Kilroy Realty(KRC) - 2025 Q2 - Quarterly Results

Q2 2025 Financial and Operational Highlights CEO Statement and Key Business Updates CEO Angela Aman reported strong Q2 2025 with accelerated leasing momentum and significant capital recycling, reflecting improved institutional interest in West Coast office assets - Leasing momentum accelerated, leading to over 400,000 square feet of lease executions[4] - Significant progress in capital recycling through land monetization and dispositions of non-strategic operating properties[4] - Institutional interest in West Coast office assets continues to improve[4] Summary of Financial Results and Operational Metrics Kilroy Realty reported increased Q2 2025 revenues, net income, and FFO, with 423,000 sq ft of leases, a $40.0 million disposition, and a $365.0 million campus held for sale | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change (%) | | :-------------------------------- | :------------------ | :------------------ | :------------- | | Revenues | $289.9 | $280.7 | +3.27% | | Net Income Available to Common Stockholders | $68.4 | $49.2 | +38.9% | | Net Income Available to Common Stockholders (per diluted share) | $0.57 | $0.41 | +39.0% | | Funds From Operations (FFO) | $135.9 | $132.6 | +2.5% | | FFO (per diluted share) | $1.13 | $1.10 | +2.7% | - Stabilized Portfolio was 80.8% occupied and 83.5% leased at June 30, 2025[6] - Signed approximately 423,000 square feet of leases, including 225,000 sq ft of new leasing on previously vacant space[6] - Completed the sale of 501 Santa Monica Boulevard for $40.0 million[6] - Classified a four-building campus in Silicon Valley (663,000 sq ft) as Held for Sale, with an expected sale price of $365.0 million[6] - Declared and paid a regular quarterly cash dividend of $0.54 per share[7] FFO Guidance and Outlook FFO per share guidance for 2025 increased to $4.05-$4.15, reflecting improved Same Property Cash NOI growth and GAAP lease termination fee income | Metric | May 2025 Assumptions | July 2025 Assumptions | | :------------------------------------------ | :------------------- | :-------------------- | | Nareit FFO per common share/unit – diluted | $3.85 - $4.05 | $4.05 - $4.15 | | Same Property Cash NOI growth | (1.5%) to (3.0%) | (1.0%) to (2.0%) | | Average full year occupancy | 80% to 82% | 80.5% to 81.5% | | GAAP lease termination fee income | +/- $3 million | +/- $13 million | - Guidance estimates reflect management's views on current and future market conditions, including rental rates, occupancy levels, and earnings impact of events[12] - Guidance does not include potential future acquisitions, dispositions, capital markets activity, impairment charges, or events outside the Company's control[12] Corporate Data & Financial Highlights Company Background Kilroy Realty is a publicly traded REIT specializing in premier office and life science properties across West Coast markets and Austin, with a 16.4 million sq ft stabilized portfolio - Kilroy Realty Corporation (NYSE: KRC) is a publicly traded real estate investment trust (REIT) and member of the S&P MidCap 400 Index[20] - The Company owns, develops, acquires, and manages real estate assets primarily consisting of premier properties in Los Angeles, San Diego, the San Francisco Bay Area, Seattle, and Austin[20] | Metric | Value (as of 6/30/2025) | | :-------------------------------- | :---------------------- | | Stabilized Office & Life Science Space | 16.4 million square feet | | Number of Buildings | 118 | | Occupied Portfolio | 80.8% | | Leased Portfolio | 83.5% | | Residential Units | 1,001 | | Average Residential Occupancy (Q2 2025) | 93.8% | Financial Highlights Kilroy Realty reported increased Q2 2025 revenues to $289.9 million, net income to $68.4 million, and FFO per diluted share to $1.13, with 80.8% portfolio occupancy | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------- | :----------------------- | :------------- | | Revenues | $289,892 | $280,731 | +3.26% | | Net Income Available to Common Stockholders | $68,449 | $49,211 | +38.90% | | Net Income Available to Common Stockholders per diluted share | $0.57 | $0.41 | +39.02% | | Funds From Operations (FFO) | $135,891 | $132,587 | +2.49% | | FFO per common share – diluted | $1.13 | $1.10 | +2.73% | | Dividends