Kilroy Realty Corporation Reports Fourth Quarter and Full Year Financial Results

Kilroy Realty Corporation (NYSE:KRC) ("Kilroy" or the "Company") today reported financial results for the fourth quarter and full year ended December 31, 2025.

"Our strong performance in the fourth quarter capped off an exceptional year of execution by the entire Kilroy Team," said Angela Aman, Chief Executive Officer. "We captured growing tenant demand for high quality, well-amenitized office and life science projects across virtually all of our submarkets, made substantial progress on leasing our in-process redevelopment and development projects, and capitalized on a resurgence of institutional investor interest in West Coast commercial real estate assets in order to refine and enhance our portfolio. As we look ahead to 2026, we are encouraged by the continued momentum we are experiencing across our platform and believe we are well positioned for continued growth and evolution."

Fourth Quarter Highlights

Financial Results

• Revenues of $272.2 million for the quarter ended December 31, 2025, as compared to $286.4 million for the quarter ended December 31, 2024
• Net income available to common stockholders of $12.4 million, or $0.10 per diluted share, for the quarter ended December 31, 2025, as compared to $59.5 million, or $0.50 per diluted share, for the quarter ended December 31, 2024
• Funds from operations ("FFO") of $117.2 million, or $0.97 per diluted share, for the quarter ended December 31, 2025, as compared to $144.9 million, or $1.20 per diluted share, for the quarter ended December 31, 2024

Leasing and Occupancy

• Stabilized Portfolio was 81.6% occupied and 83.8% leased at December 31, 2025, representing 220 basis points of leases signed that have not commenced
• During the quarter, signed approximately 827,000 square feet of leases, the Company's strongest fourth-quarter leasing performance in six years
  • Leasing activity was comprised of 547,000 square feet of new leasing on previously vacant space, 148,000 square feet of new leasing on currently occupied space, and 132,000 square feet of renewal leasing
    • At Kilroy Oyster Point Phase 2 ("KOP 2"), signed 316,000 square feet of new leases. See "Kilroy Oyster Point Phase 2" section below for additional details
    • Leasing activity during the quarter included 60,000 square feet of short-term leasing
• GAAP and cash rents on leases signed during the quarter decreased 16.8% and 27.1%, respectively, from prior levels on Second Generation leasing, excluding short-term leasing
  • Leasing spreads during the quarter were negatively impacted by:
    • A new lease signed on a space recently vacated due to a tenant bankruptcy
    • A renewal signed to preserve near-term income on a single-tenant building while the Company evaluates alternative uses
  • Excluding these two leases, GAAP and cash rents on leases signed during the quarter would have increased 16.2% and decreased 2.6%, respectively

Capital Recycling Activity

• Dispositions / Held for Sale / Assets Under Contract:
  • In December, completed the sale of Sunset Media Center, an approximately 326,000-square-foot office property in the Hollywood submarket of Los Angeles, for gross sales proceeds of $61.0 million
  • In December, entered into an agreement, subject to a non-refundable deposit, to sell Kilroy Sabre Springs, a three-building campus in the I-15 Corridor submarket of San Diego, and classified the campus as Held for Sale. The campus totals approximately 428,000 square feet, and the sale closed in January for gross sales proceeds of $124.5 million
  • In December, entered into an agreement to sell the remaining portion of the land at Santa Fe Summit for $86.0 million in gross sales proceeds. The transaction represents approximately 17 acres of the 22-acre site and is expected to close upon receipt of entitlements for residential development
• Acquisitions:
  • In December, completed the acquisition of the Nautilus Campus, a four-building, approximately 232,000-square-foot life science campus, in the Torrey Pines submarket of San Diego, for $192.0 million

Dividend

• The Board declared and paid a regular quarterly cash dividend on its common stock of $0.54 per share, equivalent to an annual rate of $2.16 per share. The dividend was paid on January 7, 2026 to stockholders of record on December 31, 2025 (the ex-dividend date)

Full Year Highlights

Financial Results

• Revenues of $1,112.7 million for the year ended December 31, 2025, as compared to $1,135.6 million for the year ended December 31, 2024
• Net income available to common stockholders of $276.1 million, or $2.32 per diluted share, for the year ended December 31, 2025, as compared to $211.0 million, or $1.77 per diluted share, for the year ended December 31, 2024
• Funds from operations ("FFO") of $505.9 million, or $4.20 per diluted share, for the year ended December 31, 2025, as compared to $551.6 million, or $4.59 per diluted share, for the year ended December 31, 2024

