HomeMy WebLinkAbout2018-05-23 e-packet@6:00Wednesday, May 23, 2018
6:00 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
Municipal Services Building, Council Chambers
33 Arroyo Drive, South San Francisco, CA
Joint Special Meeting City Council and Successor Agency
Special Meeting Agenda
May 23, 2018Joint Special Meeting City Council
and Successor Agency
Special Meeting Agenda
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of
California, that the Successor Agency to the City of South San Francisco Redevelopment Agency and the City
Council will hold a Joint Special Meeting on Wednesday, May 23, 2018, at 6:00 p.m., in the Municipal
Services Building, Council Chambers, 33 Arroyo Drive, South San Francisco, California.
Purpose of the meeting:
Call to Order.
Roll Call.
Agenda Review.
Public Comments - comments are limited to items on the Joint Special Meeting.
ADMINISTRATIVE BUSINESS
Report regarding the approval of the assignment of rights and obligations under the
Development Agreement between the City of South San Francisco and Oyster Point
Development, LLC and the Disposition and Development Agreement between the
Successor Agency to the Redevelopment Agency of the City of South San Francisco
and Oyster Point Development, LLC, respectively, from Oyster Point Development,
LLC to KR Oyster Point Developer, LLC. (Alex Greenwood, ECD Director)
1.
CLOSED SESSION
Conference with Real Property Negotiators
(Pursuant to Government Code Section 54956.8)
Property: 200 Linden Avenue, 212 and 216 Baden Avenue
Agency Negotiators: Alex Greenwood and Julie Barnard
Negotiating Parties: City of South San Francisco, South San Francisco Successor
Agency and Hisense REUS, LLC
Under Negotiation: Price and Terms
2.
Adjournment.
Page 2 City of South San Francisco Printed on 8/31/2018
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:18-377 Agenda Date:5/23/2018
Version:1 Item #:1.
Report regarding the approval of the assignment of rights and obligations under the Development Agreement
between the City of South San Francisco and Oyster Point Development,LLC and the Disposition and
Development Agreement between the Successor Agency to the Redevelopment Agency of the City of South
San Francisco and Oyster Point Development,LLC,respectively,from Oyster Point Development,LLC to KR
Oyster Point Developer, LLC.(Alex Greenwood, ECD Director)
RECOMMENDATION
Staff recommends that the City Council:
1.Approve,by motion,the Assignment of Rights and Obligations Agreement,pursuant to Article 11 of the
Development Agreement by and between the City of South San Francisco and Oyster Point
Development,LLC,which effectuates the assignment and assumption of all rights and obligations
currently from Oyster Point Development, LLC to KR Oyster Point Developer, LLC; and
Staff recommends that the Successor Agency:
2.Approve,by motion,Consent,Assignment and Assumption Agreement,pursuant to Article 3,Sections
8.4 and 8.5 of the Disposition and Development Agreement by and between the Successor Agency to
the Redevelopment Agency of the City of South San Francisco and Oyster Point Development,LLC,
which effectuates the assignment and assumption of all rights and obligations from Oyster Point
Development, LLC to KR Oyster Point Developer, LLC.
BACKGROUND
In March 2011,the City of South San Francisco (City)and the former Redevelopment Agency of the City of
South San Francisco (RDA)entered into a Development Agreement (DA)and a Disposition and Development
Agreement (DDA),respectively,with Oyster Point Ventures,LLC (Original Developer)to form a
public/private partnership to redevelop approximately 82 acres at Oyster Point.The DA and DDA are attached
(Attachments 1 and 2,respectively).When the agreements were negotiated and executed in 2011,it was
anticipated that the Original Developer,at some period in the future,might wish to transfer ownership and
assign the various obligations and rights under the DA and DDA to other development entities.
On May 13,2016,the Original Developer requested to assign all rights,responsibilities and ownership to a new
developer,Oyster Point Development,LLC (Current Developer).The City Council and Successor Agency to
the Redevelopment Agency of the City of South San Francisco (Successor Agency)approved the transfer of
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the Redevelopment Agency of the City of South San Francisco (Successor Agency)approved the transfer of
assignments to the Current Developer,Oyster Point Development,LLC,at its June 1,2016 Joint Special
Meeting.
DISCUSSION
Since the assignment to the Current Developer,the City has transferred title to the property in accordance with
the DA and DDA.Additionally,the Current Developer has begun work on what is known as Phase IC,which
includes infrastructure and site work.On April 13,2018,the Current Developer formally requested to assign
the DA and DDA to KR Oyster Point Developer,LLC (the letters requesting such assignments are included as
Attachments 3 and 4).
Ownership Structure of Transferee
KR Oyster Point Developer,LLC is the transferee entity for the project under all rights and obligations
conferred by the DDA and DA.KR Oyster Point Developer,LLC is a wholly-owned subsidiary of Kilroy
Realty,LP (KRLP),a Delaware limited partnership,whose general partner is Kilroy Realty Corporation
(Kilroy), a Real Estate Investment Trust (REIT) listed on the New York Stock Exchange.
Under the DDA,KR Oyster Point Developer,LLC (Transferee)will retain a taxable REIT subsidiary entity to
serve as the developer for the Successor Agency obligations under the DDA.Under the DA,the Transferee will
be the master developer of the project.Kilroy will acquire the underlying fee interest in each of the project’s
several phases in property-specific, wholly-owned subsidiaries of KRLP.
Assignment Process
Under the DA and DDA,before an assignment can occur,the transfer and assignment request must meet certain
requirements and be approved by the City and the Successor Agency.
Per Section 8.4 of the DDA,any assignment request to the Successor Agency must satisfy the following
requirements:
8.4 Request for Approval;Notice.For any Transfer that requires Agency's approval,Developer
shall notify Agency in writing of its request for consent,which notice shall include:(i)the
proposed effective date of Transfer or assignment (which shall not be less than forty-five (45)
days nor more than three hundred sixty-five (365)days after Developer's notice);(ii)the name
and address of the proposed transferee;(iii)current,audited financial statements of the proposed
transferee certified by an officer,partner,or owner thereof and any other relevant information
pertaining to the proposed transferee's qualifications or financial capabilities,and development
capacity that Agency may reasonably and timely request;and (iv)the instruments and other legal
documents proposed to effect any Transfer of this Agreement,the Conveyed Property or interest
therein.The transferee shall expressly assume all of the rights and obligations of the Developer
under this Agreement arising after the effective date of the Transfer with respect to the property
conveyed to the transferee and all obligations of Developer with respect thereto arising prior to
the effective date of the Transfer (unless Developer expressly remains responsible for such
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the effective date of the Transfer (unless Developer expressly remains responsible for such
obligations,either in the applicable assignment documents or by virtue of its failure to obtain a
release contemplated in Section 8.6.1)and shall agree to be subject to all other terms and
conditions set forth in this Agreement.
Provided that the assignment request meets these requirements,the Successor Agency can approve the transfer
of the rights and obligations from the Current Developer to the Transferee.Additionally,when evaluating the
transfer request,the Successor Agency shall look at the financial ability of the proposed transferee to own and
develop the project and the experience of the proposed transferee (DDA, Section 8.5).
In addition to the DDA requirements described above,the Transferee must also comply with requirements of
the DA. Pursuant to Article 11 of the DA, the following is required:
·The Developer and the Transferee must enter into an Assignment of Rights and Obligations Agreement.
·The City has 45 days to respond to the request for consent.If the City fails to respond within 45 days,
consent is deemed as granted. The Transfer request was forwarded to the City on April 13, 2018.
·The Transferee must submit to the City information describing their development experience and
financial resources (Transferee Experience and Financial and Development Capacity of Transferee
sections below address this requirement).
Transferee Experience
Kilroy Realty is a well-respected developer that has completed projects in the Bay Area representing more than
$870 million in investment and more than 1.5 million square feet of development.Kilroy’s notable Bay Area
developments include:
·Salesforce Corporate Headquarters (350 Mission, not to be confused with Salesforce Tower);
·Dropbox Exchange development in Mission Bay;
·LinkedIn/Apple project in Sunnyvale; and
·Box at Crossing 900 in Redwood City.
In addition,Kilroy Realty has 5.6 million square feet of development in planning or construction.An overview
of their experience is included as Attachment 5.
Financial and Development Capacity of Transferee
The City retained the services of an outside real estate and financial consulting firm,Economic &Planning
Systems (EPS),to analyze the financial data provided by Kilroy Realty Corporation.EPS concluded that
“Kilroy Realty is a strongly valued firm with substantial financial resources and net worth that would not likely
add any significant risk to the Successor Agency and/or City from the transfer of the Oyster Point property
associated with the financial solvency of the Transferee.”The financial due diligence assessment from EPS is
included as Attachment 6.
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Next Steps
If the City and the Successor Agency approve the proposed Transfer of Developers and Assignment and
Assumption Agreements,the new developer will assume all rights and obligations under the respective
agreements.Under the DA/DDA,the Transferee will assume obligations of all phases of development,first
with the commencement of the development of Phase I,consisting of 508,000 square feet of research and
development (R&D) and/or office space, with associated infrastructure.
Related to the construction project currently underway (Phase IC and IIC Cap Repair),the Developer’s
construction management of the project will be subject to the Agreement for Development Management
Services.The agreement was approved by City Council and the Successor Agency.It outlines the program
management protocols that require City review and approval.It should be noted that project ownership change
during construction is a risk.Potential risks that could impact project schedule and budget include
compromised team performance given the need to build new professional relationships,application of project-
specific program management protocols,and understanding of historical context and inherited decisions for the
initial transition period.City staff will monitor and manage this risk through its role and responsibilities as
outlined the Agreement for Development Management Services as well as regular construction coordination
meetings with the Developer and Program Management team.
FISCAL IMPACT
There is currently no known fiscal impact to the City General Fund due to the assignment of rights and
obligations of the DA from Oyster Point Development, LLC, to KR Oyster Point Developer, LLC.
