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Kilroy Realty (KRC)
:KRC

Kilroy Realty (KRC) AI Stock Analysis

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Kilroy Realty

(NYSE:KRC)

Rating:72Outperform
Price Target:
$37.00
▲(5.47%Upside)
Kilroy Realty scores a 72, driven by solid financial performance with strong profit margins and prudent debt management. Attractive valuation metrics and positive technical indicators further support the stock's appeal. However, challenges such as declining occupancy rates and macroeconomic uncertainties from the earnings call temper the outlook.
Positive Factors
Financial Performance
Q4 FFO beat expectations, indicating strong financial performance for the quarter.
Leasing Activity
Leasing activity was the strongest in five and a half years.
Valuation
The -15% YTD sell-off in KRC shares presents the opportunity to gain exposure to a high quality portfolio at a low valuation.
Negative Factors
Earnings Outlook
Forecast for core FFO year-over-year growth is negative for 2025 and 2026, with estimates below consensus, indicating potential challenges for KRC.
Occupancy Challenges
Occupancy continued to erode, active developments remain unleased, and 2025 guidance suggests tenant retention could fall short of the 30% level achieved in 2024.
Supply and Demand
There is a persistently elevated amount of available office space, including sublease space, in Kilroy's key markets.

Kilroy Realty (KRC) vs. SPDR S&P 500 ETF (SPY)

Kilroy Realty Business Overview & Revenue Model

Company DescriptionKilroy Realty Corporation (NYSE: KRC, the company, KRC) is a leading West Coast landlord and developer, with a major presence in San Diego, Greater Los Angeles, the San Francisco Bay Area, and the Pacific Northwest. The company has earned global recognition for sustainability, building operations, innovation and design. As pioneers and innovators in the creation of a more sustainable real estate industry, the company's approach to modern business environments helps drive creativity, productivity and employee retention for some of the world's leading technology, entertainment, life science and business services companies. KRC is a publicly traded real estate investment trust (REIT) and member of the S&P MidCap 400 Index with more than seven decades of experience developing, acquiring and managing office and mixed-use projects. As of September 30, 2020, KRC's stabilized portfolio totaled approximately 14.3 million square feet of primarily office and life science space that was 92.2% occupied and 95.5% leased. The company also had 808 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 85.0% and 37.5%, respectively. In addition, KRC had seven in-process development projects with an estimated total investment of $1.9 billion, totaling approximately 2.3 million square feet of office and life science space. The office and life science space was 90% leased.
How the Company Makes MoneyKilroy Realty generates revenue primarily through its property portfolio, which includes leasing office and mixed-use spaces to a diverse range of tenants. The company's income is primarily derived from rental revenues collected under long-term lease agreements with tenants. Additionally, Kilroy Realty engages in the development and redevelopment of properties, which can contribute to revenue growth through property sales or increased rental income from enhanced or newly developed spaces. The company's strategic focus on sustainable and innovative property solutions also helps attract high-profile tenants, thus contributing to stable and potentially increasing cash flows.

