KILROY REALTY CORP
For the period ended Dec 31, 2025. Filed Feb 11, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 11, 2026
KRC$35.82-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-13.
0001025996-25-000052
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-11.
0001628280-26-007051
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 363 previous paragraphs and 319 current paragraphs.
125 unchanged; 125 reworded; 64 added; 111 removed; 2 previous and 5 current paragraphs rearranged.
Tables are not compared: 26 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (64)
Current report
2025 Operational Highlights
Current report
Leasing. We executed new and renewal leases totaling 1.8 million square feet, excluding short-term leases, which is comprised of 1.2 million square feet of second generation leases signed within the stabilized portfolio and 0.6 million square feet of first generation, major repositioning, and development leases. For the 1.2 million square feet of leases signed within the stabilized portfolio, revenue recognized under U.S. generally accepted accounting principles (“GAAP”) and contractual rents decreased 9.3% and 18.4%, respectively. Our stabilized office portfolio was 81.6% occupied and 83.8% leased as of December 31, 2025.
Current report
Strategic Capital Allocation. In 2025, we completed the sale of three operating properties, comprised of six buildings, in three transactions to unaffiliated third parties for gross proceeds totaling approximately $466.0 million. Additionally, during the year ended December 31, 2025, we acquired two operating properties, comprised of five buildings, in two transactions for a cash purchase price of $397.3 million.
Current report
We also continued to execute on our development and redevelopment program during 2025. We added two completed redevelopment projects to our stabilized portfolio totaling 100,488 rentable square feet of life science space. We had one development project, Kilroy Oyster Point (Phase 2) (“KOP 2”), in the tenant improvement phase. During the year, we executed approximately 384,000 square feet of leases at KOP 2, bringing the project to 44% leased.
Current report
(1)For the property classified as held for sale, represents actual rentable square feet and consists of three buildings. For the in-process development project in the tenant improvement phase, represents estimated rentable square feet upon completion.
Current report
(2)Represents a recalculation of a property's rentable square footage using updated industry measurement standards.
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The following table sets forth the average occupancy of certain property groups within our stabilized portfolio for the periods presented:
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Leasing
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Leases Executed(1)
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(7) Calculated as the percentage of square footage renewed by existing tenants divided by the square footage of space renewed by existing tenants and lease expirations during the period. Excludes square footage of short-term leases.
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(8) Represents the retention rate, inclusive of leases with subtenants where the Company does not expect to experience downtime in occupancy between leases.
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(1) Represents all in-place leases as of December 31, 2025, excluding intercompany leases.
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Our capital recycling program plays a central role in reshaping our portfolio for long‑term performance and cash flow durability. By disposing of select non‑core or fully-stabilized assets, often in markets where growth prospects have moderated, as well as undeveloped land in our portfolio, we can redeploy capital into opportunities in innovation‑driven markets that can realize higher returns. Refer to “Liquidity and Capital Resources of the Operating Partnership” for further discussion of the Company’s capital recycling program.
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Stabilized Redevelopment Projects
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During the year ended December 31, 2025, we completed and added the following redevelopment projects to our stabilized portfolio:
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In-Process Development Projects - Tenant Improvement
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(2)Subject to signed agreements and non-refundable deposits as of the date of this filing. Both development sites are anticipated to close upon receipt of residential entitlements and permits, which is expected to occur beginning in phases in 2026.
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(1)Primarily represents compensation costs capitalized to construction and development and redevelopment projects.
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(2)Represents incidental property operating and carry costs capitalized to development and redevelopment projects.
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◦One property, comprised of four buildings, acquired in the fourth quarter of 2025; and
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•Disposition and Held For Sale Properties – includes the results of the following:
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◦One property, comprised of four buildings, disposed of in the third quarter of 2025;
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◦One property, comprised of three buildings, classified as held for sale as of December 31, 2025.
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(1)Commencing January 1, 2025, the Company began excluding lease termination fees from the calculation of rental income for Net Operating Income. Net Operating Income as presented has been conformed to our new definition.
Current report
(1)Beginning January 1, 2025, the Company began excluding lease termination fees from the calculation of rental income for Net Operating Income. Net Operating Income as presented has been conformed to our new definition. The years ended December 31, 2025 and 2024 excludes $13.1 million and $7.1 million of lease termination fees from total Net Operating Income, respectively, related to the Same Property portfolio.
Current report
(1)Beginning January 1, 2025, the Company began excluding lease termination fees from the calculation of rental income for Net Operating Income. The years ended December 31, 2025 and 2024 excludes $13.1 million and $7.1 million of lease termination fees from total Net Operating Income, respectively, related to the Same Property portfolio.
Current report
•A decrease in operating revenues of $24.9 million, or 2.4%, primarily due to a(n):
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•$7.0 million decrease in settlement and restoration fee income;
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•$6.6 million decrease in base rent, primarily due to a $19.8 million decrease from lease expirations, partially offset by a $13.2 million increase from higher rates;
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•$1.4 million decrease in revenues from recoverable operating expenses.
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Partially offset by a:
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•$2.8 million increase in revenues primarily due to transient parking and residential income.