This is currently no known fiscal impact to the Successor Agency due to the assignment of rights and
obligations of the DDA from Oyster Point Development, LLC, to KR Oyster Point Developer, LLC.
All funding obligations by all parties remain consistent with the obligations described in both development
agreements that were executed in March 2011.
CONCLUSION
Under the facts as discussed above,the Current Developer and Transferee have met all the requirements for
transfer under the DA and DDA.
After review of the transfer request and associated documents, it is recommended that the City Council:
1.Approve,by motion,the Assignment of Rights and Obligations Agreement,pursuant to Article 11 of the
Development Agreement by and between the City of South San Francisco and Oyster Point
Development,LLC,which effectuates the assignment and assumption of all rights and obligations
currently from Oyster Point Development, LLC to KR Oyster Point Developer, LLC; and
It is recommended that the Successor Agency:
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2.Approve,by motion,the Consent,Assignment and Assumption Agreement,pursuant to Article 3,
Sections 8.4 and 8.5 of the Disposition and Development Agreement by and between the Successor
Agency to the Redevelopment Agency of the City of South San Francisco and Oyster Point
Development,LLC,which effectuates the assignment and assumption of all rights and obligations
currently from Oyster Point Development, LLC to KR Oyster Point Developer, LLC.
Attachments:
1.Oyster Point Development Agreement (DA)
2.Oyster Point Disposition and Development Agreement (DDA)
3.Request for assignment of DA (Oyster Point Development, LLC)
4.Request for assignment of DDA (Oyster Point Development, LLC)
5.Kilroy Realty Experience
6.EPS Financial Due Diligence Assessment
7.Consent, Assumption and Assignment Agreement (DA)
8.Consent, Assumption and Assignment Agreement (DDA)
9.PowerPoints Staff Presentation.
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Oys ter Point Development, LLC
395 Oyster Point Boulevard, Suite 550
South San Francisco, CA 94080
April 13, 2018
By Hand Delivery and Electronic Mail: [email protected]
Mike Futrell
City Manager
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Re: Oyster Point Development Agreement – Request for Assignment
Dear Mr. Futrell:
As you know, the City of South San Francisco (“City”) and Oyster Point Development, LLC
(“OPD”) are parties to the Development Agreement (“DA”) dated March 23, 2011, as
assigned to OPD pursuant to an Assignment and Assumption Agreement dated August 18,
2016.
Article 11 of the DA provides that OPD may transfer or assign all or any portion of its
interests, rights, or obligations under the D A to third parties acquiring an interest or estate in
the Project (as defined in the DA), subject to obtaining the prior written approval of the City,
which shall not be unreasonably withheld. Pursuant to Section 11.02 of the DA, OPD hereby
requests the City’s written consent to the proposed assignment of OPD’s interests under the
DA to KR Oyster Point, LLC, a Delaware limited liability company, or an affiliate
(“Assignee”). A summary of the transaction is enclosed as Exhibit A. OPD and Assignee
propose that the assignment would be effective as of approximately May 25, 2018.
Pursuant to Section 11.02 of the DA, Assignee will provide information describing the
Assignee’s development experience and financial resources, under separate submittal.
A draft Assignment and Assumption Agreement, substantially in the form provided in
Exhibit F to the DA, is enclosed as Exhibit B for the City’s review and approval.
Mike Futrell
April 13, 2018
Page Two
sf-3885713
Please do not hesitate to contact me or our counsel, Megan Jennings, if you have any
questions. We look forward to hearing from you and appreciate your assistance in obtaining
the City’s approval as soon as possible.
Sincerely,
Chao Wu
Chief Executive Officer
cc (email only): Marian Lee ([email protected])
Alex Greenwood ([email protected])
Steve Mattas ([email protected])
Clara Tang ([email protected])
Stephanie Rosenberg ([email protected])
Megan Jennings ([email protected])
Oys ter Point Development, LLC
395 Oyster Point Boulevard, Suite 550
South San Francisco, CA 94080
EXHIBIT A
SUMMARY OF TRANSACTION – FOR EXPLANATORY PURPOSES ONLY
On March 23, 2017, Oyster Point Development, LLC (“OPD”) and KR Oyster Point, LLC (“KR Oyster
Point”) executed an Agreement of Purchase and Sale (“Original PSA”) under which (i) OPD would sell
to KR Oyster Point all of OPD’s right, title, and interest in the land commonly known as Phase ID and
Phase IID of the Oyster Point development project, together with all rights, privileges, easements
and appurtenances relating to such land, and (ii) OPD granted to KR Oyster Point a Right of First
Offer with respect to the remainder of OPD’s interests in the Oyster Point development project,
commonly known as Phase IIID and Phase IVD. The Original PSA was structured to close in up to
three separate closings with interests to be assigned to, and assumed by, KR Oyster Point allocated
to the respective phase.
Subsequently, OPD and KR Oyster Point executed an Amended and Restated Agreement of Purchase
and Sale under which OPD would sell to KR Oyster Point all of OPD’s right, title, and interest in the
land commonly known as Phase ID, Phase IID, Phase IIID, and Phase IVD of the Oyster Point
development project in a single closing, together with all rights, privileges, easements and
appurtenances relating to such land. Without limitation, the interests to be assigned to, and
assumed by, KR Oyster Point upon closing include the following:
• All of OPD’s rights and obligations under the existing Development Agreement and
Disposition and Development Agreement for the Oyster Point development
project. Because OPD would retain no rights or obligations, no allocation of responsibilities
would be required between OPD and KR Oyster Point, as contemplated under the Original
PSA.
• All of OPD’s interests under existing contracts for construction of Phase IC, Phase ID, and a
portion of Phase IIC, which are anticipated to be assigned to and assumed by KR Oyster
Point upon closing. Such contracts include OPD’s contracts with Teichert Construction as
General Contractor, Langan Treadwell Rollo as construction administration, environmental
and geotechnical consultant, and Cumming Construction Management as project and
construction manager. OPD’s contractors will commence construction pursuant to the
applicable construction agreements prior to closing.
• All of OPD’s interests in the Escrow Holdback Agreement dated September 29, 2017, by and
among OPD, the Successor Agency to the South San Francisco Redevelopment Agency, and
Chicago Title Insurance Company (as amended November 27, 2017).
Closing is intended to o ccur on or about May 25, 2018.
Oys ter Point Development, LLC
395 Oyster Point Boulevard , Suite 550
South San Francisco, CA 94080
EXHIBIT B
DRAFT ASSIGNMENT AND ASSUMPTION AGREEMENT
1
FORM OF CONSENT, ASSIGNMENT AND ASSUMPTION OF
DEVELOPMENT AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attn: City Manager
APNS: ___________________________________ (Space Above This Line for Recorder’s Use
Only)
Exempt from Recording Fee per Government
Code § 27383
CONSENT, ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT AGREEMENT
THIS CONSENT, ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT
AGREEMENT (“Agreement”) is entered into as of ______________________, 2018, by and among
OYSTER POINT DEVELOPMENT, LLC, a Delaware limited liability company (“Assignor”), KR
OYSTER POINT, LLC, a Delaware limited liability company (“Assignee”), and the CITY OF SOUTH
SAN FRANCISCO, a municipal corporation (“City”).
R E C I TA L S1
A. City and OYSTER POINT VENTURES, LLC, a Delaware limited liability
company (“OPV”), entered into a Development Agreement effective March 23, 2011 (Recorder’s
Document No. 2011-034324) (“Development Agreement”), to facilitate the redevelopment of that
certain real property owned and to be acquired by OPV as Developer thereunder consisting of
approximately 46 acres within the City of South San Francisco, County of San Mateo, State of California,
which is legally described in Exhibit A to the Development Agreement and shown on the map attached to
the Development Agreement as Exhibit B (“Property”). Capitalized terms used but not otherwise defined
herein shall have the meaning ascribed to such terms in the Development Agreement.
B. City, OPV and Assignor entered into an Assignment and Assumption Agreement
dated August 18, 2016 (Recorder’s Document No. 2016-082622), under which OPV assigned, and
Assignor assumed, all of OPV’s rights and obligations under the Development Agreement.
C. Assignor has a legal and/or equitable interest in the Property. City has been
informed by Assignor and Assignee that Assignor and Assignee have entered into an Amended and
Restated Purchase and Sale Agreement (“PSA”) as of __________, 2018 and that pursuant to the PSA,
Assignor desires to transfer its legal and/or equitable interest in the Property.
1 NTD: Depending on the time at which the Assignment is executed and the status of re-entitlement
efforts, recitals may need to be updated to reflect current status – e.g. if the DA has been amended to
authorize a different mix of uses at Phases III and IV.
2
D. Section 11.02 of the Development Agreement provides that Assignor may assign
all or any portion of the Project and its rights and obligations under the Development Agreement, Project
Approvals, and Subsequent Approvals (collectively, "Rights and Obligations") to another party,
provided that the Assignor and Assignee shall have entered into a Transfer Agreement with the City's
prior written consent, which Transfer Agreement shall include an agreement (“Assignment Agreement”)
substantially in the form of Exhibit F to the Development Agreement pursuant to which Assignor may be
released from obligations under the Development Agreement provided that Assignee expressly assumes
such rights and obligations.
E. Assignor has provided the required written notice to City of its intent to enter into
an Assignment Agreement as required by Section 11.02 of the Development Agreement, and Assignee
has submitted to the City information describing Assignee’s development experience and financial
resources.
F. This Agreement serves as both the Transfer Agreement and the Assignment
Agreement with respect to the Property. The City's signature on this Agreement shall constitute prior
written consent to the Transfer Agreement under section 11.02 of the Development Agreement.
G. Assignor desires to assign to Assignee all Rights and Obligations of Assignor
under the Development Agreement and Assignee desires to assume all such Rights and Obligations of
Assignor thereunder. Upon execution of this Agreement and transfer to Assignee of legal title to the
Property, Assignor desires to be released from any and all such Rights and Obligations.
A G R E E M E N T
NOW, THEREFORE, Assignor, Assignee, and City hereby agree as follows:
1. Incorporation. The foregoing recitals are true and correct and are incorporated herein by
this reference.
2. Assignment by Assignor. From and after the Effective Date hereof, Assignor hereby
assigns, transfers and grants to Assignee, and its successors and assigns, all of Assignor’s rights, interests,
obligations, duties, responsibilities, conditions and restrictions of Assignor as the “Developer” under the
Development Agreement (collectively, the “Rights and Obligations”).
3. Acceptance and Assumption. From and after the Effective Date hereof, Assignee, for
itself and its successors, assigns and legal representatives, hereby accepts such assignment and expressly
assumes all of the Rights and Obligations.
4. Release of Assignor. Assignee and City hereby fully release Assignor from the Rights
and Obligations. Both Assignor and Assignee acknowledge that this Assignment is intended to fully
assign all of the Rights and Obligations to Assignee, and it is expressly understood that Assignor shall not
retain any Rights and Obligations whatsoever.
5. Substitution of Assignor. Assignee hereafter shall be substituted for and replace Assignor
in the Development Agreement. Whenever the term “Oyster Point Ventures, LLC” or “Developer”
appears in the Development Agreement, it shall hereafter mean Assignee.
6. City Consent. City is executing this Agreement for the limited purpose of consenting, in
accordance with Section 11.02(b) of the Development Agreement, to the assignment and assumption of
3
the Rights and Obligations and clarifying that there is privity of contract between City on the one hand,
and Assignee on the other, with respect to the Development Agreement.
7. Representations and Warranties, Indemnifications and Waivers.
(a) Assignee represents and warrants to City as follows:
(i) Assignee is a limited liability company formed within and in good
standing under the laws of the State of Delaware. The copies of the documents evidencing the formation
of Assignee, which have been delivered to City, are true and complete copies of the originals, as amended
to the date of this Agreement. Assignee has full right, power and lawful authority to undertake all
obligations as provided herein and the execution, performance and delivery of this Agreement by
Assignee has been fully authorized by all requisite actions on the part of Assignee.
(ii) Assignee’s execution, delivery and performance of its obligations under
this Agreement will not constitute a default or a breach under any contract, agreement or order to which
Assignee is a party or by which it is bound.
(iii) Assignee has not (i) made a general assignment for the benefit of
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition
by Assignee’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or
substantially all, of Assignee’s assets, (iv) suffered the attachment or other judicial seizure of all, or
substantially all, of Assignee’s assets, (v) admitted in writing its inability to pay its debts as they come
due, or (vi) made an offer of settlement, extension or composition to its creditors generally.
(iv) As of the Effective Date of this Agreement, Assignee holds a legal
and/or equitable interest in the Transfer Property.
(b) Assignor and Assignee hereby acknowledge and agree that City has not made,
and will not make, any representation or warranty that the assignment and assumption of the
Development Agreement provided for hereunder will have any particular tax implications for Assignor or
Assignee.
(c) Assignor and Assignee each hereby waives and releases and each hereby agrees
to indemnify and hold City harmless from any and all damages, liabilities, causes of action, claims or
potential claims against City (including attorneys’ fees and costs) arising out of or resulting from the
City’s consent to this Agreement.
8. Development Agreement in Full Force and Effect. Except as specifically provided herein,
all the terms, covenants, conditions and provisions of the Development Agreement are hereby ratified and
shall remain in full force and effect.
9. Recording. Assignor shall cause this Agreement to be recorded in the Official Records of
San Mateo County, California, and shall promptly provide conformed copies of the recorded Agreement
to Assignee and City.
10. Successors and Assigns. Subject to the restrictions on transfer set forth in the
Development Agreement, all of the terms, covenants, conditions and provisions of this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors
and assigns, pursuant to Section 14.08 of the Development Agreement.
4
11. Assignee Address for Notices. The address of Assignee for the purpose of notices,
demands and communications under Section 14.09 of the Development Agreement shall be:
Assignee: [TO ADD]
With a copy to: [TO ADD]
12. Applicable Law/Venue. This Agreement shall be construed and enforced in accordance
with the laws of the State of California, without reference to choice of law provisions. Any legal actions
under this Agreement shall be brought only in the Superior Court of the County of San Mateo, State of
California.
13. Interpretation. All parties have been represented by counsel in the preparation and
negotiation of this Agreement, and this Agreement shall be construed according to the fair meaning of its
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting
party shall not be employed in interpreting this Agreement. Unless the context clearly requires otherwise:
(a) the plural and singular numbers shall each be deemed to include the other; (b) the masculine,
feminine, and neuter genders shall each be deemed to include the others; (c) “shall,” “will,” or “agrees”
are mandatory, and “may” is permissive; (d) “or” is not exclusive; and (e) “includes” and “including” are
not limiting.
14. Headings. Section headings in this Agreement are for convenience only and are not
intended to be used in interpreting or construing the terms, covenants or conditions of this Agreement.
15. Severability. Except as otherwise provided herein, if any provision(s) of this Agreement
is (are) held invalid, the remainder of this Agreement shall not be affected, except as necessarily required
by the invalid provisions, and shall remain in full force and effect unless amended or modified by mutual
consent of the parties.
16. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to constitute an original, but all of which, when taken together, shall constitute one
and the same instrument, with the same effect as if all of the parties to this Agreement had executed the
same counterpart.
17. Effective Date. The “Effective Date” of this Agreement shall be the date upon which
Assignee delivers to City evidence of the transfer of the Property, which date shall be after all parties
have executed this Agreement. For the purposes of this Section, the evidence of transfer shall consist of a
duly recorded deed and title report.
[Signatures follow on separate page]
5
IN WITNESS WHEREOF, Assignor, Assignee, and City have entered into this
Agreement as of the date first above written.
ASSIGNOR
OYSTER POINT DEVELOPMENT, LLC, a
Delaware limited liability company
By: ____________________________________
Name: _________________________________
Its: ____________________________________
[Notary Acknowledgment Required]
ASSIGNEE
KR OYSTER POINT, LLC, a Delaware limited
liability company
By: ________________________________________
Name: _____________________________________
Its: _______________________________________
[Notary Acknowledgment Required]
CITY
CITY OF SOUTH SAN FRANCISCO,
a municipal corporation
By:_____________________________________
Name: _________________________________
City Manager
[Notary Acknowledgment Required]
ATTEST:
By: ____________________________________
City Clerk
APPROVED AS TO FORM:
By: ____________________________________
City Attorney
6
EXHIBIT NO. 1
Transfer Property Legal Description
[to be inserted at Closing]
Oys ter Point Development, LLC
395 Oyster Point Boulevard, Suite 550
South San Francisco, CA 94080
April 13, 2018
By Hand Delivery and Electronic Mail: [email protected]
Mike Futrell
Executive Director
South San Francisco Successor Agency
400 Grand Avenue
South San Francisco, CA 94080
Re: Oyster Point Disposition and Development Agreement – Request for Assignment
Dear Mr. Futrell:
As you know, the Successor Agency to the former South San Francisco Redevelopment
Agency (“Agency”) and Oyster Point Development, LLC, (“OPD”) are parties to the
Disposition and Development Agreement (“DDA”) dated March 23, 2011, as assigned to
OPD pursuant to a Consent, Assignment and Assumption Agreement dated August 18, 2016.
Article VIII of the DDA provides that OPD may transfer or assign its interests in the DDA,
subject to obtaining the prior written approval of the Agency, which shall not be
unreasonably withheld . Pursuant to Section 8.4 of the DDA, OPD hereby requests the
Agency’s written consent for the proposed assignment of OPD’s interests under the DDA to
KR Oyster Point, LLC, a Delaware limited liability company, or an affiliate (“Assignee”). A
summary of the transaction is enclosed as Exhibit A . OPD and Assignee propose that the
assignment would be effective as of approximately May 25, 2018.
Pursuant to Section 8.4 of the DDA, Assignee will provide information describing the
Assignee’s development experience and financial resources, under separate submittal.
A draft Consent, Assignment and Assumption Agreement, substantially in the form provided
in Exhibit 9.3 to the DDA, is enclosed as Exhibit B for the Agency’s review and approval.
Mike Futrell
April 13, 2018
Page Two
Oys ter Point Development, LLC
395 Oyster Point Boulevard, Suite 550
South San Francisco, CA 94080
Please do not hesitate to contact me or our counsel, Megan Jennings , if you have any
questions . We look forward to hearing from you and appreciate your assistance in obtaining
the Agency’s approval as soon as possible.
Sincerely,
Chao Wu
Chief Executive Officer
cc (email only): Marian Lee ([email protected])
Alex Greenwood ([email protected])
Steve Mattas ([email protected])
Clara Tang ([email protected])
Stephanie Rosenberg ([email protected])
Megan Jennings ([email protected])
Oys ter Point Development, LLC
395 Oyster Point Boulevard, Suite 550
South San Francisco, CA 94080
EXHIBIT A
SUMMARY OF TRANSACTION – FOR EXPLANATORY PURPOSES ONLY
On March 23, 2017, Oyster Point Development, LLC (“OPD”) and KR Oyster Point, LLC (“KR Oyster
Point”) executed an Agreement of Purchase and Sale (“Original PSA”) under which (i) OPD would sell
to KR Oyster Point all of OPD’s right, title, and interest in the land commonly known as Phase ID and
Phase IID of the Oyster Point development project, together with all rights, privileges, easements
and appurtenances relating to such land, and (ii) OPD granted to KR Oyster Point a Right of First
Offer with respect to the remainder of OPD’s interests in the Oyster Point development project,
commonly known as Phase II ID and Phase IVD. The Original PSA was structured to close in up to
three separate closings with interests to be assigned to, and assumed by, KR Oyster Point allocated
to the respective phase.
