SAN DIEGO — Kilroy Realty Corp. (NYSE: KRC), a publicly traded real estate investment trust (REIT) based in Los Angeles, has closed the $258 million sale of four office campuses totaling nine buildings and 933,134 square feet in San Diego. The properties were 83 percent leased at the time of sale.
The buyer was John Hancock, the U.S. division of Manulife Financial Corp. (NYSE: MFC), a global life insurance company and real estate investor.
The office portfolio consists of Sequence Technology Center at 6260, 6290, 6310, 6340 and 6350 Sequence Drive; Scripps Wateridge at 10770 Wateridge Circle; Sorrento Gateway at 4921 Directors Place; and Governor Pointe at 6200 and 6220 Greenwich Drive. The assets sold in separate transactions.
“The sales prices in these transactions reflect strong investor demand for well-located, high-quality properties,” says John Kilroy, chairman, president and CEO of Kilroy Realty.
The portfolio comprises two- and three-story office buildings located in central San Diego’s Sorrento Mesa and Governor Park office submarkets. Two of the nine buildings were vacant as of July, and the remaining seven buildings were leased to tenants in technology-based industries.
Nick Psyllos, Ryan Gallagher, Michael Leggett and Nick Frasco of HFF marketed the portfolio on behalf of Kilroy Realty.
“These acquisitions are excellent examples of our team’s focus on strategic, long-term growth,” says Kevin Adolphe, president and CEO of Manulife Real Estate and president and CEO of Manulife Asset Management Private Markets. “Our newly acquired office properties in San Diego are highly complementary to our existing portfolio. These are exciting investments that we are proud to add to our portfolio as we strengthen our commitment to the San Diego market.”
In addition to the portfolio sale to John Hancock, Kilroy Realty recently sold an office building leased to Microsoft in Redmond, Wash., for $51.2 million. The REIT has committed to selling its non-core real estate holdings to facilitate new development, according to John Kilroy.
“We continue to be pleased with our ability to successfully execute our strategic plan of recycling capital into our state-of-the-art, value-creating development program,” says Kilroy. In July, the REIT acquired a 3.3-acre site in San Francisco’s South of Market area for approximately $78 million in cash. The site is zoned for mixed-use development.
As of March 31, Kilroy Realty’s stabilized portfolio totaled 13 million square feet of office properties, all located in the coastal regions of greater Seattle, the San Francisco Bay Area, Los Angeles, Orange County and San Diego. At the end of the first quarter, the company’s properties were 42 percent LEED-certified, and 60 percent of eligible properties were Energy Star-certified.
The REIT has approximately 1.7 million square feet of new office and mixed-use development under construction as well, with a total estimated investment of approximately $1.1 billion.
Kilroy Realty Corp.’s stock price closed at $71.60 per share on Wednesday, Aug. 5, up from $60.90 per share at this time last year.
Manulife Real Estate operates under the moniker John Hancock in the U.S. and as Manulife in all other parts of the world. As of March 31, Manulife’s assets under management totaled $648 billion, and the company’s real estate holdings totaled roughly $13.2 billion and spanned 57 million square feet.
Manulife’s stock price closed at $17.63 per share on Wednesday, Aug. 5, down from $20.12 per share at this time last year.
— John Nelson