Kilroy Realty Executes Agreement to Acquire Central SOMA Development Opportunity

  Kilroy Realty Executes Agreement to Acquire Central SOMA Development
  Opportunity

                                            Filed by Kilroy Realty Corporation
                                                   Commission File No. 1-12675
                         Pursuant to Rule 425 Under the Securities Act of 1933
                                      And Deemed Filed Pursuant to Rule 14a-12
                                     Under the Securities Exchange Act of 1934

                                    Subject Company: Kilroy Realty Corporation
                                                   Commission File No. 1-12675

This filing relates to the proposed merger of Kilroy Realty Corporation, a
Maryland corporation (“KRC”), and San Francisco Flower Growers' Association, a
California corporation (“SFFGA”), pursuant to the terms of that certain
Agreement and Plan of Merger, dated as of July 11, 2014, by and between KRC
and SFFGA.

Business Wire

LOS ANGELES -- July 21, 2014

Kilroy Realty Corporation (NYSE: KRC) today announced that on July 11, 2014 it
executed a merger agreement to acquire all the outstanding shares of San
Francisco Flowers Growers’ Association (“SFFGA”), a privately owned entity
whose only material asset as of the closing of the proposed merger is
anticipated to be a 1.9 acre land site in Central SOMA, in a transaction
valued at approximately $27.0 million. The acquisition will be financed by KRC
directly issuing approximately $22.0 million of its common stock to SFFGA
shareholders and the immediate repayment of approximately $4.6 million of
outstanding debt and transaction related expenses. The 1.9 acre land site is
located at the corner of Brannan Street and 6^th Street in Central SOMA, a
prime San Francisco area between Showplace Square and the South Financial
district.

KRC’s acquisition of SFFGA is contingent upon the adoption of the merger
agreement and the approval of the principal terms of the merger by SFFGA’s
shareholders holding a majority of the outstanding shares of SFFGA common
stock. The transaction will be structured as a merger that qualifies as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986 at the request of SFFGA to allow the SFFGA shareholders to defer
a portion of the U.S. federal income tax that would have otherwise resulted
from a taxable sale of the real property followed by a distribution of the
proceeds of the sale to the SFFGA shareholders. In connection with the
proposed transaction, KRC expects to file with the SEC a registration
statement on Form S-4 that will include a proxy statement of SFFGA that also
constitutes a prospectus of KRC. It is anticipated that the proposed
transaction will close by the end of the year.

About Kilroy Realty Corporation. With more than 65 years’ experience owning,
developing, acquiring and managing real estate assets in West Coast real
estate markets, Kilroy Realty Corporation (KRC), a publicly traded real estate
investment trust and member of the S&P MidCap 400 Index, is one of the
region’s premier landlords. The company provides physical work environments
that foster creativity and productivity, and serves a roster of dynamic,
innovation-driven tenants, including technology, entertainment, digital media
and health care companies.

At March 31, 2014, the company’s stabilized portfolio totaled 13.3 million
square feet of office properties, all located in the coastal regions of
greater Seattle, the San Francisco Bay Area, Los Angeles, Orange County and
San Diego. 41% of the company’s properties were LEED certified and 55% of the
eligible properties were ENERGY STAR certified. In addition, KRC has
approximately 2.5 million square feet of new office development under
construction with a total estimated investment of approximately $1.5 billion.
More information is available at http://www.kilroyrealty.com.

About San Francisco Flower Growers’ Association. SFFGA is a California
corporation headquartered in San Francisco, California. SFFGA was incorporated
in 1923 as a cooperative organized by local flower and fern growers. Its
primary business is to own and operate a portion of the real estate on which
the San Francisco Flower Mart is situated.

Additional Information and Where You Can Find It. In connection with the
proposed transaction, KRC expects to file with the SEC a registration
statement on Form S-4 that will include a proxy statement of SFFGA that also
constitutes a prospectus of KRC. SFFGA and KRC also plan to file other
relevant documents with the SEC regarding the proposed transaction. INVESTORS
ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS
FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the proxy
statement/prospectus (if and when it becomes available) and other relevant
documents filed by SFFGA and KRC with the SEC at the SEC’s website at
www.sec.gov. Copies of the documents filed by SFFGA with the SEC will be
available free of charge by contacting SFFGA at (415) 781-8410. Copies of the
documents filed by KRC with the SEC will be available free of charge by
contacting KRC Investor Relations at (310) 481-8400.

SFFGA and KRC and their respective directors and executive officers and other
members of management and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction. You can find
information about KRC’s executive officers and directors in KRC’s definitive
proxy statement filed with the SEC on April 11, 2014. Additional information
regarding the interests of such potential participants will be included in the
proxy statement/prospectus and other relevant documents filed with the SEC if
and when they become available. You may obtain free copies of these documents
from SFFGA or KRC using the sources indicated above.

This document shall not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S. Securities Act
of 1933, as amended.

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 forward-looking statements,
and you should not rely on 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
forward-looking statements, including, among others, risks associated with:
investment in real estate assets, which are illiquid; trends in the real
estate industry; significant competition, which may decrease the occupancy and
rental rates of properties; the ability to successfully complete acquisitions
and dispositions on announced terms; the ability to successfully operate
acquired properties; the availability of cash for distribution and debt
service and exposure of risk of default under debt obligations; adverse
changes to, or implementations of, applicable laws, regulations or
legislation; and the ability to successfully complete development and
redevelopment projects on schedule and within budgeted amounts. These factors
are not exhaustive. 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/A for the year ended December 31, 2013 and our other filings with the
Securities and Exchange Commission. All forward-looking statements are based
on information that was available, and speak only as of the date on which they
are made. Neither KRC nor SFFGA assume any 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 required in connection with ongoing requirements under U.S. securities
laws.

Contact:

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