Acquisitions

Operating Property Acquisitions

During the year ended December 31, 2018, we acquired the four operating properties listed below in two transactions from unrelated third parties. We did not acquire any operating properties during the year ended December 31, 2017.



Property	Date of Acquisition	Number of Buildings	Rentable Square Feet (unaudited)	Occupancy as of December 31, 2018 (unaudited)		Purchase Price (in millions) ⁽¹⁾
2018 Acquisitions
345, 347 & 349 Oyster Point Boulevard, South San Francisco, CA	January 31, 2018	3	145,530	78.5	%	$	111.0
345 Brannan Street, San Francisco, CA ⁽²⁾	December 21, 2018	1	110,030	99.7	%	146.0
Total ⁽³⁾		4	255,560			$	257.0

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(1)	Excludes acquisition-related costs.


(2)	At December 31, 2018, this property was temporarily being held in a separate VIE to facilitate potential Section 1031 Exchanges. During January 2019, the Company completed the Section 1031 Exchange related to this VIE. See Note 2 “Basis of Presentation and Significant Accounting Policies.”


(3)	The results of operations for the properties acquired during 2018 contributed $8.0 million and $1.7 million to revenue and net income, respectively, for the year ended December 31, 2018.

The related assets, liabilities and results of operations of the acquired properties are included in the consolidated financial statements as of the date of acquisition. The following table summarizes the estimated fair values of the assets and liabilities assumed at the respective acquisition dates for our 2018 operating property acquisitions:



	Total 2018 Operating Property Acquisitions ⁽¹⁾

Assets
Land and improvements	$	80,269
Buildings and improvements ⁽²⁾	172,059
Deferred leasing costs and acquisition-related intangible assets ⁽³⁾	13,593
Total assets acquired	$	265,921
Liabilities
Acquisition-related intangible liabilities ⁽⁴⁾	$	8,921
Total liabilities assumed	8,921
Net assets and liabilities acquired	$	257,000

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(1)	The purchase price of the two acquisitions completed during the year ended December 31, 2018 were individually less than 5% and in aggregate less than 10% of the Company’s total assets as of December 31, 2017.


(2)	Represents buildings, building improvements and tenant improvements.


(3)	Represents in-place leases (approximately $11.8 million with a weighted average amortization period of 1.3 years years) and leasing commissions (approximately $1.8 million with a weighted average amortization period of 6.6 years years).


(4)	Represents below-market leases (approximately $8.9 million with a weighted average amortization period of 9.8 years years).

Development Project Acquisitions

On June 1, 2018, we acquired the following 39-acre development site, which is located adjacent to the three operating properties we acquired in January 2018, from an unrelated third party. The acquisition was funded with proceeds from the Company’s unsecured revolving credit facility and the Company’s at-the-market stock offering program.



Project	Date of Acquisition	City/Submarket	Type	Purchase Price (in millions) ⁽¹⁾
Kilroy Oyster Point	June 1, 2018	South San Francisco	Land	$	308.2

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(1)

Excludes acquisition-related costs. In connection with this acquisition, we also recorded $40.6 million in accrued liabilities and environmental remediation liabilities at the date of acquisition, which are not included in the purchase price above. As of December 31, 2018, the purchase price and our current estimate of assumed liabilities are included in undeveloped land and construction in progress and the assumed liabilities are included in accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets.

On October 10, 2017, the Company completed the acquisition of a 1.2 acre development site located in the Little Italy neighborhood of downtown San Diego, California in three separate transactions from separate unrelated third parties for a total purchase price of $19.4 million and the assumption of $1.4 million of accrued liabilities.

Acquisition Costs

During the years ended December 31, 2018, 2017, and 2016, we capitalized $3.8 million, $4.6 million, and $0.5 million, respectively, of acquisition costs. During the year ended December 31, 2016, we expensed $1.9 million of acquisition costs.