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Contact: | FOR RELEASE: |
Doug Bettisworth | February 9, 2026 |
Vice President, Corporate Finance | |
(310) 481-8585 |
KILROY REALTY CORPORATION REPORTS
FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS
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LOS ANGELES, February 9, 2026 - 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
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▪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
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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
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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
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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.
Key Assumptions | 2026 Assumptions | ||
Average full year occupancy | 76.0% to 78.0% | ||
Average full year occupancy excluding KOP 2 | 80.0% to 81.5% | ||
Same Property Cash Net Operating Income (“NOI”) growth (1) | (1.50%) to 0.00% | ||
NOI from Development Properties (2) | ($23.5) to ($25.0 million) | ||
Non-Cash GAAP NOI adjustments (1) (3) | $12 to $14 million | ||
GAAP lease termination fee income | $3.0 to $4.5 million | ||
General and administrative and Leasing costs | $89 to $91 million | ||
Interest income | $2 to $3 million | ||
Gross interest expense | $212 to $214 million | ||
Capitalized interest (4) | $32 to $34 million | ||
Total development spending (5) | $150 to $200 million | ||
Dispositions | +/- $300 million | ||
Full Year 2026 Range | ||||||
Low End | High End | |||||
$ and shares/units in thousands, except per share/unit amounts | ||||||
Net income available to common stockholders per share - diluted | $0.59 | $0.79 | ||||
Weighted average common shares outstanding - diluted (6) | 120,100 | 120,100 | ||||
Net income available to common stockholders | $70,800 | $95,040 | ||||
Adjustments: | ||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 300 | 300 | ||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 17,000 | 17,000 | ||||
Depreciation and amortization of real estate assets | 342,000 | 342,000 | ||||
Gain on sale of depreciable operating property | (8,200) | (8,200) | ||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (28,000) | (28,000) | ||||
Funds From Operations (1) | $393,900 | $418,140 | ||||
Weighted average common shares/units outstanding – diluted (7) | 121,200 | 121,200 | ||||
Nareit Funds From Operations per common share/unit – diluted (1) | $3.25 | $3.45 | ||||
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(1)For additional information, please refer to pages 35-37 “Non-GAAP Supplemental Measures” of the Company’s Supplemental Financial Report furnished on
Form 8-K for management statements on the Company’s non-GAAP measures.
(2)NOI from Development Properties is primarily comprised of carry costs associated with Company’s KOP 2 and Flower Mart projects. Guidance assumes the
continued capitalization of the Company’s Flower Mart project through June 2026.
(3)Non-Cash GAAP NOI adjustments include the following items: Amortization of deferred revenue related to tenant-funded tenant improvements, Straight-
line rents, net, Amortization of net below market rents, and Lease related adjustments and other.
(4)Capitalized interest guidance assumes the continued capitalization of the Company’s Flower Mart project through June 2026.
(5)Total development spending includes recently stabilized, in-process, and future development projects.
(6)Calculated based on estimated weighted average shares outstanding, including non-participating share-based awards and the dilutive impact of contingently
issuable shares.
(7)Calculated based on the weighted average shares outstanding, including participating and non-participating share-based awards, and the dilutive impact of
contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common
stockholders, common unitholders, and restricted stock unitholders.
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
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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.
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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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KILROY REALTY CORPORATION
SUMMARY OF QUARTERLY RESULTS
(unaudited; in thousands, except per share data)
Three Months Ended December 31, | Year Ended December 31, | ||||||
2025 | 2024 | 2025 | 2024 | ||||
Revenues | $272,187 | $286,379 | $1,112,667 | $1,135,629 | |||
Net income available to common stockholders | $12,444 | $59,460 | $276,121 | $210,969 | |||
Weighted average common shares outstanding – basic | 118,338 | 118,047 | 118,279 | 117,649 | |||
Weighted average common shares outstanding – diluted | 119,153 | 118,759 | 118,832 | 118,157 | |||
Net income available to common stockholders per share – basic | $0.10 | $0.50 | $2.33 | $1.78 | |||
Net income available to common stockholders per share – diluted | $0.10 | $0.50 | $2.32 | $1.77 | |||
Funds From Operations (1)(2) | $117,158 | $144,875 | $505,920 | $551,633 | |||
Weighted average common shares/units outstanding – basic (3) | 119,869 | 119,521 | 119,835 | 119,729 | |||
Weighted average common shares/units outstanding – diluted (4) | 120,684 | 120,234 | 120,388 | 120,236 | |||
Funds From Operations per common share/unit – basic (2) | $0.98 | $1.21 | $4.22 | $4.61 | |||
Funds From Operations per common share/unit – diluted (2) | $0.97 | $1.20 | $4.20 | $4.59 | |||
Common shares outstanding at end of period | 118,372 | 118,047 | |||||
Common partnership units outstanding at end of period | 1,134 | 1,151 | |||||
Total common shares and units outstanding at end of period | 119,506 | 119,198 | |||||
December 31, 2025 | December 31, 2024 | ||||||
Stabilized office portfolio occupancy rates: (5) | |||||||
Los Angeles | 75.1% | 75.0% | |||||
San Diego | 83.7% | 89.2% | |||||
San Francisco Bay Area | 86.2% | 87.4% | |||||
Seattle | 80.0% | 80.5% | |||||
Austin | 82.2% | 74.7% | |||||
Weighted average total | 81.6% | 82.8% | |||||
Total square feet of stabilized office properties owned at end of period: (5) | |||||||
Los Angeles | 4,242 | 4,340 | |||||
San Diego | 2,728 | 2,877 | |||||
San Francisco Bay Area | 5,565 | 6,171 | |||||
Seattle | 2,998 | 2,996 | |||||
Austin | 759 | 759 | |||||
Total | 16,292 | 17,143 | |||||
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(1)Reconciliation of Net income available to common stockholders to Funds From Operations available to common stockholders and unitholders and
management statement on Funds From Operations are included after the Consolidated Statements of Operations.