Subsequently, OPD and KR Oyster Point executed an Amended and Restated Agreement of Purchase
and Sale under which OPD would sell to KR Oyster Point all of OPD’s right, title, and interest in the
land commonly known as Phase ID, Phase IID, Phase IIID, and Phase IVD of the Oyster Point
development project in a single closing, together with all rights, privileges, easements and
appurtenances relating to such land. Without limitation, the interests to be assigned to, and
assumed by, KR Oyster Point upon closing include the following:
• All of OPD’s rights and obligations under the existing Development Agreement and
Disposition and Development Agreement for the Oyster Point development
project. Because OPD would retain no rights or obligations, no allocation of responsibilities
would be required between OPD and KR Oyster Point, as contemplated under the Original
PSA.
• All of OPD’s interests under existing contracts for construction of Phase IC, Phase ID, and a
portion of Phase IIC, which are anticipated to be assigned to and assumed by KR Oyster
Point upon closing. Such contracts include OPD’s contracts with Teichert C onstruction as
General Contractor, Langan Treadwell Rollo as construction administration, environmental
and geotechnical consultant, and Cumming Construction Management as project and
construction manager. OPD’s contractors will commence construction pursuant to the
applicable construction agreements prior to closing.
• All of OPD’s interests in the Escrow Holdback Agreement dated September 29, 2017, by and
among OPD, the Successor Agency to the South San Francisco Redevelopment Agency, and
Chicago Title Insurance Company (as amended November 27, 2017).
Closing is intended to occur on or about May 25, 2018.
Oys ter Point Development, LLC
395 Oyster Point Boulevard, Suite 550
South San Francisco, CA 94080
EXHIBIT B
DRAFT CONSENT, ASSIGNMENT AND ASSUMPTION AGREEMENT
1
FORM OF CONSENT, ASSIGNMENT AND ASSUMPTION OF DISPOSITION AND
DEVELOPMENT AGREEMENT
(DDA)
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attn: City Manager
APNS:_____________________________________
(Space Above This Line for Recorder’s Use Only)
Exempt from Recording Fee per Government
Code § 27383
CONSENT, ASSIGNMENT AND ASSUMPTION AGREEMENT
This CONSENT, ASSIGNMENT AND ASSUMPTION AGREEMENT (“Agreement”),
dated as of ________________________, 2018 (the “Effective Date”), by and between the
SUCCESSOR AGENCY TO THE FORMER SOUTH SAN FRANCISCO REDEVELOPMENT
AGENCY, a public body corporate and politic, OYSTER POINT DEVELOPMENT, LLC, a Delaware
limited liability company (“Assignor”) and _____________________________________ (“Assignee”).
The former Redevelopment Agency is referred to herein as “RDA” and the Successor Agency to the RDA
is referred to as “Agency”.
W I T N E S S E T H
A. Assignee desires to acquire certain property located in the City of South
San Francisco, County of San Mateo, State of California, as more particularly described on Exhibit A
attached hereto and made a part hereof (the “Property”).
B. The Property is subject to the terms and conditions of that certain Disposition and
Development Agreement (the “DDA”) dated March 23, 2011 by and among the RDA, OYSTER POINT
VENTURES, LLC, a Delaware limited liability company (“OPV”), and the City of South San Francisco,
a municipal corporation, a memorandum of which was recorded in the Official Records of San Mateo
County as Recorder’s Document No. 2011-034325.
C. Agency, OPV and Assignor entered into a Consent, Assignment and Assumption
Agreement dated August 18, 2016 (Recorder’s Document No. 2016-082623), under which OPV assigned,
and Assignor assumed, all of OPV’s rights and obligations under the DDA. Pursuant to the Consent,
Assignment and Assumption Agreement, Assignor is the “Developer” under the DDA.
D. Pursuant to the dissolution of Redevelopment Agencies by the State of
California, Agency has succeeded to the RDA’s rights, interests, obligations and liabilities under the
DDA and has incorporated specified obligations into Agency’s Recognized Obligation Payment Schedule
2
(“ROPS”) for the period of July 2018 through June 2019, and all prior ROPS, as approved by the
Oversight Board for the Agency.1
E. [TBD]2
F. Assignor desires to assign to Assignee all of its rights, interests, obligations and
liabilities under the DDA (the “Rights and Obligations”) and for Assignee to assume the Rights and
Obligations thereunder concurrently with execution of this Agreement, and Assignee desires to so acquire
the Rights and Obligations from Assignor and agrees to assume the Rights and Obligations, all as more
fully set forth herein.
G. The Agency desires to consent to (i) Assignor’s assignment of its Rights and
Obligations under the DDA and (ii) Assignee’s assumption of the Rights and Obligations of Assignor.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Agency, Assignor and Assignee hereby agree as follows:
1. Assignment by Assignor. From and after the Effective Date hereof, Assignor hereby
assigns, transfers and grants to Assignee, and its successors and assigns, all of Assignor’s Rights and
Obligations as the “Developer” under the DDA.
2. Acceptance and Assumption. From and after the Effective Date hereof, Assignee, for
itself and its successors, assigns and legal representatives, hereby expressly assumes all of Assignor’s
Rights and Obligations as Developer under the DDA.
3. Agency’s Consent. Agency hereby consents to (i) Assignor’s assignment of its Rights
and Obligations under the DDA and (ii) the assumption by the Assignee of the Rights and Obligations
and agrees to look solely to the Assignee and its successors and assigns for any and all obligations and
liabilities of the “Developer” under the DDA arising from and after the Effective Date.
4. Governing Law. This Agreement and the legal relations of the parties hereto shall be
governed by and construed and enforced in accordance with the laws of the State of California, without
regard to its principles of conflicts of law.
5. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which together shall constitute one and the same
instrument.
6. Further Assurances. Agency and Assignee agree to take all such further actions and
execute such further documents as may be necessary or desirable to carry out the purposes of the
Agreement.
[Signatures follow on separate page]
1 NTD: To be updated depending upon time of execution.
2 NTD: Recitals to be added to reflect current status of the Redevelopment Project under the DDA (i.e.,
completion of Phase IC and certain portions of Phase ID).
3
IN WITNESS WHEREOF, Agency, Assignor and Assignee have duly executed this
Agreement as of the day and year first above written.
ASSIGNOR:
OYSTER POINT DEVELOPMENT, LLC,
a Delaware limited liability company
By: ____________________________________
Name: _________________________________
Its:
ASSIGNEE:
KR OYSTER POINT, LLC,
a Delaware limited liability company
By: _____________________________________
Name: __________________________________
Its: ____________________________________
AGENCY:
SUCCESSOR AGENCY TO THE FORMER
SOUTH SAN FRANCISCO
REDEVELOPMENT AGENCY , a public
body, corporate and politic
By: ____________________________________
Name: _________________________________
Executive Director
ATTEST:
By: ____________________________________
APPROVED AS TO FORM:
By: ____________________________________
Agency Counsel
4
EXHIBIT A
Property
[to be inserted at Closing]
CITY OF SOUTH
SAN FRANCISCO
KILROY REALTY
NYSE - KRC
IPO - 1997
COMPANY HIGHLIGHTS
PLATFORM
Vertically-integrated platform:
acquisitions, development, property
management, leasing & finance
~70 YEARS
Operating in West
Coast Markets
INVESTMENT
GRADE RATED
BAA2 / BBB Ratings
95%
OCCUPANCY
SHAREHOLDERS
Total Shareholder Return
Since 2010: >100%
2KILROY REALTY
PREMIER WEST COAST
DEVELOPER & LANDLORD
~13.7 MM SF Stabilized
~1.9 MM SF Under Construction
~7.4 MM SF Near-term Development
~23 MM SF
CLASS-A PORTFOLIO
PACIFIC
NORTHWEST
~2.7MM SF
SAN FRANCISCO
BAY AREA
~11.6MM SF
GREATER
LOS ANGELES
~5.0MM SF
GREATER
SAN DIEGO
~3.7MM SF
Note: Square footages include 4Q17 supplemental data (stabilized, under
construction and development pipeline) + Flower Mart, Kilroy Oyster Point,
and Kilroy Little Italy.
3KILROY REALTY
PORTFOLIO
DIVERSITY BY
INDUSTRY
40%
TECH
12%
MEDIA
12%
F.I.R.E.
3%
EDU
3%
WHOLESALE &
RETAIL
9%
PROFESSIONAL
& BUSINESS
SERVICES
6%
OTHER
13%
LIFE SCIENCE &
HEALTHCARE
4KILROY REALTY
LIFE SCIENCES RETAIL RESIDENTIALOFFICE
5KILROY REALTY
STRENGTH IN
LEADERSHIP
Forward-thinking, agile and discerning with
deep knowledge of local markets, economies
and key regional tenants
6KILROY REALTY
58%
LEED
CERTIFIED
73 %
ENERGY
STAR
100%
GOLD /
PLATINUM
NAREIT
“Leader in the Light Award”,
Office Sector – 2014-2017
GRESB
North American Office Leader
– 2014-2017
Green Star – 2013-2017
ENERGY STAR
“Sustained Excellence” – 2016 - 2018
“Partner of the Year” – 2014-2018
Over half of our
entire portfolio is
LEED Certified
Most of our
portfolio is
Energy Star
Certified
All developments
are designed to
be LEED Gold or
Platinum
SUSTAINABILITY
Commitment to our Environment - #1 in North America
7KILROY REALTY
OUR TENANTS
ARE THE MOST
DYNAMIC
COMPANIES IN
THE WORLD.
