Office & life science REIT on the West Coast. Trading at 0.62x book value. Leopold Aschenbrenner bought $50M in Q4 2025. | Analysis date: 2026-03-11
Leopold Aschenbrenner — the most AGI-bullish public investor — bought 1.33M shares ($50M) of an office REIT in Q4 2025. Our AGI scoring framework rates KRC a 3/10 (AGI net negative for office). The stock trades at 0.62x book value, near its 52-week low. The puzzle: why would the "AGI is imminent" guy buy a company that AGI supposedly kills? Either Leopold sees something the market doesn't, or this is a small contrarian hedge. Let's find out.
Kilroy is a REIT that owns, develops, and manages office and life science buildings in five West Coast markets. Founded in 1947 (78 years old). 241 employees.
| Category | Properties | Sq Ft / Units | Occupancy |
|---|---|---|---|
| Stabilized Office & Life Science | 121 buildings | 16.3M sq ft | 81.6% |
| Stabilized Residential | 3 properties | 1,001 units | 94.1% |
| Held for Sale | 1 property | 428K sq ft | — |
| In-Process Development | 1 project | 872K sq ft (est.) | — |
| Future Development Pipeline | 8 sites | undeveloped land | — |
San Francisco Bay Area, Los Angeles, Seattle, San Diego, Austin. All properties in California except 10 in Washington and 1 in Austin, TX.
| Real Estate Components | Amount | Notes |
|---|---|---|
| Land | $2.43B | Purchased at $2.34B, $91M in improvements since |
| — Initial cost of land | $2.34B | What they paid for it |
| — Land improvements since acquisition | $91M | |
| Buildings & Improvements | $8.51B | Gross cost (before depreciation) |
| — Initial cost of buildings | $3.16B | What they paid |
| — Improvements since acquisition | $7.03B | Massive capex over the years |
| — Other real estate additions | $339M | |
| Gross Real Estate at Cost | $12.54B | Land + buildings before depreciation |
| Less: Accumulated Depreciation | ($2.84B) | 23% depreciated |
| Net Real Estate | $9.69B | Book value of properties |
The land alone cost $2.34B to acquire. Land in SF, LA, Seattle, San Diego doesn't depreciate — it generally appreciates. The $2.43B land on the books is likely understated relative to current market value, since it was acquired over decades (since 1947).
The buildings are carried at $8.51B gross, depreciated to $5.66B net. Commercial buildings in prime West Coast locations are worth more than depreciated book in most cases. However, 81.6% occupancy is below historical norms (~90%+), which depresses market value.
Conservative estimate: Even if buildings are worth 80% of net book ($4.5B) and land is worth 1.2x book ($2.9B), total real estate value is ~$7.4B. Against $5.3B of total liabilities, that leaves ~$2.1B of equity value, or ~$18/share. Current price is $28.49 — above this very conservative estimate. But this assumes 80% of book which is harsh.
Fair estimate: If buildings are worth 100% of net book ($5.66B) and land is worth 1.5x book ($3.6B), total = $9.3B. Minus $5.3B liabilities = $4.0B equity = ~$34/share. Above current price.
| Item | FY2025 | Notes |
|---|---|---|
| ASSETS | ||
| Net Real Estate Investment Property | $9.69B | 89% of total assets |
| Right-of-use assets (operating leases) | $128M | Ground leases |
| Deferred Rent Receivables | $425M | Straight-line rent adjustments |
| Cash & Cash Equivalents | $179M | |
| Prepaid & Other Assets | $55M | |
| Accounts Receivable | $13M | |
| Other / Deferred Comp / etc. | ~$426M | Balancing to total |
| TOTAL ASSETS | $10.92B | |
| LIABILITIES | ||
| Unsecured Debt | $4.00B | ~76% of total debt (investment grade) |
| Secured Debt (mortgages) | $593M | 11% of total debt |
| Accounts Payable & Accrued | $289M | |
| Operating Lease Liabilities | $128M | Ground leases |
| Dividends Payable | $65M | |
| Deferred Revenue | $71M | |
| Deferred Compensation | $30M | |
| Environmental Remediation | $70M | Accrued for contaminated sites |
| Other Liabilities | ~$31M | |
| TOTAL LIABILITIES | $5.28B | |
| EQUITY | ||
| Common Stockholders' Equity | $5.42B | Excluding noncontrolling interests |
| Noncontrolling Interest | $217M | 0.9% LP interest + redeemable |
| TOTAL EQUITY | $5.64B | |
| Maturity | Amount | Notes |
|---|---|---|
| Due within 12 months | $601M | Needs refinancing or paydown |
| Due in year 2 | $249M | |
| Due after year 5 | $2.40B | Bulk of debt is long-dated |
| Total Debt | $4.59B | Debt / Total Assets = 42% |
| Unamortized Debt Issuance Costs | ($9M) |
| Cash Flow Item | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|
| Revenue | $229M | $955M | $1.10B | $1.13B | $1.14B | $1.11B |
| Net Income | $83M | $659M | $259M | $238M | $233M | $303M |
| Operating Cash Flow | $456M | $516M | $592M | $603M | $541M | $566M |
| CapEx | ($189M) | ($120M) | ($98M) | ($96M) | ($54M) | ($63M) |
| Development Spending | — | — | — | — | — | ($175M) |
| Acquisitions | — | ($587M) | — | — | — | ($397M) |
| Property Sales Proceeds | — | — | — | — | $20M | $448M |
| Depreciation & Amortization | — | — | — | — | — | $355M |
| Dividends Per Share | $2.00 | $2.00 | $2.04 | $2.12 | $2.16 | $2.16 |
| Year | Shares Outstanding | Change |
|---|---|---|
| FY2020 | 113,241,341 | — |
| FY2021 | 116,429,130 | +2.8% |
| FY2022 | 116,806,575 | +0.3% |
| FY2023 | 117,160,173 | +0.3% |
| FY2024 | 117,649,111 | +0.4% |
| FY2025 | 118,278,990 | +0.5% |
Shares are slowly increasing — about 0.3-0.5% per year from stock-based compensation. No buybacks. This is typical for REITs (they distribute cash as dividends rather than buy back stock).
