Kilroy Realty Corp.

In 2020, KRC significantly outperformed office peers, generating same-store cash net operating income (SS NOI) growth of 8.3% versus -0.7% for the office REITs that we rate. The company posted negative SS NOI of 2.9% for the three months ended March 31, 2021 (excluding lease terminations) with same-store average occupancy ticking down to 90.8% from 93.5%, driven by small expirations across the portfolio. However, this decline in occupancy was partially offset by healthy rent spreads of 4.9% (on a cash basis). Although we expect continued pressure on occupancy during 2021 due to announced move-outs as well as some tenants potentially reducing their footprints, we still expect positive SS NOI growth supported by strong rent spreads given the sizable portion of

...Kilroy Realty Corp.'s high-quality portfolio caters to a strong tenant roster of tech and life science focused companies. We expect Kilroy Realty Corp.'s (KRC's) leading position in West Coast markets and strong tenant roster with a focus on tech and life science will continue to support stable operating performance, despite some near-term headwinds. KRC owns high-quality properties in key tech and life science markets including the San Francisco Bay Area and San Diego. This has allowed the company to maintain a well-leased portfolio and healthy rental rates during the pandemic while maintaining strong execution of its development pipeline. Moreover, KRC's tenant mix largely comprises well-capitalized technology and life science companies, which have demonstrated resiliency through the COVID-19 pandemic, and we expect them to be key drivers for economic and job growth over the medium to long term. In 2020, KRC significantly outperformed office peers, generating same-store cash net operating...

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