Core Viewpoint - Kilroy Realty Corporation (NYSE: KRC) is rated as a Buy for income-focused investors interested in real estate investment trusts (REITs) despite its struggles due to exposure to the office market [1] Company Analysis - Kilroy Realty Corporation has been negatively impacted by its exposure to the office market, leading to a decline in its stock performance [1] - The company is viewed as a potential investment opportunity for those seeking income through REITs [1] Analyst Background - The analysis is provided by David A. Johnson, who has over 30 years of investment experience and holds advanced degrees in finance and business administration [1]

I am an experienced financial analyst and a former writer for Fade The Market on Seeking Alpha, with a passion for numbers and a knack for unraveling complex financial data. Armed with a strong financial modeling and data analysis background, I thrive on providing accurate insights and recommendations to drive informed financial decisions. I possess a keen eye for detail and possess a solid understanding of market trends and economic indicators. My expertise lies in evaluating investment opportunities, asse ...

Friday was a good day to be an investor in commercial real estate company Kilroy Realty (KRC 4.09%). On news of an analyst upgrade, accompanied by a price-target bump, Kilroy's stock zoomed to close the trading session more than 4% higher. That handily beat the performance of the benchmark S&P 500 index, which rose by slightly over 1%.A new bull says buyWell before market open, JPMorgan Chase's Anthony Paolone shifted his recommendation on Kilroy's shares to overweight (i.e., buy) from neutral. The pundit a ...

Revenue and Financial Performance - Revenues grew 2.2% to $289.9 million for Q3 2024 compared to $283.6 million in Q3 2023[3] - Net income available to common stockholders was $0.44 per diluted share, slightly down from $0.45 in Q3 2023[3] - Funds from operations (FFO) increased 4.5% to $140.4 million, or $1.17 per diluted share, compared to $134.0 million, or $1.12 per diluted share, in Q3 2023[3] - Revenues for Q3 2024 increased to $289.938 million, up 3.3% from $280.731 million in Q2 2024[12] - Net Income Available to Common Stockholders rose to $52.378 million in Q3 2024, a 6.4% increase from $49.211 million in Q2 2024[12] - EBITDA, as adjusted, reached $185.960 million in Q3 2024, up 4.2% from $178.461 million in Q2 2024[12] - Funds From Operations (FFO) increased to $140.448 million in Q3 2024, a 5.9% rise from $132.587 million in Q2 2024[12] - Total revenues for Q3 2024 were $289.9 million, compared to $280.7 million in Q2 2024 and $283.6 million in Q3 2023[14] - Net income available to common stockholders for Q3 2024 was $52.4 million, compared to $49.2 million in Q2 2024 and $52.8 million in Q3 2023[14] - Funds From Operations (FFO) for Q3 2024 were $140.4 million, compared to $132.6 million in Q2 2024 and $134.0 million in Q3 2023[15] - FFO per common share/unit for Q3 2024 was $1.17 (basic) and $1.17 (diluted), compared to $1.10 (basic) and $1.10 (diluted) in Q2 2024[15] - Funds Available for Distribution (FAD) for Q3 2024 were $96.8 million, compared to $114.8 million in Q2 2024 and $118.7 million in Q3 2023[15] - Total operating revenues for Q3 2024 increased by 2.2% to $289.9 million compared to $283.6 million in Q3 2023[16] - Rental income for Q3 2024 grew by 1.1% to $234.1 million from $231.6 million in Q3 2023[16] - Tenant reimbursements for Q3 2024 rose by 5.6% to $51.8 million compared to $49.1 million in Q3 2023[16] - Other property income for Q3 2024 surged by 36.9% to $4.0 million from $2.9 million in Q3 2023[16] - Net Operating Income for Q3 2024 increased by 1.7% to $196.7 million compared to $193.4 million in Q3 2023[16] - Same Store operating revenues for Q3 2024 increased by 2.8% to $272.3 million from $264.8 million in Q3 2023[17] - Same Store Cash Net Operating Income for Q3 2024 grew by 2.7% to $183.6 million compared to $178.8 million in Q3 2023[17] - Net Income Available to Common