8KILROY REALTY
KILROY
FINANCIAL
HIGHLIGHTS
9KILROY REALTY
INVESTMENT
GRADE RATED
Baa2/BBB with stable outlooks
from both Moodys and S&P
BEST IN CLASS BALANCE SHEET
FLEXIBLE, SIMPLE
BALANCE SHEET
Highly flexible and simple balance
sheet with low secured debt
VERY
LOW LEVERAGE
5.4x Debt to EBITDA
100%
Debt is fixed rate
(excluding bank debt)
$1.5BN
Credit facility that allows for
borrowings up to $1.5BN
~7 YEARS
Extended debt maturity
profile with average age of
7 years
As of December 31, 2017 10KILROY REALTY
LOWEST LEVERAGE AMONG PEERS
4.7x
HIW
21%
ESRT
6.2x
ARE
34%
DEI
5.4x
KRC
26%
ARE
7.0x
BDN
37%
BDN
5.6x
PDM
30%
BXP
8.8x
CLI
37%
VNO
10.4x
CXP
Note: Reflects latest annualized quarterly results available on SNL as of the date the analysis was created.
44%
PGRE
4.8x
ESRT
24%
KRC
6.6x
BXP
36%
SLG
5.5x
HPP
27%
HIW
7.5x
DEI
37%
OFC
9.1x
PGRE
39%
CXP
6.1x
OFC
30%
HPP
8.8x
VNO
38%
PDM
13.1x
SLG
54%
CLI
DEBT / EBITDA
DEBT / ENTERPRISE VALUE
11KILROY REALTY
KILROY
LIFE SCIENCES
~4.6 MM SF
Operating and Development Portfolio
12KILROY REALTY
LIFE SCIENCE TEAM
PREMIER EXPERTISE
TRACY
MURPHY
EVP, Life Sciences
15 years
STEVE
ROSETTA
EVP, Chief
Investment Officer
20+ years
ELIOTT
TRENCHER
SVP, Corporate
Strategy
10 years
JONAS VASS
SVP, Development
& Construction
10+ years
JEFF
BESEN
VP,
Investments
& Life Science
10 years
MARK
MILTIMORE
VP, Facilities &
Engineering
15 years
PETER
DOWLEY
Sr. Analyst,
Investments
7 Years
13KILROY REALTY
RECENTLY
COMPLETED
DEVELOPMENTS
14KILROY REALTY
SALESFORCE
SAN FRANCISCO, CA
INVESTMENT ~$280 MM
DELIVERY 2015
SIZE ~450,000 SF
LEED Platinum
15KILROY REALTY
INVESTMENT ~$295 MM
DELIVERY 2014
SIZE ~588,000 SF
LEED Gold
LINKEDIN / APPLE
SUNNYVALE, CA
16KILROY REALTY
INVESTMENT ~$105 MM
DELIVERY 2016
SIZE ~185,000 SF
LEED Platinum
DROPBOX AT
333 BRANNAN
SAN FRANCISCO, CA
17KILROY REALTY
INVESTMENT ~$190 MM
DELIVERY 2015
SIZE ~340,000 SF
LEED Gold
BOX AT
CROSSING 900
REDWOOD CITY, CA
18KILROY REALTY
INVESTMENT ~$465 MM
DELIVERY 2015-2016
SIZE ~725,000 SF (Gross)
Mixed-use
Development
LEED Gold
Historic Preservation
COLUMBIA SQUARE
HOLLYWOOD, CA
19KILROY REALTY
COLUMBIA SQUARE
PROPER RESIDENCES // 200+ UNITS OF LUXURY HOUSING
PROPER RESIDENCES
200+ units of luxury housing
first of its kind in Hollywood
COLUMBIA SQUARE
PROPER RESIDENCES //
200+ UNITS OF LUXURY HOUSING
20KILROY REALTY
DEVELOPMENT
PIPELINE
5.6 MM SF
21KILROY REALTY
333 DEXTER
SOUTH LAKE UNION, SEATTLE
22KILROY REALTY
333 DEXTER
SOUTH LAKE UNION, SEATTLE
INVESTMENT ~$400 MM
DELIVERY ~2019-2020
SIZE ~645,000 SF; full-city
block
-~630,000 SF of
office space
-~15,000 SF of
ground-floor retail
-833 parking stalls
LEED Gold Target
23KILROY REALTY
THE EXCHANGE
COMMITMENT TO DESIGN
BEFORE AFTER
24KILROY REALTY
THE EXCHANGE
MISSION BAY, SAN FRANCISCO
25KILROY REALTY
INVESTMENT ~$560 MM
DELIVERY ~2018
SIZE ~750,000 SF
LEED Platinum Target
THE EXCHANGE
MISSION BAY, SAN
FRANCISCO
26KILROY REALTY
SECTOR 1
SECTOR 2
SECTOR 3
SECTOR 4
SECTOR 4
SECTOR 3
SECTOR 2
SECTOR 1
EXHAUST
BOILERS
LAB EXHAUST AIR HEAT / HOT WATER WATER CONSERVATION CHILLED WATER BASE-BUILD HVAC
BUILDING SUPPLY & EXHAUST SHAFTS
LAB EXHAUST SHAFTS
STAIR SHAFTS
ELECTRICAL ROOMS / BUS DUCT RISERS
IT ROOMS
HOT & CHILLED WATER RISERS
ELECTRICAL SYSTEM
SHAFT DESIGN
LAB WASTE
INCOMING 12KV ELECTRICAL SERVICE
SECTOR 1
SECTOR 2
SECTOR 3
SECTOR 4
SECTOR 4
SECTOR 3
SECTOR 2
SECTOR 1
EXHAUST
BOILERS
LAB EXHAUST AIR HEAT / HOT WATER WATER CONSERVATION CHILLED WATER BASE-BUILD HVAC
BUILDING SUPPLY & EXHAUST SHAFTS
LAB EXHAUST SHAFTS
STAIR SHAFTS
ELECTRICAL ROOMS / BUS DUCT RISERS
IT ROOMS
HOT & CHILLED WATER RISERS
ELECTRICAL SYSTEM
SHAFT DESIGN
LAB WASTE
INCOMING 12KV ELECTRICAL SERVICE
SECTOR 1
SECTOR 2
SECTOR 3
SECTOR 4
SECTOR 4SECTOR 3SECTOR 2SECTOR 1
EXHAUST
BOILERS
LAB EXHAUST AIR HEAT / HOT WATER WATER CONSERVATION CHILLED WATER BASE-BUILD HVAC
BUILDING SUPPLY & EXHAUST SHAFTSLAB EXHAUST SHAFTSSTAIR SHAFTSELECTRICAL ROOMS / BUS DUCT RISERSIT ROOMSHOT & CHILLED WATER RISERS
ELECTRICAL SYSTEM
SHAFT DESIGN
LAB WASTE
INCOMING 12KV ELECTRICAL SERVICE
THE EXCHANGE
BUILDING SYSTEMS
27KILROY REALTY
100 HOOPER, PDR
SOMA, SAN FRANCISCO
28KILROY REALTY
100 HOOPER, PDR
SOMA, SAN FRANCISCO
INVESTMENT ~$270 MM
DELIVERY ~2018
SIZE ~320K SF of Office,
(100% leased to Adobe)
~80K SF of PDR
(production,
distribution and repair)
LEED Platinum Target
29KILROY REALTY
FLOWER MART
SOMA, SAN FRANCISCO
30KILROY REALTY
FLOWER MART
SOMA, SAN FRANCISCO
INVESTMENT ~$2 BN
DELIVERY ~2023
SIZE ~2.3 MM SF of office,
retail, and wholesale
flower market
LEED Platinum Target
31KILROY REALTY
KILROY OYSTER POINT
SOUTH SAN FRANCISCO, CA
32KILROY REALTY
KILROY OYSTER POINT
SOUTH SAN FRANCISCO, CA
33KILROY REALTY
INVESTMENT ~$2.5 BN
DELIVERY Multi-phased
Development
KILROY
OYSTER POINT
SOUTH SAN FRANCISCO,
CA
34KILROY REALTY
ACADEMY ON VINE
HOLLYWOOD, LOS ANGELES
35KILROY REALTY
ACADEMY ON VINE
HOLLYWOOD, LOS ANGELES
INVESTMENT ~$400 MM
DELIVERY ~2019-2020
SIZE ~600,000 SF
-~335,000 SF of office
-~13,000 SF of F&B and retail
-~16,500 SF flexible studio/
production
-Residential tower with
196 units
LEED Gold Target
36KILROY REALTY
ONE PASEO
DEL MAR HEIGHTS, SAN DIEGO
37KILROY REALTY
INVESTMENT ~$700 MM
DELIVERY ~2018-2020
SIZE ~1.1 MM SF over
~23.6 acres
LEED Neighborhood
Development
ONE PASEO
DEL MAR HEIGHTS,
SAN DIEGO
38KILROY REALTY
THE HEIGHTS
AT ONE PASEO
39KILROY REALTY
THE SHOPS
AT ONE PASEO
40KILROY REALTY
THE RESIDENCES
AT ONE PASEO
41KILROY REALTY
DEVELOPMENT
EXPERIENCE
Environmental Considerations
42KILROY REALTY
555 MATHILDA
SUNNYVALE, CA
SIZE ~663,000 SF
ENVIRONMENTAL
CONSIDERATIONS
Office development that included off-
haul of contaminated soil including
but not limited to existing plumes and
Shell Oil site clean-up. Vapor barrier
systems were required and installed
during development. Monitoring wells
were decommissioned and re-installed
during site development.
43KILROY REALTY
331 FAIRCHILD
MOUNTAIN VIEW, CA
SIZE ~87,000 SF
ENVIRONMENTAL
CONSIDERATION
Office development of a former
superfund site that included
hazardous soil handling and vapor
mitigation. Coordination with EPA for
continued on-site monitoring.
44KILROY REALTY
690 MIDDLEFIELD
MOUNTAIN VIEW, CA
SIZE ~340,000 SF
ENVIRONMENTAL
CONSIDERATION
Office development that included
off-haul of contaminated soils,
abandonment of monitoring wells.