declared per common share | $0.54 | $0.54 | 0.00% | | Net Operating Income Margin | 65.8% | 67.0% | -1.20 pp | | Period End Occupancy Percentage | 80.8% | 83.7% | -2.90 pp | | Period End Leased Percentage | 83.5% | 85.4% | -1.90 pp | - Net Debt to Company's Share of EBITDAre Ratio increased to 6.6x in Q2 2025 from 6.4x in Q2 2024[24] Consolidated Balance Sheets Kilroy Realty's total assets decreased by 5.86% and liabilities by 10.75% as of June 30, 2025, with assets held for sale increasing to $255.8 million | Metric | 6/30/2025 ($ in thousands) | 6/30/2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :------------------------- | :------------------------- | :------------- | | Total Assets | $10,867,832 | $11,543,756 | -5.86% | | Total Liabilities | $5,274,388 | $5,909,498 | -10.75% | | Total Equity | $5,593,444 | $5,634,258 | -0.72% | | Real estate and other assets held for sale, net | $255,795 | $0 | N/A | | Cash and cash equivalents | $193,129 | $835,893 | -76.99% | | Unsecured debt, net | $4,002,507 | $4,519,796 | -11.45% | Consolidated Statements of Operations Kilroy Realty's Q2 2025 operations show a 3.26% revenue increase and a 45.87% net income rise, supported by a property sale gain and reduced interest expense | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------- | :----------------------- | :------------- | | Total revenues | $289,892 | $280,731 | +3.26% | | Total expenses | $196,736 | $199,378 | -1.32% | | Interest income | $512 | $10,084 | -94.92% | | Interest expense | $30,844 | $36,763 | -16.11% | | Gain on sale of depreciable operating property | $16,554 | $0 | N/A | | Net Income | $79,568 | $54,547 | +45.87% | | Net Income Available To Common Stockholders | $68,449 | $49,211 | +38.90% | - The company began presenting 'Other income (expense)' from January 1, 2025, which includes tax expenses, acquisition/disposition expenses, and environmental/sustainability related income/expenses[31] Funds From Operations & Funds Available for Distribution Q2 2025 FFO increased by 2.49% to $135.9 million, but FAD decreased by 9.44% to $103.9 million, driven by higher recurring capital expenditures | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------- | :----------------------- | :------------- | | Funds From Operations (FFO) | $135,891 | $132,587 | +2.49% | | FFO per common share/unit – diluted | $1.13 | $1.10 | +2.73% | | Funds Available for Distribution (FAD) | $103,889 | $114,834 | -9.53% | | Recurring tenant improvements, leasing commissions, and capital expenditures | ($34,040) | ($22,069) | +54.26% | | Straight-line rents, net | $3,354 | ($634) | N/A | Supplemental Income Statement Detail Q2 2025 supplemental income shows cash lease termination fee income increased to $10.6 million, other revenues rose, and straight-line rents turned positive | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------- | :----------------------- | :------------- | | Base rent | $201,955 | $202,649 | -0.34% | | Tenant reimbursements | $48,035 | $49,427 | -2.82% | | Other revenues | $19,967 | $13,819 | +44.49% | | Straight-line rents, net | ($3,354) | $634 | N/A | | Cash lease termination fee income | $10,588 | $2,465 | +329.13% | | Total Revenues | $289,892 | $280,731 | +3.26% | Net Operating Income Kilroy Realty's Q2 2025 Cash NOI increased by 3.64% to $187.1 million and NOI by 1.48% to $190.8 million, driven by higher cash operating revenues | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------- | :----------------------- | :------------- | | Total cash operating revenues | $275,417 | $271,746 | +1.35% | | Total cash operating expenses | $88,281 | $91,181 | -3.00% | | Cash Net Operating Income | $187,136 | $180,565 | +3.64% | | Net Operating Income | $190,779 | $187,996 | +1.48% | | Lease termination fees | $10,754 | $1,451 | +641.14% | - Starting January 1, 2025, lease termination fees are excluded from NOI and Cash NOI calculations to provide a more indicative measure of operating performance[39] Same Property Net Operating Income Analysis (Cash Basis) Same Property Cash NOI increased by 4.5% to $178.6 million in Q2 2025, driven by higher cash operating revenues, despite average occupancy decreasing to 80.5% | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------- | :----------------------- | :------------- | | Total