Q4 2024 Kilroy Realty Corp Earnings Call Transcript
Key Points
- Kilroy Realty Corp (KRC) reported strong financial results and a significant increase in leasing activity, achieving the highest level of leasing since Q4 2019.
- The company successfully executed major leases, including a multi-floor lease with Walmart and a 274,000 square foot lease with a global technology company in the San Francisco Bay area.
- KRC's markets are showing signs of sustained recovery, with historically low levels of new supply and increased workplace attendance requirements.
- The company has unique opportunities for growth, particularly in high-quality vacancies in recently developed or repositioned assets.
- KRC is actively managing its future development pipeline, including potential reentitlement of certain parcels for alternative uses like residential, to maximize value realization for shareholders.
- KRC's occupancy ended the year at 82.8%, impacted by several large move-outs, including Capital One and Microsoft.
- The company's 2025 FFO guidance indicates a decrease in average occupancy to between 80% and 82%, driven by expected move-outs and downsizings.
- Cash same-property NOI is projected to decline between negative 1.5% to negative 3% in 2025, with base rent and net recoveries detracting from growth.
- There is continued uncertainty in the transaction market, and KRC's guidance does not include any FFO impact from potential land sales.
- The Flower Mart project in San Francisco faces challenges, with potential earnings implications if development is deemed unwarranted based on market conditions.
Good afternoon and welcome to the Kilroy Realty Corporation fourth quarter 2024 earnings conference call. My name is Harry, and I will be your operator today. (Operator Instructions)
I would now like to hand the conference over to [Doug Butterworth], Senior Director of Corporate Finance. Thank you. You may proceed.
Good morning, everyone. Thank you for joining us. On the call with me are Angela Aman, CEO; Jeffrey Kuehling, EVP, CFO and Treasurer; and Eliott Trencher, EVP, CIO. In addition, Justin Smart, President; and Rob Porat, EVP, Chief Leasing Officer, will be available for Q&A.
Please note that some of the information 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 and supplemental package have been filed on a Form 8-K with the
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