LA-Based REIT Profits Triple
Introduction to Earnings Season
Earnings season comes with earnings calls, and one Los Angeles commercial real estate CEO this week showed how to work both ends of the expectations game that comes with publicly traded outfits.
Los Angeles-based real estate investment trust Kilroy Realty reported net income of $156.2 million for the quarter ended Sept. 30 compared to $52.4 million a year earlier. Revenue declined but not by much, with $279.7 million compared to $289.9 million a year ago.
Kilroy Realty’s Strategic Moves
Chief executive Angela Aman touted the firm’s $205 million purchase of Maple Plaza, an office campus located in Beverly Hills. The three-story, 300,000 square-foot office space marked the company’s entry to the wealthy Westside, and it might have given Aman one of the best earnings-call talking points since she took the CEO’s job nearly two years ago.
Maple Plaza was 75 percent leased at the time of purchase, and has since “become the strongest driver of leasing activity in our Los Angeles portfolio,” Aman said on the call.
And that’s saying a lot given Kilroy’s Los Angeles portfolio encompasses 53 properties, more than 4.5 million square feet of rentable space, and is 74 percent occupied overall.
Managing Expectations
Aman and her crew told analysts and others on the call that the $5 billion company has inked more than 550,000 square feet of leases, new and renewals. Then she showed the other side of her CEO chops — managing expectations for next year, when 970,000 square feet of leases are set to expire. The company was staring at 1.9 million square feet before it locked down occupancy for about half the space with renewals. Aman said the company now anticipates “move-outs in 2026 for the majority of what’s left in the expiration pool.”
That’s about 500,000 square feet, if you apply mathematics to the earnings-call narrative. Aman said the hope is to chip away at the pending expirations via new leasing.
Market Reaction and Upcoming Earnings
The market seemed to like the overall story, in any case, sending Kilroy shares trading higher on earnings in the wake of the earnings report.
Hudson Pacific pending
Spooky season is over but earnings season isn’t. Victor Coleman’s Hudson Pacific Properties reports earnings next Wednesday, and that is one we’re paying particular attention to after the company posted hundreds of millions in financial losses.
Bren ditches downtown SD
The country’s richest developer, Donald Bren, is all out of offices in downtown San Diego. The billionaire’s Irvine Company ended its reign as the largest office landlord in downtown — and its presence.
The company dumped its last office tower: One American Plaza, a 34-story, 650,000-square-foot property.
John Saca and daughter Payton Saca purchased the real estate for $120 million — Bren’s company paid about $300 million for it in 2006.
Other Developments
Art Deco gem in receivership
A couple months ago, we posed a question: Does Rockwood have time to save Santa Monica Clock Tower?
The clock has struck midnight, it seems and the office tower is in the receiver’s hands now.
The court appointed a receiver to take control of the property that was once the tallest in the city after special servicer Rialto Capital sued Rockwood Capital, alleging that the Santa Monica Clock tower owner defaulted on commercial mortgage-backed securities debt connected to the property, and owed about $25 million.
Honoring the late Nelson Rising
Earlier in October, the Rose Bowl Legacy Foundation dedicated the Nelson C. Rising Legacy Bridge at the Rose Bowl Stadium. The late Nelson Rising was known for the part he played in developing Los Angeles’ skyline. His son Christopher Rising, who now helms Rising Realty Partners, was there to honor his father.
Conclusion
The Los Angeles commercial real estate scene has seen significant developments, from Kilroy Realty’s tripled profits to Hudson Pacific’s upcoming earnings report. The market is watching closely as companies navigate the expectations game and make strategic moves to stay ahead.
FAQs
Q: What was Kilroy Realty’s net income for the quarter ended Sept. 30?
A: $156.2 million
Q: What is the occupancy rate of Kilroy’s Los Angeles portfolio?
A: 74 percent
Q: Who purchased One American Plaza from Donald Bren’s Irvine Company?
A: John Saca and daughter Payton Saca
Q: What is the status of the Santa Monica Clock Tower?
A: It is in receivership
Q: Who was honored by the Rose Bowl Legacy Foundation?
A: The late Nelson Rising