(2)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(3)Calculated based on weighted average shares outstanding, including participating share-based awards (i.e., nonvested stock and certain time-based
restricted stock units) and assuming the exchange of all common limited partnership units outstanding.
(4)Calculated based on weighted average shares outstanding, including participating and non-participating share-based awards, dilutive impact of
contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.
(5)Occupancy percentages and total square feet reported are based on the Company’s stabilized office portfolio for the periods presented.
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KILROY REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
December 31, 2025 | December 31, 2024 | ||
ASSETS | |||
Real Estate Assets | |||
Land | $1,641,913 | $1,750,820 | |
Buildings and improvements | 8,505,486 | 8,598,751 | |
Undeveloped land and construction in progress | 2,387,742 | 2,309,624 | |
Total real estate assets held for investment | 12,535,141 | 12,659,195 | |
Accumulated depreciation and amortization | (2,843,811) | (2,824,616) | |
Total real estate assets held for investment, net | 9,691,330 | 9,834,579 | |
Real estate and other assets held for sale, net | 115,155 | — | |
Cash and cash equivalents | 179,316 | 165,690 | |
Marketable securities | 30,807 | 27,965 | |
Current receivables, net | 12,765 | 11,033 | |
Deferred rent receivables, net | 424,794 | 451,996 | |
Deferred leasing costs and acquisition-related intangible assets, net | 278,232 | 225,937 | |
Right of use ground lease assets, net | 128,116 | 129,222 | |
Prepaid expenses and other assets, net | 54,561 | 51,935 | |
TOTAL ASSETS | $10,915,076 | $10,898,357 | |
LIABILITIES AND EQUITY | |||
Liabilities: | |||
Secured debt, net | $592,685 | $598,199 | |
Unsecured debt, net | 3,996,774 | 3,999,566 | |
Accounts payable, accrued expenses, and other liabilities | 288,963 | 285,011 | |
Ground lease liabilities | 127,628 | 128,422 | |
Accrued dividends and distributions | 65,009 | 64,850 | |
Deferred revenue and acquisition-related intangible liabilities, net | 125,628 | 142,437 | |
Rents received in advance and tenant security deposits | 75,701 | 71,003 | |
Liabilities related to real estate assets held for sale | 4,945 | — | |
Total liabilities | 5,277,333 | 5,289,488 | |
Equity: | |||
Stockholders’ Equity | |||
Common stock | 1,184 | 1,181 | |
Additional paid-in capital | 5,230,747 | 5,209,653 | |
Retained earnings | 188,876 | 171,212 | |
Total stockholders’ equity | 5,420,807 | 5,382,046 | |
Noncontrolling Interests | |||
Common units of the Operating Partnership | 51,911 | 52,472 | |
Consolidated property partnerships | 165,025 | 174,351 | |
Total noncontrolling interests | 216,936 | 226,823 | |
Total equity | 5,637,743 | 5,608,869 | |
TOTAL LIABILITIES AND EQUITY | $10,915,076 | $10,898,357 |
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KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
Three Months Ended December 31, | Year Ended December 31, | ||||||
2025 | 2024 | 2025 | 2024 | ||||
Revenues | |||||||
Rental income | $267,363 | $281,355 | $1,093,587 | $1,118,115 | |||
Other property income | 4,824 | 5,024 | 19,080 | 17,514 | |||
Total revenues | 272,187 | 286,379 | 1,112,667 | 1,135,629 | |||
Expenses | |||||||
Property expenses | 64,673 | 63,249 | 243,726 | 243,441 | |||
Real estate taxes | 26,556 | 24,026 | 107,564 | 108,951 | |||
Ground leases | 2,991 | 2,990 | 12,048 | 11,715 | |||
General and administrative expenses | 19,485 | 16,977 | 73,108 | 71,074 | |||
Leasing costs | 2,592 | 2,013 | 10,352 | 8,764 | |||
Depreciation and amortization | 92,623 | 89,121 | 354,854 | 356,182 | |||
Total expenses | 208,920 | 198,376 | 801,652 | 800,127 | |||
Other Income (Expenses) | |||||||
Interest income | 2,205 | 4,790 | 6,970 | 37,752 | |||
Interest expense | (32,148) | (33,245) | (126,292) | (145,287) | |||
Other income (expense) (1) | 44 | (493) | 168 | (992) | |||
Gains on sales of depreciable operating properties | — | — | 127,038 | — | |||
Impairment of real estate assets | (16,259) | — | (16,259) | — | |||
Gain on sale of long-lived assets | — | 5,979 | — | 5,979 | |||
Total other expenses | (46,158) | (22,969) | (8,375) | (102,548) | |||
Net income | 17,109 | 65,034 | 302,640 | 232,954 | |||
Net income attributable to noncontrolling common units of the Operating Partnership | (120) | (593) | (2,682) | (2,062) | |||
Net income attributable to noncontrolling interests in consolidated property partnerships | (4,545) | (4,981) | (23,837) | (19,923) | |||
Total net income attributable to noncontrolling interests | (4,665) | (5,574) | (26,519) | (21,985) | |||
Net income available to common stockholders | $12,444 | $59,460 | $276,121 | $210,969 | |||
Weighted average shares of common stock outstanding – basic | 118,338 | 118,047 | 118,279 | 117,649 | |||
Weighted average shares of common stock outstanding – diluted | 119,153 | 118,759 | 118,832 | 118,157 | |||
