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DATE

Tuesday, April 28, 2026 at 1 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Angela Aman
  • Chief Investment Officer — Eliott Trencher
  • Executive Vice President, Leasing and Business Development — Robert Paratte
  • Senior Vice President, Finance and Accounting — Jeffrey Kuehling

TAKEAWAYS

  • Leasing Volume -- 568,000 square feet during the quarter, the company’s strongest Q1 leasing since 2017 and more than double the prior year’s first quarter total.
  • Annualized Base Rent from Signed But Not Commenced Leases -- Nearly $78 million, offering visibility on forward revenue growth.
  • Portfolio Occupancy -- Ended at 77.6%; excluding KOP2, occupancy would have been 81.5%, a decline of 10 basis points.
  • Cash Same Property NOI Growth -- Increased by 1.8% for the quarter, driven by reduced bad debt expense and other net property income items, offset partially by lower base rent.
  • Leasing Spreads on Activity -- GAAP spreads at negative 10.6% and cash spreads at negative 16.8%, mainly due to two San Francisco leases with spaces vacant over 12 months; positive GAAP (19.2%) and cash (5.2%) spreads for spaces vacant less than 12 months.
  • FFO per Diluted Share -- $0.91 in the quarter.
  • 2026 FFO Guidance -- Increased by $0.21 at the midpoint to a new range of $3.49 to $3.63 per diluted share, reflecting both portfolio and timing updates.
  • Cash Same Property NOI Guidance -- Revised to 0.25%-1.25% growth, representing a 150 basis point increase at the midpoint, following a $5.9 million settlement and improved property fundamentals.
  • Operating Property Dispositions -- Year-to-date dispositions of approximately $350 million, already exceeding the original full-year goal, including two San Diego office sales for $146 million and the Hollywood residential assets.
  • Share Repurchase -- $73 million of stock repurchased at an average price of $30.80 per share using disposition proceeds.
  • Capital Markets Activity -- Fully redeemed $50 million in private placement notes ahead of maturity in April.
  • Major Development -- Closed a joint venture on the 1900 Broadway project (250,000 square feet, Downtown Redwood City), now 60% pre-leased under a 20-year lease at portfolio-high rates; total anticipated project cost is $330 million to $350 million with Kilroy Realty Corporation expecting a 97% share of costs.
  • Yield on 1900 Broadway -- Stabilized yields projected in the low to mid-9% range, based on executed rent comps; 60% of the project is already pre-leased.
  • Operating Property Cap Rates -- Recent asset sales’ average cap rates in the mid-single digits; residential sales specifically cited in the 4% range.
  • KOP2 Leasing Update -- A 38,000 square foot post-quarter lease brings this South San Francisco life science project to 49% leased; yield expectations for the project in the mid-5% range remain unchanged.
  • Spec Suite Program -- All five recently constructed spec suites at 201 Third, San Francisco, were leased by completion, reflecting tenant demand for move-in ready options.
  • San Francisco Market Dynamics -- Three consecutive quarters of positive net absorption and first quarter leasing exceeding 3 million square feet, up more than 10% from pre-pandemic quarterly averages.
  • Flower Mart Development Update -- Expense capitalization is projected to continue through late Q4, with a process underway with the City of San Francisco to amend development entitlements for flexibility; expense capitalization is expected to cease at year-end unless demand changes materially.
  • Occupancy Guidance -- Management expects occupancy to trough in the second quarter, driven by scheduled move-outs.

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RISKS

  • Portfolio occupancy declined due to inclusion of KOP2, and the bulk of remaining 2026 lease expirations are anticipated to be move-outs, with limited opportunities for renewal according to management.
  • GAAP and cash leasing spreads were negative for the quarter, primarily as a result of long-vacant San Francisco space, explicitly referenced as a drag on overall spreads this period.
  • Management acknowledged a low probability, but not zero, that Flower Mart expense capitalization could extend beyond Q4 due to entitlement process uncertainty, potentially exposing the company to higher uncapitalized expenses if market demand does not materialize.

SUMMARY

Kilroy Realty Corporation (KRC +3.30%) reported its highest first-quarter leasing volume since 2017 while achieving above-guidance capital recycling through $350 million of year-to-date property sales. The company secured a 20-year lease for 60% of its 1900 Broadway development at record rent levels, supporting anticipated low- to mid-9% stabilized yields and prefunding its equity commitment. Signed but not commenced leases now represent nearly $78 million of annualized rent, indicating embedded future growth beyond current occupancy levels. Despite this momentum, GAAP and cash leasing spreads were negative due to specific legacy vacancies, and management signaled that portfolio occupancy will trough in the coming quarter as the company clears out a large block of 2026 lease expirations.

  • Robert Paratte stated, "rolling twelve-month leasing totals have returned to historical averages in San Francisco—about 9 million square feet," illustrating a normalization of demand levels in that market.
  • Jeffrey Kuehling disclosed, "that point, a little less than $1 million of quarterly operating expenses and real estate taxes along with $7 million of quarterly capitalized interest will begin impacting earnings." after expense capitalization ceases late in the fourth quarter.
  • Eliott Trencher confirmed, "The cap rate on all sales announced year to date averages in the mid-single digits. As a reminder."
  • Angela Aman emphasized disciplined capital allocation, noting balanced use of asset sale proceeds for both debt repayment and opportunistic stock buybacks.

INDUSTRY GLOSSARY

  • Spec Suites: Pre-built, move-in-ready office spaces constructed by the landlord to expedite leasing for tenants seeking immediate occupancy and flexible terms.
  • Net Absorption: The net change in occupied space within a market over a given period, calculated as the difference between newly leased and vacated space.
  • KOP2: Refers to the Kilroy Oyster Point Phase 2 development, a life sciences asset in South San Francisco, distinct from other company holdings.
  • Cash Same Property NOI: Net operating income from properties held throughout both periods being compared, before property-level debt service, on a cash basis.

