Just when you thought you were out of the woods, you’re pulled back in.
Kilroy was through the worst of its 2026, million square feet of lease expirations. The REIT only had another 300,000 square feet left, and they were mostly leases that were less than 50,000 square feet. But it’s never too early to think about next year … when another million square feet are set to expire.
Once again, a lot of the expirations are in Los Angeles. A big one to watch: DirecTV’s 500,000-plus square feet in El Segundo, most of which expires late next year. Per the REIT’s latest 10-K, it rakes in more than $16 million a year via DirecTV.
“Obviously, we need to work through DirecTV at Kilroy Airport Center,” CEO Angela Aman said on Tuesday’s earnings call. “We’re exploring a wide range of options for that campus and that location.”
She mentioned the possibility of filling the two tower office campus, where DirecTV is the primary tenant — or selling it. It’s a chunk of space with some history. Kilroy and AT&T, DirecTV’s then-parent company, were in a legal battle because the tenant wanted out. Days before a trial, Kilroy settled.
The rest of the 2027 expirations are almost all less than 50,000 square feet.
“We feel actually pretty good about renewal possibilities given the granularity and how diversified the rest of the pool really is,” Aman said. That’s very different from when she spoke about the 2026 expirations and said she mostly anticipated “move-outs.”
The REIT’s second quarter earnings call, apart from the leasing talk, wasn’t too eventful. There were no buys or sales to report. Revenues, profits and funds from operations were all down compared to a year earlier, but not enough to shake shareholders, judging by its relatively steady share price.
SoCal deals
Los Angeles saw a pricey trade in WeHo and a landmark tower downtown falling into receivership. In Orange County, there was a loss on an office tower. Here’s what you need to know.
- A retail spot on Melrose, occupied by luxe French fashion house Jacquemus, sold for $29 million — or $7,250 per square foot. The sellers are Faring Capital, Capital Insight and Parallel Acquisitions; the buyer is Acadia Realty Trust.
There’s a reason the deal was so pricey. Jacquemus’ lease isn’t up until 2030, and its rent is about $1.7 million and increases each year. That’s more than the typical WeHo rent because the prior landlord and Jacquemus had an agreement that kept the landlord from developing another piece of real estate on the lot, per a person familiar.
- The Fallas family, of the bankrupt discount retailer of the same name, ceded control of the Metropolitan downtown after a $32 million default. The special servicer and the family are still in talks post-receivership, per a person familiar, and there are offers on the table to purchase the apartments and vacant ground floor retail once occupied by a Fallas Paredes store.
- Lincoln sold an Orange County office tower for about $63 million, which is much less than its pre-pandemic $92.5 million purchase price. The latest deal for Orange Center Tower came out to around $220 per square foot, compared to the almost $330 per square foot Lincoln Property Company purchased it for in late 2017.
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