Moody's Investors Service says that although it maintains a generally negative outlook for the office property sector is negative, its outlook for office REIT ratings remains stable. "As office market fundamentals continue to weaken, we expect office REITs to experience earnings pressure," Moody's says in a recent report. The firm also expects development pipelines to slow considerably in light of the current economic climate. Fitch Ratings sees the office REIT sector as stable and "unchanged since the beginning of the year."

Among the REITs delivering steady profits lately is Pasadena, CA-based Alexandria Real Estate Equities Inc., which last week reported that funds from operations rose 6% per share for the third quarter ended Sept. 30, compared with the third quarter of last year on revenue that climbed 13% and total FFO that was up 14%. The FFO total was nearly $49 million or $1.53 per share.

Alexandria, which specializes in life sciences space, also reported leasing of 618,000 sf at 26 different properties during the quarter, of which 211,000 sf related to new or renewal leases of previously leased space and approximately 407,000 rentable square feet related to developed, redeveloped or previously vacant space. The company is even seeing rent growth in this uncertain economy, with rental rates for these new or renewal leases were on average approximately 8.2% higher than rental rates for expiring leases.

Among the leases that Alexandria has signed this year are an agreement with Pfizer Inc. for approximately 100,000 sf with an option for an additional 50,000 sf at The Alexandria Center for Science and Technology at Mission Bay, San Francisco. Pfizer will locate its Biotherapeutics and Bioinnovation Center at the property. In another of its deals, Gilead Sciences Inc. has signed a long-term lease for approximately 106,000 sf in Seattle.

Alexandria's results reflect how demand continues to climb and construction continues to grow in the life sciences realm, as illustrated by plans for a 60,000-sf Biomedical Research Laboratories and Community Sciences complex at the University of Texas at Brownsville. The $33-million project UT Brownsville project will be the launching point for the university's life science and research zone, just one of a host of life sciences projects under way or planned around the country despite the overall slowing of construction nationwide of general office space.

Another REIT reporting increased FFO recently was Los Angeles-based Kilroy Realty Corp., which said that FFO for the third quarter ended Sept. 30 totaled $34.5 million and $1 per share compared to $28.2 million and 81 cents per share in the third quarter last year. Net income of $13.2 million and 40 cents per share, compared to $9 million and28 cents per share in the third quarter of 2007, with revenue growing to $77.1 million from $65.1 million.

Kilroy "reported solid financial results for the third quarter, despite the uncertainty about the direction of the economy and the turmoil in global credit markets," company president and CEO John B. Kilroy Jr. commented in the company's earnings conference call. During the third quarter, Kilroy added two properties, which are 100% leased, to its stabilized portfolio, a newly developed 146,000-sf office building located along the I-15 corridor in San Diego County and a newly redeveloped 107,000-sf office building in El Segundo, CA. The two properties represent a total estimated new investment of approximately $66 million.

Kilroy has three additional properties currently under development, all located in submarkets of San Diego County. The three properties total approximately 254,000 sf and represent a total estimated investment of approximately $111 million. They are 58% leased.

On the down side of the REIT ledger, Los Angeles-based Maguire Properties continued to struggle in the third quarter. The REIT reported a net loss of $72.5 million and $1.52 per share for the third quarter ended Sept. 30, compared with net income of $81.7 million and $1.74 per share for the comparable period last year. Maguire reported a deficit of $20.2 million and 42 cents per share of funds from operations for the third quarter, compared with a deficit of $2.7 million and six cents per share in the third quarter last year.

Maguire has been attempting to turn the company around under new president and CEO Nelson Rising, who said that the company is in talks with a "very qualified" buyer for its 105-acre Park Place mixed-use office campus in Irvine. The sale of Park Place, and its other Orange County assets, is part of Maguire's plan to improve its balance sheet and its financial performance.