Tuesday, September 3, 2002
Kilroy Realty in Litigation With Former Tenant
By a MetNews Staff Writer
EToys Inc., now operating as EBC I Inc., is suing former landlord Kilroy Realty Corp. in its bid to reacquire proceeds from two letters of credit.
Kilroy, in a statement Friday, said EToys’ lenders delivered $15 million in letters of credit to secure obligations under a lease and to repay some tenant improvement and leasing costs.
EToys, which operated corporate headquarters on Olympic Boulevard in West Los Angeles, defaulted on its lease in January 2001, Kilroy said.
EToys filed for Chapter 11 in March 2001, ceasing operations and dismissing all employees except for those winding down operations.
While in Chapter 11, the company completed transactions, including the sale of EToys name, logo and trademarks to KB Holdings LLC.
Kilroy, a Los Angeles-based real estate investment trust, said it plans to defend itself against the claim, which it describes as without merit.
Last week, Kilroy lost its bid to stop a proposed 46-acre development of up to 2 million square feet of office space and 500,000 square feet of retail and industrial space on Sepulveda Boulevard in El Segundo.
The proposed project is slated to be developed on parcels now owned by Federal Express Corp. at the former Rockwell aerospace site on Sepulveda Boulevard.
Los Angeles Superior Court Judge David Yaffe ruled in favor of Los Angeles-based Thomas Properties Group in a long-running legal and political battle
Kilroy, which owns a corporate campus nearby, filed suit to block the project under the California Environmental Quality Act. The REIT challenged the environmental impact report for the Thomas project and claimed El Segundo officials violated environmental law when they approved the report.
Kilroy’s challenge was running concurrently earlier this year with a city-wide referendum in El Segundo. Thomas lobbied for voters to approve its project while Kilroy lobbed for voters to reject it. Both spent hundreds of thousands on their campaigns.
El Segundo voters approved the development by a 2-1 margin in June.
Yaffe also ordered Kilroy to pay the court costs incurred by Thomas Properties, the city of El Segundo and the site’s owner, Federal Express.
Copyright 2002, Metropolitan News Company