Full Conference Call Transcript

Angela Aman: Thanks, Doug. And thank you all for joining us today. Over the last several quarters, fundamentals across our West Coast markets have meaningfully improved. As return-to-office momentum has intensified, space rationalizations by large users have abated, and the artificial intelligence ecosystem has created considerable new business formation and growth, all contributing to a resurgence in space requirements from rapidly scaling new companies and well-established players alike. Recent tenant behavior, both within our portfolio and across the markets in which we operate, points to a constructive dynamic around technological change with companies seeking to utilize AI to enhance their growth and augment their talented team, rather than automating simply to manage costs.

Against this backdrop, our team's disciplined execution drove our strongest first quarter leasing results since 2017, with total productivity of approximately 568 thousand square feet, more than double our first quarter performance last year, positioning us to increase our full-year average occupancy guidance by 25 basis points at the midpoint. Importantly, leases signed but not yet commenced now represent nearly $78 million of contractually obligated annualized base rent to be realized over the coming years, providing significant visibility on future growth.

To hit on a few highlights across our regions, in San Francisco, the epicenter of the AI innovation ecosystem, market conditions continue to tighten, as first quarter leasing exceeded 3 million square feet, more than 10% above pre-pandemic quarterly averages, resulting in the third consecutive positive quarter of net absorption and positioning us well to capitalize on broad-based demand across our Bay Area portfolio. In the San Francisco CBD, we have seen significant momentum at our assets in the South of Market, or SoMa, submarket. At 201 Third, our lease rate improved from 26% at year-end 2024 to over 80% this quarter.

We have successfully captured demand from a wide range of growing tenants, including both larger format users such as Tubi and Harvey AI, and a variety of smaller format users. As you may recall, in 2025, Harvey AI leased 93 thousand square feet at 201 Third, before signing a 62 thousand square foot expansion this quarter, with occupancy occurring in April 2026, just one month following lease execution.

This significant expansion occurring within one year of the original lease execution speaks to both the impressive growth trajectories we are seeing for a number of rapidly scaling AI companies and also to the discipline that they have generally employed with respect to their real estate decisions, taking space only when necessitated by the current needs of the business. In addition, our team has captured outsized market share at 201 Third through the deployment of a creative and disciplined spec suites program, with all five of our recently constructed spec suites leased by completion. We are also thrilled to be experiencing strong demand across other core Bay Area submarkets.

At Crossing 900 in Downtown Redwood City, we completed a 27 thousand square foot direct lease with a current subtenant during the quarter, generating an increase in cash base rent of more than 40%, underscoring the depth of demand for high quality, well-located space in this transit-oriented, walkable, and well-amenitized submarket. In Seattle, the strength we have seen in Bellevue over the last several years continues, optimally positioning space we recently recaptured for near-term releasing and rent upside. In addition, the momentum we discussed last quarter in the Denny Regrade submarket further accelerated, benefiting our recently repositioned project, West 8th.

Following approximately 74 thousand square feet of new lease executions at West 8th in the fourth quarter of last year, we are pleased to announce an additional 76 thousand square feet of new leases signed at the project year to date, including a 43 thousand square foot lease with General Motors signed in the first quarter and a 33 thousand square foot lease with SoFi, signed in the first few days of the second quarter.

With additional tenant discussions underway, we have good visibility into the future pipeline, reflecting the strength and competitiveness of this asset as the recent renovations and enhanced amenity offerings continue to resonate with tenants and position the property to capture a meaningful share of growing market demand. In Los Angeles, leasing activity within our portfolio has improved meaningfully over the last year, with trailing twelve-month productivity up approximately 66%, reflecting both a continued gradual improvement in the overall market and the significant portfolio repositioning work that we have done in LA over the last two years.

Of particular note within the region, Arrow in Long Beach is seeing a pickup in tour activity, as the local market begins to experience a resurgence in defense and aerospace requirements. Blackwelder in Culver City is seeing an acceleration in activity from a wide variety of users, including technology and AI companies. And Maple Plaza, a recent acquisition in Beverly Hills, is continuing to experience strong, broad-based demand from the financial services and media and entertainment sectors, notably surpassing our original expectations.

In life sciences, KOP2 continues to outperform the broader South San Francisco market, as the project's purpose-built life science space and top-tier amenitization offerings resonate with decision makers who are showing a higher propensity to execute than they have at any time over the last several years. Subsequent to quarter end, we executed a 38 thousand square foot lease with Olema Pharmaceuticals, bringing the project to 49% leased. The future pipeline remains robust as we evaluate opportunities to complete the remaining lease-up of our multi-tenant building while also engaging with several large-format users for the remaining full-building opportunity, which represents the most compelling offering within KOP phase two, featuring premium views and the most prominent location within the project.

Turning to capital allocation, during the first quarter, we continued to raise attractively priced capital through dispositions of non-core and non-strategic assets, with a long-term goal of enhancing the durability and growth profile of the company's cash flow stream. During the period, we sold two office properties, Kilroy Sabre Springs and Del Mar Tech Center, both in San Diego, for aggregate gross proceeds of $146 million. In both cases, these assets benefited from the consistent demand we have seen across markets from owner-users for well-located, high-quality real estate, driving a highly efficient execution for our shareholders.

Subsequent to quarter end, we closed on the sale of our two Hollywood residential assets, Columbia Square Living and Jardine, for aggregate gross proceeds of $[inaudible], resulting in year-to-date operating property dispositions of approximately $350 million, exceeding our original full-year goal. Residential sales followed the implementation of a holistic asset management strategy for our residential portfolio through which we recognized significant margin expansion, resulting in a materially better valuation at the time of disposition. Following the transaction, our residential exposure is now limited to One Paseo Living, which we view as a core long-term holding given the asset's significant synergies with the retail and office components of the broader One Paseo campus, where we continue to achieve record-setting commercial rents.

With proceeds from our first quarter dispositions, we elected to opportunistically capitalize on recent capital markets volatility, repurchasing approximately $73 million of stock at an average price of $30.80 per share. And in April, we fully redeemed the $50 million tranche of private placement notes scheduled to mature in July. Looking forward, we will continue to explore opportunities to harvest attractively priced capital from our existing portfolio while exploring the full range of redeployment alternatives available to us. In last night's release, we also announced the formation of a joint venture to develop a premier, substantially pre-leased Class A office asset in Downtown Redwood City, one of the strongest submarkets in the entire Kilroy Realty Corporation portfolio.

