Kilroy’s Q3 Numbers Are In Line With Our Expectations; We Maintain Our $69 FVE

No-moat-rated Kilroy Realty reported third-quarter results that were largely in line with our expectations as share prices of office REITs have declined significantly in the past few months. The firm reported funds from operations, or FFO, of $1.17 per share, 19.3% higher than the $0.98 in FFO during the third quarter of 2021. Meanwhile, same-store net operating income increased 2.2% compared with a year ago and same-store cash net operating income increased 6.4% on a year-over-year basis. The company reported stabilized occupancy rate of 90.8% in the third quarter, down 60 basis points on a sequential basis. Kilroy Realty remains our preferred pick for investors considering office REITs given its high-quality portfolio, low leverage, and appealing valuations. We are maintaining our $69 fair value estimate for Kilroy Realty after incorporating third-quarter results.