Analyst Note
| Yousuf Hafuda |Kilroy Realty reported strong fourth-quarter results, which indicate that the firm can comfortably withstand the disruption caused by the ongoing coronavirus pandemic. The company reported fourth-quarter funds from operations, or FFO, of $0.95 per share, a somewhat modest decline as compared with $1.00 for the fourth quarter of 2019. Meanwhile, full-year 2020 FFO was $3.71 per share, down as compared with $3.91 during 2019. The quarterly and full-year decreases derive from reductions in rental revenue for the firm’s co-working, advertising, parking and residential businesses. Additionally, performance was hindered by slightly lower firmwide collections, which was partially offset by higher rents and new development. With a period of coronavirus related weakness already incorporated into our outlook for no-moat rated Kilroy Realty, we are maintaining our $65 per share fair value estimate.