Q2 2025 Kilroy Realty Corp Earnings Call Transcript
Key Points
- Kilroy Realty Corp (KRC) reported a strong quarter with over 400,000 square feet of new and renewal leases signed, showing a material improvement both sequentially and year-over-year.
- The company is seeing significant leasing activity in San Francisco and San Diego, with notable transactions including a 93,000 square foot lease with an AI tenant in San Francisco.
- Kilroy Realty Corp (KRC) is actively engaged in lease negotiations for approximately 100,000 square feet at its Kilroy Oyster Point development, indicating strong demand in the life science sector.
- The company announced the disposition of several properties, including a 4-building campus in Silicon Valley, which is expected to close at the end of the third quarter, allowing for efficient capital recycling.
- Kilroy Realty Corp (KRC) raised its 2025 FFO outlook to a range of $4.05 to $4.15 per share, reflecting positive financial performance and strategic capital allocation.
- Occupancy declined to 80.8% from 81.4% in the previous quarter, with expectations of a further modest decline in the third quarter.
- GAAP re-leasing spreads were negative 11.2% and cash re-leasing spreads were negative 15.2%, impacted by a single large lease in San Francisco.
- The company anticipates a deceleration in same-property NOI growth in the second half of the year due to onetime items and difficult comparisons.
- Kilroy Realty Corp (KRC) is facing challenges with lease expirations in 2026, with expectations of larger vacates or significant downsizes in the first half of the year.
- The Flower Mart project in San Francisco remains uncertain, with ongoing discussions with the city regarding modifications to the development plan, potentially impacting future capitalization.
Hello, everyone, and a warm welcome to the Kilroy Realty Corporation second-quarter 2025 earnings conference call. My name is Emily, and I'll be coordinating your call today. (Operator Instructions)
I would now like to hand the call over to Doug Bettisworth, Vice President, Corporate Finance. Please go ahead.
Good morning, everyone. Thank you for joining us. On the call with me today are Angela Aman, CEO; Jeffrey Kuehling, EVP, CFO and Treasurer; and Eliott Trencher, EVP, CIO. In addition, Justin Smart, President; and Rob Paratte, EVP, Chief Leasing Officer, will be available for Q&A.
Please note that some of this information that we will be discussing during this call is forward-looking in nature. Please refer to our supplemental package for a statement regarding the forward-looking information on this call and in the supplemental.
This call is being webcast live on our website and will be available for replay for the next eight days. Our earnings release
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