cash operating revenues | $262,974 | $258,745 | +1.63% | | Total cash operating expenses | $84,368 | $87,873 | -4.00% | | Cash Net Operating Income | $178,606 | $170,872 | +4.53% | | Average Occupancy | 80.5% | 83.2% | -2.70 pp | - The Same Property Portfolio includes 116 properties, representing 99.4% of the Stabilized Portfolio and 95.5% of the Total Portfolio[43] EBITDAre Kilroy Realty reported Q2 2025 EBITDAre increased by 1.70% to $181.5 million, and Adjusted EBITDAre grew by 4.12% to $167.4 million, reflecting improved operating performance | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------- | :----------------------- | :------------- | | Net Income Available to Common Stockholders | $68,449 | $49,211 | +38.90% | | EBITDAre | $181,500 | $178,461 | +1.70% | | Company's share of EBITDAre | $167,914 | $170,860 | -1.72% | | Company's share of Adjusted EBITDAre | $167,402 | $160,776 | +4.12% | - Starting January 1, 2025, the company began adjusting for taxes in its EBITDAre calculation, which are included in 'Other income (expense)' on the Consolidated Statement of Operations[47] Portfolio Data Stabilized Portfolio Occupancy Overview by Region Stabilized portfolio occupancy was 80.8% and leased 83.5% as of June 30, 2025, with regional variations; residential properties maintained 93.8% average occupancy | Region | Occupied at 6/30/2025 | Occupied at 3/31/2025 | Leased at 6/30/2025 | Leased at 3/31/2025 | | :------------------------ | :-------------------- | :-------------------- | :------------------ | :------------------ | | Total Stabilized Portfolio | 80.8% | 81.4% | 83.5% | 83.9% | | Los Angeles | 74.4% | 72.7% | 76.4% | 75.8% | | San Diego | 85.0% | 87.5% | 86.5% | 88.7% | | San Francisco Bay Area | 84.8% | 86.8% | 86.9% | 87.1% | | Seattle | 78.5% | 78.6% | 84.6% | 85.1% | | Austin | 79.9% | 76.4% | 83.2% | 81.5% | | Total Residential Properties | 93.8% | 95.2% | N/A | N/A | - University Towne Center in San Diego and several properties in Silicon Valley, South San Francisco, and Other Peninsula maintained 100% occupancy[51][57][59][61][62] - Culver City in Los Angeles had the lowest occupancy at 30.5%, though it improved from 15.2% in the prior quarter[51] Information on Leases Executed Kilroy Realty executed 345,943 sq ft of leases in Q2 2025, with Second Generation GAAP and cash rents decreasing by 11.2% and 15.2%, and a retention rate of 32.5% | Lease Type | of Leases (QTD) | Square Feet (QTD) | Weighted Average Lease Term (Mo.) | TI/LC Per Sq.Ft. | Changes in GAAP Rents | Changes in Cash Rents | | :---------------------------------------------------------------- | :---------------- | :------------------ | :------------------------ | :--------------- | :-------------------- | :-------------------- | | 2nd Gen Leasing | 29 | 282,479 | 54 | $46.69 | (11.2)% | (15.2)% | | 1st Gen / Major Repositioning / In-Process Development & Redevelopment Leasing | 5 | 63,464 | 139 | $147.86 | N/A | N/A | | Total | 34 | 345,943 | N/A | N/A | N/A | N/A | | Retention Rate Metric | Quarter to Date | Year to Date | | :-------------------------------- | :-------------- | :----------- | | Retention Rate | 32.5% | 25.2% | | Retention Rate, including subtenants | 35.0% | 34.4% | - During Q2 2025, 13 new leases totaling 123,963 square feet were signed and commenced[67] Stabilized Portfolio Capital Expenditures Total Second Generation Capital Expenditures for Q2 2025 amounted to $34.0 million, a significant increase driven by higher tenant improvements and leasing commissions | Capital Expenditure Type | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------- | :----------------------- | :------------- | | Second Generation Capital Improvements | $13,548 | $10,029 | +35.09% | | Second Generation Tenant Improvements & Leasing Commissions | $20,492 | $12,040 | +70.20% | | Total Second Generation Capital Expenditures | $34,040 | $22,069 | +54.26% | | Total Major Repositioning Capital Expenditures | $702 | $9,940 | -92.94% | | Total First Generation Capital Expenditures | $5,834 | $3,773 | +54.63% | - The Average Capital Expenditures to Average NOI Ratio for the trailing five quarters was 14.0%[70] Stabilized Portfolio Lease Expirations Kilroy Realty's stabilized portfolio faces