In a report released yesterday, John Kim from BMO Capital maintained a Sell rating on Kilroy Realty, with a price target of $35.00.
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John Kim’s rating is based on a combination of factors that raise concerns about the sustainability of Kilroy Realty’s recent financial performance. While the company reported a favorable increase in funds from operations per share and raised its 2025 guidance, a significant portion of this improvement is attributed to non-recurring items such as termination income and increased capitalized interest. These elements suggest that the underlying quality of the earnings may not be as robust as it appears.
Additionally, operational results present a mixed picture. Although there was an uptick in leasing activity, the cash re-leasing spreads remain negative, indicating potential challenges in maintaining rental income levels. Furthermore, while Kilroy Realty has made progress in asset sales and pre-leasing of development projects, these developments may not be sufficient to offset the broader concerns about the company’s financial health and growth prospects. These factors collectively contribute to John Kim’s decision to issue a Sell rating for Kilroy Realty’s stock.
In another report released on July 14, Scotiabank also maintained a Sell rating on the stock with a $37.00 price target.