Leasing and Occupancy

• During the year, signed approximately 2,051,000 square feet of leases, the Company's highest annual leasing volume since 2019
  • Leasing activity was comprised of 1,108,000 square feet of new leasing on previously vacant space, 233,000 square feet of new leasing on currently occupied space, and 710,000 square feet of renewal leasing
    • Leasing activity during the year included 270,000 square feet of short-term leasing, primarily comprised of 187,000 square feet of short-term renewal leasing
• GAAP and cash rents on leases signed during the year decreased 9.3% and 18.4%, respectively, from prior levels on Second Generation leasing, excluding short-term leasing

Kilroy Oyster Point Phase 2

• As highlighted above, signed approximately 316,000 square feet of leases during the fourth quarter for a total of 384,000 square feet of leases signed at KOP 2 during the year, exceeding the Company's previously communicated goal of 100,000 square feet of lease executions. The project is now 3% occupied and 44% leased
  • Leasing activity at KOP 2 during the fourth quarter was comprised of the following transactions:
    • The University of California, San Francisco executed a full-building lease spanning approximately 280,000 square feet and is expected to commence occupancy in the fourth quarter of 2027
    • A new genomic sequencing foundry signed an approximately 20,000-square-foot lease in a space designed and built as part of the Company's spec suite initiative. The company commenced occupancy upon lease execution in the fourth quarter of 2025
    • Acadia Pharmaceuticals executed an approximately 16,000-square-foot lease and is expected to commence occupancy at KOP 2 in the second quarter of 2026

Development / Redevelopment

• During the first quarter of 2025, received a temporary certificate of occupancy and progressed KOP 2 from the under construction phase to the tenant improvement phase
• During the third quarter of 2025, added 4690 Executive Drive, an approximately 52,000-square-foot redevelopment project in the University Towne Center submarket of San Diego, to the stabilized portfolio. The property is 47% leased
• During the third quarter of 2025, added 4400 Bohannon Drive, an approximately 48,000-square-foot redevelopment project in the Other Peninsula submarket of the San Francisco Bay Area, to the stabilized portfolio. The property is 0% leased

Capital Recycling Activity

• In addition to the capital recycling activities highlighted above, the following transactions occurred during the year:
  • Dispositions / Assets Under Contract:
    • In April, entered into an agreement, subject to a non-refundable deposit, to sell a portion of the land at Santa Fe Summit for $38.0 million in gross sales proceeds. The transaction represents approximately five acres of the 22-acre site and is anticipated to close upon the receipt of entitlements, which is expected to occur in 2026
    • In June, completed the sale of 501 Santa Monica Boulevard, an approximately 79,000-square-foot operating property in West Los Angeles for gross sales proceeds of $40.0 million
    • In July, entered into an agreement, subject to a non-refundable deposit, for the sale of 1633 26th Street for $41.0 million in gross sales proceeds. The transaction is anticipated to close upon the receipt of entitlements, which is expected to occur in 2026
    • In September, completed the sale of a four-building, approximately 663,000-square-foot campus in Silicon Valley for gross sales proceeds of $365.0 million
  • Acquisitions:
    • In September, completed the acquisition of Maple Plaza, an approximately 306,000-square-foot office property in the Beverly Hills submarket of Los Angeles, for $205.3 million

Balance Sheet / Liquidity

• In August, completed a public offering of $400.0 million of 5.875% unsecured senior notes due October 2035
• In September, fully redeemed $400.0 million of 4.375% unsecured senior notes due October 2025
• As of December 31, 2025, the Company had approximately $1.3 billion of total liquidity, comprised of approximately $0.2 billion of cash and cash equivalents and approximately $1.1 billion available under the fully undrawn unsecured revolving credit facility

Sustainability and Corporate Social Responsibility Highlights

• Achieved carbon neutral operations across the portfolio for the sixth consecutive year
• Over six megawatts of installed onsite solar capacity generating clean electricity
• Listed on U.S. EPA's National Top 100 list of largest green power users
• Earned GRESB 5-Star Designation for Standing Assets
• Earned GRESB Regional Sector Leader in the Americas in Technology/Life Science for Development
• Achieved the most ENERGY STAR NextGen certifications of any building owner since the launch of the new certification program in 2024
• Achieved over 1.6 million square feet of new ENERGY STAR certifications across the portfolio, bringing the total to over 10.9 million square feet of ENERGY STAR certified space
• Became a Fitwel Champion+ company
• Maintained Green Lease Leader Gold status