This complex transaction was a long time in the making, requiring substantial effort and coordination across our platform, with our partner and with the project's anchor tenant. 1900 Broadway, which is fully entitled for a 250 thousand square foot office project, is located just blocks from Kilroy Realty Corporation’s highly successful Crossing 900 asset, which has remained 100% leased since delivery in 2015. Over time, we have consistently captured meaningful rent growth at Crossing 900, releasing over 80 thousand square feet since 2023, with cash rent spreads up nearly 60%.

Concurrently with closing on the venture, we executed a 20-year lease with a top-tier global law firm for 145 thousand square feet, representing approximately 60% of the building, at the highest rates ever realized in the Kilroy Realty Corporation portfolio. Since closing, we have experienced strong inbound interest from a wide range of high-quality tenants, and we look forward to updating you on our progress as the project advances. Eliott will cover project costs, estimated returns, and timing in a few moments, but I would note that substantially all of our equity investment in this project has been prefunded through the land parcel sales that are currently under contract.

Before turning the call over, I want to provide a few comments on the Flower Mart project. As Jeffrey will touch on in a moment, we have revised our expense capitalization assumptions for Flower Mart to reflect continued capitalization through the fourth quarter of this year. As we previously stated, we are working with the City of San Francisco to redesign and reimagine the Flower Mart project while maintaining and building upon our current approvals. In addition to seeking flexibility to develop a broader mix of uses, we are also looking to amend the existing development agreement and create a special use district to provide relief from certain planning code requirements, the specifics of which are still under discussion.

The city, which has been a constructive and valued partner in this process, has suggested an alternative approach to analyzing and documenting the changes in the special use district, which we believe will ultimately increase our long-term flexibility and optionality, though the alternative approval process will take additional time. We now expect the process to be completed late in the fourth quarter and would assume that expense capitalization ceases at that time. We are highly convicted that the path we are pursuing at the Flower Mart will result in the best possible outcome for shareholders, and as always, we will continue to update you as the process unfolds.

In conclusion, I want to thank the entire Kilroy Realty Corporation team for an incredibly busy quarter across nearly every facet of our business. Your efforts are creating meaningful value for all of our stakeholders, and I am grateful for your continued energy and enthusiasm. Eliott?

Eliott Trencher: Thanks, Angela. Over the last several months, the capital markets have demonstrated continued momentum as buyers recognize the inflection in fundamentals and the positive impact AI is having on our market. As a result, transaction size is increasing and asset quality is improving. For example, the Transamerica Pyramid in San Francisco recently traded for $1.05 thousand per square foot, the first time an institutional property has eclipsed the $1 thousand a foot level in that market since 2022. Kilroy Realty Corporation continues to be an active seller, and during the quarter, we closed on $146 million comprised of the previously announced Kilroy Sabre Springs at $125 million and Del Mar Tech Center sold in March for $21 million.

Del Mar Tech Center is a 40 thousand square foot building in the Del Mar submarket of San Diego, and at the time of sale, the building was roughly 50% leased with a weighted average remaining lease term of one year. We remain big believers in Del Mar Heights and are still the largest owner in the submarket, but selling this property made economic sense. Additionally, last week, we closed on the sale of our two residential towers in Hollywood for $[inaudible].

As many of you know, these towers were developed by Kilroy Realty Corporation as part of our Columbia Square and On Vine projects, and the layout of the campuses allows the residential to be separate and distinct from the neighboring office properties. We determined these buildings would be good sales candidates given the lack of synergies with the office as well as the depth of demand for high-quality apartments. Before bringing the properties to market, we spent time ensuring the operations and structure were optimized to facilitate a sale and maximize proceeds. The cap rate on all sales announced year to date averages in the mid-single digits.

As a reminder, in addition to the operating property sales, we have $165 million of land sales under contract, with roughly half expected to close late this year or early next year. We continue to evaluate additional opportunities to sell or repurpose non-strategic land. Turning to acquisitions, as Angela mentioned, we closed on a joint venture to develop 1900 Broadway, a 250 thousand square foot project in Downtown Redwood City that is already roughly 60% pre-leased. 1900 Broadway is adjacent to Downtown Redwood City’s restaurant row, making it one of the most walkable and amenitized properties in the area and worthy of premium rents.

Kilroy Realty Corporation was uniquely positioned to take advantage of this off-market opportunity given our deep market insight, strong local relationships, and proven development acumen. These factors gave our partner, Lane Partners, and our anchor tenant, Cooley, confidence in our ability to bring this deal together. We intend to break ground next year, and Cooley is expected to take occupancy in early 2030. The total anticipated cost for the project is $330 million to $350 million, of which our share will be 97% upon completion. Stabilized yields are expected to be in the low to mid-9% range.

Before turning the call over to Jeffrey, I think it would be beneficial to summarize the substantial disposition progress we have made over the last two and a half years. As private capital returned to the office sector, Kilroy Realty Corporation meaningfully ramped up sales efforts with a total of roughly $980 million of land and operating properties completed or under contract. We have talked about individual transactions in detail on prior calls, but in total, this demonstrates the private market is open and functional and can be a source of attractively priced capital if executed thoughtfully.

We elected to redeploy a portion of the sales proceeds into four high-caliber infill, amenitized, multi-tenant investments totaling roughly $765 million, which includes the full cost of building out 1900 Broadway. This capital recycling gives us a more diversified and sustainable cash flow stream while also making the portfolio more amenitized, walkable, and supply constrained. As a result of being a net seller of roughly $215 million, we were able to use a portion of the savings to pay down debt and opportunistically repurchase stock. We are proud of the progress made to date and intend to keep making the next best capital allocation decision one step at a time. With that, I will turn the call over to Jeffrey.

Jeffrey Kuehling: Thanks, Eliott. Before turning to results, I want to highlight two disclosure enhancements this quarter aimed at providing investors with better visibility into leasing performance and how executed activity translates into future results. First, we have added a leasing spread calculation focused on space vacant for less than 12 months. This aligns with how most of our peers present spreads and better isolates true mark-to-market activity; our historical calculation remains unchanged and is presented alongside the new metric. Second, we have expanded our disclosure regarding signed but not commenced leases, which currently totals over 1 million square feet and nearly $78 million of contractually obligated annualized base rent.

