KRC
Kilroy Realty Corporation
$34.83
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Strong
·
Conviction
Undervalued
Trading 40.8% below fair value
You pay
$34.83
Bear
$45.99
Fair
$58.80
Bull
$71.62
Bear
$45.99
+32.0%
$5.43 FFO × 10x
Fair
$58.80
+68.8%
$5.43 FFO × 13x
Bull
$71.62
+105.6%
$5.43 FFO × 16x
Adjust Assumptions
13.0x
$
Key Value Driver
FFO/share ($5.43) × office P/FFO multiple
Implied Market Multiple
6.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (28 analysts)
$37.63
Divergence from AlphaVal
56%
Summary
At $5.43 FFO/share with a 13x office REIT multiple, the base-case value is $58.80 per share. Dividend yield: 6.2%. DDM cross-check: $31.17.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 6.2% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $31.17 (47% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $37.63 (from 28 analysts). Our estimate is 56% above the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify