Kilroy Realty Acquires Premier Life Science Property in South Lake Union

Kilroy Realty Corporation (NYSE: KRC) today announced that it has acquired for $106.1 million, a four-story, LEED Gold-certified, life science property located at 401 Terry Avenue North in the heart of the South Lake Union submarket of Seattle. The project includes a three-level subterranean parking structure that provides an above market parking ratio of 2/1,000 and is immediately adjacent to KRC’s two-building Westlake Terry campus.

Developed in 2003 and situated on a half city block, 401 Terry’s highly desirable location is central to both general office and life science industries and is situated amidst technology and medical research innovators, including Amazon.com, the Bill and Melinda Gates Foundation and the Fred Hutchinson Cancer Research Center. The property is located on the South Lake Union Streetcar line, which connects riders to the regional bus tunnel and light rail systems.

401 Terry is one of only five life science facilities developed in the Puget Sound Region during the last ten years. The concrete constructed property features a superior building design reflecting 36,000 square foot floor plates, floor-to-floor heights of 14 to 19 feet and augmented floor thickness. Additionally, the property encompasses many above-standard specifications such as enhanced loading and seismic capabilities as well as above-standard building systems, including independent air handling and redundant power systems serving the laboratory space.

401 Terry is 100% leased through 2021 to Institute for Systems Biology (ISB), a leader in the field of developing new strategies in biology and medicine. The existing lease to ISB totals 140,605 square feet. Based on current Building Owners and Managers Association (BOMA) standards, the building’s rentable square footage on a single-tenant basis exceeds 153,000 square feet.

“In today’s environment, in which core pricing has been extremely aggressive, this is another example of how our leading West Coast franchise has allowed us to acquire a fully-leased premier asset at an in-place cap rate of 6% and where in-place rents are approximately 20% below market,” said John Kilroy, Jr., the company’s chairman, president and chief executive officer.

“401 Terry is a tremendously valuable addition to our portfolio. The South Lake Union neighborhood is one of the most dynamic urban environments in the country that is highly sought after by leading growth industries and tenants. The location is truly exceptional with its adjacency to transportation and abundant retail amenities – key factors that contribute to the long-term strength of this asset. Vulcan developed an extremely high caliber building reflecting the most state of the art features among the few new, life science buildings in the region,” said Mike Shields, senior vice president of KRC’s Pacific Northwest region.

About Kilroy Realty Corporation. With more than 65 years’ experience owning, developing, acquiring and managing real estate assets in West Coast real estate markets, Kilroy Realty Corporation (KRC), a publicly traded real estate investment trust and member of the S&P MidCap 400 Index, is one of the region’s premier landlords. The company provides physical work environments that foster creativity and productivity, and serve a roster of dynamic, innovation-driven tenants, including technology, entertainment, digital media and health care companies. At December 31, 2013, the company’s stabilized portfolio totaled 12.7 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. 40% of the company’s properties were LEED certified and 53% were Energy Star certified. In addition, KRC had approximately 2.5 million square feet of new office development under construction with a total estimated investment of approximately $1.5 billion. 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, 2013 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 U.S. securities laws.