This disclosure highlights the embedded growth already in place and provides greater visibility into the forward trajectory of the operating platform. Turning to our financial results, FFO for the first quarter was $0.91 per diluted share. With respect to occupancy, as a reminder, KOP2 entered the stabilized pool during the quarter, impacting reported portfolio metrics. As a result, portfolio occupancy ended the quarter at 77.6%. Excluding KOP2, first quarter occupancy would have been 81.5%, down only 10 basis points despite our previously communicated first quarter move-outs. The dispositions of Kilroy Sabre Springs and Del Mar Tech Center completed during the quarter had no impact on overall reported occupancy.

Cash same property NOI increased 1.8% in the first quarter, driven by lower bad debt expense and contributions from net expense settlements, restoration fee income, and other property income. These positive impacts were partially offset by detraction from base rent despite a marginal increase in overall occupancy, reflecting free rent periods from certain new tenants in the portfolio. On the leasing front, activity during the quarter resulted in GAAP spreads of negative 10.6% and cash spreads of negative 16.8%. Those spreads were driven primarily by two leases in San Francisco, both of which involved space that was vacant for longer than 12 months. Importantly, these were capital-light transactions that generated attractive net effective rent outcomes.

These two leases were partially offset in the quarter’s reported spreads by the lease Angela previously mentioned at Crossing 900 in Redwood City, which not only generated the highest net effective rent of the quarter in our operating portfolio, but also delivered significant positive cash and GAAP releasing spreads. Leasing on space vacant for less than 12 months performed well, generating positive GAAP spreads of 19.2% and cash spreads of 5.2%. Turning to guidance, last night we increased our 2026 FFO guidance by $0.21 at the midpoint with a new FFO range of $3.49 to $3.63 per diluted share, reflecting improvement in our core portfolio and platform operations and updated timing assumptions on Flower Mart expense capitalization.

With respect to Flower Mart, as Angela discussed, we are now assuming that expense capitalization will cease late in the fourth quarter. At that point, a little less than $1 million of quarterly operating expenses and real estate taxes along with $7 million of quarterly capitalized interest will begin impacting earnings. This change increased guidance by approximately $15 million to $16 million, or $0.14 per share, and it was reflected in the capitalized interest in development guidance provided last night. Cash same property NOI growth is now expected to range from 25 to 125 basis points, representing a 150 basis point increase at the midpoint from our prior range. This increase is driven by two factors.

First, in April, we received a $5.9 million settlement related to the 23andMe bankruptcy, which fully resolves our economic interest in that process and contributes approximately 90 basis points to NOI growth. Second, strengthening fundamentals in our core operations, driven primarily by improving net expenses and increased average occupancy, contribute an additional 60 basis points to growth. We also raised the top end of our operating asset dispositions guidance range to reflect our progress to date. We moved decisively, closing dispositions earlier than anticipated and recycling capital into compelling investment opportunities, including $73 million of opportunistic share repurchases and prudent debt repayment.

Looking ahead, and as Angela and Eliott noted, we will continue to take a balanced, disciplined approach to capital allocation, seeking opportunities to create value for shareholders while prioritizing balance sheet strength and financial flexibility. With that, we are happy to answer your questions.

Operator: Thank you. We will now open the call for questions. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. And if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Manas Ebek from Evercore ISI. Your line is open. Please go ahead.

Manas Ebek: Perfect. Thank you. And just wanted to say thanks, in the beginning, for the additional disclosures in the supplemental. It has been very helpful. My question was for Los Angeles and San Diego to see if you could maybe elaborate a little bit further on the leasing demand that you see there and how far along we are here on the recovery. Obviously, we understand, and it is great to see how positive San Francisco has responded recently.

Robert Paratte: Hi, Manas. I will continue on the theme that Angela mentioned. Across the entire company portfolio, we are seeing an increase in activity, including tours, proposals, and done deals, and Los Angeles is no exception. In Q1, we signed 24 deals in LA, and we are seeing quite a bit of activity at our Long Beach project and Maple Plaza, and we are starting to see a pickup in activity at Westside Media Center on the West Side of LA and one of our other assets here. Our pipeline continues to grow in the LA market.

Following on the 24 deals I mentioned, we have more deals that are in the pipeline and leases actually, but we are not going to quantify all that until they are done. It is improving, and again, I would say this across our entire portfolio: we are seeing a continued flight to quality. It is a world of haves and have-nots, so the recovery is not the same for all owners or all properties, and we are benefiting from having these high-quality assets in LA, San Diego, etc. At Nautilus, which I will really focus on because that is our newest acquisition, we had 400 thousand square feet of tours since January 1.

We have several tenants that are looking to grow in the project, and we continue to entertain tours and the other normal activity that goes with leasing, and we could not be happier with that. The amenities are really showing well now. Now that it is spring, everything looks great at the site, so very happy with that. At Kilroy Center Del Mar, we are seeing an exceptional amount of activity. Our spec suite program there is really paying off as it is in other markets like Austin, and we are going to continue on that front, being very strategic in bringing spec suites to market but providing what the market wants.

Operator: Thank you for your question. Your next question comes from the line of Anthony Paolone from JPMorgan. Anthony, your line is now open.

Anthony Paolone: Great. Thank you. My first question is on 1900 Broadway and wondering if you could talk about the expected yield you expect to make on that and where rents need to be for the unleased space to achieve it?

Eliott Trencher: Tony, in my prepared remarks, I mentioned that we are expecting stabilized yields in the low to mid-9% range. We have leased 60% of the building and have a good rent comp for where market rents are, so if we replicate that, we will be in really good shape.

Angela Aman: I would also emphasize, as we have discussed about 1900 Broadway, it is really just a few blocks away from our Crossing 900 asset, where we have leased 80 thousand square feet over the last couple of years at rents that are up on average 60%. We have a lot of data points in the market in addition to the Cooley lease that point us to where rents should be in this market. As Eliott mentioned in his prepared remarks, 1900 Broadway is adjacent to restaurant row in this submarket, so it is highly walkable, highly amenitized, and really should command premium rents as we saw in the transaction that has already been executed.

We are excited about having additional supply to lease in what has been and continues to be one of the strongest submarkets in the entire Kilroy Realty Corporation portfolio.