45KILROY REALTY
CROSSING 900
REDWOOD CITY, CA
SIZE ~347,000 SF
ENVIRONMENTAL
CONSIDERATION
Office development that included the
handling and off-haul of contaminated
soils. Project included a holdback with
Redwood City for reimbursement of
environmental costs as part of the
purchase of the former City parcel.
46KILROY REALTY
THE EXCHANGE
SAN FRANCISCO, CA
SIZE ~750,000 SF
ENVIRONMENTAL
CONSIDERATION
Office / R&D development on landfill
that included the handling and off-
haul of contaminated soils and vapor
barrier systems.
47KILROY REALTY
100/150 HOOPER
SAN FRANCISCO, CA
SIZE
~320K SF of Office, (100%
leased to Adobe)
~80K SF of PDR (production,
distribution and repair)
ENVIRONMENTAL
CONSIDERATION
Included off-haul of contaminated soil.
48KILROY REALTY
ACADEMY ON VINE
HOLLYWOOD, CA
SIZE ~600,000 SF
ENVIRONMENTAL
CONSIDERATION
Removal of UST’s ACM, substantial
transite piping.
49KILROY REALTY
COLUMBIA SQUARE
HOLLYWOOD, CA
SIZE ~725,000 SF (Gross)
ENVIRONMENTAL
CONSIDERATION
Removal of UST’s, ACMs only.
50KILROY REALTY
333 BRANNAN
SAN FRANCISCO, CA
SIZE ~185,000 SF
ENVIRONMENTAL
CONSIDERATION
Development project with dirty soil
and/or vapor issues.
51KILROY REALTY
350 MISSION
SAN FRANCISCO, CA
SIZE ~450,000 SF
ENVIRONMENTAL
CONSIDERATION
ACM abatement. Treatment of
groundwater.
52KILROY REALTY
TERRA BELLA
MOUNTAIN VIEW, CA
SIZE ~114,000 SF
ENVIRONMENTAL
CONSIDERATION
Part of a superfund site. Ongoing
monitoring on the site, there is a
VMS and active remediation. We are
involved in bi-weekly calls with the
responsible party, environmental
consultants, and often the EPA on this
project to help ensure remediation is
on track.
53KILROY REALTY
SIERRA POINT
-Performed various studies and pre-development for Opus West of the former landfill located in Brisbane and
South San Francisco.
CHANNEL AT MISSION BAY SAN FRANCISCO
-315-unit apartment development on a former landfill that included the handling and off-haul of contaminated
soils and vapor barrier systems.
PARK TERRACE, SAN FRANCISCO
-105-unit condominium development on a former landfill that included the handling and off-haul of contaminated
soils and vapor barrier systems.
-Estimating and superintendent experiences working on many large-scale earthwork, grading, paving, and utility
projects.
PREVIOUS
EXPERIENCE
54KILROY REALTY
WHERE INNOVATION WORKS
KILROY REALTY
P:\181000s\181053_SSFOnCall\Corres\181053mm_Kilroy2.docx
M EMORANDUM
To: Ernesto Lucero, City of South San Francisco
From: Walter Kieser and Michael Nimon, EPS
Subject: Financial Assessment of Kilroy Realty; EPS #181053
Date: May 10, 2018
Economic & Planning Systems, Inc. (EPS) has been retained by the City
of South San Francisco to conduct initial due diligence associated with
financial capacity of the proposed Oyster Point biotech development
transferee. The Project is expected to consist of 2.25 million square feet
of biotech and life science uses with the first phase comprising 508,000
square feet (with associated cost estimated at around $300 million,
including $30 million of Successor Agency infrastructure improvements).
It is understood that KR Oyster Point Developer, LLC will be the prime
transferee and master developer for the Oyster Point project. KR Oyster
Point Developer, LLC1 is a wholly owned subsidiary of Kilroy Realty, L.P.,
a Delaware limited partnership with a general partner as Kilroy Realty
Corporation, a publicly traded real estate investment trust. Given a lack
of financial information available about Kilroy Realty, L.P.’s subsidiaries,
this review is focused on the general partner, Kilroy Realty Corporation.
This financial assessment addresses the business terms specified under
the Development and Disposition Agreement (DDA) dated
March 23, 2011 and Development Agreement (DA) dated
March 23, 2011, between Oyster Point Ventures, LLC and the City of
South San Francisco. The primary documents reviewed for this analysis
1 KR Oyster Point Developer, LLC is currently registered as KR Oyster Point,
LLC and is undergoing a name change. Furthermore, various LLCs are
envisioned for each phase of the Project as follows:
Phase ID – KR Oyster Point I, LLC
Phase IIDA– KR Oyster Point II, LLC
Phases IIDB, IISC, III & IV – KR Oyster Point III, LLC
Marina – Oyster Cove Marina Owner, LLC
Memorandum May 10, 2018
Financial Assessment of Kilroy Realty Page 2
P:\181000s\181053_SSFOnCall\Corres\181053mm_Kilroy2.docx
include Kilroy Realty Corporation’s 10-K reports dated December 31, 2017 and
December 31, 2016, media search, and review of the company’s project description and new
project pipeline provided by Kilroy Realty to the City of South San Francisco.
Description of the Proposed Transferee
The present analysis focuses on the financial capacity of Kilroy Realty Corporation. Kilroy Realty
Corporation is a general partner of Kilroy Realty, L.P. incorporated in 1996 and headquartered in
Los Angeles. It is a self-administered real estate investment trust active in investment,
development, and management of office and mixed-use projects along the West Coast. It
specializes in Class A properties in the coastal markets, including the San Francisco Bay Area and
targets tenants in healthcare, technology, media, life science, and professional services sectors.
Its tenants include Apple, LinkedIn, Salesforce, and DirecTV. Kilroy Realty Corporation is traded
at the New York Stock Exchange.
Requirements of the Disposition and Development
Agreement
Our assessment focuses upon specific clauses in the development agreement and disposition and
development agreement related to financial qualifications and documentation.
DDA Section 8.4 iii): Current audited financial statements of the proposed
transferee.
Based on the 2017 10-K report, Kilroy Realty Corporation’s net income was $154 million, down
about 50 percent from a year prior. Kilroy Realty Corporation’s assets are valued at $6.8 billion
with total market cap estimated at about $6.9 billion as of April 26, 2018.
DDA Section 8.5 i): Financial ability of the proposed transferee to own and
develop the Conveyed Property, or portion thereof.
Based on Kilroy Realty Corporation’s financial position and valuation, financial ability to finance
development of the Oyster Point project is deemed high. Specifically, the estimated Phase 1 cost
of $300 million would comprise less than 5 percent of Kilroy Realty Corporation’s reported
assets, assuming no debt funding.
DDA Section 8.5 ii) (4): Net worth sufficiently sound and strong to undertake and
complete the obligations to be performed by Developer
pursuant to the terms of this Agreement.
Kilroy Realty Corporation’s net worth (or equity) is estimated at $4.0 billion based on the 2017
balance sheet. The estimated Phase 1 cost of $300 million would comprise less than 8 percent of
Kilroy Realty Corporation’s equity. Although no rule of thumb exists about the relationship
between equity and the project cost, EPS believes the firm’s value is sufficient to undertake and
complete the Developer obligations under the terms of the Oyster Point agreement. However,
this sufficiency is predicated on the extent of equity potentially available and committed to Kilroy
Realty Corporation’s subsidiaries, as appropriate.
Memorandum May 10, 2018
Financial Assessment of Kilroy Realty Page 3
P:\181000s\181053_SSFOnCall\Corres\181053mm_Kilroy2.docx
DA Section 11.2 b): Transferee’s development experience and financial
resources.
Kilroy Realty Corporation is focused on development, acquisition, management, and financing of
Class A properties in strong markets along the West Coast of the United States. Kilroy Realty
Corporation’s development pipeline consists of 5.6 million square feet of projects, including
Oyster Point. It had 1.8 million square feet of office under construction as of December 31,
2017. The firm’s experience includes development of 450,000 square feet for Salesforce in San
Francisco and 588,000 square feet for Apple and LinkedIn in Sunnyvale. These deals required
respective investments of $280 million and $295 million. Both of these deals are on par with the
cost estimate for Phase 1 of the Oyster Point project, suggesting demonstrated financial
resources for undertaking the Oyster Point project.
Kilroy Realty Corporation reports an investment-grade credit rating with capacity to borrow up to
$1.5 billion. It also reports a relatively low leverage ratio of 5.4x as compared to industry
competitors.
Summary
Kilroy Realty Corporation is a strongly valued firm with substantial financial resources and net
worth that would not likely add any significant additional risk to the Successor Agency and/or
City from the transfer of the Oyster Point property associated with financial solvency of the
Transferee. Kilroy Realty Corporation sees the Oyster Point as part of its investment strategy
into Class A life science portfolio in the Bay Area. Future details about the partnership structure
of the development team, participation and involvement of other partnering entities, and
identification of deal-specific points related to equity commitment guarantees and assurances for
scenarios where development does not proceed as planned will be important factors for
controlling the Success Agency’s and/or City’s risk exposure to the Project. The extent of equity
potentially available and committed to KR Oyster Point Developer, LLC by Kilroy Realty
Corporation will also be important. This information is not available and has not been provided
to EPS as part of this deliverable.
1
APNS: (Space Above This Line for Recorder’s Use Only)
Exempt from Recording Fee per Government
Code § 27383
CONSENT, ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT AGREEMENT
THIS CONSENT, ASSIGNMENT AND ASSUMPTION OF DEVELOPMENT
AGREEMENT (“Agreement”) is entered into as of , 2018, by and among OYSTER POINT
DEVELOPMENT, LLC, a Delaware limited liability company (“Assignor”), KR OYSTER POINT
DEVELOPER, LLC, a Delaware limited liability company, formerly known as KR Oyster Point, LLC
(“Assignee”), and the CITY OF SOUTH SAN FRANCISCO, a municipal corporation (“City”).