Kilroy Realty Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q1-2025)
|
% Change Since: 10.04%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook. On the positive side, strong leasing activity in San Francisco, driven by the burgeoning AI industry, and a significant land sale agreement were highlighted. However, challenges include declining occupancy, negative re-leasing spreads, and macroeconomic uncertainty affecting future leasing activity. The sentiment remains cautious given the regulatory challenges in the life sciences sector.
Q1-2025 Updates
Positive Updates
Strong Leasing Activity and Pipeline in San Francisco
A nearly 60,000 square foot lease with a technology company in San Francisco, representing the largest lease execution in the city since 2019. A 60% year-over-year increase in tour activity in the San Francisco portfolio was reported, indicating strong visibility on the future pipeline.
AI Industry Growth Driving Demand
The burgeoning AI industry is significantly contributing to office demand, with a 34,000 square foot expansion for a data analytics and AI tenant in Seattle.
Positive Developments in San Francisco
San Francisco's crime rate is now the lowest in 23 years, contributing to growing foot traffic and the re-amenitization of major office corridors.
Successful Sustainability Initiatives
The company published its annual sustainability report with new goals to be achieved by 2030, maintaining leadership in corporate responsibility.
Significant Land Sale Agreement
An agreement to sell a portion of the Santa Fe Summit site in San Diego for $38 million, with projected gross proceeds from future land sales expected to exceed $150 million.
Negative Updates
Occupancy Decline
Occupancy ended the quarter at 81.4%, down from 82.8% at the end of the previous year, driven by known move-outs including a significant 81,000 square foot move-out in the second quarter.
Negative Re-Leasing Spreads
GAAP re-leasing spreads were negative 15.8%, while cash re-leasing spreads were negative 23%, impacted by a single large transaction with a lower base rent.
Macroeconomic Uncertainty
The environment is defined by volatility, with macroeconomic uncertainty impacting office demand and capital allocation.
Regulatory Challenges in Life Science Sector
Market volatility has dampened enthusiasm around public market financing for life sciences, with a complex policy and regulatory outlook.
Company Guidance
During the Kilroy Realty Corporation's 1Q '25 earnings call, management provided updated guidance for 2025, highlighting several key metrics. The forward leasing pipeline saw a 40% year-over-year improvement in tour activity, driven largely by a 60% increase in San Francisco, indicative of a strengthening office demand as the city experiences its lowest crime rate in 23 years. The company also completed a 60,000 square foot lease with a technology firm in San Francisco and a 34,000 square foot expansion for an AI tenant in Seattle, underscoring the burgeoning AI industry's impact on leasing activity. While cash same-property NOI declined by 160 basis points year-over-year and occupancy decreased to 81.4%, Kilroy reaffirmed its full-year guidance, including FFO and cash same-property NOI growth, with a focus on maintaining operational flexibility and strategic capital allocation.

Kilroy Realty Financial Statement Overview

Summary
Kilroy Realty's financial performance is solid with a stable income statement and balance sheet, although there is a need for improved free cash flow generation. The company has a strong profit margin and prudent debt management, but declining cash reserves and revenue growth could be areas of concern.
Income Statement
75
Positive
Kilroy Realty's income statement shows moderate stability and growth. The TTM gross profit margin is solid at 66.8%, though we've seen a slight decline in revenue with a recent negative growth rate of -0.68%. The net profit margin stands at 17.74%, indicating healthy profitability levels. However, the EBIT and EBITDA margins are consistent, which is a positive sign for operational efficiency.
Balance Sheet
70
Positive
The company's balance sheet appears stable with a debt-to-equity ratio of 0.88, which is reasonable for a REIT. Equity ratio is strong at 49.23%, demonstrating a well-capitalized structure, though the return on equity is relatively moderate at 3.74% TTM. The overall leverage is manageable, but the declining cash reserves could pose a risk if not addressed.
Cash Flow
68
Positive
Cash flow analysis shows a decrease in free cash flow growth, with a TTM free cash flow of $34.04 million, down from the previous period. The operating cash flow to net income ratio is favorable at 2.55, reflecting efficient cash conversion, though the free cash flow to net income ratio is low. Overall, the cash flow situation is stable but shows room for improvement in free cash flow generation.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.13B1.14B1.13B1.10B955.04M898.40M
Gross Profit
764.86M783.24M778.62M775.93M685.46M637.68M
EBIT
326.98M334.51M329.91M324.68M282.67M242.53M
EBITDA
705.16M735.49M708.81M640.75M553.33M538.41M
Net Income Common Stockholders
199.88M210.97M212.24M232.62M628.14M187.10M
Balance SheetCash, Cash Equivalents and Short-Term Investments
175.90M193.66M510.16M347.38M441.55M759.47M
Total Assets
10.88B10.90B11.40B10.80B10.58B10.00B
Total Debt
4.73B4.73B5.05B4.39B4.19B4.02B
Net Debt
4.58B4.56B4.54B4.04B3.78B3.29B
Total Liabilities
5.30B5.29B5.74B5.12B4.89B4.72B
Stockholders Equity
5.36B5.38B5.43B5.44B5.44B5.03B
Cash FlowFree Cash Flow
34.04M40.17M58.77M5.63M-1.28B-160.47M
Operating Cash Flow
510.20M541.15M602.59M592.24M516.40M455.59M
Investing Cash Flow
-378.55M-225.04M-800.40M-553.19M-747.88M-542.13M
Financing Cash Flow
-839.94M-660.58M360.60M-118.75M-164.57M833.32M

