Q1 2025 Kilroy Realty Corp Earnings Call Transcript
Key Points
- Kilroy Realty Corp (KRC) reported solid leasing activity in Q1 2025, with a significant 60,000 square foot lease executed with a technology company in San Francisco.
- The company experienced a 60% year-over-year increase in tour activity in its San Francisco portfolio, indicating strong future leasing potential.
- KRC is actively engaging with potential tenants for its KOP Phase 2 development project in South San Francisco, supported by the project's high-quality construction and broad amenity offerings.
- The company is making progress in monetizing its land bank, with the first phase of its Santa Fe Summit land parcel disposition under contract for $38 million.
- KRC published its annual sustainability report, introducing ambitious goals to be achieved by 2030, reinforcing its commitment to corporate responsibility.
- KRC's occupancy declined to 81.4% at the end of Q1 2025, down from 82.8% at year-end, due to known move-outs of several larger tenants.
- First quarter GAAP re-leasing spreads were negative 15.8%, while cash re-leasing spreads were negative 23%, impacted by a large transaction with minimal capital investment.
- The life science sector faces challenges with market volatility dampening enthusiasm for public market financing and a complicated policy and regulatory outlook.
- KRC's Los Angeles market has been slower, partly due to disruptions from January fires, with only a slight uptick in tour activities.
- The company faces challenges in leasing up its redevelopment properties, which are expected to come into the stabilized occupancy pool in Q3 2025 with low leasing levels.
Hello and welcome to the Kilroy Realty Corporation 1Q '25 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 Bettisworth, Vice President's, Corporate Finance. Thank you. 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 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.
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