R E C I TA L S
A. City and OYSTER POINT VENTURES, LLC, a Delaware limited liability
company (“OPV”), entered into a Development Agreement effective March 23, 2011 (Recorder’s
Document No. 2011-034324) (“Development Agreement”), to facilitate the redevelopment of that
certain real property owned and to be acquired by OPV as Developer thereunder consisting of
approximately 46 acres within the City of South San Francisco, County of San Mateo, State of California,
which is legally described in Exhibit A to the Development Agreement and shown on the map attached to
the Development Agreement as Exhibit B (“Property”). Capitalized terms used but not otherwise
defined herein shall have the meaning ascribed to such terms in the Development Agreement.
B. City, OPV and Assignor entered into an Assignment and Assumption
Agreement dated August 18, 2016 (Recorder’s Document No. 2016-082622), under which OPV
assigned, and Assignor assumed, all of OPV’s rights and obligations under the Development Agreement.
C. Assignor has a legal and/or equitable interest in the Property. City has been
informed by Assignor and Assignee that Assignor and Assignee have entered into an Amended and
Restated Agreement of Purchase and Sale and Joint Escrow Instructions (“PSA”) as of March 30,
2018 and that pursuant to the PSA, Assignor desires to transfer its legal and/or equitable interest in the
Property. Assignee is under the ownership and control of Kilroy Realty, L.P., a Delaware limited
partnership (“KRLP”) whose general partner is Kilroy Realty Corporation, a Real Estate Investment
Trust listed on the NYSE.
D. Section 11.02 of the Development Agreement provides that Assignor may assign
all or any portion of the Project and its rights and obligations under the Development Agreement, Project
Approvals, and Subsequent Approvals to another party, provided that the Assignor and Assignee shall
have entered into a Transfer Agreement with the City's prior written consent, which Transfer
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of South San
Francisco 400 Grand
Avenue
South San Francisco, CA
94080 Attn: City Clerk
2
Agreement shall include an agreement (“Assignment Agreement”) substantially in the form of Exhibit F
to the Development Agreement pursuant to which Assignor may be released from obligations under the
Development Agreement provided that Assignee expressly assumes such rights and obligations.
E. Assignor has provided the required written notice to City of its intent to enter into
an Assignment Agreement as required by Section 11.02 of the Development Agreement, and Assignee
has submitted to the City information describing Assignee’s development experience and financial
resources.
F. This Agreement serves as both the Transfer Agreement and the Assignment
Agreement with respect to the Property. The City's signature on this Agreement shall constitute prior
written consent to the Transfer Agreement under section 11.02 of the Development Agreement.
G. Assignor desires to assign to Assignee all rights and obligations of Assignor
under the Development Agreement and Assignee desires to assume all such rights and obligations of
Assignor thereunder. Upon execution of this Agreement and transfer to Assignee of legal title to the
Property, Assignor desires to be released from any and all such rights and obligations, except as set forth
in Section 8 herein below.
A G R E E M E N T
NOW, THEREFORE, Assignor, Assignee, and City hereby agree as follows:
1. Incorporation. The foregoing recitals are true and correct and are incorporated herein by
this reference.
2. Assignment by Assignor. From and after the Effective Date hereof, Assignor hereby
assigns, transfers and grants to Assignee, and its successors and assigns, all of Assignor’s rights, interests,
obligations, duties, responsibilities, conditions and restrictions of Assignor as the “Developer” under the
Development Agreement (collectively, the “Rights and Obligations”).
3. Acceptance and Assumption. From and after the Effective Date hereof, Assignee, for
itself and its successors, assigns and legal representatives, hereby accepts such assignment and expressly
assumes all of the Rights and Obligations.
4. Release of Assignor. Assignee and City hereby fully release Assignor from the Rights
and Obligations. Both Assignor and Assignee acknowledge that this Assignment is intended to fully
assign all of the Rights and Obligations to Assignee, and it is expressly understood that Assignor shall not
retain any Rights and Obligations whatsoever.
5. Substitution of Assignor. Assignee hereafter shall be substituted for and replace Assignor
in the Development Agreement. Whenever the term “Oyster Point Ventures, LLC” or “Developer”
appears in the Development Agreement, it shall hereafter mean Assignee. Except as set forth in Sections 7
and 8 herein below, nothing in this Agreement shall increase, decrease, or otherwise modify any of the
rights or obligations of the “Developer” or the “City” under the Development Agreement.
6. City Consent. City is executing this Agreement for the limited purpose of consenting, in
accordance with Section 11.02(b) of the Development Agreement, to the assignment and assumption of
the Rights and Obligations and clarifying that there is privity of contract between City on the one hand,
and Assignee on the other, with respect to the Development Agreement.
3
7. Transfer to Affiliate. In the event of a subsequent assignment or transfer to an affiliated
party pursuant to Section 11.02(a) of the Development Agreement, the transferor Developer shall remain
responsible for the performance of the transferred obligations under the Development Agreement and, in
connection with any such subsequent affiliated assignment or transfer, the transferor Developer and any
affiliated party shall have sufficient funding to perform the transferred obligations and shall provide to
City financial statements or documentation, acceptable to the City Manager which approval shall not be
unreasonably withheld, that demonstrate that the affiliated entity or entities have sufficient funds
available to perform the transferred obligations.
8. Community Facilities District. Developer (which for purposes of this Section 8 shall
include Assignor and Assignee) shall not intervene in any litigation brought in connection with the
formation of South San Francisco Community Facilities District (“CFD”) No. 2017-01 (Public Services
and Facilities) (“CFD 2017-01”), and shall continue to support the formation of CFD 2017-01, at no
expense to the Developer. In the event that CFD 2017-01 is invalidated by court order, Developer shall
consent to and vote in favor of formation of a new CFD to provide the same services and facilities
provided for in CFD 2017-01 as long as the financial obligation of the Developer in any such new CFD
does not exceed the Component A Maximum Special Tax and Component B Maximum Special Tax as
such terms are defined in the Rate and Method of Apportionment for CFD 2017-01 adopted by the City
Council as Resolution No. 17-1124.
9. Representations and Warranties, Indemnifications and Waivers.
(a) Assignee represents and warrants to City as follows:
(i) Assignee is a limited liability company duly formed within and in good
standing under the laws of the State of Delaware. The copies of the documents evidencing the formation
of Assignee, which have been delivered to City, are true and complete copies of the originals, as amended
to the date of this Agreement. Assignee has full right, power and lawful authority to undertake all
obligations as provided herein and the execution, performance and delivery of this Agreement by
Assignee has been fully authorized by all requisite actions on the part of Assignee.
(ii) Assignee’s execution, delivery and performance of its obligations under
this Agreement will not constitute a default or a breach under any contract, agreement or order to which
Assignee is a party or by which it is bound.
(iii) Assignee has not (i) made a general assignment for the benefit of
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition
by Assignee’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or
substantially all, of Assignee’s assets, (iv) suffered the attachment or other judicial seizure of all, or
substantially all, of Assignee’s assets, (v) admitted in writing its inability to pay its debts as they come
due, or (vi) made an offer of settlement, extension or composition to its creditors generally.
(iv) As of the Effective Date of this Agreement, Assignee holds a legal
and/or equitable interest in the Transfer Property.
(b) Assignor and Assignee hereby acknowledge and agree that City has not made,
and will not make, any representation or warranty that the assignment and assumption of the
Development Agreement provided for hereunder will have any particular tax implications for Assignor or
Assignee.
(c) Assignor and Assignee each hereby waives and releases and each hereby agrees
to indemnify and hold City harmless from any and all damages, liabilities, causes of action, claims or
4
potential claims against City (including attorneys’ fees and costs) arising out of or resulting from the
City’s consent to this Agreement.
10. Development Agreement in Full Force and Effect. Except as specifically provided herein,
all the terms, covenants, conditions and provisions of the Development Agreement are hereby ratified and
shall remain in full force and effect.
11. Recording. Assignor shall cause this Agreement to be recorded in the Official Records of
San Mateo County, California, and shall promptly provide conformed copies of the recorded Agreement
to Assignee and City.
12. Successors and Assigns. Subject to the restrictions on transfer set forth in the
Development Agreement, all of the terms, covenants, conditions and provisions of this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors
and assigns, pursuant to Section 14.08 of the Development Agreement.
13. Assignee Address for Notices. The address of Assignee for the purpose of notices,
demands and communications under Section 14.09 of the Development Agreement shall be:
Assignee: KR Oyster Point Developer, LLC
c/o Kilroy Realty Corporation
12770 El Camino Real, Suite 250
Attn: Tracy Murphy
San Diego, CA 92130
Phone: 858.523.0300
With copies to:
KR Oyster Point Developer, LLC
c/o Kilroy Realty Corporation
12200 W. Olympic Blvd., Suite 200
Los Angeles, CA 90064
Attn: Legal Department
Phone: 310.480.8400
With a copy to: Allen Matkins Leck Gamble Mallory & Natsis LLP
1901 Avenue of the Stars, Suite 1880
Los Angeles, CA 90067-6019
Attn: Anton N. Natsis, Esq.
Phone: 310.788.2400
14. Applicable Law/Venue. This Agreement shall be construed and enforced in accordance
with the laws of the State of California, without reference to choice of law provisions. Any legal actions
under this Agreement shall be brought only in the Superior Court of the County of San Mateo, State of
California.
15. Interpretation. All parties have been represented by counsel in the preparation and
negotiation of this Agreement, and this Agreement shall be construed according to the fair meaning of its
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting
5
party shall not be employed in interpreting this Agreement. Unless the context clearly requires otherwise:
(a) the plural and singular numbers shall each be deemed to include the other; (b) the masculine,
feminine, and neuter genders shall each be deemed to include the others; (c) “shall,” “will,” or “agrees”
are mandatory, and “may” is permissive; (d) “or” is not exclusive; and (e) “includes” and “including” are
not limiting.