Anthony Paolone: Okay. Thanks for that. And then just maybe I missed this, did you give a cap rate on the two resi sales?

Eliott Trencher: We gave cap rates for all the sales that we have done to date, which were in the mid-single digits. The resi sales were around the 4% range.

Operator: Thank you for your question. Your next question comes from the line of John Kim from BMO Capital Markets. John, your line is now open.

John Kim: Thank you, and thanks for the new disclosure. On the signed leases not commenced, I was wondering what was driving most of the leases, 86% to net leases. I know that KOP2 is a big part of that, but assuming 1900 Broadway is as well, it would suggest the yield on that could be closer to 13% versus 9%. I am wondering if I have my math right and if there is any conservatism in that number.

Angela Aman: There is not much to point to in terms of why the population of signed but not commenced is skewed so much to net leases. It really is just a mix issue and the properties and markets that make up the signed but not occupied pool at this point in time. On the yield, I would just reiterate what Eliott mentioned in his prepared remarks and in response to the last question: stabilized yield on this project, we think, is in the low to mid-9% range. We think it is very compelling.

There is going to be good growth at this project over time as well, again in one of the strongest submarkets in the Kilroy Realty Corporation portfolio, so we feel like the development upside here is worth what is a relatively small amount of leasing still to complete at this project.

John Kim: Okay. And at Flower Mart, I know you talked about extending the capitalized interest. What is the possibility that you keep development going forward? I know that you are committed to One Paseo, and this looks like this could be another mixed-use development with a big multifamily component. Just wanted your latest thoughts on the Flower Mart as far as keeping it as a development project.

Angela Aman: We are watching the San Francisco market really closely as well as how things evolve in addition to where we are able to take the process we are going through right now in terms of design and entitlement flexibility and optionality. There is still a lot for us to sort out as we move through this process, and we have time as this process continues to unfold to watch what happens with both commercial and residential rents within the City of San Francisco. We are committed to making sure that whatever we do in terms of next steps in 2027 and beyond at the Flower Mart project maximizes value for shareholders.

Prior to the pandemic, the company had a very strong plan to develop this on the commercial side. We are exploring a broader mix of uses that would allow us, as you mentioned, to add more residential into the project. We need to see how the market continues to evolve and what the project ultimately looks like to decide what the optimal execution path is. Maintaining a lot of flexibility and prioritizing optionality is a way to create additional economic value at the Flower Mart.

Operator: Thank you for your question. Your next question comes from the line of Seth Bergey from Citi. Your line is now open.

Seth Bergey: As you think about the revised disposition guidance, what would get you to the higher end? Are you just evaluating the depth of the buyer pool and any changes you have seen in terms of demand for assets? And then are there any submarkets you would look to exit within that revised disposition range?

Eliott Trencher: The revised disposition range at the low end implies that we stop with what we have done to date, and then we have about $150 million at the high end of the range beyond what we have done. That clearly has some room to execute, and our approach is going to be consistent with what we have talked about in the past, which is if we can find compelling opportunities, then we are going to pursue them, and we wanted to reflect that with an adjustment to the disposition range. There is not a particular market or submarket that we are focused on exiting.

We are really just looking for the way to maximize proceeds on good execution on assets that we think are going to be mispriced given our forward-looking view.

Angela Aman: I would add to echo some of what Eliott mentioned in his prepared remarks: in addition to healthy demand that we have seen over the last couple of years, particularly from owner-users looking to acquire assets, we have really seen a resurgence in institutional demand and interest across our West Coast markets. Where there are opportunities, as Eliott just mentioned, to take advantage of that renewed demand for West Coast commercial assets, we want to make sure we allow ourselves enough room within the guidance range to be able to capitalize on that.

Seth Bergey: And then I think in the prepared remarks, you mentioned AI and technology as a demand driver for some of the LA submarkets. Do you think LA will have a spillover effect from San Francisco and be a large component of recovering that market? Or how do you quantify the impact that AI can have on a market like Los Angeles?

Angela Aman: We are not suggesting it is going to be a huge driver of demand in the LA market. We have certainly seen a lot more San Francisco-native or AI-native companies leasing space particularly in the Pacific Northwest, where there is a much larger resident talent pool in the tech sector. We have certainly seen the spillover benefits in that market. We are seeing some of it in the LA market. It is pretty concentrated in a few specific submarkets—Culver City in particular. It is interesting to note that we are seeing some of those tenants pop up.

It is great from a marginal demand standpoint, but we are seeing much broader demand, even in markets such as Culver City, across different industry categories as well.

Operator: Thank you for your question. Your next question comes from the line of Andrew Berger from Bank of America. Andrew, your line is now open.

Andrew Berger: Sounds like the first quarter was a very strong quarter for leasing. Could you talk a bit about where the pipeline is today and if there is any way to quantify how big it is going forward? I think last quarter you said it was up about 65% year over year.

Robert Paratte: Andrew, the change in San Francisco is so dramatic over the last 12 to 18 months that it is actually hard to pinpoint the pipeline because it continues to grow. To add some color to what Angela was talking about with the three consecutive quarters of positive absorption, there were 13 deals done in Q1 over 100 thousand square feet, and that is a very big number for the city. Another really important note is that 5 million square feet of availability has been absorbed since its peak in mid-2025, and that is very meaningful because that availability rate was really the headline that had everyone concerned.

A third point that is really important is that these deals—both the 100 thousand square feet plus and other parts of that 3 million square feet—are expansionary, and that is also a very positive indicator. You look at our deal with Harvey, for example, where they took an additional 60 thousand square feet. The pipeline for us keeps growing. Our team has done a terrific job at 201 Third, as Angela pointed out. We are focused on 360 Third and 303 Second. We are talking to folks about 345 Brannan. So SoMa was the strongest submarket of the San Francisco market, and Kilroy Realty Corporation is a direct beneficiary of that because that is where all of our assets are.

We are poised and ready to start executing, and things are looking really good; the momentum, not only for us but others in the market, is quite strong.