Stockholders for Q3 2024 was $52.378 million, compared to $52.762 million in Q3 2023[64] - Net Operating Income for Q3 2024 was $196.691 million, slightly down from $193.396 million in Q3 2023[64] - Same Store Net Operating Income for Q3 2024 was $188.564 million, up from $172.344 million in Q3 2023[64] - EBITDA, as adjusted for Q3 2024 was $185.960 million, compared to $173.798 million in Q3 2023[66] - Company's share of EBITDA, as adjusted for Q3 2024 was $178.475 million, up from $165.408 million in Q3 2023[66] - Funds Available for Distribution (FAD) for Q3 2024 was $96.82 million, down from $118.70 million in Q3 2023[67] - Total Funds Available for Distribution for the nine months ended September 30, 2024, was $336.98 million, compared to $370.78 million for the same period in 2023[67] Occupancy and Leasing - Stabilized portfolio occupancy was 84.3% with a leased rate of 85.8% as of September 30, 2024[4] - Signed approximately 436,000 square feet of leases in Q3 2024, including 209,000 square feet of short-term leasing[4] - GAAP rents on signed leases increased 26.0% and cash rents increased 7.1% from prior levels, excluding short-term leasing[4] - Period End Occupancy Percentage improved to 84.3% in Q3 2024, up from 83.7% in Q2 2024[12] - Average occupancy for Q3 2024 was 84.6%, down from 86.1% in Q3 2023[18] - Same Store rental income for Q3 2024 increased by 0.7% to $224.5 million from $223.0 million in Q3 2023[18] - Same Store property expenses for Q3 2024 rose by 6.4% to $61.2 million compared to $57.5 million in Q3 2023[18] - Stabilized portfolio occupancy in Los Angeles increased to 76.7% as of 9/30/2024, up from 73.9% at 6/30/2024[19] - Hollywood / West Hollywood submarket achieved 85.8% occupancy, with a leased rate of 86.1% as of 9/30/2024[19] - El Segundo submarket occupancy improved to 81.8% as of 9/30/2024, up from 74.4% at 6/30/2024[19] - San Diego's stabilized portfolio occupancy reached 87.9% as of 9/30/2024, with Del Mar submarket at 96.4% occupancy[19] - San Francisco Bay Area stabilized portfolio occupancy stood at 91.1% as of 9/30/2024, with Silicon Valley and South San Francisco at 100% occupancy[19] - Seattle's stabilized portfolio occupancy was 80.4% as of 9/30/2024, with Bellevue submarket at 94.4% occupancy[19] - Austin CBD submarket occupancy increased to 74.2% as of 9/30/2024, up from 72.3% at 6/30/2024[19] - Total stabilized portfolio occupancy across all regions was 84.3% as of 9/30/2024, with a leased rate of 85.8%[19] - 1350 Ivar Avenue in Hollywood / West Hollywood maintained 100% occupancy as of 9/30/2024[20] - 2240 E. Imperial Highway in El Segundo maintained 100% occupancy as of 9/30/2024[20] - San Diego total occupancy rate at 9/30/2024 is 87.9%, with a leased rate of 90.5%[21] - San Francisco Bay Area total occupancy rate at 9/30/2024 is 91.1%, with a leased rate of 91.7%[22] - 12348 High Bluff Drive in San Diego has an occupancy rate of 51.5% at 9/30/2024[21] - 12707 High Bluff Drive in San Diego has an occupancy rate of 93.5% at 9/30/2024[21] - 3579 Valley Centre Drive in San Diego shows a decline in occupancy from 94.7% at 6/30/2024 to 87.0% at 9/30/2024[21] - 3721 Valley Centre Drive in San Diego has an occupancy rate of 78.9% at 9/30/2024, with a leased rate of 90.3%[21] - 2100 Kettner Boulevard in San Diego has a low occupancy rate of 22.6% at 9/30/2024[21] - 100 Hooper Street in San Francisco Bay Area has an occupancy rate of 95.5% at 9/30/2024[22] - 303 Second Street in San Francisco Bay Area has an occupancy rate of 73.5% at 9/30/2024[22] - 4200 Bohannon Drive in San Francisco Bay Area has an occupancy rate of 69.4% at 9/30/2024[22] - Total stabilized portfolio occupancy rate is 84.3% as of 9/30/2024, with a leased rate of 85.8%[23] - Seattle portfolio occupancy rate is 80.4%, with a leased rate of 81.6%[23] - Austin portfolio occupancy rate is 74.2%, with a leased rate of 80.7%[23] - Residential properties average occupancy rate is 92.0% as of 9/30/2024[24] - Total 2nd generation leasing for Q3 2024 includes 261,062 square feet with a weighted