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•$2.0 million decrease in property expenses, primarily due to a decrease in insurance premiums and residential expenses; and
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Partially offset by a:
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•A decrease of $13.0 million, attributable to the Disposition and Held for Sale Properties, primarily due to one property, comprised of four-buildings, disposed of during the third quarter of 2025; and
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•A decrease of $1.4 million, attributable to the Re/Development Properties, primarily due to non-recurring revenue from settlement fee income received from one tenant in 2024.
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Partially offset by:
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•An increase of $7.8 million, attributable to the Acquisition Properties, primarily due to one property acquired during the third quarter of 2025 and one property acquired in the third quarter of 2024.
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Lease Termination Fees
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Lease termination fees increased $6.0 million, or 85.5%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to a lease termination fee recognized for one tenant in the second quarter of 2025 in the San Francisco Bay Area region.
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Removed paragraphs (111)
Previous report
2024 Operating and Development Highlights
Previous report
Leasing. During 2024, we achieved our highest annual leasing volume since 2019. We executed new and renewal leases totaling 1.4 million square feet within our stabilized portfolio, excluding short-term leases, with an increase in GAAP rents of 8.2% and a decrease in cash rents of 4.5%. Our stabilized office portfolio was 82.8% occupied and 84.9% leased as of December 31, 2024.
Previous report
Development. We continued to execute on our development and redevelopment program during 2024. We had two redevelopment projects in the tenant improvement phase and one development project under construction. See “—Factors that May Influence Future Operations” for additional information regarding our development program.
Previous report
Refer to our 2024 Financing Highlights in “—Liquidity and Capital Resources of the Operating Partnership” for a list of financing transactions completed in 2024 and Note 10 “Secured and Unsecured Debt of the Operating Partnership” to our consolidated financial statements included in this report for additional information regarding our debt and capital market activity.
Previous report
The preparation of financial statements in conformity with GAAP requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting periods.
Previous report
Certain accounting policies are considered to be critical accounting policies. Critical accounting policies are those policies that require our management team to make significant estimates and/or assumptions about matters that are uncertain at the time the estimates and/or assumptions are made or where we are required to make significant judgments and assumptions with respect to the practical application of accounting principles in our business operations. Critical accounting policies are by definition those policies that are material to our financial statements and for which the impact of changes in estimates, assumptions, and judgments could have a material impact to our financial statements.
Previous report
The following critical accounting policies discussion reflects what we believe are the most significant estimates, assumptions, and judgments used in the preparation of our consolidated financial statements. This discussion of our critical accounting policies is intended to supplement the description of our accounting policies in the footnotes to our consolidated financial statements and to provide additional insight into the information used by management when evaluating significant estimates, assumptions, and judgments. For further discussion of our significant accounting policies, see Note 2 “Basis of Presentation and Significant Accounting Policies” to our consolidated financial statements included in this report.
Previous report
The determination of whether we are or the tenant is the owner of tenant improvements for accounting purposes is subject to significant judgment. In making that determination, we consider numerous factors and perform a detailed evaluation of each individual lease. No one factor is determinative in reaching a conclusion. The factors we evaluate include, but are not limited to, the following:
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•whether the lease agreement requires landlord approval of how the tenant improvement allowance is spent prior to installation of the tenant improvements;
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•whether the lease agreement requires the tenant to provide evidence to the landlord supporting the cost and what the tenant improvement allowance was spent on prior to payment by the landlord for such tenant improvements;
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•whether the tenant improvements are unique to the tenant or reusable by other tenants;
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•whether the tenant is permitted to alter or remove the tenant improvements without the consent of the landlord or without compensating the landlord for any lost utility or diminution in fair value; and
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•whether the ownership of the tenant improvements remains with the landlord or remains with the tenant at the end of the lease term.
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When we conclude that we are the owner of tenant improvements for accounting purposes using the factors discussed above, we record the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants, as our capital asset. During the years ended December 31, 2024, 2023, and 2022, we capitalized $3.5 million, $7.1 million, and $22.8 million, respectively, of tenant-funded tenant improvements. The amount of tenant-funded tenant improvements recorded in any given year varies based upon the mix of specific leases executed and/or commenced during the reporting period. For these tenant-funded tenant improvements, we record the amount funded by or reimbursed by tenants as deferred revenue, which is amortized and recognized as rental income on a straight-line basis over the term of the related lease beginning upon substantial completion of the leased premises. The determination of who owns the tenant improvements has a significant impact on the amount of non-cash rental revenue that we record related to the amortization of deferred revenue for tenant-funded tenant improvements. For the years ended December 31, 2024, 2023, and 2022, we recognized $19.1 million, $20.7 million and $19.3 million, respectively, of non-cash rental revenue related to the amortization of deferred revenue recorded in connection with tenant-funded tenant improvements.
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For residential properties, we commence revenue recognition upon lease commencement. Residential rental revenue is recognized on a straight-line basis over the term of the related lease, which is generally one year, net of any concessions.
Previous report
Termination options in some of our leases allow the tenant to terminate the lease, in part or in whole, prior to the end of the lease term under certain circumstances. Termination options generally require advance notification from the tenant, and payment of a termination fee that reimburses us for a portion of the remaining rent under the original lease term and the net book value of lease inception costs such as commissions, tenant improvements, and lease incentives. Termination fee income, included in rental income, is recognized on a straight-line basis from the date of the executed termination agreement through the revised lease expiration when the amount of the fee is determinable and collectability of the fee is probable. This fee income is reduced on a straight-line basis by any deferred rent receivable related to the lease.