significant lease expirations, with 10.0% of leased square footage expiring in 2026 and 7.7% in 2027, with varying ABR per sq ft - Adjusting for leases backfilled or renewed but not yet commenced, 2025, 2026, and 2027 expirations would be reduced by 90,492, 1,272, and 5,875 square feet, respectively[74] Stabilized Portfolio Lease Expiration Summary Lease expiration summary shows 2.4% of leased square footage expires in 2025 ($16.98 million ABR), with the largest portion (61.4%) in 2030 and Beyond | Year | % of Total Leased Sq. Ft. | Annualized Base Rent ($ in thousands) | ABR per Sq. Ft. | | :--- | :------------------------ | :------------------------------------ | :-------------- | | 2025 | 2.4% | $16,980 | $52.88 | | 2026 | 10.0% | $60,747 | $46.61 | | 2027 | 7.7% | $39,109 | $38.95 | | 2028 | 8.9% | $72,687 | $62.17 | | 2029 | 9.6% | $68,648 | $54.40 | | 2030 and Beyond | 61.4% | $499,264 | $62.08 | Stabilized Portfolio Lease Expiration Schedule by Region Regional lease expiration data shows San Francisco Bay Area has the highest ABR per sq ft for 2025 and 2028, with Los Angeles having the largest sq ft expiring in 2027 | Year | Region | Total Square Feet | % of Total Leased Sq. Ft. | Annualized Base Rent ($ in thousands) | ABR per Sq. Ft. | | :--- | :------------- | :---------------- | :------------------------ | :------------------------------------ | :-------------- | | 2025 | Los Angeles | 67,982 | 0.5% | $2,817 | $41.44 | | 2025 | San Francisco Bay Area | 93,381 | 0.6% | $6,332 | $67.81 | | 2026 | Los Angeles | 532,611 | 4.1% | $20,487 | $38.46 | | 2026 | San Francisco Bay Area | 316,514 | 2.4% | $20,241 | $63.95 | | 2027 | Los Angeles | 728,021 | 5.5% | $26,635 | $36.59 | | 2028 | San Francisco Bay Area | 737,225 | 5.6% | $49,555 | $67.22 | | 2030 and Beyond | San Francisco Bay Area | 3,025,608 | 23.1% | $230,127 | $76.06 | Top 20 Tenants Kilroy Realty's top 20 tenants account for 54.6% of ABR and 41.0% of rentable square feet, with a weighted average remaining lease term of 5.9 years | Metric | Value | | :----------------------------------------- | :---- | | Total Annualized Base Rental Revenue (Top 20) | $412,420k | | Percentage of Total Annualized Base Rental Revenue | 54.6% | | Total Rentable Square Feet (Top 20) | 6,727,939 | | Percentage of Total Rentable Square Feet | 41.0% | | Weighted Average Remaining Lease Term (Years) | 5.9 | - The largest tenant, a global technology company, contributes 5.9% of total ABR and occupies 849,826 square feet across Seattle and San Diego, with significant lease expirations in 2032-2033 and 2037[77] - Stripe, Inc. (San Francisco Bay Area) is the third-largest tenant, contributing 4.4% of total ABR with a lease expiring in 2034[77] Tenant Industry Diversification Tenant industry diversification is based on NAICS, with major technology, life science, and media companies among top tenants suggesting a diversified portfolio - Tenant industry diversification is based on the North American Industry Classification System (NAICS)[82] - The data includes 100% of consolidated property partnerships and is based on square footage of all in-place leases in the Stabilized Portfolio[82] 2025 Operating Property Acquisitions Kilroy Realty completed no operating property acquisitions in Q1 or Q2 2025 - No operating property acquisitions were made in Q1 or Q2 2025[83] 2025 Property Dispositions, Held for Sale, and Development Pipeline Under Contract Kilroy Realty disposed of one property for $40.0 million in Q2 2025, classified a $365.0 million campus as Held for Sale, and has two development sites under contract for $79.0 million | Category | Property | Submarket | Square Feet / Acreage | Sales Price / Anticipated Sales Price ($ in millions) | | :----------------------------------------- | :-------------------------------- | :---------------- | :-------------------- | :---------------------------------------------------- | | Operating Property Dispositions (Q2 2025) | 501 Santa Monica Boulevard | West Los Angeles | 78,509 | $40.0 | | Operating Properties Held for Sale | Silicon Valley Campus | Silicon Valley | 663,460 | $365.0 | | Development Pipeline - Under Contract | 1633 26th Street | West Los Angeles | 2 acres | $41.0 | | Development Pipeline - Under Contract | Santa Fe Summit | 56 Corridor | 5 acres | $38.0 | | Total Anticipated Proceeds | N/A | N/A | N/A | $444.0 | - The sale of the Silicon Valley Campus is expected to close late in Q3 2025[6] - Development pipeline transactions are subject to non-refundable deposits and are anticipated to close in 2026 upon receipt of entitlements[84] Consolidated Ventures (Noncontrolling Property Partnerships) Consolidated ventures showed strong Q2 2025 performance, with Cash NOI increasing by 28.1% to $25.7 million and Net Income more than doubling to $27.7 million, driven by lease termination fees | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------- | :----------------------- | :------------- | | Total cash operating revenues | $35,022 | $28,640 | +22.28% | | Cash Net Operating Income | $25,719 | $20,074 | +28.12% | | Net Operating Income | $25,483 | $21,097 | +20.79% | | Lease termination fees | $10,724 | $135 | +7843.70% | | Net Income | $27,733 | $13,691 | +102.56% | - Kilroy Realty holds ownership percentages of 56% in two San Francisco properties and 93% in a Redwood City property within these ventures[85] Development Stabilized Development & Redevelopment Projects No development or redevelopment projects reached stabilization in Q1 or Q2 2025 - No projects were stabilized in Q1 or Q2 2025[92] In-Process Development & Redevelopment Projects Kilroy Realty has three in-process development projects totaling 975,000 sq ft with an estimated $1.11 billion investment, all currently 0% occupied | Project | Location | Estimated Rentable Square Feet | Total Estimated Investment ($ in millions) | % Leased | % Occupied | Estimated Stabilization Date | | :-------------------------------- | :---------------- | :----------------------------- | :----------------------------------------- | :------- | :--------- | :--------------------------- | | Kilroy Oyster Point - Phase 2 | South San Francisco | 875,000 | $1,025 | 0% | 0% | 1Q 2026 | | 4400 Bohannon Drive | Other Peninsula | 48,000 | $55 | 0% | 0% | 3Q 2025 | | 4690 Executive Drive | University Towne Center | 52,000 | $30 | 47% | 0% | 3Q 2025 | | Total | N/A | 975,000 | $1,110 | 3% | 0% | N/A | - Projects are in 'cold shell condition' and ready for tenant improvements, which may require additional major base building construction[93] Future Development Pipeline Kilroy Realty's future development pipeline includes significant projects across West Coast markets and Austin, with $1.402 billion in cash costs incurred as of June 30, 2025 | Location | Project | Approx. Developable Square Feet / Resi Units | Total Cash Costs Incurred as of 6/30/2025 ($ in millions) | | :---------------- | :-------------------------------- | :----------------------------------------- | :-------------------------------------------------------- | | Los Angeles | 1633 26th Street | 190,000 | $15 | | San Diego | Santa Fe Summit | 600,000 - 650,000 | $116 | | San Diego | 2045 Pacific Highway | 275,000 | $57 | | San Diego | Kilroy East Village | 1,100 units | $68 | | San Francisco Bay Area | Kilroy Oyster Point - Phases 3 and 4 | 875,000 - 1,000,000 | $233 | | San Francisco Bay Area | Flower Mart | 2,300,000 | $642 | | Seattle | SIX0 | 925,000 and 650 units | $195 | | Austin | Stadium Tower | 493,000 | $76 | | Total | N/A | N/A | $1,402 | - Project scope and estimates are subject to change due to market conditions, tenant demands, construction costs, and regulatory processes[95] - 1633 26th Street and a portion of Santa Fe Summit are under contract for sale, anticipated to close in 2026 upon receipt of entitlements[96] Debt & Capitalization Data Capital Structure Kilroy Realty's total debt was $4.63 billion (53.0% of market cap) as of June 30, 2025, with unsecured debt at $4.03 billion (4.02% rate) and secured debt at $603.6 million (5.13% rate) | Metric | Amount ($ in thousands) | % of Total Market Capitalization | | :------------------------------------------------ | :---------------------- | :------------------------------- | | Unsecured Debt | $4,025,000 | 46.1% | | Secured Debt | $603,595 | 6.9% | | Total Debt | $4,628,595 | 53.0% | | Equity and Noncontrolling Interest in Operating Partnership | $4,098,154 | 47.0% | | Total Market Capitalization | $8,726,749 | 100.0% | | Weighted Average Stated Rate (Unsecured Debt) | 