| Shares | 1,327,700 |
| Entry Quarter | Q4 2025 (new position) |
| Average Cost | $37.37 |
| Current Price | $28.49 |
| Gain/Loss | -22.3% (-$11.1M) |
| Position Size | $49.6M at cost (1.2% of portfolio) |
| % of KRC Outstanding | 1.1% |
Notable: This is Leopold's ONLY non-infrastructure position. Every other holding is either: data center infrastructure (CRWV, CORZ, APLD), power/energy (EQT, SEI, BE, LBRT), semiconductors/optics (INTC, LITE, SNDK, COHR, TSEM), or Bitcoin miners (IREN, CIFR, RIOT, HUT, etc.). KRC is the odd one out.
Kilroy owns 16.3M sq ft of office in prime West Coast locations with existing power infrastructure. If office demand permanently declines, some of these properties (especially life science buildings with heavy power/cooling) could be converted or redeveloped into data centers.
8 undeveloped land sites in the pipeline. West Coast land with entitlements is extremely scarce and valuable for data center development.
At 0.62x book, you're getting the land for ~60 cents on the dollar. The land alone ($2.4B book) may be worth more than the entire market cap ($3.4B) minus debt.
Office REITs are at historical low valuations. KRC traded at $60-80 pre-COVID. If occupancy recovers from 81.6% to 90%+, NOI increases ~15-20% without any new spending.
At $28.49, you're getting a 7.6% dividend yield that's well-covered by cash flow. Even if the stock goes nowhere, you collect 7.6% annually.
The 15% FCF yield is extraordinarily high for a company with real assets. The market is pricing in permanent decline.
Remote/hybrid work permanently reduces office demand. AGI accelerates this — if AI can replace knowledge workers, who needs the office?
81.6% occupancy is already below breakeven for many office buildings. West Coast markets (especially SF) have been hardest hit by remote work.
$601M of debt matures within 12 months — needs refinancing in a high-rate environment.
Life science real estate had a massive building boom 2020-2023. Many markets now have oversupply. If KRC's life science properties face vacancy, the thesis weakens.
Top 20 tenants = 54% of revenue. Concentrated tenant risk. One major departure could materially impact occupancy.
| Method | Value/Share | vs Current ($28.49) | Assumptions |
|---|---|---|---|
| Book Value (reported equity) | $45.79 | +61% | Stockholders equity / shares = $5.42B / 118.3M |
| Conservative NAV (80% buildings, 1.2x land) | $18 | -37% | Harsh discount on building values, modest land premium |
| Fair NAV (100% buildings, 1.5x land) | $34 | +19% | Book value on buildings, premium on land |
| OCF / 10% cap rate | $36 | +26% | $566M OCF / 10% = $5.66B EV - $4.6B debt + $179M cash |
| FCF Yield = 10% | $42 | +48% | $500M FCF / 10% = $5B enterprise value |
| Dividend Discount (8% required) | $27 | -5% | $2.16 / 8% = $27 (no growth assumed) |
At $28.49, you're paying ~$3.4B for a company with $9.7B of net real estate (book), $179M cash, $566M annual operating cash flow, and $4.6B of debt. The equity value on the books is $5.4B — you're buying at a 37% discount.
The real question is whether the book value is reliable. For REITs, book value understates land (acquired decades ago at lower prices) but may overstate buildings (if office demand has permanently shifted). The net effect is uncertain.
Floor price estimate: Even in a harsh scenario (80% of net building value + 1.0x land value = $7.1B real estate - $5.3B liabilities = $1.8B equity = ~$15/share), you'd lose about 47% from current price. This is NOT a "can't lose money" situation at today's price. The floor is probably $12-18/share, not zero, but there IS meaningful downside.
KRC is a real business generating real cash flow (~$500M FCF on $3.4B market cap = 15% FCF yield) trading at a big discount to book value (0.62x). The assets are mostly real (land + buildings, no goodwill), but the occupancy problem (81.6%) is real too.
Leopold's thesis is likely one of:
This does NOT meet our "very little chance of losing money" criteria at current price. The floor is probably $12-18, not $28. However, if the land is worth significantly more than book (plausible for West Coast properties acquired over decades), the floor could be higher.
To go deeper, we need:
Data sources: SEC EDGAR XBRL (CIK 1025996), yfinance, 10-K filing (FY2025), Situational Awareness LP 13F (Q4 2025). Analysis date: 2026-03-11.