KRC
#Yes, <UNK>, do you want to cover that one.
Yes, this is <UNK>, let me jump in initially.
We've ---+ my recollection is we've only done one small transaction of $12 million so far this year and so what we said in the opening comments was we're working on some transactions that could take that to $200 million but in terms of the specific transaction, I mean <UNK> can talk about it, but we're really not going to get into details on the transaction because it hasn't closed yet.
Yes, right now we're subject to confidentiality agreement so we're not going to comment on the disposition.
Well, we've said before that we thought it would likely be San Diego area and that continues to be the case.
Yes, that's one of the tenants, that's the end of the third quarter of next year so they would be vacating.
Yes, <UNK>, do you want to go over that.
Yes, this is <UNK>.
You know, as you've moved through these projects they evolved, scope changes with respect to additional square footage that we were able to fit in on the site.
You know, final planning of the residential town and the retail.
It has mostly to do with some additional square footage that we're going to be able to squeeze in under the current entitlements.
It also relates to construction cost.
You know, we've been forecasting fairly significant increases and that's exactly what we've seen throughout the platform.
No because as <UNK> said, we ended up increasing the square footage.
We pretty well covered the expected increase in construction costs and related soft costs within the initial budget but as <UNK> said, we did increase the square footage.
So yield wise we think we're going to be right about in the range we've forecasted.
Well, I think whenever they want to ask it.
If I think it's realistic, you know, we always forecast that we're going to have a period of time subsequent to completion of the warm shell and what not to lease the building up.
You know, generally we beat it very substantially but I think once the building tops out it's appropriate to say, you know, how are things going.
People can ask whenever they like but most of these markets are not preleasing markets.
Seattle has not been a prelease market although it has seen a couple of projects that have been preleased, one being the very significant 800,000 square feet or so for Google being done by Vulcan, Paul <UNK>'s company and the other Facebook, I think it's around 400,000 feet also being done in South Lake Union by Paul <UNK>.
Generally buildings are up and nearing warm shell completion in Seattle before they're leased and it seems true in Hollywood and San Diego and most of the markets we're in although we've seen exceptions to that obviously particularly in San Francisco a few years ago.
Sure, I don't know that I have that in my head.
Does anybody on the <UNK> team.
We don't have our construction development people in the room so ---+ Do you have that Rob or <UNK>.
I'm thinking it's 3Q 2018 but we can double check that.
Yes, <UNK>, do you want to deal with the San Diego.
I think <UNK> can cover One Paseo.
Yes, so Judd how are you.
On One Paseo on the front end it's all about pulling permits and getting through the city so we had a little bit of a delay on just getting through the city and the permit volume.
That's primarily the schedule.
We're working hard to make a lot of that up so ---+ but that was the cause of it.
Can you repeat the question because I didn't follow ---+
I'll defer to <UNK> in terms of what was reported but we haven't decreased the square footage.
I think as we started construction we locked in the new number.
So it's 650 at this point.
Sorry, I know the answer to that.
Sorry, there are a couple of parcels that are near 333 Dexter when we bought the site that had square footage related to them as well and so the difference between the 650 and the 700 is related to those parcels that were across the street.
Yes, it's basically now in our shadow pipeline, we've taken them off the development page and they are potential development for shadow pipeline.
Yes, no some of that is related to property taxes.
A lot of that is you can see tenant reimbursement is up so a lot of that was passed through so it didn't really impact, you know, the bottom line.
I think for the remainder of the year we obviously had strong same store growth in the first quarter, 2% in the second quarter, we anticipate sort of flat same store for the remainder of the year to end up in that 2.5% to 3% range.
But, you know, it's utilities, it's opex, it's property taxes but, again, if you look at our reimbursement line most of that is pass through.
Rob, do you want to cover that one.
Sure, I'll start with San Francisco.
You know, as Jeff mentioned the quarter had marginal 136,000 feet of negative absorption but what that doesn't show are the pending deals that are happening, one of which has already happened that will be reflected in Q3.
Year to date there have been over ten deals of over 100,000 feet.
Going down below that there have been 29 deals of 20,000 feet or greater so activity remains really strong and this is ---+ a lot of it is net growth from companies that have already have facilities in San Francisco that are looking to expand and we continue to see interest from tenants that aren't in San Francisco yet but touring.
So San Francisco I think is on record for a really strong second half of the year and brokers themselves are also very optimistic.
So we're very pleased with what we see.
Switching to Seattle and specially Bellevue, we're ---+ as <UNK> said, the building we've got can suite single tenant, multi-tenant, two twin towers connected by super floors has all of the bells and whistles, great retail on the ground plane and there's nothing in the development horizon right now that will deliver when we deliver.
So we've got a window until extremely pleased with what we see going on and you've seen kind of stepping out of South Lake Union, just Seattle in general, the amount of activity and leasing that's happened year-to-date has put it in the top rank of the country in terms of office markets.
So it's not just ---+ it's not just South Lake Union it's also Bellevue and even Downtown Seattle has seen some significant leasing.
You're talking about dispositions.
Yes, well we kind of ---+ we get together every year, we figure out which buildings we think are going to perform very well for the future and which buildings may not or which buildings maybe have tapped out and we concentrate on the latter two.
I wasn't quite sure about what you were talking about in terms of opportunities.
You know, we could sell everything if we wanted to.
The market is extremely robust with regard to buyer activity and we will continue as we have over the past, I guess, better part of 20 years we've been a public company we'll continue to do select dispositions to recycle capital or take advantage of other opportunities.
So, I think you'll just see more of the same.
Right now, as I mentioned you know, San Diego in Total is 8% above market so that's going to hit next year so that will take a big chunk of that away.
<UNK> do you want to ---+
Twenty-five to 30%.
Yes, what it ---+ what was the latest update from (inaudible) guys.
We believe spring of 2018 the Central SOMA Plan will be approved and approximately six months after that the Prop M allocation for Flower Mart.
Yes, <UNK> <UNK> here actually.
Quick question for you on the velocity of leasing amongst the younger kind of VC funded companies in San Francisco and Silicon Valley area.
How is that looking.
I mean you mentioned some of the smaller deals with the 20,000 square foot range were getting done but how does it look overall in terms of their ability to continue to grow and so forth.
Well, you've got to really look at VC funding and if you take a look at the VC funding in San Francisco, the second quarter was $7.7 billion, the first quarter was $6.2 billion.
It's on track.
They've raised more money then I think they've ever raised and as we understand it, it's on track to ---+ so about $14 billion in the first half.
That contrasts with ---+ you know, in 2010 it was $10 billion, $12 billion in 2011, $11 billion in 2012, $12 billion in 2013 and then we dropped, then we pumped, up to $25 billion in 2014 and $27 billion in 2015, $21 billion in 2016 last year.
We're on track to see a lot more VC funding this year than all but maybe 2014 of the last seven years and I think that bodes well for our continued growth of these companies and that generally translates to continued growth in demand for space.
Thank you.
You're welcome.
Thank you for joining us today, we appreciate your interest in KR<UNK>
Goodbye.