16. Headings. Section headings in this Agreement are for convenience only and are not
intended to be used in interpreting or construing the terms, covenants or conditions of this Agreement.
17. Severability. Except as otherwise provided herein, if any provision(s) of this Agreement
is (are) held invalid, the remainder of this Agreement shall not be affected, except as necessarily required
by the invalid provisions, and shall remain in full force and effect unless amended or modified by mutual
consent of the parties.
18. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to constitute an original, but all of which, when taken together, shall constitute one
and the same instrument, with the same effect as if all of the parties to this Agreement had executed the
same counterpart.
19. Effective Date. The “Effective Date” of this Agreement shall be the date upon which
Assignee delivers to City evidence of the transfer of the Property, which date shall be after all parties
have executed this Agreement. For the purposes of this Section, the evidence of transfer shall consist of a
duly recorded deed and title report.
[Signatures follow on separate page]
6
IN WITNESS WHEREOF, Assignor, Assignee, and City have entered into this
Agreement as of the date first above written.
ASSIGNOR ASSIGNEE
OYSTER POINT DEVELOPMENT, LLC, a
Delaware limited liability company
By:
Name:
Its:
KR OYSTER POINT DEVELOPER, LLC, a
Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership,
its sole member
By: Kilroy Realty Corporation,
a Maryland corporation,
its General Partner
By:___________________________
Name: ________________________
Title:__________________________
By:___________________________
Name: ________________________
Title:__________________________
[Notary Acknowledgment Required] [Notary Acknowledgment Required]
7
CITY
CITY OF SOUTH SAN FRANCISCO,
a municipal corporation
By:_
Name:
City Manager
[Notary Acknowledgment Required]
ATTEST:
By:
City Clerk
APPROVED AS TO FORM:
By:
City Attorney
8
EXHIBIT NO. 1
Transfer Property Legal Description
[to be inserted at Closing]
2963795.1
1
APNS: (Space Above This Line for Recorder’s Use
Only)
Exempt from Recording Fee per
Government Code § 27383
CONSENT, ASSIGNMENT AND ASSUMPTION AGREEMENT
(Oyster Point Disposition and Development Agreement)
This CONSENT, ASSIGNMENT AND ASSUMPTION AGREEMENT (“Agreement”), dated as
of , 2018 (the “Effective Date”), by and between the SUCCESSOR AGENCY TO THE FORMER
SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY, a public body corporate and politic,
OYSTER POINT DEVELOPMENT, LLC, a Delaware limited liability company (“Assignor”), and KR
OYSTER POINT DEVELOPER, LLC, a Delaware limited liability company, formerly known as KR
Oyster Point, LLC (“Assignee”). The former Redevelopment Agency is referred to herein as “RDA” and
the Successor Agency to the RDA is referred to as “Agency”.
W I T N E S S E T H
A. Assignee desires to acquire certain property located in the City of South San Francisco,
County of San Mateo, State of California, as more particularly described on Exhibit A attached hereto and
made a part hereof (the “Property”).
B. The Property is subject to the terms and conditions of that certain Disposition and
Development Agreement (the “DDA”) dated March 23, 2011 by and among the RDA, OYSTER POINT
VENTURES, LLC, a Delaware limited liability company (“OPV”), and the City of South San Francisco,
a municipal corporation, (“City”) a memorandum of which was recorded in the Official Records of San
Mateo County as Recorder’s Document No. 2011-034325.
C. Agency, OPV and Assignor entered into a Consent, Assignment and Assumption
Agreement dated August 18, 2016 (Recorder’s Document No. 2016-082623), under which OPV assigned,
and Assignor assumed, all of OPV’s rights and obligations under the DDA. Pursuant to the Consent,
Assignment and Assumption Agreement, Assignor is the “Developer” under the DDA.
D. Pursuant to the dissolution of redevelopment agencies by the State of California, Agency
has succeeded to the RDA’s rights, interests, obligations and liabilities under the DDA and has
incorporated specified obligations into Agency’s Recognized Obligation Payment Schedule (“ROPS”) for
the period of July 2018 through June 2019, and all prior ROPS, as approved by the Oversight Board for
the Agency.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attn: City Clerk
2
E. City and Assignor entered into an Agreement for Development Management Services
(“Development Services Agreement”) dated February 1, 2017, pursuant to which OPD agreed to provide
City and Agency with certain development management services for the design, engineering, permitting,
construction and completion of the Phase IC Improvements and the Phase IIC Cap Repair, as therein
defined.
F. Assignor desires to assign to Assignee all of its rights, interests, obligations and
liabilities under the DDA, including the Development Services Agreement (the “Rights and
Obligations”), and for Assignee to assume the Rights and Obligations thereunder concurrently with
execution of this Agreement, and Assignee desires to so acquire the Rights and Obligations from
Assignor and agrees to assume the Rights and Obligations, all as more fully set forth herein. Assignee
is under the ownership and control of Kilroy Realty, L.P., a Delaware limited partnership (“KRLP”)
whose general partner is Kilroy Realty Corporation, a Real Estate Investment Trust listed on the NYSE.
G. The Agency desires to consent to (i) Assignor’s assignment of its Rights and
Obligations under the DDA and (ii) Assignee’s assumption of the Rights and Obligations of Assignor.
A G R E E M E N T
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Agency, Assignor and Assignee hereby agree as follows:
1. Assignment by Assignor. From and after the Effective Date hereof, Assignor hereby
assigns, transfers and grants to Assignee, and its successors and assigns, all of Assignor’s Rights and
Obligations as the “Developer” under the DDA.
2. Acceptance and Assumption. From and after the Effective Date hereof, Assignee,
for itself and its successors, assigns and legal representatives, hereby expressly assumes all of
Assignor’s Rights and Obligations as Developer under the DDA.
3. Agency’s Consent. Agency hereby consents to (i) Assignor’s assignment of its
Rights and Obligations under t he DDA and (ii) the assumption by the Assignee of the Rights and
Obligations and agrees to look solely to the Assignee and its successors and assigns for any and all
obligations and liabilities of the “Developer” under the DDA arising from and after the Effective Date.
4. No Modification of Responsibilities. Nothing in this Agreement shall increase,
decrease, or otherwise modify any of the rights or obligations of the “Developer”, the “Agency”, or the
“City” under the DDA.
5. Transfer to Affiliate. In the event of a subsequent assignment or transfer to an entity or
entities of controlling Developer, controlled by Developer, or under common control by Developer
pursuant to Section 8.2.1 of the DDA, the transferor Developer shall remain responsible for the
performance of the transferred obligations under the DDA and, in connection with any such subsequent
affiliated assignment or transfer, the transferor Developer and any affiliated party shall have sufficient
funding to perform the transferred obligations and shall provide to Agency financial statements or
documentation, acceptable to the Agency’s Executive Director which approval shall not be unreasonably
withheld, that demonstrate that the affiliated entity or entities have sufficient funds available to perform
the transferred obligations.
3
6. Governing Law. This Agreement and the legal relations of the parties hereto shall
be governed by and construed and enforced in accordance with the laws of the State of California,
without regard to its principles of conflicts of law.
7. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which together shall constitute one and the same
instrument.
8. Further Assurances. Agency and Assignee agree to take all such further actions
and execute such further documents as may be necessary or desirable to carry out the purposes of
the Agreement.
[Signatures follow on separate page]
4
IN WITNESS WHEREOF, Agency, Assignor and Assignee have duly executed this
Agreement as of the day and year first above written.
ASSIGNOR:
OYSTER POINT DEVELOPMENT,
LLC,
a Delaware limited liability company
By: Name: Its:
ASSIGNEE:
KR OYSTER POINT DEVELOPER, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership,
its sole member
By: Kilroy Realty Corporation,
a Maryland corporation,
its General Partner
By:__________________________
Name: _______________________
Title:________________________
By:__________________________
Name: _______________________
Title:_________________________
AGENCY:
SUCCESSOR AGENCY TO THE
FORMER SOUTH SAN FRANCISCO
REDEVELOPMENT AGENCY,
a public body, corporate and politic
By:
Name: Executive Director
ATTEST:
By:
APPROVED AS TO FORM:
By:
Agency Counsel
5
EXHIBIT A
Property
[to be inserted at Closing]
2963794.1
City Council / Successor Agency
May 23, 2018
1
2
March 2011 DA/DDA Approved
June 2016 DA/DDA Assigned from
Original Developer to OPD, LLC
Fall 2017 Land transferred & start of
Phase 1 construction
April 2018 OPD requests to assign DA/DDA
to KR Oyster Point Developer, LLC
3
City has 45 days to respond
City has the right to review and approve:
1)Developer Experience
2)Financial & Development Capacity
4
5
Independent analysis by Economic & Planning Systems
$6.8 billion assets
Sufficient assets to fund Phase 1 construction ($300 million)
Planning to fund with 100% equity
Low leverage ratio & capacity to borrow $1.5 billion (if needed)
Need to financially link LLC with the parent company (Kilroy Realty)
6
Staff recommends the Council/Agency approve
by motion:
Assignment and assumption of all rights &
obligations of the Oyster Point DA and DDA
from Oyster Point Development, LLC to KR
Oyster Point Developer, LLC
7
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:18-356 Agenda Date:5/30/2018
Version:1 Item #:3.
Conference with Real Property Negotiators
(Pursuant to Government Code Section 54956.8)
Property: 200 Linden Avenue, 212 and 216 Baden Avenue
Agency Negotiators: Alex Greenwood and Julie Barnard
Negotiating Parties:City of South San Francisco,South San Francisco Successor Agency and Hisense REUS,
LLC
Under Negotiation: Price and Terms
City of South San Francisco Printed on 5/24/2018Page 1 of 1
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