Net income available to common stockholders per share – basic | $0.10 | $0.50 | $2.33 | $1.78 | |||
Net income available to common stockholders per share – diluted | $0.10 | $0.50 | $2.32 | $1.77 | |||
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(1)Commencing January 1, 2025, the Company began presenting a new line item, Other income (expense), which includes tax expenses, acquisition and disposition expenses, and
income or expenses related to environmental and sustainability initiatives, all of which were previously included in General and administrative expenses. Historical amounts for
General and administrative expenses and Other income (expense) have been revised to conform with the current period presentation.
11
KILROY REALTY CORPORATION
FUNDS FROM OPERATIONS
(unaudited; in thousands, except per share data)
Three Months Ended December 31, | Year Ended December 31, | ||||||
2025 | 2024 | 2025 | 2024 | ||||
Net income available to common stockholders | $12,444 | $59,460 | $276,121 | $210,969 | |||
Adjustments: | |||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 120 | 593 | 2,682 | 2,062 | |||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,545 | 4,981 | 23,837 | 19,923 | |||
Depreciation and amortization of real estate assets | 91,213 | 87,536 | 349,271 | 349,828 | |||
Gains on sales of depreciable operating properties | — | — | (127,038) | — | |||
Impairment of real estate assets | 16,259 | — | 16,259 | — | |||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (7,423) | (7,695) | (35,212) | (31,149) | |||
Funds From Operations (1)(2)(3) | $117,158 | $144,875 | $505,920 | $551,633 | |||
Weighted average common shares/units outstanding – basic (4) | 119,869 | 119,521 | 119,835 | 119,729 | |||
Weighted average common shares/units outstanding – diluted (5) | 120,684 | 120,234 | 120,388 | 120,236 | |||
Funds From Operations per common share/unit – basic (2) | $0.98 | $1.21 | $4.22 | $4.61 | |||
Funds From Operations per common share/unit – diluted (2) | $0.97 | $1.20 | $4.20 | $4.59 | |||
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(1)The Company calculates Funds From Operations available to common stockholders and common unitholders (“FFO”) in accordance with the 2018
Restated White Paper on FFO approved by the Board of Governors of Nareit. The White Paper defines FFO as net income or loss (calculated in
accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains
and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly
attributable to decreases in the value of depreciable real estate held by the entity. The reconciling items include amounts to adjust earnings from
consolidated partially-owned entities and equity in earnings of unconsolidated affiliates to FFO. Our calculation of FFO includes the amortization of
deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back
net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and
common unitholders.
Management believes that FFO is a useful supplemental measure of the Company’s operating performance. The exclusion from FFO of gains and losses
from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of the
Company’s activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard
for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different
methodologies to calculate FFO, and accordingly, the Company’s FFO may not be comparable to all other REITs.
Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes
predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have
considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes
depreciation and amortization of real estate assets, management believes that FFO along with the required GAAP presentations provides a more complete
measurement of the Company’s performance relative to its competitors and a more appropriate basis on which to make decisions involving operating,
financing, and investing activities than the required GAAP presentations alone would provide.
FFO should not be viewed as an alternative measure of the Company’s operating performance since it does not reflect either depreciation and
amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties,
which are significant economic costs and could materially impact the Company’s results from operations.
(2)Reported amounts are attributable to common stockholders, common unitholders, and restricted stock unitholders.
(3)FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $3.5
million and $4.1 million for the three months ended December 31, 2025 and 2024, respectively, and $14.6 million and $19.1 million for the year ended
December 31, 2025 and 2024, respectively.
(4)Calculated based on weighted average shares outstanding, including participating share-based awards (i.e., certain time-based restricted stock units) and
assuming the exchange of all common limited partnership units outstanding.
(5)Calculated based on weighted average shares outstanding, including participating and non-participating share-based awards, dilutive impact of
contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.