office assets acquisitions.
The Heights, which boasts a wide range of modern amenities, encompasses 13.8 acres and is situated in the Del Mar sub-market of San Diego. The campus comprises an office building as well as life science building, both of which are three-storied and together span a total of around 219,000 square feet. An underground parking structure is also included in the domain.
Both the buildings, which are LEED Silver certified, are fully anchored by 5 high-end tenants that include Neurocrine Bioscience and Knobbe Martens Olson & Bear.In addition, the campus has a 90,000 square foot land parcel permitted for a high-tech office building.
The Heights’ location in one of the most thriving coastal submarkets of San Diego and its proximity to important transportation networks makes it an accretive buy for Kilroy Realty. We expect the above-mentioned transaction to drive strong rental revenue growth in the coming quarters.
Notably, The Heights has an initial cash return of around 6% and is in proximity to Kilroy Realty’s upcoming development project, One Paseo. Hence, the company expects to generate considerable combined gain from both the projects.
Kilroy Realty owns, develops and manages a diverse portfolio of office, industrial and multi-purpose real estate properties primarily in the coastal regions of Los Angeles, Orange County, San Diego, greater Seattle and the San Francisco Bay Area. As of Jun 30, 2013, the company owned 13.5 million rentable square feet of office space.
Kilroy Realty currently carries a Zacks Rank #3 (Hold). Other well-performing REITs include Sovran Self Storage Inc. , Getty Realty Corp. (GTY - Free Report) and Highwoods Properties Inc. (HIW - Free Report) . While Sovran Self Storage and Getty Realty carry a Zacks Rank #1 (Strong Buy), Highwoods Properties has a Zacks Rank #2 (Buy).