average lease term of 80 months[25] - Changes in GAAP rents for Q3 2024 are 48.3%, while changes in cash rents are 22.4%[25] - Retention Rates (Leases Executed) measure the percentage of space renewed by existing tenants at lease expiration or termination[60] Capital Expenditures and Investments - Acquired Junction at Del Mar, a 104,000 square foot office property in San Diego, for $35.0 million, which is 96% leased with a weighted average lease term of 4.7 years[4] - Total capital expenditures for 2nd generation improvements are $25.66 million for Q3 2024[27] - Major repositioning capital expenditures total $4.30 million for Q3 2024[28] - 1st generation capital expenditures for tenant improvements and leasing commissions are $1.43 million for Q3 2024[28] - Average capital expenditures to average NOI ratio is 11.7% for the trailing five quarters[27] - The company acquired two buildings in Del Mar during Q3 2024, totaling 103,731 rentable square feet for $35.0 million[35] - Consolidated property ventures with Norges Bank Real Estate Management in San Francisco total 1,265,115 rentable square feet, with 56% ownership[36] - Year-to-date net operating income for consolidated ventures is $64.416 million, with adjustments leading to a cash net operating income of $63.684 million[37] - In-process development projects total 100,000 rentable square feet with an estimated investment of $80 million, currently 0% leased[38] - Kilroy Oyster Point - Phase 2, under construction, will add 875,000 rentable square feet with a total estimated investment of $1.0 billion[39] - Future development pipeline includes projects totaling approximately 5,733,000 square feet and 1,750 residential units, with $1.356 billion in cash costs incurred as of 9/30/2024[40] - Recurring tenant improvements, leasing commissions, and capital expenditures totaled $25.66 million in Q3 2024, up from $20.52 million in Q3 2023[67] Debt and Financial Ratios - Total liquidity as of September 30, 2024, was approximately $1.7 billion, including $0.6 billion in cash and $1.1 billion available under the unsecured revolving credit facility[4] - Total debt as of September 30, 2024, is $5,036,923 thousand, representing 52.2% of total market capitalization[41] - Net debt to Company's share of EBITDA, as adjusted, is 6.4x as of September 30, 2024[43] - Total equity and noncontrolling interest in the operating partnership is $4,612,933 thousand, representing 47.8% of total market capitalization[41] - Weighted average stated rate for total debt is 4.13% as of September 30, 2024[41] - Net debt decreased to $4,411,528 thousand as of September 30, 2024, from $4,322,539 thousand as of June 30, 2024[43] - Total debt to total asset value covenant is 33%, well below the 60% limit as of September 30, 2024[44] - Fixed charge coverage ratio is 3.2x, exceeding the 1.5x covenant requirement as of September 30, 2024[44] - Unencumbered asset pool debt service coverage is 3.58x, surpassing the 1.75x covenant requirement as of September 30, 2024[44] - Interest coverage ratio is 5.1x, significantly above the 1.5x covenant requirement as of September 30, 2024[44] - Unencumbered asset pool value to unsecured debt is 282%, well above the 150% covenant requirement as of September 30, 2024[44] - Net Debt to Company's Share of EBITDA, as adjusted Ratio is a measure of borrowed capital used to increase real estate investment returns and assess debt repayment ability[51] Expenses and Costs - Property expenses for Q3 2024 were $63.6 million, compared to $59.3 million in Q2 2024 and $59.4 million in Q3 2023[14] - Depreciation and amortization for Q3 2024 were $91.9 million, compared to $87.2 million in Q2 2024 and $85.2 million in Q3 2023[14] - Interest expense for Q3 2024 was $36.4 million, compared to $36.8 million in Q2 2024 and $29.8 million in Q3 2023[14] - Recurring tenant improvements, leasing commissions, and capital expenditures for Q3 2024 were $25.7 million, compared to $22.1 million in Q2 2024 and $20.5 million in Q3 2023[15] - Interest expense for Q3 2024 