San Diego — Kilroy Realty Corp. (NYSE: KRC), an office, mixed-use and life sciences REIT based in Los Angeles, has obtained a $375 million loan for a portion of One Paseo, a mixed-use campus in San Diego. New York Life Insurance Co. provided the 11-year, non-recourse loan, which features a fixed 5.9 percent interest rate. The loan matures in August 2034.
The 36-acre property is situated between the city’s Carmel Valley neighborhood and Del Mar, as well as near I-5 and State Route 56. One Paseo is home to tenants including lululemon athletica, Sephora, drybar, BodyRok, Harland Brewing, Shake Shack, Cava and Blue Bottle Coffee, among others.
The loan was secured by a 23-acre portion of Kilroy Realty’s One Paseo campus that comprises two office buildings, 608 apartment units and more than 95,000 square feet of retail space. This portion was developed in phases between 2019 and 2021, according to Kilroy Realty.
“Against a challenging capital markets backdrop, we are very pleased with this loan execution, which further fortifies our already strong balance sheet and liquidity position while establishing a new partnership with a world-class life insurance company,” says John Kilroy, CEO of Kilroy Realty.
JLL and Allen Matkins advised Kilroy Realty in the transaction. The company intends to use proceeds from the loan for general corporate purposes, including funding new developments and reserving funds to address its December 2024 unsecured bond maturity.
As of June 30, 2023, Kilroy Realty’s portfolio totaled approximately 16.2 million square feet of primarily office and life sciences space that was 86.6 percent occupied. The company also had more than 1,000 residential units in Hollywood and San Diego that had a quarterly average occupancy of 92.7 percent.
In addition, Kilroy Realty has life sciences redevelopment projects underway totaling approximately 100,000 square feet with total estimated redevelopment costs of $80 million, as well as three office and life sciences developments spanning 1.7 million square feet with an estimated total investment of $1.7 billion.
Kilroy Realty’s stock price closed on Monday, July 31 at $35.70 per share, down from $53.54 a year ago, a 33.3 percent decline.
— John Nelson