Highwoods Properties (NYSE:HIW) vs. Kilroy Realty (NYSE:KRC) Critical Survey

Highwoods Properties (NYSE:HIW) and Kilroy Realty (NYSE:KRC) are both mid-cap real estate companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, valuation, profitability, institutional ownership, risk, analyst recommendations and earnings.

Insider & Institutional Ownership

96.3% of Highwoods Properties shares are held by institutional investors. Comparatively, 94.2% of Kilroy Realty shares are held by institutional investors. 1.3% of Highwoods Properties shares are held by insiders. Comparatively, 0.8% of Kilroy Realty shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

Highwoods Properties has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, Kilroy Realty has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Highwoods Properties and Kilroy Realty, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Highwoods Properties	0	8	0	0	2.00
Kilroy Realty	2	9	4	0	2.13

Highwoods Properties presently has a consensus target price of $32.00, indicating a potential upside of 1.46%. Kilroy Realty has a consensus target price of $38.54, indicating a potential upside of 4.41%. Given Kilroy Realty’s stronger consensus rating and higher probable upside, analysts clearly believe Kilroy Realty is more favorable than Highwoods Properties.

Profitability

This table compares Highwoods Properties and Kilroy Realty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Highwoods Properties	22.56%	7.68%	2.98%
Kilroy Realty	2.63%	0.52%	0.27%

Earnings and Valuation

This table compares Highwoods Properties and Kilroy Realty”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Highwoods Properties	$806.11 million	4.32	$159.61 million	$1.69	18.66
Kilroy Realty	$1.11 billion	3.86	$276.12 million	$0.24	153.79

Kilroy Realty has higher revenue and earnings than Highwoods Properties. Highwoods Properties is trading at a lower price-to-earnings ratio than Kilroy Realty, indicating that it is currently the more affordable of the two stocks.

Dividends

Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 6.3%. Kilroy Realty pays an annual dividend of $2.16 per share and has a dividend yield of 5.9%. Highwoods Properties pays out 118.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kilroy Realty pays out 900.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Highwoods Properties beats Kilroy Realty on 10 of the 16 factors compared between the two stocks.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.

About Kilroy Realty

Kilroy Realty Corporation (NYSE: KRC, the company, Kilroy) is a leading U.S. landlord and developer, with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, Greater Seattle and Austin. The company has earned global recognition for sustainability, building operations, innovation and design. As a pioneer and innovator in the creation of a more sustainable real estate industry, the company's approach to modern business environments helps drive creativity and productivity for some of the world's leading technology, entertainment, life science and business services companies. The company is a publicly traded real estate investment trust (REIT) and member of the S&P MidCap 400 Index with more than seven decades of experience developing, acquiring and managing office, life science and mixed-use projects. As of December 31, 2023, Kilroy's stabilized portfolio totaled approximately 17.0 million square feet of primarily office and life science space that was 85.0% occupied and 86.4% leased. The company also had approximately 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 92.5%. In addition, the company had two in-process life science redevelopment projects totaling approximately 100,000 square feet with total estimated redevelopment costs of $80.0 million and one approximately 875,000 square foot in-process development project with a total estimated investment of $1.0 billion.