Kilroy Realty Supplemental Financial Report Q4 2025 Where Innovation Works KILROY REALTY CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS --------------- LOS ANGELES, February 9, 2026 - Kilroy Realty Corporation (NYSE: KRC) ("Kilroy" or the "Company") today reported financial results for the fourth quarter and full year ended December 31, 2025. "Our strong performance in the fourth quarter capped off an exceptional year of execution by the entire Kilroy Team," said Angela Aman, Chief Execu ...

Core Viewpoint - Kilroy Realty Corporation reported strong performance in Q4 2025, highlighting growth in tenant demand for high-quality office and life science projects, significant leasing activity, and a positive outlook for 2026 [2][6]. Financial Results - Revenues for Q4 2025 were $272.2 million, down from $286.4 million in Q4 2024 [6][31]. - Net income available to common stockholders was $12.4 million, or $0.10 per diluted share, compared to $59.5 million, or $0.50 per diluted share in the previous year [6][31]. - Funds from operations (FFO) were $117.2 million, or $0.97 per diluted share, down from $144.9 million, or $1.20 per diluted share in Q4 2024 [6][31]. - For the full year 2025, revenues totaled $1,112.7 million, a decrease from $1,135.6 million in 2024 [13][31]. - Full year net income available to common stockholders was $276.1 million, or $2.32 per diluted share, compared to $211.0 million, or $1.77 per diluted share in 2024 [13][31]. - Full year FFO was $505.9 million, or $4.20 per diluted share, down from $551.6 million, or $4.59 per diluted share in 2024 [13][31]. Leasing and Occupancy - The stabilized portfolio was 81.6% occupied and 83.8% leased as of December 31, 2025, with 220 basis points of leases signed that have not commenced [6][24]. - In Q4 2025, approximately 827,000 square feet of leases were signed, marking the strongest fourth-quarter leasing performance in six years [6][31]. - Leasing activity included 547,000 square feet of new leasing on previously vacant space, 148,000 square feet on currently occupied space, and 132,000 square feet of renewal leasing [6][31]. - GAAP and cash rents on leases signed during the quarter decreased by 16.8% and 27.1%, respectively, from prior levels on Second Generation leasing [6][31]. Capital Recycling Activity - In December 2025, the company completed the sale of Sunset Media Center for $61.0 million and entered into an agreement to sell Kilroy Sabre Springs for $124.5 million, which closed in January 2026 [6][31]. - The company also agreed to sell a portion of land at Santa Fe Summit for $86.0 million in gross sales proceeds [12][31]. Dividend - The Board declared a quarterly cash dividend of $0.54 per share, equivalent to an annual rate of $2.16 per share, paid on January 7, 2026 [7]. Guidance for 2026 - The company initiated FFO per share guidance for 2026 of $3.25 to $3.45 per diluted share [17][19]. - Key assumptions for 2026 include average full year occupancy of 76.0% to 78.0% and same property cash net operating income growth of -1.50% to 0.00% [19]. Sustainability and Corporate Social Responsibility - Kilroy achieved carbon neutral operations for the sixth consecutive year and has over six megawatts of installed onsite solar capacity [26][27]. - The company has received numerous sustainability accolades, including the GRESB 5-Star Designation and ENERGY STAR certifications [26][27].

