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1. Company Snapshot

1.a. Company Description

Kilroy 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.

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1.b. Last Insights on KRC

Kilroy Realty Corporation's recent performance was driven by strong leasing momentum, with over 400,000 square feet of lease executions in Q2 2025. The company's quarterly funds from operations (FFO) of $1.13 per share beat estimates, driven by improved leasing and one-time items. Additionally, Kilroy Realty announced a $400 million public offering of senior notes due 2035, providing capital flexibility. The company's CEO highlighted a "strong quarter of execution" across the business, with progress on capital recycling. Guidance appears to be increasing, driven by non-recurring benefits.

1.c. Company Highlights

2. Kilroy Realty's Q3 2025 Earnings: A Strong Performance Amidst Evolving Market Trends

Kilroy Realty Corporation (KRC) reported a robust third quarter of 2025, with Funds From Operations (FFO) of $1.08 per diluted share, beating analyst estimates of $1 per share. The actual EPS came out at $1.09. Cash same-property Net Operating Income (NOI) growth for the quarter was 60 basis points, driven by real estate tax appeal wins. The company's occupancy statistics improved modestly, ending at 81%, up from 80.8% at the end of the second quarter. As noted by Jeffrey Kuehling, EVP and CFO, the FFO includes $0.03 per share of one-time items, indicating a strong underlying performance.

Publication Date: Oct -31

📋 Highlights
  • Accelerated Leasing Activity: KRC signed 550,000 sq ft of new/renewal leases in Q3 2025, the highest in 6 years, including 95,000 sq ft in San Francisco's SOMA submarket.
  • Progress on 2026 Lease Expirations: Renewals reduced 2026 expirations from 1.9M to 970,000 sq ft, with 148,000 sq ft of post-quarter renewals and a 40% retention rate.
  • Capital Transactions: Sold a Silicon Valley campus for $365M and acquired Maple Plaza in Beverly Hills for $205M, reflecting strategic portfolio optimization.
  • FFO and Guidance Update: 2025 FFO guidance raised to $4.18–$4.24/share (up $0.11/share), with 60 bps same-property NOI growth driven by tax appeals and 81% occupancy.
  • AI/Life Science Demand Surge: San Francisco reported 1.5M sq ft of AI demand, while KOP 2 achieved 84,000 sq ft of leases (84% of 100k+ goal) with biotech/tech tenants.

Leasing Activity and Market Trends

Leasing activity was robust, with over 550,000 square feet of new and renewal leases signed, marking the company's highest third quarter of leasing activity in 6 years. The San Francisco market, particularly the South of Market (SOMA) submarket, performed exceptionally well, with over 95,000 square feet of new and renewal leases executed. Angela Aman, CEO, highlighted the company's success at 201 Third Street, where a full floor lease was signed with Tubi, a global streaming entertainment company.

Portfolio Performance and Expirations

KRC made progress in addressing its largest remaining 2026 lease expirations, including a long-term renewal with Scripps in San Diego and a short-term renewal with SCAN in Long Beach. The company signed an additional 148,000 square feet of renewals related to 2026 lease expirations subsequent to quarter end. The 2026 expiration pool has decreased from 1.9 million square feet to 970,000 square feet due to leasing activity and renewal activity.

Valuation and Outlook

With a P/E Ratio of 15.17 and a Dividend Yield of 5.21%, Kilroy Realty's stock appears to be reasonably valued. The company's updated 2025 FFO outlook to a range of $4.18 to $4.24 per share represents an $0.11 per share increase at the midpoint. Analysts estimate next year's revenue growth at -1.3%, indicating a challenging environment. However, Kilroy Realty's strong leasing activity and improving market trends position the company for potential long-term success.

Market Dynamics and Future Prospects

The demand for Kilroy Realty's properties is driven by AI-related companies, which now make up over 30% of tenants in the San Francisco market. The company's SOMA assets, particularly 201 Third, have seen a remarkable sea change in activity, with 3 consecutive quarters of major leasing. As the market stabilizes, Kilroy expects to have more pricing power in San Francisco, with the growing demand picture and decreasing vacancy contributing to improved leasing spreads.

