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LOS ANGELES, CA-Former tenant eToys has filed a lawsuit against Kilroy Realty Corp. asking the Los Angeles-based real estate investment trust to return of the proceeds from two letters of credit that Kilroy collected on when eToys defaulted on its rent at a Kilroy-owned building before going bankrupt.

Kilroy was one of a number of Southern California landlords that required eToys and other dot-com companies to post letters of credit rather than cash as security on the theory that letters of credit would not be tied up in court as cash accounts would if dot.com companies went bankrupt.

EToys formerly occupied nearly all of a 151,000-sf office building at Kilroy’s Westside Media Center in West Los Angeles. The REIT collected approximately $15 million on the eToys letters of credit for rent and as reimbursement for tenant improvement costs. Kilroy, which says the eToys suit is “without merit,” says eToys defaulted on its lease and other obligations in January of 2001. The online toy retailer filed for bankruptcy in March of 2001.

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