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Generally, our leases require the tenant to restore the leased space to standard office condition upon the expiration of the lease. In some circumstances, tenants may negotiate to pay us a restoration fee in lieu of restoring the space. Restoration fee income, included in rental income, is recognized on a straight-line basis from the date of the executed restoration fee agreement through lease expiration when the amount of the fee is determinable and collectability of the fee is probable.
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When tenants declare bankruptcy, we may be able to collect some portion of their past-due rents through the bankruptcy process, whether through applying security deposit balances, drawing on tenants’ letters of credit, or through bankruptcy settlements. We recognize any amounts collected through the bankruptcy process when cash is received.
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Calculating additional rent requires an in-depth analysis of the complex terms of each underlying lease. Examples of judgments and estimates used when determining the amounts recoverable include:
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•estimating the final expenses, net of accruals, that are recoverable;
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•estimating the fixed and variable components of operating expenses for each building;
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•conforming recoverable expense pools to those used in establishing the base year or base allowance for the applicable underlying lease; and
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•concluding whether an expense or capital expenditure is recoverable pursuant to the terms of the underlying lease.
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During the year, we accrue estimated additional rent in the period in which the recoverable costs are incurred based on our best estimate of the amounts to be recovered. Throughout the year, we perform analyses to match additional rent with reimbursable costs incurred to date. Additionally, during the fourth quarter of each year we perform preliminary reconciliations and, if a change in estimate is warranted, an adjustment is recorded to reflect the revised estimate. Subsequent to year end, we perform final detailed reconciliations and analyses on a lease-by-lease basis and bill or refund each tenant for any cumulative annual adjustments in the first and second quarters of each year for the previous year’s activity. Our historical experience for the years ended December 31, 2023 and 2022 has been that our final reconciliation and billing process resulted in final amounts that approximated the total annual additional rent recognized.
Previous report
For the years ended December 31, 2024, 2023, and 2022, we recorded a net reduction to rental revenues for direct write-offs associated with transitioning certain tenants to a cash basis of reporting and an allowance for uncollectible accounts for both current tenant receivables and deferred rent receivables of approximately 0.4%, 1.1% (of which 0.5% related to one tenant), and 0.2% of total revenues, respectively. Additional amounts may potentially be restored in future periods as circumstances warrant, consistent with our accounting policies. In the event our estimates were not consistent with actual collections and we had to change our allowances by 1% of revenue from continuing operations, the potential impact to our net income available to common stockholders would be approximately $11.4 million, $11.3 million and $11.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Previous report
The fair value of the above-market or below-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term, and (ii) management’s estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease for above-market operating leases and the initial non-cancellable term plus the term of any below-market fixed rate renewal options, if applicable, for below-market operating leases. Our below-market operating leases generally do not include fixed rate or below-market renewal options. The amounts recorded for above-market operating leases are included in deferred leasing costs and acquisition-related intangible assets, net on the balance sheet and are amortized on a straight-line basis as a reduction of rental income over the remaining term of the applicable leases. The amounts recorded for below-market operating leases are included in deferred revenue and acquisition-related intangible liabilities, net on the balance sheet and are amortized on a straight-line basis as an increase to rental income over the remaining term of the applicable leases plus the term of any below-market fixed rate renewal options, if applicable. The amortization of a below-market ground lease obligation is recorded as an increase to ground lease expense in the consolidated statements of operations for the periods presented. The amortization of an above-market ground lease obligation is recorded as a decrease to ground lease expense in the consolidated statements of operations for the periods presented. If a lease were to be terminated prior to its contractual expiration, amortization of the related above-market or below-market lease intangible would be accelerated through the termination date.
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The determination of the fair value of the acquired tangible and intangible assets and assumed liabilities of acquisitions requires us to make significant judgments and assumptions about the numerous inputs discussed above. The use of different assumptions in these fair value calculations could significantly affect the reported amounts of the allocation of our acquisition related assets and liabilities and the related depreciation and amortization expense recorded for such assets and liabilities. In addition, because the value of above and below market leases are amortized as either a reduction or increase to rental income, respectively, our judgments for these intangibles could have a significant impact on our reported rental revenues and results of operations.
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•low occupancy levels, forecasted low occupancy levels or near term lease expirations at a specific property;
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•current period operating or cash flow losses combined with a historical pattern or future projection of potential continued operating or cash flow losses at a specific property;
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•deterioration in rental rates for a specific property as evidenced by sudden significant rental rate decreases or continuous rental rate decreases over numerous quarters, which could signal a continued decrease in future cash flows for that property;
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•deterioration of a given rental submarket as evidenced by significant increases in market vacancy and/or negative absorption rates or continuous increases in market vacancy and/or negative absorption rates over numerous quarters, which could signal a decrease in future cash flows for properties within that submarket;
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•significant increases in property sales yields, continuous increases in property sales yields over several quarters, or recent property sales at a loss within a given submarket, each of which could signal a decrease in the market value of properties;
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•significant change in strategy or use of a specific property or any other event that could result in a decreased holding period, including classifying a property as held for sale, or significant development delay;
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•evidence of material physical damage to the property; and
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•default by a significant tenant when any of the other indicators above are present.
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When we evaluate for potential impairment our real estate assets to be held and used, as well as land held for future development for potential impairment, we first evaluate whether there are any indicators of impairment.
