UPDATE: Key Banc Downgrades Kilroy Realty to Underweight, PT is at $35

Key Banc lowers its rating on Kilroy Realty

to Underweight from Hold with a downside price target of $35 per share. Key Banc says, "this downgrade largely reflects our view that high multiple REITs could come under pressure in 2012. In our December 19, 2011 initiation, we voiced concerns that KRC's valuation looked stretched and much of the upside from occupancy gains has been realized following the 1,000 bps rebound from trough levels to 92.8%. We were able to look past our valuation concern given our favorable view of West Coast office fundamentals, and KRC's portfolio repositioning and move into San Francisco." KRC closed at $39.09 per share on Wednesday.