LOS ANGELES -Kilroy Realty Corporation’s (NYSE: KRC) Flower Mart Project in San Francisco’s Central SoMa neighborhood was unanimously approved by the San Francisco Planning Commission at its July 18, 2019 public hearing. The approval includes an initial office allocation of approximately 1.4 million square feet under San Francisco’s Office Development Annual Limit Program (a.k.a. Prop. M), as well as priority for a future phase allocation of approximately 350,000 square feet in 2021, with the remainder of the more than 2 million square feet of office space in the Project allocated after 2021. The Flower Mart Project’s development agreement must still be approved by the San Francisco Board of Supervisors and signed by the Mayor, a process which could be complete as early as October of this year.
“The Flower Mart Project represents the future of Central SoMa and San Francisco. The project’s vibrant mix of uses, abundant neighborhood-serving retail, and innovative work environments will make it the transformational hub that the city and the neighborhood need. We are very excited and grateful for the Planning Commission’s support,” said John Kilroy, KRC’s Chairman and CEO.
“This is one of the best projects we’ve ever seen, or at least that I’ve ever seen. I don’t think there’s anything this project doesn’t have,” said Planning Commission Vice-President Joel Koppel at the hearing.
The approximately 2.3-million-square-foot, mixed-use Flower Mart Project is the largest of the proposed office and retail projects planned for the Central SoMa neighborhood. In addition to funding the construction of a new, 115,000-square-foot wholesale flower market, the Project will include most of the new neighborhood-serving retail in Central SoMa, dedicate a site to the City for 100% affordable housing, create thousands of good construction and other jobs, and deliver unprecedented community and economic benefits to the City, including hundreds of millions of dollars in development impact fees and new tax revenues.
The Project is the product of more than five years of negotiations and partnership between Kilroy Realty, the wholesale flower vendor community, and the City. Key elected leaders have provided consistent guidance and support throughout the project development, especially Supervisor Aaron Peskin, Supervisor Matt Haney, Mayor London Breed, former Supervisor Jane Kim, former Mayor Art Agnos, and the late Mayor Ed Lee.
The full Planning Commission package for the San Francisco Flower Mart project is available at http://commissions.sfplanning.org/cpcpackets/2017-000663ENXOFAPCADVA.pdf.
About Kilroy Realty Corporation. Kilroy Realty Corporation (KRC), a publicly traded real estate investment trust and member of the S&P MidCap 400 Index, is one of the West Coast’s premier landlords. The company has over 70 years of experience developing, acquiring and managing office and mixed-use real estate assets. The company provides physical work environments that foster creativity and productivity and serves a broad roster of dynamic, innovation-driven tenants, including technology, entertainment, digital media and health care companies.
At March 31, 2019, the company’s stabilized portfolio totaled approximately 13.2 million square feet of office space located in the coastal regions of Los Angeles, Orange County, San Diego, the San Francisco Bay Area and Greater Seattle and 200 residential units located in the Hollywood submarket of Los Angeles. The stabilized portfolio was 92.5% occupied and 96.2% leased. In addition, KRC had under construction five projects totaling approximately 2.1 million square feet of office space that was 26% leased and 801 residential units. KRC also had three projects in the tenant improvement phase totaling approximately 1.2 million square feet of office, PDR and retail space of which the office components of the projects are fully leased to Adobe and Dropbox.
The company’s commitment and leadership position in sustainability has been recognized by various industry groups across the world. In September 2018, the company was recognized by GRESB both as North American leader across all asset classes and a global leader among all publicly traded real estate companies. Other sustainability accolades include NAREIT’s Leader in the Light award for the past five years, the EPA’s highest honor of Sustained Excellence and winner of ENERGY STAR Partner of the Year for the past six years. The company is listed in the Dow Jones Sustainability World Index. At the end of the first quarter, the company’s stabilized portfolio was 63% LEED certified and 76% of eligible properties were ENERGY STAR certified. 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 or implied in the forward-looking statements, and you should not rely on the 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 the forward-looking statements, including, among others: global market and general economic conditions and their effect on our liquidity and financial conditions and those of our tenants; adverse economic or real estate conditions generally, and specifically, in the States of California and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses; our ability to re-lease property at or above current market rates; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; and our ability to maintain our status as a REIT. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. 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, 2018 and our other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information, and speak only as of the dates 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 we are required to do so in connection with our ongoing requirements under federal securities laws.