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Cost Capitalization and Depreciation
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•Provide benefit in future periods;
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•Extend the useful life of the asset beyond our original estimates; and
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•Increase the quality of the asset beyond our original estimates.
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Reworded paragraphs (125)
Previous wording
Statements contained in this “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are not historical facts may be forward-looking statements. Forward-looking statements include, among other things, statements or information concerning our plans, objectives, capital resources, portfolio performance, results of operations, projected future occupancy and rental rates, lease expirations, debt maturities, potential investments, strategies such as capital recycling, development and redevelopment activity, projected construction costs, projected construction commencement and completion dates, projected square footage of space that could be constructed on undeveloped land that we own, projected rentable square footage of or number of units in properties under construction or in the development pipeline, anticipated proceeds from capital recycling activity or other dispositions and anticipated dates of those activities or dispositions, projected increases in the value of properties, dispositions, future executive incentive compensation, pending, potential or proposed acquisitions, plans to grow our Net Operating Income and FFO, our ability to re-lease properties at or above current market rates, anticipated market conditions and demographics and other forward-looking financial data, as well as the discussion in “—Factors That May Influence Future Results of Operations,” “—Liquidity and Capital Resource of the Company,” and “—Liquidity and Capital Resources of the Operating Partnership.” Forward-looking statements can be identified by the use of words such as “believes,” “expects,” “projects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates”, or “anticipates” and the negative of these words and phrases and similar expressions that do not relate to historical matters. Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends, and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results, and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results, or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others:
Current wording
Statements contained in this “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are not historical facts may be forward-looking statements. Forward-looking statements include, among other things, statements or information concerning our plans, objectives, capital resources, portfolio performance, results of operations, projected future occupancy and rental rates, lease expirations, debt maturities, potential investments, strategies such as capital recycling, development and redevelopment activity, projected construction costs, projected construction commencement and completion dates, projected square footage of space that could be constructed on undeveloped land that we own, projected rentable square footage of or number of units in properties under construction or in the development pipeline, anticipated proceeds from capital recycling activity or other dispositions and anticipated dates of those activities or dispositions, projected increases in the value of properties, dispositions, future executive incentive compensation, pending, potential or proposed acquisitions, plans to grow our NOI and FFO, our ability to re-lease properties at or above current market rates, anticipated market conditions and demographics and other forward-looking financial data, as well as the discussion in “—Factors That May Influence Future Results of Operations,” “—Liquidity and Capital Resource of the Company,” and “—Liquidity and Capital Resources of the Operating Partnership.” Forward-looking statements can be identified by the use of words such as “believes,” “expects,” “projects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates”, or “anticipates” and the negative of these words and phrases and similar expressions that do not relate to historical matters. Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends, and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results, and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results, or events. Numerous factors could cause actual future performance, results, and events to differ materially from those indicated in the forward-looking statements, including, among others:
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•global market and general economic conditions, including periods of heightened inflation, and their effect on our liquidity and financial conditions and those of our tenants;
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•global market and general economic conditions, including actual and potential tariffs and periods of heightened inflation, and their effect on us and our tenants;
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•any significant downturn in tenants’ businesses, including bankruptcy, lack of liquidity or lack of funding, and the impact labor disruptions or strikes, such as episodic strikes in the entertainment industry, may have on our tenants’ businesses;
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•any significant downturn in tenants’ businesses, including bankruptcy, lack of liquidity or lack of funding, and the impact labor disruptions or strikes, such as episodic strikes in the media industry, may have on our tenants’ businesses;
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We are a self-administered REIT active in premier office, life science, and mixed-use property types in the United States. We own, develop, acquire, and manage real estate assets, consisting primarily of premier properties in Los Angeles, San Diego, the San Francisco Bay Area, Seattle and Austin, which are markets that we believe have strategic advantages and strong barriers to entry. We own our interests in all of our real estate assets through the Operating Partnership and conduct substantially all of our operations through the Operating Partnership. We owned an approximate 99.0% general partnership interest in the Operating Partnership as of both December 31, 2024 and 2023. All of our properties are held in fee except for the fourteen office buildings that are held subject to long-term ground leases for the land (see Note 19 “Commitments and Contingencies” to our consolidated financial statements included in this report for additional information regarding our ground lease obligations).
Current wording
We are a self-administered REIT active in premier office, life science, and mixed-use property types in the United States. We own, develop, acquire, and manage real estate assets, consisting primarily of premier office and life science properties in the San Francisco Bay Area, Los Angeles, Seattle, San Diego, and Austin, which are markets we believe have strategic advantages and strong barriers to entry. We own our interests in all of our real estate assets through the Operating Partnership and conduct substantially all of our operations through the Operating Partnership. We owned an approximate 99.1% and 99.0% common general partnership interest in the Operating Partnership as of December 31, 2025 and 2024, respectively. All of our properties are held in fee except for the fourteen office buildings that are held subject to long-term ground leases for the land (see Note 17 “Commitments and Contingencies” to our consolidated financial statements included in this report for additional information regarding our ground lease obligations).
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Throughout 2024, we remained focused on creating value for our stockholders through leasing, and development and redevelopment activities. We also continued to maintain a strong balance sheet and elevate our leadership position in environmental, social, and corporate governance operations.
