Updated Aug 6 at 2:17pm ET.
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The average rate for a 30-year fixed mortgage reached 6.69 percent this week, its highest level in over a year. For a real estate firm like this one, higher rates are a direct challenge because they increase the cost of borrowing and can make it harder to refinance its roughly 5 billion dollars in existing debt.
While this specific rate is for home buyers, it reflects a broader environment of high interest rates that can lower the value of commercial buildings. This is particularly difficult for a landlord already dealing with high vacancy rates in its West Coast office properties.
Goldman Sachs raised its price target for the stock to $31, up from a previous target of $28. Even with the higher target, the firm kept its Sell rating, which is a signal that they expect the stock to perform worse than other companies in the market.
The new target is still about 18 percent below the current price. This suggests that while the analysts see some improvement, they remain cautious about the company's ability to manage its high vacancy rates and the slow transition into life science properties.
Source: Goldman Sachs
The company earned 17 cents per share last quarter, which was higher than the 15 cents analysts expected. Revenue came in at 270 million dollars, matching what the market anticipated. Management highlighted that they signed about 400,000 square feet of new and renewed leases, with new rents on those spaces coming in significantly higher than what previous tenants were paying.
While the leasing activity is a good sign, the business is still navigating a difficult period where nearly a fifth of its buildings are empty. The focus remains on whether the company can fill these vacancies fast enough to cover its high costs and debt payments. For now, the results show the portfolio is stable but not yet in a clear growth phase.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Analysts have been busy adjusting their outlooks following the company's recent quarterly earnings report. Most experts are split, with 11 buys and 17 neutral or bearish ratings, and the average target price is roughly equal to today's price.
The company has a habit of clearing the low bars set by analysts, beating profit expectations in six of the last eight quarters even as its total revenue has been shrinking.
| Expectation | |
|---|---|
| EPS | $0.13 |
| Revenue | $262M |
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