Our earnings release and supplemental package have been filed on a Form 8-K with the SEC, and both are also available on our website. Elliot will provide an update on our recent transaction activity, and Jeffrey will discuss our financial results and provide you with our updated 2026 guidance. Importantly, leases signed but not yet commenced now represents nearly $78 million of contractually obligated annualized base rents to be realized over the coming years, providing significant visibility on future growth. We're also thrilled to be experiencing strong demand across other core Bay Area submarkets.

Maple Plaza, our recent acquisition in Beverly Hills, is continuing to experience strong, broad-based demand from the financial services and media and entertainment sectors, notably surpassing our original expectations. In both cases, these assets benefited from the consistent demand we have seen across markets from owner users for well-located, high-quality real estate, driving a highly efficient execution for our shareholders. With proceeds from our first quarter dispositions, we elected to opportunistically capitalize on recent capital markets volatility, repurchasing approximately $73 million of stock at an average price of $30.80 per share. Looking forward, we'll continue to explore opportunities to harvest attractively priced capital from our existing portfolio while exploring the full range of redeployment alternatives available to us.

Over time, we've consistently captured meaningful rent growth at Crossing 900, re-leasing over 80,000 sq ft since the fourth quarter of 2023 at cash rent spreads up nearly 60%. Over the last several months, the capital markets have demonstrated continued momentum as buyers recognize the inflection in fundamentals and the positive impact AI is having on our markets. We determined these buildings would be good sales candidates given the lack of synergies with the office as well as the depth of demand for high quality apartments. As private capital returned to the office sector, Kilroy meaningfully ramped up sales efforts with a total of roughly $980 million of land and operating properties completed or under contract.

What went well
  • Delivered the strongest first-quarter leasing since 2017 at approximately 568,000 sq ft, more than double the prior-year first quarter, allowing the company to raise full-year average occupancy guidance by 25 basis points at the midpoint.
  • Raised 2026 FFO guidance by $0.21 at the midpoint to a new range of $3.49-$3.63 per diluted share, reflecting stronger core-portfolio performance and updated Flower Mart capitalization timing.
  • At 201 Third in San Francisco the lease rate jumped from 26% at year-end 2024 to over 80%, including a 62,000 sq ft Harvey AI expansion and all five newly built spec suites leased by completion, while the signed-but-not-commenced pool exceeded 1 million sq ft and nearly $78 million of annualized base rent.
  • Formed a joint venture to develop 1900 Broadway in downtown Redwood City (250,000 sq ft, already about 60% pre-leased via a 20-year, 145,000 sq ft lease with law firm Cooley at the highest rates ever realized in the portfolio), with expected stabilized yields in the low-to-mid 9% range.
  • Exceeded its full-year operating disposition goal early with about $350 million completed year-to-date (including $146 million of San Diego sales and $202 million of Hollywood residential assets), opportunistically repurchased roughly $73 million of stock at an average $30.80 per share, and redeemed $50 million of private placement notes.
What went wrong
  • First-quarter FFO declined to $0.91 per diluted share, and reported portfolio occupancy dropped to 77.6% as Kilroy Oyster Point Phase 2 entered the stabilized pool (excluding it, occupancy was 81.5%, down just 10 basis points).
  • Overall reported leasing spreads were negative at -10.6% GAAP and -16.8% cash, driven by two San Francisco leases on space vacant longer than 12 months.
  • Cash same-property NOI grew only 1.0%, with base rent detracting despite higher occupancy because of free-rent periods granted to certain new tenants.
  • Kilroy Oyster Point Phase 2 remained a near-term drag on reported occupancy and earnings as its carry costs continued to flow through the income statement.
  • Management now assumed Flower Mart expense capitalization would cease late in the fourth quarter of 2026, after which roughly $1 million of quarterly operating expenses and taxes plus $7 million of quarterly capitalized interest would begin impacting earnings.

More on Kilroy Realty Corp

Reported 2026-04-28 · figures from the Kilroy Realty Corp Q1 2026 earnings call.

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