Key Highlights

  • Funds from operations were USD 104.6 million, or USD 0.88 per diluted share.
  • Net income available to common stockholders was USD 15.5 million, or USD 0.13 per share.
  • The company signed about 815,000 square feet of leases in the quarter.
  • Full-year FFO guidance was narrowed to USD 3.55 to USD 3.59 per share.

Quarter Results

Kilroy Realty (NYSE:KRC) reported third-quarter 2026 results on Thursday from Los Angeles. Revenues were USD 271.6 million against USD 279.7 million a year earlier. Net Income available to common stockholders was USD 15.5 million, or USD 0.13 per diluted share, against USD 156.2 million, or USD 1.31. Funds from operations were USD 104.6 million, or USD 0.88 per share, against USD 130.6 million, or USD 1.08.

CEO Angela Aman said West Coast momentum continued to build, with activity from a wide variety of users and industries, and that leasing Volume was among the company's highest quarterly totals since 2019, with sequential leased occupancy gains in all five regions.

Leasing and Occupancy

The company signed about 815,000 square feet of leases: 345,000 square feet of new leasing on vacant space, 127,000 square feet of new leasing on occupied space and 343,000 square feet of renewals. The renewals included a 12-year, roughly 243,000 square foot renewal with Box at Crossing 900. About 12,000 square feet was short-term leasing.

GAAP and cash rents on second generation leases rose 30.6% and 9.7% from prior levels, excluding short-term leasing. Excluding space vacant for more than 12 months, GAAP and cash rents rose 37.9% and 13.9%.

The stabilized portfolio was 76.9% occupied and 83.0% leased at Sept. 30, with 610 basis points of leases signed but not yet commenced. Excluding Kilroy Oyster Point Phase 2, the stabilized portfolio was 80.7% occupied and 84.8% leased, with 410 basis points signed but not yet commenced.

Balance Sheet and Dividend

In July, Kilroy repaid at par the USD 200.0 million of 4.350% private Placement senior notes due October 2026. In August it agreed to sell land at Kilroy East Village in San Diego for USD 19.5 million, a transaction scheduled to close in the fourth quarter.

The board declared and paid a regular quarterly Dividend of USD 0.54 per share, an annual rate of USD 2.16, on Oct. 14 to holders of record on Sept. 30.

Revised Guidance

Nareit-defined FFO guidance for 2026 is USD 3.55 to USD 3.59 per diluted share, from USD 3.49 to USD 3.63. Average full-year occupancy is guided at 77.00% to 77.50% from 76.50% to 78.00%, and at 80.75% to 81.25% excluding Kilroy Oyster Point Phase 2. Same property cash NOI growth is guided at 0.75% to 1.00% from 0.25% to 1.25%. Development property NOI is guided at about negative USD 21.0 million, from negative USD 22.5 million to negative USD 24.0 million, and Lease termination fee income at USD 1.1 million to USD 1.5 million, from USD 3.0 million to USD 4.5 million.

Measures Ahead

The dividend of USD 0.54 equals about 61% of third-quarter FFO of USD 0.88. The midpoint of guidance moved by USD 0.01 while the range narrowed from USD 0.14 to USD 0.04 per share. Leased occupancy of 83.0% sits 6.1 points above occupied occupancy of 76.9%, so commencement dates of signed leases matter to reported results. Reference points include occupancy at Kilroy Oyster Point Phase 2, rent spreads, the San Diego land closing, and development NOI.