Real estate investment trust Kilroy Realty (KRC) has announced three off-market transactions worth $670 million in a bid to increase its footprint on the West Coast. All the acquisitions are expected to close by the end of Q3.
The three purchases include the recently completed Indeed tower in Austin, Texas, a land parcel in San Diego, and a ground lease under Kilroy’s Key Center office tower in Washington.
Kilroy is acquiring Indeed Tower, which was completed in May 2021, for $580 million. The purchase is expected to be immediately financially and strategically beneficial to Kilroy.
Kilroy Chairman and CEO John Kilroy said, “I can’t overstate how well Indeed tower fits with our strategic and property objectives. It is arguably the best building in Austin, is in one of the best locations, provides us with scale that will support future growth, is anchored by an investment-grade technology tenant, and provides a value-add opportunity through lease-up in an office market that is strengthening.” (See Kilroy Realty stock chart on TipRanks)
Kilroy’s second acquisition of a land parcel in the Little Italy neighborhood in Sand Diego is for $42 million. It plans to develop an office space of up to 275,000 square feet on the site.
Kilroy’s third purchase, the ground lease under its Key Center project in Washington for $47 million, strategically eliminates its ground rent obligation. The company had anticipated a substantial increase in rent in the coming years.
On June 14, Wolfe Research analyst Andrew Rosivach initiated coverage on the stock with a Buy rating and an $88 price target (21.6% upside potential).
Rosivach believes Kilroy can generate competitive growth to shorter duration businesses after the sale of 1800 Owens.
Based on 4 Buys, 4 Holds, and 1 Sell, consensus among analysts is a Moderate Buy. The KRC average analyst price target of $75 implies 3.6% upside potential. That’s after shares have climbed 31.1% so far this year.
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