Q1 2026 Kilroy Realty Corp Earnings Call Transcript
Key Points
- Kilroy Realty Corp (KRC) reported its strongest first quarter leasing results since 2017, with total productivity of approximately 568,000 square feet, more than double the previous year's performance.
- The company increased its full-year average occupancy guidance by 25 basis points at the midpoint, driven by strong leasing activity.
- Leases signed but not yet commenced represent nearly $78 million of contractually obligated annualized base rent, providing significant visibility on future growth.
- In San Francisco, market conditions have tightened with first-quarter leasing exceeding 3 million square feet, positioning KRC well to capitalize on demand across its Bay Area portfolio.
- KRC successfully executed a joint venture to develop a premier, substantially pre-leased Class A office asset in downtown Redwood City, with a 20-year lease signed at the highest rates ever realized in the Kilroy portfolio.
- Leasing spreads during the quarter showed negative GAAP spreads of 10.6% and cash spreads of 16.8%, primarily driven by two leases in San Francisco.
- Portfolio occupancy ended the quarter at 77.6%, which is relatively low, although it would have been 81.5% excluding KOP 2.
- The company anticipates a drop in occupancy in the second quarter due to the pace of move-outs, with Q2 being the largest move-out quarter of 2026.
- The Flower Mart project in San Francisco is undergoing a redesign and reimagining process, which is expected to delay capitalization until late in the fourth quarter.
- Despite improvements, the Los Angeles market is experiencing only gradual recovery, with the broader market still facing challenges.
Ladies and gentlemen, thank you for joining us, and welcome to Kilroy Realty Corporation Q1 2026 earnings conference call. (Operator Instructions)
I will now hand the conference over to Douglas Bettisworth, Vice President of Corporate Finance. Douglas, 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. Our earnings release and supplemental package have been filed on a Form 8-K with the SEC, and both
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