Okta Signs 10-Year Lease with Kilroy Realty for New San Francisco Headquarters at 100 First Street

Dec 06, 2017 04:54 pm

Kilroy Realty Corporation (NYSE:KRC) today said it has signed a 10-year lease with Okta, Inc. (NASDAQ:OKTA) for 207,000 square feet of space at Kilroy Realty’s 100 First Street office property in the South of Market district of San Francisco.

A leading provider of identity for the enterprise, Okta is expanding its footprint in the city in the wake of its April 2017 initial public offering and anticipated growth plans. Okta plans to establish its new corporate headquarters at 100 First Street, with expected occupancy occurring in phases, beginning in the second quarter of 2018.

Okta’s lease at 100 First Street is the most recent in a series of record-breaking deals executed by Kilroy Realty. Over the past twelve months, the company has signed three of San Francisco’s largest office leases that in aggregate total approximately 1.3 million square feet. In October of this year, Kilroy Realty signed the single largest commercial lease in San Francisco history with Dropbox totaling 736,000 square feet at The Exchange at 16th. And in November of 2016, the company’s lease with Adobe, which totals 320,000 square feet, at 100 Hooper was recognized as “deal of the year” by the San Francisco Business Times. Year to date, Kilroy Realty has signed more than 2.5 million square feet of leases throughout its stabilized and development portfolios.

“San Francisco continues to incubate some of the most dynamic new companies in the world and we are delighted that Okta, a thriving newly public company, has chosen to join our roster of tenants in the city,” said John Kilroy, the Company’s Chief Executive Officer. “I’m proud of our team for their relentless commitment to drive our deal making machine and deliver extraordinary leasing results with high caliber tenants, including our recent transactions with Okta, Dropbox and Adobe.”

The success of these projects reflects Kilroy Realty’s ability to meet the specific needs of today’s rapidly growing companies and dynamic workforces. “Growth companies in San Francisco are looking for unique spaces that energize and motivate their employees and are also highly efficient. Kilroy Realty has a unique understanding of these needs, and executes at an impressive rate to meet them,” said Chris Roeder, International Director, JLL.

100 First Street is a 27-story, 467,000 square-foot office building designed by Skidmore, Owings and Merrill and built in 1988. The LEED Gold and Energy Star certified property is currently 95% leased. Okta’s new 207,000 square foot lease will replace all of Delta Dental’s 188,000 square feet of space in the building that expires in the second quarter of 2018 as well as include an additional 19,000 square feet.

"We're proud to call San Francisco home, and we are excited to continue to grow our presence in the community here in partnership with Kilroy. The new space will give the team at Okta room to scale, build and innovate for our customers as we expand in the coming years, all under one roof — in the heart of the city,” said Todd McKinnon, CEO and co-founder of Okta.

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 September 30, 2017, the company’s stabilized portfolio totaled approximately 13.7 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. In addition, KRC had four projects totaling approximately 1.8 million square feet of office space, 237 residential units and 96,000 square feet of retail space under construction.

The company has been recognized by GRESB as the North American leader in office sustainability for the last four years and is listed in the Dow Jones Sustainability World Index. At the end of the third quarter, the company’s stabilized portfolio was 55% LEED certified and 73% 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 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 implementations of, applicable laws, regulations or legislation; 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, 2016 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 date 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.

Kilroy Realty Corporation
Tyler H. Rose
Executive Vice President and Chief Financial Officer
(310) 481-8484
Michelle Ngo
Senior Vice President and Treasurer
(310) 481-8581