Columbia Square is one of Kilroy's five development projects underway.

LOS ANGELES—Kilroy Realty‘s 2Q14 reports show strong NOI growth that outperformed analysts original estimates. Driven by higher rental growth than expected, Kilroy’s NOI was $0.04 higher than consensus estimates and $0.01 higher than RBC Capital Markets estimates, while FFO finished the quarter at $0.72 per share, $0.01 above estimates.

According to RBC Capital Markets, Kilroy’s 2Q14 reports differed significantly from the original forecasts. Currently, RBC ranks Kilroy’s stock as outperform. Overall, the Kilroy shows a strong balance sheet with 89% of its debt at a fixed rate and a $90 million balance on the company’s revolving credit line.

In addition to strong NOI growth, same store NOI grew by 4.6% with same store occupancy rising from 89.8% to 92.1%. Although growth was strong, it was a lower increase than 1Q14, which had a same store NOI growth of 7.7% and same-store occupancy 50 basis points higher. However, overall occupancy closed at 93.2% for the quarter, an increase of 80 basis points over the preceding quarter and 250 basis points over last year, with positive net absorption.

Development is really Kilroy’s bread and butter. The REIT currently has six projects under construction in California, representing an $800 million investment. The projects include the Columbia Square office campus development in Hollywood, which recently signed a 93,000-square-foot lease with its first tenant, NeueHouse. The other projects are either fully leased or nearly. Kilroy has nine additional development projects in the pipeline.  And although the REIT did not acquire any new operating assets this quarter, it did acquire new development sites.