Orange County Business Journal

Kilroy Continues to Cash Out of OC, Puts Offices on Block

REAL ESTATE: Sold industrial portfolio for $500M last year Mark Mueller Sunday, September 8, 2013
2211 Michelson: last OC property expected to remain in Kilroy’s hands

2211 Michelson: last OC property expected to remain in Kilroy’s hands

Chairman and Chief Executive John Kilroy Jr. said he sees OC as a nonstrategic market for the company, despite the company’s significant holdings in Los Angeles and San Diego counties.

That’s because of the dominance of Newport Beach-based Irvine Company in its holdings of high-end buildings in OC, Kilroy said during the company’s last analyst call.

“You have to be careful that you have exactly the right product, and you have to be a [market] timer because of that big beast called the Irvine Company,” Kilroy said.

2211 Michelson, a 6-year-old building a few blocks from John Wayne Airport, still fits the bill as being a good fit for the company, officials said.

“We’re not in the market on the Michelson building,” Kilroy said.

The company bought the 12-story office in 2010 for about $103 million.

The REIT refinanced its debt for 2211 Michelson last summer. The $97 million loan also is tied to a smaller Santa Monica office that Kilroy owns.

“We think that [2211 Michelson] continues to hold plenty of solid value, and if and when we need to or want to pull the trigger for some reason on that, we expect [the value] to be there,” Khouri said.

Officials said they weren’t concerned about operational issues arising from having only one OC building to manage. They also held out the potential for future acquisitions here if the opportunity arises.

“I don’t see us being big acquirers [in OC],” Kilroy said. “We will be opportunistic if there’s a great buy [available], but I don’t see any great buys right now.”

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