Kilroy Realty Technical Analysis

Technical Analysis Sentiment
Positive
Last Price35.08
Price Trends
50DMA
32.60
Positive
100DMA
33.26
Positive
200DMA
35.77
Negative
Market Momentum
MACD
0.84
Negative
RSI
60.73
Neutral
STOCH
37.07
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KRC, the sentiment is Positive. The current price of 35.08 is above the 20-day moving average (MA) of 33.94, above the 50-day MA of 32.60, and below the 200-day MA of 35.77, indicating a neutral trend. The MACD of 0.84 indicates Negative momentum. The RSI at 60.73 is Neutral, neither overbought nor oversold. The STOCH value of 37.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KRC.

Kilroy Realty Risk Analysis

Kilroy Realty disclosed 51 risk factors in its most recent earnings report. Kilroy Realty reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Kilroy Realty Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
KRKRC
72
Outperform
$8.29B20.873.69%6.16%1.11%-3.07%
BXBXP
67
Neutral
$12.47B732.74-0.10%5.47%3.74%-102.51%
CUCUZ
66
Neutral
$5.13B91.191.15%4.19%10.93%-31.07%
HIHIW
66
Neutral
$3.43B19.917.21%6.29%-2.01%31.64%
61
Neutral
$2.83B10.890.42%9.23%5.94%-21.26%
DEDEI
61
Neutral
$3.00B46.792.49%5.13%-1.98%
SLSLG
58
Neutral
$4.92B663.10-0.13%4.77%13.36%94.82%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
KRC
Kilroy Realty
35.08
4.86
16.08%
BXP
Boston Properties
71.47
12.68
21.57%
CUZ
Cousins Properties
30.49
8.31
37.47%
DEI
Douglas Emmett
14.88
1.93
14.90%
HIW
Highwoods Properties
31.55
6.85
27.73%
SLG
SL Green Realty
64.33
11.05
20.74%

Kilroy Realty Corporate Events

Executive/Board ChangesShareholder Meetings
Kilroy Realty Holds 2025 Annual Stockholders Meeting
Neutral
May 20, 2025

Kilroy Realty Corporation held its 2025 annual meeting of stockholders on May 20, 2025. During the meeting, all director nominees were elected to serve until the 2026 annual meeting, the compensation of the Company’s named executive officers was approved on an advisory basis, and Deloitte & Touche LLP was ratified as the independent auditor for the fiscal year ending December 31, 2025.

The most recent analyst rating on (KRC) stock is a Buy with a $49.00 price target. To see the full list of analyst forecasts on Kilroy Realty stock, see the KRC Stock Forecast page.

Executive/Board Changes
Kilroy Realty Announces Departure of Chief Accounting Officer
Neutral
May 14, 2025

Kilroy Realty announced that Merryl Werber, the Senior Vice President, Chief Accounting Officer, and Controller, will leave the company on January 9, 2026, to pursue other opportunities. The company has started the search for her replacement, and her departure is not due to any disagreements over financial statements or accounting practices.

The most recent analyst rating on (KRC) stock is a Buy with a $49.00 price target. To see the full list of analyst forecasts on Kilroy Realty stock, see the KRC Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Kilroy Realty Reports Strong Q1 2025 Financial Results
Positive
May 5, 2025

On May 5, 2025, Kilroy Realty Corporation reported its financial results for the first quarter ended March 31, 2025, highlighting a strong start to the year despite market volatility. The company achieved revenues of $270.8 million and a net income of $39.0 million, with significant leasing activity and progress in its development projects. Kilroy also announced an agreement to sell a portion of its Santa Fe Summit site, which is expected to close in 2026, indicating strategic moves to monetize its land assets.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.