Kilroy Earnings: Occupancy Declines Weigh on Profitability, but Shares Remain Compellingly Cheap

No-moat-rated Kilroy Realty’s second-quarter results were largely in line with our expectations as the demand for west-coast office real estate remains muted due to macroeconomic factors and a slower recovery in physical office utilization rates. The firm reported funds from operations of $1.19 per share in the second quarter, which was around 1.7% higher than the $1.17 per share FFO reported in the second quarter of the previous year. The short-term outlook for office real estate remains challenging, but shares are compellingly cheap from a long-term perspective.