A number of US REITs are turning to development because they can achieve better returns than by acquiring existing properties at aggressive price levels.

• Kilroy Realty completed the redevelopment of two projects in Southern California in 2012. Two additional projects totalling 50,000 sqm, which were 70% pre-leased, were close to completion at year end. The company is increasing its presence in the San Francisco Bay Area and has another four buildings totalling 1.4 million square feet under construction.

• Boston Properties is developing eight office projects in New York, DC, San Francisco, and Boston totalling 250,000sqm. The buildings were 66% leased at year-end 2012. The Company, along with Hines Interests, recently broke ground on the 130 000sqm San Francisco Transbay Terminal Tower, which is scheduled for completion in 2017.

REITs have expanded through acquisitions by taking advantage of the current low borrowing rates.

In 2012, Boston Properties acquired four properties totalling 240 000sqm that were 93% leased, while S.L. Green acquired a fee interest in four properties totalling 81,000 sqm that were more than 90% leased.

Kilroy acquired 14 buildings totalling 163 000sqm in 2012 and two additional buildings totalling 30,000 sqm located in Seattle in January 2013.

Office REITs have been sturdy so far this year. The largest REITs have experienced limited improvement in occupancy and rent growth.

Like all REITs, across the board, US Office REITs are continuing to leverage off balance sheets, taking advantage of low interest rates, to grow their portfolios through acquisitions and to some degree, new development.