Mizuho has moved Kilroy Realty (KRC) to an Underperform rating from Neutral and reduced its price target to $29, down from $37. The firm identified several factors it says will weigh on the REIT's near-term outlook: tenant moveouts that pressure estimates, potential credit risk associated with a tech- and software-heavy tenant roster, and a sluggish lease-up at Kilroy's sizable life-science project, KOP.
The broker noted that these elements could compress Kilroy's valuation multiple. The REIT currently trades at roughly 10 times funds from operations, and Mizuho's revised target assumes a lower multiple - specifically, one times below current levels - yielding the new $29 price objective.
Market moves this year have been unfavorable for the company. The stock has declined about 15% year-to-date, underperforming a REIT benchmark that has climbed 7% in the same period. Current market quotations place the share price at $31.22, which is above Mizuho's new target but below a platform-derived Fair Value estimate of $37.74. That gap is noted by some observers as an indication the stock may be trading beneath its assessed fair value despite the recent drop.
Investors also have a recurring income element to consider: the company has maintained dividend distributions for 29 consecutive years and the current dividend yield stands at 6.92%.
Recent quarterly results and additional context
Kilroy reported fourth-quarter 2025 results that included a notable earnings-per-share miss. EPS came in at $0.10, materially below the $0.29 that had been expected. Revenue for the quarter was $272.2 million, narrowly outpacing a $272.11 million forecast. While the revenue figure slightly exceeded projections, the EPS shortfall was a focal point for investors assessing near-term operating performance.
There have been no recent reports of mergers or acquisitions involving Kilroy. The latest updates have not highlighted further analyst upgrades or downgrades beyond the actions already noted.
Key takeaways
- Mizuho downgraded Kilroy to Underperform and cut its price target to $29 from $37.
- Primary concerns cited: tenant moveouts, tech/software tenant credit risk, and slow lease-up at the KOP life-science project.
- Q4 2025 EPS of $0.10 missed estimates; revenue of $272.2 million slightly exceeded expectations.
What this affects
These developments touch the commercial real estate and REIT sectors directly, with ancillary implications for markets tied to West Coast office fundamentals and life-sciences leasing dynamics.