4.02% | N/A | | Weighted Average Stated Rate (Secured Debt) | 5.13% | N/A | | Weighted Average Stated Rate (Total Debt) | 4.17% | N/A | - The unsecured revolving credit facility had no outstanding balance as of June 30, 2025[100] - Several senior notes (2028, 2032, 2033) are designated as green bonds[101] Debt Maturities Kilroy Realty has a well-laddered debt maturity schedule, with 9% of total debt maturing in both 2025 ($403.2 million at 4.37%) and 2026 ($401.3 million at 4.06%) | Year | Total Debt ($ in thousands) | Weighted Average Stated Rate | % of Total Debt | | :--- | :-------------------------- | :--------------------------- | :-------------- | | 2025 | $403,153 | 4.37% | 9% | | 2026 | $401,317 | 4.06% | 9% | | 2027 | $449,125 | 4.55% | 9% | | 2028 | $400,000 | 4.75% | 9% | | 2029 | $475,000 | 4.12% | 10% | | 2030 | $500,000 | 3.05% | 11% | | 2031 | $350,000 | 4.27% | 8% | | 2032 | $425,000 | 2.50% | 9% | | 2033 | $450,000 | 2.65% | 9% | | 2034 | $375,000 | 5.90% | 8% | | 2036 | $400,000 | 6.25% | 9% | - The maturity date of the unsecured term loan assumes the exercise of two 12-month extensions[104] Debt Covenants & Leverage Ratios Kilroy Realty shows strong debt covenant compliance, with total debt to asset value at 33-35% and fixed charge coverage ratios exceeding 1.5x; Net Debt to EBITDAre was 6.6x | Covenant | Requirement | Actual Performance (as of 6/30/2025) | | :----------------------------------------- | :---------- | :----------------------------------- | | Total debt to total asset value | less than 60% | 33% (Unsecured Credit), 35% (Unsecured Senior Notes) | | Fixed charge coverage ratio | greater than 1.5x | 3.4x (Unsecured Credit), 5.5x (Unsecured Senior Notes) | | Unencumbered asset pool value to unsecured debt | greater than 150% | 301% | | Net debt to Company's share of EBITDAre Ratio | N/A | 6.6x | | Net debt to Company's share of Adjusted EBITDAre Ratio | N/A | 6.7x | | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | | :----------------------------------------- | :----------------------- | :----------------------- | | Net debt | $4,435,466 | $4,322,539 | | Trailing 12-months Company's share of EBITDAre | $674,686 | $673,269 | | Trailing 12-months Company's share of Adjusted EBITDAre | $658,562 | $632,284 | Non-GAAP Supplemental Measures Management Statements on Non-GAAP Supplemental Measures Management provides statements on non-GAAP measures (NOI, EBITDAre, FFO, FAD) as useful supplements to GAAP for evaluating performance and liquidity, with lease termination fees excluded from NOI starting 2025 - Non-GAAP measures like NOI, EBITDAre, FFO, and FAD provide useful supplemental information for investors to understand the Company's financial condition and results of operations[107][109][113][114][116][119][120] - Commencing January 1, 2025, lease termination fees are excluded from NOI metrics as they are non-recurring, providing a more indicative measure of operating performance[108] - These non-GAAP measures should not be viewed as alternatives to GAAP measures, as they exclude significant economic costs and activities[111][113][114][118][120] Definitions & Reconciliations Definitions Included in Supplemental This section defines key financial and operational terms, including Annualized Base Rent, Capital Expenditures, Payout Ratios, Lease Types, NOI Margin, and portfolio classifications, with rollforwards for Same Property and Stabilized Portfolios - Annualized Base Rent is defined as annualized monthly contractual rents from existing tenants, excluding certain non-cash adjustments[123] - The Same Property Portfolio includes properties owned and stabilized for two comparable reporting periods, excluding undeveloped land, development projects, and properties held for sale[142] Same Property Portfolio Rollforward (as of 6/30/2025) | Metric | Number of Buildings | Square Feet | | :----------------------------------------- | :------------------ | :---------- | | Same Property Portfolio as of 12/31/2024 | 119 | 16,209,399 | | Stabilized Development and Redevelopment Properties Added | 2 | 829,591 | | Dispositions and Properties Held for Sale | (5) | (741,969) | | Remeasurements | — | (5,261) | | Same Property Portfolio as of 6/30/2025 | 116 | 16,291,760 | Stabilized Portfolio Rollforward (as of 6/30/2025) | Metric | Number of Buildings | Square Feet | | :----------------------------------------- | :------------------ | :---------- | | Stabilized Portfolio as of 12/31/2024 | 123 | 17,142,721 | | Dispositions and Properties Held for Sale | (5) | (741,969) | | Remeasurements | — | (5,261) | | Stabilized Portfolio as of 6/30/2025 | 118 | 16,395,491 | Reconciliation of Net Income Available to Common Stockholders to Same Property Cash Net Operating Income This reconciliation details adjustments from Net Income Available to Common Stockholders to Same Property Cash NOI, showing $68.4 million in Net Income adjusted to $178.6 million in Same Property Cash NOI for Q2 2025 | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | | :----------------------------------------- | :----------------------- | :----------------------- | | Net Income Available to Common Stockholders | $68,449 | $49,211 | | Net Income | $79,568 | $54,547 | | Depreciation and amortization | $87,625 | $87,151 | | Interest expense | $30,844 | $36,763 | | Lease termination fees (subtracted) | ($10,754) | ($1,451) | | Net Operating Income | $190,779 | $187,996 | | Cash Net Operating Income | $187,136 | $180,565 | | Non-Same Property Net Cash Operating Income | ($8,530) | ($9,693) | | Same Property Cash Net Operating Income | $178,606 | $170,872 | - Lease termination fees are excluded from Net Operating Income, Cash Net Operating Income, and Same Property Cash Net Operating Income starting January 1, 2025[155] Reconciliation of Historical Net Income Available to Common Stockholders to Company's Share of Adjusted EBITDAre This section reconciles historical Net Income Available to Common Stockholders to the Company's Share of Adjusted EBITDAre for Q1 2024, Q4 2023, and Q3 2023, detailing adjustments for interest, depreciation, and noncontrolling interests | Metric | Q1 2024 ($ in thousands) | Q4 2023 ($ in thousands) | Q3 2023 ($ in thousands) | | :----------------------------------------- | :----------------------- | :----------------------- | :----------------------- | | Net Income Available to Common Stockholders | $49,920 | $47,284 | $52,762 | | Interest expense | $38,871 | $32,325 | $29,837 | | Depreciation and amortization | $88,031 | $86,016 | $85,224 | | EBITDAre | $182,602 | $171,387 | $173,798 | | Company's share of EBITDAre | $173,942 | $163,059 | $165,408 | | Company's share of Adjusted EBITDAre | $160,752 | $152,363 | $158,393 | Reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution This reconciliation shows adjustments from GAAP Net Cash Provided by Operating Activities to FAD, with Q2 2025 GAAP Net Cash of $143.7 million adjusted to FAD of $103.9 million after recurring capital expenditures | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | | :----------------------------------------- | :----------------------- | :----------------------- | | GAAP Net Cash Provided by Operating Activities | $143,746 | $88,693 | | Recurring tenant improvements, leasing commissions and capital expenditures | ($34,040) | ($22,069) | | Depreciation of non-real estate furniture, fixtures and equipment | ($1,382) | ($1,562) | | Net changes in operating assets and liabilities | $9,245 | $55,471 | | Funds Available for Distribution | $103,889 | $114,834 | Forward-Looking Statements Disclaimer on Forward-Looking Information This section disclaims that the report contains forward-looking statements subject to inherent uncertainties and risks, which could cause actual results to differ materially, and cautions readers not to rely on them as predictions of future performance - The report contains forward-looking statements concerning lease expirations, debt maturities, potential investments, development, dispositions, and financial data[159] - Forward-looking statements are based on current expectations, beliefs, and assumptions, but are not guarantees of future performance[159] - Actual performance, results, and events may vary materially due to numerous unpredictable factors, including global economic conditions, real estate market risks, tenant defaults, interest rate changes, and regulatory compliance[159] - Kilroy Realty Corporation assumes no obligation to update any forward-looking statement unless required by federal securities laws[159]