Andrew Berger: And it sounds like speed to occupancy is becoming more important. Can you talk a little bit more about this? How much of the comments around speed to occupancy are related to AI-type tenants versus tenants more broadly? And you mentioned spec suites—can you talk a little bit more about which markets you are leaning into spec suites more and what type of results that is creating for your leasing teams?

Robert Paratte: I will use the Olema example. They are in two different spaces in San Francisco. One was a space that was not current or modern enough for their needs. The other is a space where they got pushed out by an AI company, and so that created an immediate need for space, and we were ready to execute on that because they are taking a portion of our spec labs and to-be-built space. That is a very good example of what is happening. You either have rapidly growing AI companies that organically need space, or others are getting displaced by larger AI companies.

One point I would raise about San Francisco is that the FIRE category was quite active in Q1—venture capital, banking, and finance. San Francisco is really hitting on all cylinders from both the traditional as well as technology front. In terms of our spec suites strategy, it is case by case and market by market. If we have a spec suite or two in a building and they have not leased, we are not going to build more until we have activity on that, and we have been really judicious about how we apply it. The markets where we have seen a lot of traction with spec suites are clearly San Francisco, Seattle, Austin, San Diego, and parts of LA.

Angela Aman: It has been an interesting dynamic. At 201 Third, we built out five spec suites on one floor with some shared common space and a conference center, and having all five leased before we had completed construction was really telling in terms of where demand is, particularly in the submarket with earlier-stage companies and the degree to which they are prioritizing speed to occupancy. In markets like Austin, as Rob mentioned, we have seen a similar dynamic over a longer period of time, where every time we begin building out the spec suites, we have a different level of interest than we had from pure shell conditions.

We have tried to be thoughtful and disciplined about how we are building out spec suites, both to make sure we do not get over our skis on specific sizes as market demand may shift and to make sure that we have inventory at these projects at all times. As they get leased up or as we see incremental interest, we are prepared and willing to lean in and replicate success from earlier phases of the spec suite program. Across most of our markets, it has been highly effective and has driven both a higher lease rate and faster occupancy commencements over the last couple of years.

Operator: Thank you for your question. Your next question comes from the line of Nicholas Yulico from Scotiabank. Nicholas, your line is now open.

Nicholas Yulico: Thanks. I had a couple questions on specific buildings. In terms of West 8th, I know you have had a lot of leasing traction there. Can you talk a little bit more about the dynamic of taking market share in Seattle versus pulling tenants that are maybe looking at Seattle and Bellevue? And then secondly, on 360 Third, San Francisco, I think you have an expiration there, a little over 100 thousand square feet this year. If you could talk about the traction on that and remind us when that expiration is.

Robert Paratte: On West 8th, two factors are in play in terms of the absorption we have done. Both SoFi and General Motors are new to market. What really played into that is the renovation that we did at West 8th and the traction that we have built with Databricks and other tenants in the market. This part of town, Denny Regrade, right on the edge of the traditional CBD, is where people want to be. It is where the talent is either living or very close by, and it has the type of amenities tenants want. That is causing that absorption and what we are able to capitalize on.

In Bellevue, we expect to see, but we have not yet seen, a direct correlation between higher rates in Bellevue and more absorption in Seattle. Most tenants are pretty focused on being in one or the other, but over time we may see some tenants flow from Bellevue to Seattle. At 360 Third, we do have that expiration coming up. We have been marketing the space. We have had conversations with larger tenants over 100 thousand square feet and others around 50 thousand square feet. We are focused on the asset.

The proximity of 360 Third between the Bay Bridge and BART and Muni is really strategic for a lot of companies—that is why it did well in the past, and we expect the same going forward.

Jeffrey Kuehling: Nick, just to clarify, the 360 Third expiration is a little over 100 thousand square feet in Q2.

Nicholas Yulico: Okay, thanks. And that is a known vacate?

Jeffrey Kuehling: Yes.

Nicholas Yulico: Okay. Thank you. And then just a question on DIRECTV. Any latest thoughts there on a renewal possibility? If it is not a renewal, I think you were contemplating some other uses for the asset or a potential sale. Any thoughts there?

Robert Paratte: I do not want to give too much color, but DIRECTV is a possibility. We have some other activity. The project is really well amenitized with terrific outdoor spaces and landscaping, and we have been pushing the marketing of that. We do have some conversations going on.

Angela Aman: Remember, it is only a little less than 50 thousand square feet in the 2026 expiration pool. A larger portion of that lease does not expire until 2027, so we have time to work through that.

Operator: Thank you for your question. Your next question comes from the line of Blaine Heck from Wells Fargo. Blaine, your line is now open.

Blaine Heck: Thanks. I was hoping you could talk more specifically about the forward leasing pipeline at KOP2. How much of the demand is for spec suites versus larger spaces? Anything you could tell us about tenant profiles, and whether the mid-5% yield forecast is still intact?

Robert Paratte: The pipeline is similar to what we executed on in Q4 and Q1—basically life science focused, primarily and almost exclusively. The tenant ranges in size down in South San Francisco right now: the bulk are probably 10 thousand to 50 thousand square feet—that is probably 50% of the demand in the market—and there are quite a few. There are over four requirements over 100 thousand square feet in the market, and there are some significantly above 100 thousand square feet.

As Angela alluded to, we are working on filling the rest of Building F, which is our multi-tenant building, and we are in conversations on the vacant building, which is the most prominent of the three buildings on the campus and really has terrific signage opportunities and prominence for tenants that want that.

Angela Aman: We confirm the yield expectations we shared last quarter in the mid-5% range. Those are still fully intact.

Blaine Heck: Great. Thank you both. Then switching gears to capital allocation, can you give us an update on your thoughts on share repurchases going forward, just given where the stock is trading? How do you think about their attractiveness relative to acquisitions or development?

Angela Aman: What we have demonstrated over the last couple quarters is a desire to make sure that as we think about capital allocation, we are prioritizing balance sheet strength and flexibility and employing a balanced approach. You have seen us be active on acquisitions going back several quarters. You saw us this quarter pair operating property disposition proceeds realized during the quarter with debt repayment for a balanced approach and execute share repurchases, just like we told you we would, in a leverage-neutral or deleveraging way. We continue to see good value in the stock.