Recent Developments

• In January, added KOP 2 to the stabilized portfolio
• In January, completed the sale of Kilroy Sabre Springs

Net Income Available to Common Stockholders / FFO Guidance

The Company is initiating Nareit-defined FFO per share guidance for 2026 of $3.25 to $3.45 per diluted share. The table below reflects key assumptions for 2026 guidance.

The Company's guidance estimates for the full year 2026, and the reconciliation of Net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this press release, reflect management's views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this press release. These guidance estimates do not include the impact on the Company's operating results from any events outside of the Company's control, as the timing and magnitude of any such events are not known at the time the Company provides guidance. There can be no assurance that the Company's actual results will not differ materially from these estimates.

Conference Call and Audio Webcast

The Company's management will discuss fourth quarter results and the current business environment during the Company's February 10, 2026 earnings conference call. The call will begin at 10:00 a.m. Pacific Time and last approximately one hour. To participate and obtain conference call dial-in details, register by using the following link, https://www.netroadshow.com/events/login/LE9zwo4AF0rVUaxBU0IDSIu6q6M8vLBYYMS. Those interested in listening via the Internet can access the conference call at https://events.q4inc.com/attendee/267439370. It may be necessary to download audio software to hear the conference call.

About Kilroy Realty Corporation

Kilroy is a leading U.S. landlord and developer, with operations in the San Francisco Bay Area, Los Angeles, Seattle, San Diego, 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, media, 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, 2025, Kilroy's stabilized portfolio totaled approximately 16.3 million square feet of primarily office and life science space that was 81.6% occupied and 83.8% leased. The Company also had approximately 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 94.1%. In addition, the Company had one development project in the tenant improvement phase totaling approximately 872,000 square feet with a total estimated investment of $1.2 billion.

A Leader in Sustainability and Commitment to Corporate Social Responsibility

Kilroy has a longstanding commitment to sustainability and continues to be a recognized leader in our sector. For over a decade, the Company and its sustainability initiatives have been recognized with numerous honors, including earning the GRESB five star rating and being named a sector and regional leader in the Americas. Other honors have included the Nareit Leader in the Light Award, being listed on the Dow Jones Sustainability World Index, being named ENERGY STAR Partner of the Year, and receiving the ENERGY STAR highest honor of Sustained Excellence.

Kilroy is proud to have achieved carbon neutral operations across our portfolio since 2020. The Company also has a longstanding commitment to maintain high levels of LEED, Fitwell, and ENERGY STAR certifications across the portfolio.

Kilroy is committed to cultivating a company culture that makes a positive difference in our employees' lives by focusing on development, celebrating our unique backgrounds, promoting employee health and wellness, and dedicating ourselves to being a responsible corporate citizen through our community service and philanthropic efforts.

More information is available at http://www.kilroyrealty.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends, and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results, and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results, or events. Numerous factors could cause actual future performance, results, and events to differ materially from those indicated in the forward-looking statements, including, among others: global market and general economic conditions, including actual and potential tariffs and periods of heightened inflation, and their effect on us and our tenants; adverse economic or real estate conditions generally, and specifically, in the States of California, Texas, and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants' businesses, including bankruptcy, lack of liquidity or lack of funding, and the impact labor disruptions or strikes, such as episodic strikes in the media industry, may have on our tenants' businesses; our ability to re-lease property at or above current market rates; reduced demand for office space, including as a result of remote working and flexible working arrangements that allow work from remote locations other than an employer's office premises; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service, and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; changes in interest rates and the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment, and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices, or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed, and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use, and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement, and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations, or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers' financial condition, and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; risks associated with climate change and our sustainability strategies, and our ability to achieve our sustainability goals; and our ability to maintain our status as a REIT. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors included under the caption "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2024, and our other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information and speak only as of the dates on which they are made. We assume no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information, or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.

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Doug Bettisworth

Vice President, Corporate Finance

(310) 481-8585