was $36.408 million, compared to $29.837 million in Q3 2023[64] - Depreciation and amortization for Q3 2024 was $91.879 million, up from $85.224 million in Q3 2023[64] - General and administrative expenses for Q3 2024 were $18.066 million, down from $24.761 million in Q3 2023[64] - Depreciation of non-real estate furniture, fixtures, and equipment was $1.64 million in Q3 2024, slightly lower than $1.71 million in Q3 2023[67] Leasing and Tenant Metrics - Total expiring leases in 2024 account for 2.0% of total leased square feet, with an annualized base rent of $17,069 thousand, representing 2.1% of total ABR[29] - In 2025, expiring leases represent 5.4% of total leased square feet, with an annualized base rent of $33,134 thousand, accounting for 4.2% of total ABR[29] - For 2026, expiring leases make up 13.6% of total leased square feet, with an annualized base rent of $91,231 thousand, representing 11.4% of total ABR[29] - The San Francisco Bay Area has the highest expiring leases in 2026, with 945,807 square feet (6.8% of total leased square feet) and an annualized base rent of $49,543 thousand (6.2% of total ABR)[30] - In 2027, expiring leases account for 7.8% of total leased square feet, with an annualized base rent of $44,373 thousand, representing 5.6% of total ABR[29] - The San Francisco Bay Area leads in 2028 with 730,462 square feet (5.2% of total leased square feet) and an annualized base rent of $49,244 thousand (6.2% of total ABR)[30] - For 2029 and beyond, expiring leases represent 62.9% of total leased square feet, with an annualized base rent of $540,815 thousand, accounting for 67.7% of total ABR[29] - The San Francisco Bay Area dominates in 2029 and beyond, with 3,450,764 square feet (24.8% of total leased square feet) and an annualized base rent of $257,088 thousand (32.2% of total ABR)[30] - Los Angeles has significant expiring leases in 2029 and beyond, with 1,419,998 square feet (10.2% of total leased square feet) and an annualized base rent of $81,371 thousand (10.2% of total ABR)[30] - Seattle's expiring leases in 2029 and beyond total 1,697,982 square feet (12.2% of total leased square feet) with an annualized base rent of $78,027 thousand (9.8% of total ABR)[30] - Top 20 tenants contribute $428.742 million in annualized base rental revenue, representing 53.6% of total annualized base rental revenue and 42.5% of total rentable square feet[32] - The largest tenant, a global technology company, contributes $44.851 million annually, accounting for 5.6% of total annualized base rental revenue and 5.0% of total rentable square feet[32] - Technology sector tenants account for 54% of annualized base rent and 51% of rentable square feet, highlighting strong sector diversification[34] Portfolio and Asset Management - Total real

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JHVEPhoto Kilroy Realty (NYSE:KRC) has dipped 18% year-to-date as market enthusiasm over a potentially dovish pathway for Fed rate cuts in 2024 has given way to angst from a return of higher for longer. There is a rising probability of zero rate cuts in 2024, an event that would see REIT continue to trade on historically low multiples. KRC generated fiscal 2024 first quarter funds from operations ("FFO") of $1.11 per share, beating consensus and up by 2 cents sequentially with guidance for FFO to come in be ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-12675 (Kilroy Realty Corporation) Commission File Number: 000-54005 (Kilroy Realty, L.P.) KILROY REALTY CORPORATION KILROY REALTY ...

Q1 2024 Supplemental Financial Report KILROY REALTY CORPORATION REPORTS FIRST QUARTER FINANCIAL RESULTS --------------- Financial Results • Revenues of $278.6 million • Net income available to common stockholders of $0.42 per diluted share • Funds from operations available to common stockholders and unitholders ("FFO") of $133.7 million, or $1.11 per diluted share • Stabilized portfolio was 84.2% occupied and 85.7% leased at March 31, 2024 • Signed approximately 400,000 square feet of leases, inclusive of 1 ...

