Zacks_Analysts' Blog : Kilroy Realty to Offer Shares - Analyst Blog

Kilroy Realty Corp. (KRC) recently announced plans to offer 4.5 million shares.

To cover any over-allotments, Kilroy Realty also plans to offer a 30-day option to the underwriters of purchasing an additional 675,000 shares.

The company's operating partnership, Kilroy Realty, L.P., is expected to utilize the net proceeds from the offering. It intends to use a part of the proceeds to pay off the cash portion of an acquisition of four office buildings, which is currently under progress in Kirkland, Washington. The total purchase price for the acquisition is approximately $100 million.

The rest of the proceeds may be utilized to repay unsecured debts under the operating partnership’s revolving credit facility and for other general purposes. In case the acquisition in Washington does not come through, the entire net proceeds of the public offering may be used to repay borrowings and future acquisitions.

This public offering will enable the company to attain financial flexibility and to be in a position to take up investment opportunities and acquisitions which go a long way in adding to the top-line growth. As of December 31, 2010, Kilroy Realty’s cash position stood at $14.8 million and net secured debt stood at $313 million.

Kilroy Realty Corporation is a real estate investment trust that engages in investment, development and management of properties. The main focus of Kilroy Realty remains on a conservatively managed balance sheet, and an expansion program that may include acquisitions or development depending upon specific opportunities.

Kilroy Realty currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, MPG Office Trust, Inc. (MPG), currently retains a Zacks #5 Rank, which translates into a short-term Strong Sell rating.