Q3 2025 Kilroy Realty Corp Earnings Call Transcript
Key Points
- Kilroy Realty Corp (KRC) reported strong leasing activity, signing over 550,000 square feet of new and renewal leases, marking their highest third quarter of leasing activity in six years.
- The company has seen a resurgence in leasing activity in San Francisco, particularly in the SOMA submarket, with tour activity up 170% year-over-year.
- Kilroy Oyster Point Phase 2 is benefiting from improved sentiment in the life science sector, with 84,000 square feet of leases signed to date.
- KRC completed the sale of a four-building campus in Silicon Valley for $365 million and acquired Maple Plaza in Beverly Hills for $205 million, marking their first investment in this sought-after submarket.
- The company raised its 2025 FFO outlook to a range of $4.18 to $4.24 per share, reflecting an $0.11 per share increase at the midpoint due to several positive factors including noncash income and improved same-property NOI guidance.
- Despite strong leasing activity, KRC faces a significant pool of 970,000 square feet of 2026 lease expirations that will require new leasing activity to offset potential move-outs.
- The company anticipates that SCAN will vacate 87,000 square feet at Aero by the end of their extended term, which could impact near-term stability.
- KRC's occupancy statistics were negatively impacted by the stabilization of redevelopment projects, resulting in a 50-basis-point negative impact during the third quarter.
- The departure of NeueHouse, a 95,000 square foot tenant at Columbia Square due to bankruptcy, will impact occupancy and revenue in the fourth quarter.
- The Flower Mart project in San Francisco faces ongoing uncertainty regarding its development path and timeline, with interest and other expense capitalization expected to continue through June 2026.
Hello, everyone, and welcome to the KRC Third Quarter '25 Earnings Conference Call. My name is Emily, and I'll be coordinating your call today. (Operator Instructions)
I would now like to turn the call over to Doug Bettisworth, Vice President of Corporate Finance to begin. 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. Our earnings release and supplemental package have been
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