Kilroy Realty Corp. (NYSE:KRC.PRH) Q3 2016 Earnings Conference Call Transcript

Oct 27, 2016 • 01:00 pm ET


Kilroy Realty Corp. (NYSE:KRC.PRH) Q3 2016 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and welcome to the Third Quarter 2016 Kilroy Realty Corp. Earnings Conference Call. My name is Derek and I'll be your operator for today. At this time, all participants are in a listen-only mode. We shall facilitate a question-and-answer session towards the end of the conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to Mr. Tyler Rose, EVP and CFO. Please proceed.

Tyler Rose

Good morning, everyone. Thank you for joining us. On the call with me today are John Kilroy, Jeff Hawken, David Simon, Heidi Roth, Mike Sanford, Rob Paratte, Tracy Murphy and Michelle Ngo.

(Forward-Looking Cautionary Statements)

John will start the call with a review of the third quarter, Jeff will discuss conditions in our key markets and I'll finish up with financial highlights and review of our updated earnings guidance for 2016. Then we'll be happy to take your questions. John?

John Kilroy

Thank you, Tyler and hello everyone. Thank you for joining us today. We've made substantial progress in all areas of the company since our last call. Here are the highlights. On the development front, as we reported last night, we signed long-term commitments with high quality credit tenants for over 1 million square feet of space at our development projects. This includes commitments of both 100 Hooper and the Exchange, which on a combined basis are now over 80% committed.

We've said in the past that we wouldn't start construction on 100 Hooper, until we made leasing progress on either the Exchange or Hopper. Since we have now made substantial progress on both projects, we will begin construction later this quarter on 100 Hopper. As a reminder, it is a 400,000 square foot office in PDR project in the SOMA neighborhood of Showplace Square. The total estimated investment is approximately $270 million.

Moving south to Hollywood, we signed leases at the recently completed office component of Columbia Square covering 71,000 square feet, taking the project to 84% leased. This includes a 31,000 square foot expansion agreement with Viacom, increasing its total lease commitment to 210,000 square feet and a 40,000 square foot lease with a global apparel company.

We're also seeing strong interest in our Columbia Square Residential Tower. We expect leasing to accelerate even more as we complete construction of the amenities for this space, including the rooftop and ground level restaurants. We are now 44% leased, up from 22% at the end of the third quarter.

In San Diego, we signed a letter of intent at the recently completed office project in Del Mar called The Heights for approximately 23,000 square feet, taking the 75,000 square foot office building to 65% committed. In our stabilized portfolio, we signed new or renewing leases on 314,000 square feet of space at rents that were up 24% on a GAAP basis and 12% on a cash basis. We generated another quarter of strong same-store of NOI growth with cash NOI