We also appreciate the significant capital markets volatility, especially in our sector, and we want to keep enough financial flexibility to step in when we see periods of significant dislocation. As discussed earlier, we increased operating property disposition guidance. The land sale proceeds we have already announced are earmarked for 1900 Broadway and that is effectively fully funded from an equity standpoint. Additional operating property disposition proceeds will be available for balanced redeployment based on how we see the full set of alternatives at that point in time.

Operator: Thank you for your question. Your next question comes from the line of Brendan Lynch from Barclays. Your line is now open.

Brendan Lynch: Thank you for taking my questions. You have managed our expectations on churn this year. Maybe you could give us your current expectations on the retention rate for the remaining 740 thousand square feet that are set to expire.

Angela Aman: Going back a couple of quarters, when that pool was larger—probably around 1 million square feet—we expected the vast majority of those lease expirations would be move-outs. If you go back two years and look at what was in totality in the 2026 pool, which was about 2 million square feet, we did successfully renew a number of those spaces early during 2025. The blended retention rate on that initial almost 2 million square foot pool of 2026 expirations was about 40%, maybe a bit better than 40%, relatively in line with historical pre-pandemic averages.

That said, when we look at the lease expiration schedule right now for 2026, there are a few opportunities to work through some renewals, but they are reasonably limited. From a reported retention standpoint, you will also begin to see us renewing early some of the 2027 expiration pool, so it is harder to tell you exactly in any given quarter what the reported retention rate will look like. For modeling, the bulk of the 2026 remaining expirations will be move-outs.

Brendan Lynch: Thank you. And are you still anticipating that occupancy troughs in the second quarter?

Angela Aman: Yes. Given the pace of move-outs—you can see that on the lease expiration page—Q2 is by far our biggest move-out quarter during 2026. That is our current expectation.

Operator: Thank you for your question. Your next question comes from the line of Upal Rana from KeyBanc Capital Markets. Your line is now open.

Upal Rana: Thank you. On dispositions, do you anticipate elevated dispositions or being a net seller to continue into 2027? Or will 2026 be the bulk or the tail end of it?

Eliott Trencher: It is a little too early to talk about 2027. The way we have approached dispositions to date is to be flexible and dynamic, look at what the market is telling us, take those signals, and do what we think is in the best interest of shareholders. We gave guidance on what we thought dispositions would be to date in 2026. We executed beyond that and we are adjusting, and we will continue to take that approach. To the extent that we still see appealing opportunities, we will continue to sell, and if not, we will not.

Angela Aman: That is the right way to frame it. This has been an opportunistic exercise. I would not frame it as how much we have to sell. Especially when you think about what we did during the quarter and what we announced last night in terms of the residential sales—those were have-to-sell transactions only in the sense that there was a real opportunity to raise very attractively priced capital on behalf of our shareholders, and we took advantage of that. We will continue to be opportunistic as we evaluate the disposition pool, prioritizing balance sheet strength and flexibility and making the company’s cash flow stream more durable and faster growing over the medium to longer term.

Upal Rana: Great, that was helpful. And then, Angela, you mentioned Maple Plaza seeing strong, broad-based demand. Could you provide more detail there and any update you could provide on Beverly Hills broadly?

Angela Aman: We have seen great traction there overall. The lease-up and our retention experience with respect to some tenants we had originally underwritten to vacate has been much better than we expected. Demand is from a broader mix—media and entertainment, financial services, professional services—not overly tied to any one sector. We are encouraged about the momentum we are seeing there and the long-term potential for Beverly Hills overall.

Eliott Trencher: On the capital side, all that we have seen in the market since we acquired has reaffirmed that capital really wants to be in Beverly Hills. We have seen a wide array of capital focused on Beverly Hills, and we feel really good about when we bought the building.

Robert Paratte: We are really happy with the leasing momentum we have. We are leading the market right now at Maple Plaza. There is a lot of media, private wealth, and financial services demand, as Angela pointed out. In cases like Maple and at 201 Third, you start building momentum in leasing and that attracts other activity. We have worked hard since taking the project over to improve the lobbies and landscaping, and it is showing well. We are really happy with the rental rates; based on underwriting, we are exceeding underwriting in all cases.

Operator: Thank you for your question. Your next question comes from the line of Tom Catherwood from BTIG. Your line is now open.

Tom Catherwood: Thank you. Maybe, Rob, starting with you: from a lease strategy perspective, over the last year or so, you have put some tenants into shorter-term leases with the hope that some could grow into more space or convert into longer-term leases. For some of the demand that you are talking about today, are some of those shorter-term leases actually converting longer term?

Robert Paratte: Some are, but a lot of it is also a trend in the market as tenants are willing to commit with conviction—meaning longer-term leases. In the case of Olema, it is a longer-term lease, and in some other cases, it is a short-term deal that we have extended. We are hitting it on both fronts.

Angela Aman: Specifically in the San Francisco CBD, where we have talked about this trend being most pronounced, the execution with Harvey this quarter underscores why we thought it made sense to do that original deal last year. It was a shorter-term deal with very little capital spend, reusing existing improvements left over by the prior tenant—very positive NER but shorter term. The reason they wanted flexibility was not that they wanted out at the end of the term; they did not know their full space requirements and wanted flexibility to meet growth objectives. Where we have worked with tenants and gone a little shorter term, it has been with a view to accommodating their future growth.

The Harvey example—leasing 93 thousand square feet last year and another 62 thousand square feet this quarter—speaks to why that strategy in certain submarkets and for certain tenants has been highly effective.

Tom Catherwood: Perfect, that was exactly what I was looking for. And then, Angela, as you work through a revised program for the Flower Mart, is there a potential outcome where capitalization carries beyond December, or is that more of a hard stop?

Angela Aman: At this moment in time, we feel that is a pretty hard stop, with a view to finishing the revised design and entitlement process with the city—getting to the point where we have more flexibility around the mix of uses and greater ability to phase the project. Once we complete that, we are waiting for demand to be sufficient in the market at rents that will justify new construction. Right now, we think there is a gap that would necessitate us stopping capitalization probably late in the fourth quarter of this year. We are watching the San Francisco market closely. There are very few large contiguous blocks of high-quality space remaining available.

It is a low probability, but not a 0% probability, that there is something demand-driven and actionable as we get into 2027. Right now, I would say it is a low probability, but not 0%.