Portfolio and Occupancy - As of December 31, 2023, the stabilized portfolio included 121 office properties with a total rentable area of 17,044,128 square feet, achieving an occupancy rate of 85.0% and a leased percentage of 86.4%[26] - The stabilized residential properties consist of 3 properties with 1,001 units, achieving an occupancy rate of 92.8%[183] - As of December 31, 2023, approximately 15.0% of the total square footage of the company’s stabilized office properties was unoccupied[91] - 48% of the properties are leased on a triple net basis, 23% on a full service gross basis, and 21% on a modified gross basis[188] - The company’s properties are primarily located in California, with some in Washington and Texas[186] - The company reported a total rentable square footage of 17,044,128 square feet across 121 properties, with an occupancy rate of 85.0%[195] - The property located at 200 W. 6th Street, Austin CBD, Texas, has a rentable area of 758,975 square feet and an occupancy rate of 64.9%[195] - The annualized base rent for the total portfolio is $807,804,000, averaging $56.31 per square foot[195] - The company emphasizes the importance of economic occupancy in its reporting metrics[195] Development and Future Projects - The company added two development projects totaling 829,591 square feet of office space in San Diego and Austin during 2023, with one in-process development project under construction of approximately 875,000 square feet[28] - The future development pipeline consists of eight sites representing approximately 64 gross acres of undeveloped land, with the potential to develop over 6.0 million square feet of various property types[29] - The future development pipeline includes approximately 3.5 million to 4 million developable square feet across various locations, including Greater Los Angeles and San Francisco Bay Area[202] - The company has ongoing in-process development projects totaling 875,000 square feet, with stabilization expected by Q4 2025[198] - The company has two in-process redevelopment projects totaling 100,000 square feet, with stabilization expected by Q2 2025[200] Financial Position and Strategy - The company maintains a strong financial position, allowing it to pursue attractive acquisition and development opportunities, supported by over 75 years of experience in West Coast markets[36] - The financing strategy aims to maintain significant liquidity and a conservative leverage ratio, utilizing multiple sources of capital and managing interest rate exposure primarily on a fixed-rate basis[40] - The company had $520.0 million outstanding under its unsecured term loan facility as of December 31, 2023, with no borrowings under its unsecured revolving credit facility[75] - The company had approximately $5.0 billion in aggregate principal amount of indebtedness as of December 31, 2023, with $929.7 million in principal payments expected during the year ending December 31, 2024[136] - Total debt represented 51.3% of the company's total market capitalization as of December 31, 2023[136] - The company is required to distribute at least 90% of its taxable income to maintain its REIT qualification, which may limit its ability to fund future capital needs from operating cash flows[147] Sustainability and Environmental Initiatives - The company has received high sustainability performance rankings, including the GRESB 5 Star designation and the US EPA ENERGY STAR Partner of the Year Sustained Excellence Award for eight consecutive years[41] - The company aims to build new projects to LEED specifications, pursuing Platinum or Gold certification for all office and life science developments[43] - The company is pursuing LEED Gold certification for approximately 946,000 square feet of office and life science space, focusing on energy efficiency strategies[44] - The company has achieved carbon neutral operations since 2020 and expects to maintain this status for the fourth consecutive year in 2023[45] - The company continues to track and report on its progress toward carbon reduction goals validated by the Science-Based Targets Initiative[45] - The company incorporates green lease language into 100% of new leases, aligning interests on energy, water, and waste efficiency[101] - The company is focusing on sustainability, aiming for a 20% reduction in carbon emissions by 2025[192] Competition and Market Risks - The company faces significant competition, which may decrease occupancy and rental rates of its properties[15] - A downturn in tenants' businesses could reduce the company's revenues and cash flows, impacting overall financial condition[15] - The company may not be able to renew leases or re-lease available space, which could adversely affect financial performance[15] - The company is subject to risks associated with climate change and sustainability strategies, which may affect its operations[15] - The company may face challenges in obtaining necessary materials and skilled labor for construction projects due to economic or political changes[79] Employee and Community Engagement - As of December 31, 2023, the company employed 248 people and emphasizes employee development through various training and education programs[50] - The company has been recognized in Bloomberg's Gender Equality Index for five consecutive years, with 56% of its workforce being female and 42% ethnically diverse[51] - The company expanded its "Week of Service" initiative into a "Month of Service," with over 165 employees dedicating more than 1,000 hours to community service in 2023[54] Revenue and Financial Performance - For the year ended December 31, 2023, approximately 98.9% of the company’s revenues were derived from rental income[88] - The company reported a revenue increase of 7.9% year-over-year, reaching $1,007.7 million[192] - The company reported a revenue increase of 9.0% year-over-year, reaching $1.56 billion[1] - The company reported a revenue of $2.555 billion, representing a 40.1% increase year-over-year[1] - The company reported a revenue increase of 8.2% year-over-year, reaching $1.76 billion in Q3 2023[1] - The company provided a future outlook with a revenue guidance of $1.5 billion for the next quarter, representing a 5.0% increase[3] - New product launches are expected to contribute an additional $250 million in revenue, with a projected growth rate of 7.4%[4] Cybersecurity and Compliance - The company has a Cybersecurity Incident Response Plan that is reviewed annually to ensure preparedness for potential cybersecurity incidents[179] - The Audit Committee oversees the company's cybersecurity risk management program and receives periodic reports from management[175] - The company has not identified any known cybersecurity risks that have materially affected its operations or financial condition[176] - Legislative or regulatory changes could adversely impact the company's ability to qualify as a REIT and its tax treatment[171]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-12675 (Kilroy Realty Corporation) Commission File Number: 000-54005 (Kilroy Realty, L.P.) KILROY REALTY CORPORATION KILROY RE ...