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3/10/21
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Kilroy Realty Corporation has signed a definitive agreement to sell The Exchange on 16th, a 750k sf office property located at 1800 Owens St in San Francisco’s Mission Bay neighborhood, for $1.08 bil, or approximately $1,440/sf. Although Kilroy has not named the buyer, industry sources are pointing to NYC-based private equity giant KKR.
The deal is said to be the highest per-square-foot sales price for a major property in the city’s commercial real estate market. The company will use the sale proceeds to fund development, for acquisitions, and for other general corporate purposes, including potentially paying down debt, repurchasing stock or paying a special dividend to the company’s common stockholders. The transaction is currently in escrow and expected to close at the end of March.
KRC commenced development of The Exchange in late 2015 and inked a 15-year lease with Dropbox for the entire office component of the property in 2017. At the time, the project, located adjacent to 16th St and I-280, was the largest single Class A commercial lease transaction ever completed in San Francisco. The total development cost for the project was approximately $585 mil, or $780/sf.
“This transaction demonstrates that quality assets in quality locations remain highly attractive to buyers and in this case generated a record price,” said John Kilroy, chairman and chief executive officer of KRC. “The return we achieved from development to disposition clearly highlights the value we have created through our development program. In addition, the strong price underscores the embedded value of our stabilized portfolio, which is well-leased, modern and highly sustainable.”
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