Current wording
Throughout 2025, we remained focused on creating value for our stockholders through leasing and strategic capital allocation. We also continued to maintain a strong balance sheet and elevate our leadership position in sustainable operations.
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Financing. In 2024, we issued $400.0 million of new debt at a stated interest rate of 6.250% and we amended and restated the terms of the unsecured revolving credit facility to maintain its borrowing capacity and extend the maturity date to July 31, 2028. Additionally, we repaid $320.0 million on the 2022 Term Loan Facility and repaid in full the $403.7 million aggregate principal amount outstanding of our 3.450% senior notes due 2024 at maturity.
Current wording
Financing. In 2025, we issued $400.0 million of new debt at a stated interest rate of 5.875% and we exercised our option to extend the maturity date of our unsecured term loan facility by 12 months to October 3, 2026. Additionally, we repaid in full the $400.0 million aggregate principal amount outstanding of our 4.375% senior notes due 2025.
Previous wording
As of December 31, 2024, our stabilized portfolio was comprised of 123 office, life science, and mixed-use properties encompassing an aggregate of approximately 17.1 million rentable square feet and 1,001 residential units. Our stabilized portfolio includes all of our properties with the exception of development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, undeveloped land, and real estate assets held for sale. We define redevelopment properties as those properties for which we expect to spend significant development and construction costs pursuant to a formal plan to change its use, the intended result of which is a higher economic return on the property. We define a property in the tenant improvement phase as a development or redevelopment property where the project has reached “cold shell condition” and is ready for tenant improvements, which may require additional major base building modifications before being placed in service. Projects in the tenant improvement phase are moved into our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities. Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets as the projects or phases of projects are placed in service.
Current wording
As of December 31, 2025, our stabilized portfolio was comprised of 121 office, life science, and mixed-use properties encompassing an aggregate of approximately 16.3 million rentable square feet and 1,001 residential units. Our stabilized portfolio includes all of our properties with the exception of development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, undeveloped land, and real estate assets held for sale, if any.
Previous wording
We did not have any properties or undeveloped land held for sale at December 31, 2024. Our stabilized portfolio also excludes our future development pipeline, which, as of December 31, 2024, was comprised of eight potential development sites, representing approximately 64 gross acres of undeveloped land, on which we believe we could develop more than 6.0 million rentable square feet of office space.
Current wording
Our stabilized portfolio also excludes our future development pipeline, which, as of December 31, 2025, was comprised of eight potential development sites on which we believe we could develop approximately 6.0 million rentable square feet of commercial real estate space and approximately 1,750 residential units.
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The following table reconciles the changes in the rentable square feet in our stabilized office portfolio of operating properties from December 31, 2023 to December 31, 2024:
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The following table reconciles the changes in the rentable square feet in our stabilized portfolio of operating properties from December 31, 2024 to December 31, 2025, excluding our residential portfolio:
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The following table sets forth certain information regarding our stabilized portfolio:
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The following table sets forth certain information regarding our stabilized portfolio, excluding our residential portfolio, as of the end of the period presented:
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(1) Occupancy percentages reported are based on our stabilized portfolio as of the end of the period presented and exclude occupancy percentages of properties held for sale. Represents economic occupancy for space where we have achieved revenue recognition for the associated lease agreements.
Current wording
(1) Occupancy percentages reported are calculated as the average of the daily ending occupancy percentages for the period presented. Represents economic occupancy for space where we have achieved revenue recognition for the associated lease agreements.
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(3) Our residential portfolio consists of our 200-unit residential tower and 193-unit Jardine project in Hollywood, California and 608 residential units at our One Paseo mixed-use project in Del Mar, California.
Current wording
(3) Our residential portfolio consists of our 200-unit Columbia Square Living property and 193-unit Jardine property in Hollywood, California and 608 residential units at our One Paseo mixed-use property in San Diego, California.
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Leasing Activity and Changes in Rental Rates. The amount of net rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, newly developed or redeveloped properties, newly acquired properties with vacant space, and space available from unscheduled lease terminations. The amount of rental income we generate also depends on our ability to maintain or increase rental rates at our properties. Negative trends in one or more of these factors could adversely affect our rental income in future periods. The following tables set forth certain information regarding leasing activity during the year ended December 31, 2024.
Current wording
Leasing Activity and Changes in Rental Rates. The amount of rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, including sublease space, newly developed or redeveloped properties and newly acquired properties with vacant space. The amount of rental income we generate also depends on our ability to maintain or increase rental rates at our properties. Negative trends in one or more of these factors could adversely affect our rental income in future periods. As noted below, the change in rents and cash rents for 2nd Gen Leasing decreased during the year, primarily due to lease arrangements with four tenants. The following tables set forth certain information regarding leasing activity during the year ended December 31, 2025:
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(2) Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs.
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(2) Includes tenant improvements and third-party leasing commissions, and excludes tenant-funded tenant improvements and indirect leasing costs.
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(3) Calculated as the change between the expiring GAAP rent and the new GAAP rent for the same space. Space that was vacant when the property was acquired is excluded from our change in rents calculations to provide a more meaningful market comparison.
Current wording
(3) Calculated as the change between the expiring GAAP rent and the new GAAP rent for the same space. When necessary, lease structures are modified (adjusted for triple net) for comparability. Space that was vacant when the property was acquired is excluded from these calculations.