Financial Data and Key Metrics Changes - FFO for the quarter was $1.08 per diluted share, including approximately $0.03 per share of one-time items [20] - Cash same property NOI growth for Q3 was 60 basis points, with real estate tax appeals contributing to 150 basis points of growth [20] - Occupancy improved to 81%, up from 80.8% at the end of Q2 [20] Business Line Data and Key Metrics Changes - Over 550,000 square feet of new and renewal leases were signed in Q3, marking the highest third quarter of leasing activity in six years [4] - SOMA assets executed over 95,000 square feet of new and renewal leases this quarter, with tour activity up 170% year over year [5][6] - In life sciences, 84,000 square feet of leases were signed to date, with significant demand from biotech companies [9][10] Market Data and Key Metrics Changes - Office demand in San Francisco reached a post-pandemic high of nearly 9 million square feet, up from approximately 7 million square feet last quarter [4] - The XBI index is up more than 20% year to date, indicating strong performance in the biotech sector [9] - Over 2 million square feet of sublease space has been taken off the market in San Francisco, indicating a sustained recovery [36] Company Strategy and Development Direction - The company is focusing on capturing growing demand across markets and ensuring assets are well-positioned to outperform [8] - The acquisition of Maple Plaza in Beverly Hills for $205 million marks a strategic investment in a high-demand area [12] - The Flower Mart project is being redesigned with multiple development scenarios submitted to the city's planning department [15][74] Management's Comments on Operating Environment and Future Outlook - Management noted improving workplace norms and a resurgence in leasing activity driven by AI and tech companies [3] - The company anticipates modest occupancy improvement in Q4 due to accelerated rent commitments [21] - Management raised the 2025 FFO outlook to a range of $4.18 to $4.24 per share, reflecting positive updates in leasing and occupancy [22][23] Other Important Information - The company completed the sale of a four-building campus in Silicon Valley for gross proceeds of $365 million [12] - The company is actively engaged in discussions with potential tenants for the KOP2 project, indicating a robust future pipeline [11][66] Q&A Session Summary Question: Thoughts on retention for expirations and occupancy commencement - Management indicated a remaining expiration pool of about 970,000 square feet for 2026, with limited opportunities for additional renewals [29][30] Question: Competitive positioning in San Francisco - Management noted a shift in tenant preferences towards impactful space, with strong demand from larger tenants returning to the market [32][35] Question: Update on KOP leasing activity and demand - Management reported strong momentum in leasing activity, with a focus on biotech and related sectors, and confidence in exceeding leasing goals [38][40] Question: Insights on Noy House lease and rent contribution - Management clarified that the Noy House lease will impact occupancy, but strong interest is expected for the space due to its high-quality build-out [45][46] Question: Capital allocation strategy and priorities - Management emphasized a disciplined approach to capital allocation, evaluating opportunities for investment and potential stock buybacks [71][72]

Financial Data and Key Metrics Changes - FFO for the quarter was $1.13 per diluted share, including approximately $0.11 per share of one-time items [10] - Cash same property NOI growth in the second quarter was 4.50%, with one-time items contributing 3.00% [10] - Occupancy at the end of the second quarter was 80.8%, down from 81.4% at the end of the first quarter [10][11] Business Line Data and Key Metrics Changes - The company is under contract to sell land at 20 Sixth Street in Los Angeles for $41 million, and completed the sale of 501 Santa Monica for $40 million [6][7] - The Flower Mart project remains the largest investment in the future development pipeline, currently entitled for a 2,300,000 square foot primarily office project [3][4] - GAAP releasing spreads were negative 11.2% in the second quarter, while cash releasing spreads were negative 15.2% [13] Market Data and Key Metrics Changes - The company expects a modest decline in occupancy in the third quarter, primarily due to the addition of two redevelopment projects [12] - The spread between leased and occupied space increased to 2.70%, a 100 basis point improvement year over year [13] - The company is seeing a widening of the types of buyers evaluating office assets, indicating growing conviction in the West Coast office recovery [21] Company Strategy and Development Direction - The company aims to monetize non-income producing land and concentrate investments in areas with robust demand drivers [5][6] - The strategy includes selling operating properties valued favorably relative to expectations for fundamentals [5] - The company is actively working on redesigning the Flower Mart project to allow for a broader mix of uses and earlier development phases [3][4] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about positive net absorption in the fourth quarter, supported by significant lease commencements [12] - The company is closely monitoring the impact of AI on office space requirements, noting both job losses and new job creation [44][46] - Management has raised the 2025 FFO outlook to a range of $4.05 to $4.15 per share, reflecting updated expectations for capitalization at the Flower Mart [14][15] Other Important Information - The company has a total buyback authorization of approximately $400 million, which has not yet been utilized [22] - The company is under contract to sell a four-building campus in Silicon Valley for $365 million, with occupancy expected to decline significantly by 2026 [7][8] Q&A Session Summary Question: Can you talk about the type of buyers and valuation discussions? - Management noted a variety of buyers including institutional and high net worth individuals, with depth across different types of opportunities [18][19] Question: Can you provide more detail on KOP2 activity? - Management expressed encouragement regarding leasing activity at KOP, with a focus on life science and healthcare tenants [24][25] Question: How do you view the impact of AI on office space? - Management highlighted the dual dynamics of job losses in traditional tech and new job creation driven by AI, with a positive outlook for markets like San Francisco [44][46] Question: What is the status of the Flower Mart project? - Management indicated ongoing constructive discussions with the city regarding project modifications, with expectations for updates in the coming quarters [60][62] Question: How is the company addressing lease expirations for 2026? - Management acknowledged a focus on addressing lease expirations, with expectations for some larger vacates in the first half of 2026 [32][33]