Hedge Fund’s $358 Million Kilroy Realty Stake Reveals a Big Contrarian Bet on West Coast Real Estate

Core Insights - Kilroy Realty Corporation has a stabilized portfolio of approximately 17 million square feet, primarily focused on office and life science spaces, emphasizing sustainability and innovation [1] - The company's shares are currently priced at $40.78, reflecting a 1% increase over the past year, which is significantly lower than the S&P 500's 13% gain during the same period [2] Investment Activity - D1 Capital Partners L.P. increased its stake in Kilroy Realty by acquiring nearly 6.6 million additional shares, bringing its total position to approximately 8.5 million shares valued at $358.4 million [3][4] - This acquisition indicates institutional interest in high-quality coastal office REITs, despite challenges in the sector [5] Financial Performance - Kilroy's revenue for the latest quarter was $279.7 million, a decrease from $289.9 million a year earlier, while net income rose significantly to $156.2 million from $52.4 million [5] - The fund's Kilroy position now represents 4.1% of D1's disclosed U.S. equity portfolio, suggesting a strategic long-term investment approach [6] Market Outlook - Kilroy Realty is experiencing strong leasing momentum and has reaffirmed its full-year FFO guidance, indicating a potential path toward stabilization despite ongoing occupancy challenges [7]