Previous wording
(4) Calculated as the change between the expiring cash rent and the new cash rent for the same space. Space that was vacant when the property was acquired is excluded from our change in rents calculations to provide a more meaningful market comparison.
Current wording
(4) Calculated as the change between the expiring cash rent and the new cash rent for the same space. When necessary, lease structures are modified (adjusted for triple net) for comparability. Space that was vacant when the property was acquired is excluded from these calculations.
Previous wording
(5) Represents leases commenced or executed at properties in the stabilized portfolio during the period, excluding leases with a lease term of less than one year. Excludes leases commenced at space not previously leased at recently completed development projects that have been added to the stabilized portfolio and at space in the stabilized portfolio for which we are incurring significant non-recurring capital expenditures to reposition and is expected to result in additional revenue generated when re-leased.
Current wording
(5) Represents leases executed at properties in the stabilized portfolio during the period, excluding short-term leases. Excludes leases executed at space that was vacant when the property was acquired, space not previously leased at recently completed development projects that have been added to the stabilized portfolio, and space in the stabilized portfolio for which we are incurring significant non-recurring capital expenditures to reposition and is expected to result in additional revenue generated when re-leased. Tenant improvement and leasing commission capital expenditures for projects classified as Major Repositioning are captured in 2nd Gen Capital Expenditures.
Previous wording
(6) Represents leases commenced or executed at space not previously leased, recently completed development projects that have been added to the stabilized portfolio, at space in the stabilized portfolio for which we are incurring significant non-recurring capital expenditures to reposition and is expected to result in additional revenue generated when re-leased, and at projects in our development and redevelopment portfolios.
Current wording
(6) Represents leases executed at space not previously leased, space that was vacant when the property was acquired, recently completed development projects that have been added to the stabilized portfolio, at space in the stabilized portfolio for which we are incurring significant non-recurring capital expenditures to reposition and is expected to result in additional revenue generated when re-leased, and at projects in our development and redevelopment portfolios.
Previous wording
Scheduled Lease Expirations. The following tables set forth certain information regarding our lease expirations for our stabilized portfolio, excluding our residential properties, for the next five years and by region for the next two years.
Current wording
Lease Expirations. The following tables set forth certain information regarding our scheduled lease expirations for our stabilized portfolio, excluding our residential properties, and by region for the next two years:
Previous wording
(3) Annualized base rent includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures, including full service gross, modified gross, and triple net. Percentages represent percentage of total portfolio annualized contractual base rental revenue. For additional information on tenant improvement and leasing commission costs incurred by the Company for the current reporting period, please see further discussion under the caption “Information on Leases Commenced and Executed.”
Current wording
(3) Represents annualized monthly contractual rents from existing tenants in occupancy, including the impact of straight-lined rent escalations and the amortization of free rent periods and excluding the impact of the following: amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above/below-market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures, including full service gross, modified gross, and triple net. Amounts represent percentage of total portfolio annualized contractual base rental revenue.
Previous wording
(4) Adjusting for leasing transactions executed as of December 31, 2024 but not yet commenced, the 2025 and 2026 expirations would be reduced by 127,744 and 430,644 square feet, respectively.
Current wording
Adjusting for leases that have been backfilled or renewed by a subtenant as of December 31, 2025 but not yet commenced, the expirations for 2026 and 2027 would be 910,164 and 1,005,191 square feet, respectively.
Previous wording
Our rental rates and occupancy are impacted by general economic conditions, including the pace of regional economic growth and access to capital. Therefore, we cannot give any assurance that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates.
Current wording
Our rental rates and occupancy are impacted by general economic conditions, including the pace of regional economic growth and access to capital. Therefore, we cannot guarantee that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates.
Previous wording
We believe that a portion of our long-term future growth will continue to come from the completion of our in-process development and redevelopment projects and, subject to market conditions, from identifying new redevelopment opportunities and executing on our future development pipeline. Our future development pipeline may also expand in the future through targeted acquisitions of development opportunities on the West Coast and in Austin, Texas, subject to market conditions.
Current wording
We believe that a portion of our long-term future growth will indirectly continue to come from the completion of our in-process development and redevelopment projects and, subject to market conditions, from identifying new opportunities and executing on our future development pipeline.
Previous wording
We have a proactive planning process by which we continually evaluate the size, timing, costs, and scope of our development and redevelopment programs and, as necessary, scale activity to reflect the economic conditions and the real estate fundamentals that exist in our submarkets. We expect to execute on our development and redevelopment programs with prudence and will be pursuing opportunities with attractive economic returns in strategic locations with proximity to public transportation or transportation access, retail amenities, and in markets with strong fundamentals and visible demand. We generally plan to develop projects in phases, as appropriate, and we favor starting projects with significant pre-leasing activity.
Current wording
We have a proactive planning process by which we continually evaluate the size, timing, costs, and scope of our development and redevelopment projects and, as necessary, scale activity to reflect the economic conditions and the real estate fundamentals that exist in our submarkets. We expect to execute on our development and redevelopment programs with prudence and pursue opportunities with attractive economic returns in strategic locations with proximity to public transportation or transportation access, retail amenities, and in markets with strong fundamentals and visible demand. We generally plan to develop projects in phases, as appropriate, and we favor starting projects with significant pre-leasing activity.