Operator: Thank you for your question. Your next question comes from the line of Caitlin Burrows with Goldman Sachs. Your line is now open.

Caitlin Burrows: Maybe just a follow-up on Flower Mart. If you were to stop capitalizing in 2026, put a pause on the project, and then resume whether it is six months or multiple years later, would full capitalization come back, or would you then start capitalizing on the incremental spend?

Jeffrey Kuehling: In the event that we do have a great outcome where we can start capitalizing in the near future, it would be on the full accrued balance. It would not be just the marginal spend. It would be the same rate that you are seeing today.

Caitlin Burrows: Got it. And then maybe back to the leasing pipeline today versus a quarter ago. Do you think the leasing pace of over 550 thousand square feet is sustainable, or what is required to meet the low versus high end of the occupancy guidance this year?

Robert Paratte: I would love to be in the prediction business, but I can just tell you that the demand we are seeing is real, and all of our teams are busy. I could not be happier with our whole leasing team and the people that support them in getting these things executed. We are really busy, and more to come.

Operator: Thank you for your question. Your next question comes from the line of Dylan Burzinski from Green Street. Your line is now open.

Dylan Burzinski: Hey, thanks. Not to ask you another question geared toward predicting anything, but going to do so anyway. Things continue to be firing on all cylinders in San Francisco. Do you have any sense for how far behind LA and then the Seattle CBD is relative to what you are seeing in San Francisco and the broader Bay Area?

Angela Aman: In the Pacific Northwest, Bellevue has been very strong for the last couple of years. Availability has continued to compress and rents have performed very well. That market feels very tight right now. Over the last couple of quarters, our assets in Seattle—not in the downtown core but in Denny Regrade/South Lake Union—have definitely seen increased momentum. With roughly 150 thousand square feet signed over the last couple of quarters, we feel like there is a lot more momentum in Seattle, from very high-quality tenants and a broader mix of uses. LA feels like it is gradually improving, and I would candidly admit that improvement is gradual.

The improvement in our pipeline and executed productivity has been due to both that gradual market improvement and the significant portfolio reallocation work we have done within LA over the last couple of years. Our portfolio is better positioned to capture what has been a slowly improving market in LA. There are pockets performing better—Arrow in Long Beach benefiting from a resurgence in defense and aerospace up through the South Bay, including El Segundo. LA will be a broader aggregation of industries moving in the right direction, and we are cautiously optimistic, but it will be a step behind.

Dylan Burzinski: That is incredibly helpful detail, Angela. I appreciate it. One more: as you look at lease expirations next year, I think they are largely Q1-weighted if we exclude the DIRECTV lease expiration in 2027, which sounds like it is in flux. As you reach out and get a sense for renewal possibility for next year, are tenants more receptive than they were coming into 2026 and 2025?

Angela Aman: We have a couple of things going for us in 2027. It is a considerably smaller expiration year than 2026 was a year ago. The largest expiration next year is AT&T/DIRECTV, which is a fourth quarter expiration. Outside of that, the pool is very granular—nothing above 100 thousand square feet and only one lease between 50 thousand and 100 thousand square feet. We are beginning some of those conversations. We have expirations happening in some pretty strong markets where we are already having conversations either about renewal or significant interest from potential backfill tenants. We need to keep our heads down and execute as it relates to the 2027 pool.

The overall size and granularity of that pool outside of AT&T/DIRECTV is encouraging.

Operator: Thank you for your question. Your next question comes from the line of Michael Carroll from RBC Capital Markets. Your line is now open.

Michael Carroll: Thanks. I wanted to circle back on Rob’s comments regarding the leasing pipeline. Has that pipeline continued to build and grow? Is it bigger today than it was at the beginning of 2025?

Robert Paratte: Absolutely. It continued to grow throughout 2025, and the pipeline is increasing now. There is a pending transaction that is relatively significant that is going to happen in SoMa probably in Q2—not with us—but it is another indication that the market is thriving and SoMa is on a tear right now. The real upswing started mid-2025 and picked up steam for the rest of the year and into Q1.

Michael Carroll: And is the volatility that you are highlighting mainly driven by the San Francisco market? Are tenants getting taken out of the pipeline because they are leasing space, or are tenants delaying decisions or finding it hard to quantify their space needs?

Robert Paratte: On the positive end, it is hard to pinpoint because literally every week there is new demand coming from tenants.

Angela Aman: And significant demand—larger format tenants. The size of the pipeline is up materially year over year, and we have also seen an increase in average size requirements, with more tenants between 50 thousand and 100 thousand square feet. You have seen that in the execution stats as well. The pipeline being marginally up over the last quarter or two while we have had substantial executions is a really good sign.

Robert Paratte: The last thing I would say, Michael, is that rolling twelve-month leasing totals have returned to historical averages in San Francisco—about 9 million square feet. That gives you more color on the pipeline.

Operator: Thank you for your question. Your next question comes from the line of Peter Abramowitz from Deutsche Bank. Your line is now open.

Peter Abramowitz: Thank you. Most of my questions have been asked, but one on software tenants in the portfolio and potential tenants. Could you give some color on the tone of conversations with software tenants these days, particularly in the Bay Area? It seems so far this year that the equity markets are pricing these companies as if there is an existential threat to their business. What is the tone of conversations with them, and have there been any meaningful additions to the sublease market from that portion of the portfolio?

Angela Aman: Going back several years to the height of the pandemic, software was a category where we saw some of the largest blocks of sublease space. Thankfully, many of those blocks have been spoken for. While it might look one way on the lease expiration schedule, we have a much more granular tenancy within some of that space and tenants that we believe—especially in San Francisco—have a high likelihood of renewing or going direct with us down the road. A lot of that headline impact has already been felt in the portfolio and was felt several years ago. That space was successfully re-leased in many circumstances.

I am not aware of any conversation we have had in the last six months where the tone from those tenants has changed in any material way.

Robert Paratte: I agree. We have software companies we are talking to that need more space. The news is national, but on the ground we are not seeing pullbacks—rather increased demand.

Operator: Thank you for your questions. There are no further questions at this time, and this concludes today’s call. Thank you for attending. You may now disconnect.