3. NewsRoom

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Kilroy Realty Corporation $KRC Shares Acquired by Campbell & CO Investment Adviser LLC

Nov -17

Source: defenseworld.net

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Y Intercept Hong Kong Ltd Makes New Investment in Kilroy Realty Corporation $KRC

Nov -03

Source: defenseworld.net

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Oppenheimer Asset Management Inc. Buys 5,995 Shares of Kilroy Realty Corporation $KRC

Nov -02

Source: defenseworld.net

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D.A. Davidson & CO. Takes $269,000 Position in Kilroy Realty Corporation $KRC

Oct -31

Source: defenseworld.net

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Asset Management One Co. Ltd. Sells 6,163 Shares of Kilroy Realty Corporation $KRC

Oct -29

Source: defenseworld.net

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Kilroy Realty Corporation (KRC) Q3 2025 Earnings Call Transcript

Oct -28

Source: seekingalpha.com

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Kilroy Realty (KRC) Q3 FFO and Revenues Surpass Estimates

Oct -27

Source: zacks.com

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Kilroy Realty Corporation Reports Third Quarter Financial Results

Oct -27

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Fixed Lease Payments

Expected Growth: 3.0%

Kilroy Realty Corporation's 3.0% growth in fixed lease payments is driven by a strong demand for office spaces in prime locations, steady rent increases, and a high occupancy rate of 92%. Additionally, the company's strategic acquisitions and developments in high-growth markets, such as San Francisco and Los Angeles, contribute to the growth.

Variable Lease Payments

Expected Growth: 3.0%

Kilroy Realty Corporation's 3.0% growth in Variable Lease Payments is driven by increasing demand for Class A office spaces, strategic lease renewals and expansions, and rising rental rates in prime markets such as San Francisco and Los Angeles. Additionally, the company's focus on sustainability and amenity-rich properties attracts high-quality tenants, contributing to the growth.

Other Property

Expected Growth: 3.0%

Kilroy Realty's Other Property segment growth is driven by increasing demand for life science and technology spaces, strategic acquisitions, and redevelopment of existing properties. Additionally, the company's focus on sustainability and energy-efficient buildings attracts tenants willing to pay premiums, contributing to the 3.0% growth rate.

Net Collectability (Reversals) Recoveries

Expected Growth: 3.0%

Kilroy Realty Corporation's 3.0% growth in Net Collectability (Reversals) Recoveries is driven by effective lease administration, improved tenant credit quality, and enhanced billing processes. Additionally, strategic asset management and proactive rent collection efforts have contributed to the increase in recoveries.

7. Detailed Products

Office Properties

Kilroy Realty Corporation offers a range of office properties, including Class A office buildings, campus-style office parks, and mixed-use developments.

Life Science Properties

The company provides specialized life science properties, including laboratory and research facilities, designed to meet the unique needs of life science companies.

Industrial Properties

Kilroy Realty Corporation offers industrial properties, including warehouse and distribution facilities, to support the logistics and supply chain needs of companies.

Mixed-Use Developments

The company develops and owns mixed-use projects, combining office, retail, and residential spaces to create vibrant, walkable communities.

Sustainable and Energy-Efficient Properties

Kilroy Realty Corporation prioritizes sustainability and energy efficiency in its properties, incorporating green building practices and renewable energy systems.

8. Kilroy Realty Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Kilroy Realty Corporation operates in a competitive industry, but the threat of substitutes is mitigated by the company's focus on high-quality, Class A office properties in prime locations.

Bargaining Power Of Customers

Kilroy Realty Corporation's customers are primarily large, credit-worthy tenants, which reduces the bargaining power of customers.

Bargaining Power Of Suppliers

Kilroy Realty Corporation has a diversified supplier base, which reduces the bargaining power of suppliers.

Threat Of New Entrants

The commercial real estate industry has high barriers to entry, including significant capital requirements and regulatory hurdles, which reduces the threat of new entrants.

Intensity Of Rivalry

Kilroy Realty Corporation operates in a highly competitive industry, with many established players competing for tenants and market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 52.43%
Debt Cost 4.54%
Equity Weight 47.57%
Equity Cost 9.11%
WACC 6.71%
Leverage 110.21%

11. Quality Control: Kilroy Realty Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
COPT Defense

A-Score: 6.1/10

Value: 4.2

Growth: 4.8

Quality: 5.7

Yield: 8.0

Momentum: 4.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Kilroy Realty

A-Score: 6.0/10

Value: 5.1

Growth: 3.9

Quality: 5.8

Yield: 8.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Highwoods Properties

A-Score: 5.9/10

Value: 4.8

Growth: 3.1

Quality: 5.4

Yield: 10.0

Momentum: 4.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Douglas Emmett

A-Score: 4.9/10

Value: 4.3

Growth: 4.6

Quality: 3.7

Yield: 8.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Boston Properties

A-Score: 4.8/10

Value: 3.3

Growth: 3.1

Quality: 3.8

Yield: 8.0

Momentum: 4.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
SL Green Realty

A-Score: 4.1/10

Value: 2.1

Growth: 0.9

Quality: 3.5

Yield: 9.0

Momentum: 3.5

Volatility: 5.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

40.78$

Current Price

40.78$

Potential

-0.00%

Expected Cash-Flows