Previous wording
•4690 Executive Drive, University Towne Center, San Diego, California. In March 2022, we began the phased redevelopment of this property and completed base building components and moved the building to the tenant improvement phase during the third quarter of 2024. This project is comprised of approximately 52,000 square feet of life science space with a total estimated investment of $25.0 million, inclusive of the depreciated basis of the building. We expect this property to be added to the stabilized portfolio in the third quarter of 2025.
Current wording
•4690 Executive Drive, University Towne Center, San Diego, California. In March 2022, we began the phased redevelopment of this property and completed base building components during the third quarter of 2024. This project is comprised of 52,074 square feet of life science space with a total estimated investment of $30.0 million, inclusive of the depreciated basis of the building. We added the building to the stabilized portfolio in the third quarter of 2025 upon reaching one year since substantial completion. The project is 47% leased.
Previous wording
•4400 Bohannon Drive, Menlo Park, California. In December 2022, we began the redevelopment of this property in the Other Peninsula submarket and completed base building components and moved the building to the tenant improvement phase during the third quarter of 2024. This project is comprised of approximately 48,000 square feet of life science space with a total estimated investment of $55.0 million, inclusive of the depreciated basis of the building. We expect this property to be added to the stabilized portfolio in the third quarter of 2025.
Current wording
•4400 Bohannon Drive, Menlo Park, California. In December 2022, we began the redevelopment of this property in the Other Peninsula submarket and completed base building components during the third quarter of 2024. This project is comprised of 48,414 square feet of life science space with a total estimated investment of $55.0 million, inclusive of the depreciated basis of the building. We added the building to the stabilized portfolio in the third quarter of 2025 upon reaching one year since substantial completion.
Previous wording
As of December 31, 2024, we had one development project under construction:
Current wording
As of December 31, 2025, we had one development project in the tenant improvement phase:
Previous wording
•Kilroy Oyster Point (Phase 2), South San Francisco, California. In June 2021, we commenced construction on Phase 2 of this 39-acre life science campus situated on the waterfront in South San Francisco. The second phase encompasses approximately 875,000 square feet of office and life science space across three buildings with a total estimated investment of $1.0 billion. In January 2025, we progressed this project to the tenant improvement phase upon receiving a temporary certificate of occupancy.
Current wording
•Kilroy Oyster Point (Phase 2), South San Francisco, California. In June 2021, we commenced construction on Phase 2 of this 39-acre life science campus situated on the waterfront in South San Francisco and progressed the property to the tenant improvement phase during the first quarter of 2025. The second phase encompasses 871,738 square feet of office and life science space across three buildings with a total estimated investment of $1.2 billion. We expect this property to be added to the stabilized portfolio one year from the date of the cessation of major base building construction activities, which is expected to occur in January 2026. The project is 44% leased.
Previous wording
As of December 31, 2024, our future development pipeline included eight future projects located in Los Angeles, San Diego, the San Francisco Bay Area, Seattle and Austin with an aggregate cost basis of approximately $1.4 billion, at which we believe we could develop more than 6.0 million rentable square feet of office space.
Current wording
As of December 31, 2025, our future development pipeline included the following projects, at which we believe we could develop approximately 6.0 million rentable square feet of commercial real estate space and approximately 1,750 residential units.
Previous wording
(1)Represents developable office/life science square feet and/or residential units. The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: significant changes in the economy, market conditions, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes, or project design.
Current wording
(1)Project scope, including the estimated developable square feet or number of residential units, could change materially from estimates provided due to one or more of the following: significant changes in the economy, market conditions, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes, or project design.
Previous wording
Fluctuations in our development activities could cause fluctuations in the average development asset balances qualifying for interest and other carrying cost and internal cost capitalization in future periods. A slowdown in development activities could result in fewer projects qualifying for interest capitalization under GAAP, resulting in higher interest expense. During the year ended December 31, 2024, we capitalized interest on in-process development and redevelopment projects and future development pipeline projects with an average aggregate cost basis of approximately $1.9 billion, as it was determined these projects qualified for interest and other carrying cost capitalization under GAAP. For the year ended December 31, 2024, we capitalized $82.5 million of interest to our qualifying development and redevelopment projects. For the year ended December 31, 2024, we capitalized $12.1 million of internal costs to our qualifying development and redevelopment projects and $8.6 million of internal costs to our qualifying capital improvement projects in the stabilized portfolio.
Current wording
Fluctuations in our development activities could cause fluctuations in the average development asset balances qualifying for interest and other carrying costs and internal cost capitalization in future periods. A slowdown in development activities could result in fewer projects qualifying for interest capitalization under GAAP, resulting in higher interest and other expense. The following table sets forth our capitalized interest and other capitalized costs for our development and redevelopment properties and capital improvement projects in the stabilized portfolio:
Previous wording
Management internally evaluates the operating performance and financial results of our stabilized portfolio based on Net Operating Income. We define “Net Operating Income” as consolidated operating revenues (rental income and other property income) less consolidated operating expenses (property expenses, real estate taxes and ground leases).
Current wording
Management internally evaluates the operating performance and financial results of our stabilized portfolio based on Net Operating Income. We define “Net Operating Income” as revenues less lease termination fees and consolidated operating expenses (property expenses, real estate taxes and ground leases). Commencing January 1, 2025, the Company began excluding lease termination fees from the calculation of rental income for Net Operating Income as they are non-recurring in nature and their exclusion will provide a measure that we believe is more indicative of our core operating performance. Historical amounts for Net Operating Income have been revised to conform with current period presentation, which resulted in no change to consolidated net income.
Previous wording
Net Operating Income is considered by management to be an important and appropriate supplemental performance measure to net income because we believe it helps both investors and management to understand the core operations of our properties excluding corporate and financing-related costs and non-cash depreciation and amortization. Net Operating Income is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. This measure thereby provides an operating perspective not immediately apparent from net income. In addition, Net Operating Income is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. Other real estate companies may use different methodologies for calculating Net Operating Income, and accordingly, our presentation of Net Operating Income may not be comparable to other real estate companies. Because of the exclusion of the items shown in the reconciliation below, Net Operating Income should only be used as a supplemental measure of our financial performance and not as an alternative to GAAP income from operations or net income.
Current wording
Net Operating Income is considered by management to be an important and appropriate supplemental performance measure to net income because we believe it helps both investors and management to understand the core operations of our properties. Net Operating Income is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. Because the Company’s Net Operating Income metrics exclude lease termination fees, leasing costs, general and administrative expenses, interest expense, depreciation and amortization, other income and expenses, impairment of real estate assets, and gains and losses, they provide performance measures that, when compared year over year, reflect the consolidated revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. In addition, Net Operating Income is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. Other real estate companies may use different methodologies for calculating Net Operating Income and, accordingly, our presentation of Net Operating Income may not be comparable to other real estate companies. Because of the exclusion of the items shown in the reconciliation below, Net Operating Income should only be used as a supplemental measure of our financial performance and not as an alternative to GAAP net income.
Previous wording
•Same Store Properties – includes the consolidated results of all of the properties that were owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1, 2023 and still owned and included in the stabilized portfolio as of December 31, 2024, including our three residential properties in Hollywood and Del Mar, California;
Current wording
•Same Property Portfolio – includes the consolidated results of all of the properties that were owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1, 2024 and still owned and included in the stabilized portfolio as of December 31, 2025, including our three residential properties in Hollywood and San Diego, California;
Previous wording
•Development Properties – includes the results generated by certain of our in-process development and redevelopment projects, expenses for certain of our future development projects, and the results generated by the following stabilized development properties:
Current wording
•Re/Development Properties – includes the results generated by certain of our in-process development and redevelopment projects, and expenses for certain of our future development projects, and the results generated by the two stabilized redevelopment properties that were added to the stabilized portfolio in the third quarter of 2025;
Previous wording
•Acquisition Properties – includes the results, from the date of acquisition through the periods presented, for the one property acquired in the third quarter of 2024;
Current wording
•Acquisition Properties – includes the results, from the date of acquisition through the periods presented, of the following:
Previous wording
During the year ended December 31, 2024, we acquired one operating property, comprised of two buildings, in one transaction for a cash purchase price of $35.0 million. As part of our growth strategy, which is highly dependent on market conditions and business cycles, among other factors, we continue to evaluate strategic opportunities and remain a disciplined buyer of core, value-add and strategic operating properties and land. We historically have focused on growth opportunities primarily in markets populated by knowledge and creative-based tenants in a variety of industries, including technology, media, healthcare, life sciences, entertainment, and professional services. Against the backdrop of market volatility, we expect to manage a strong balance sheet and selectively evaluate opportunities that we believe have the potential to either add immediate Net Operating Income to our portfolio or play a strategic role in our future growth. We generally finance our acquisitions through proceeds from the issuance of debt and equity securities, borrowings under our unsecured revolving credit facility, proceeds from our capital recycling program, the assumption of existing debt, and cash flows from operations.
Current wording
◦One property, comprised of two buildings, acquired in the third quarter of 2024;
Previous wording
•A decrease of $6.2 million attributable to the Same Store Properties primarily due to an in-place lease intangible asset becoming fully amortized at one property in the second quarter of 2023.
Current wording
◦One property disposed of in the second quarter of 2025;
Previous wording
◦One office building that was added to the stabilized portfolio in the fourth quarter of 2023;
Current wording
◦One property disposed of in the fourth quarter of 2025; and
Previous wording
The following table sets forth certain information regarding the property groups within our stabilized office portfolio as of December 31, 2024.
Current wording
The following table sets forth certain information regarding the property groups within our stabilized portfolio as of December 31, 2025:
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Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
(1) Includes activities of consolidated property partnerships. Excludes leases with a lease term of less than one year (i.e., short-term leases).
Current report — wording carried from elsewhere
◦One property acquired in the third quarter of 2025; and
Current report — wording carried from elsewhere
(2)Excludes our three residential properties.
Current report — wording carried from elsewhere
Consolidated Property Partnerships. See Note 10 “Noncontrolling Interests on the Company’s Consolidated Financial Statements” to our consolidated financial statements included in this report for additional information.
Current report — wording carried from elsewhere
The following table summarizes the balance and terms of our 2024 Term Loan Facility:
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
(3)As of December 31, 2024, there was no outstanding balance on the unsecured revolving credit facility.
Previous report — wording carried elsewhere
The unsecured revolving credit facility, unsecured term loan facility, unsecured senior notes and certain other secured debt arrangements contain covenants and restrictions requiring us to meet certain financial ratios and reporting requirements. Key existing financial covenants and their covenant levels include: