Kilroy Realty reported first-quarter 2026 revenue of $270.1 million, essentially flat from $270.8 million a year earlier. The company swung to a net loss of $19.3 million, or 16 cents a share, from net income of $39.0 million, or 33 cents a share, in the first quarter of 2025.
Funds from operations fell to $108.8 million, or 91 cents a share, from $122.3 million, or $1.02 a share, a year earlier.
Leasing was the standout in the quarter. Kilroy signed 568,000 square feet of leases, its strongest first-quarter total since 2017. Of that, 406,000 square feet was new leasing on previously vacant space, 80,000 square feet was new leasing on occupied space, and 82,000 square feet was renewal business. About 70,000 square feet was short-term leasing.
At quarter-end, the stabilized portfolio was 77.6% occupied and 82.3% leased, leaving 470 basis points of leases signed but not yet commenced. Excluding Kilroy Oyster Point Phase 2, occupancy was 81.5% and leased space was 84.3%, with 280 basis points signed but not yet started.
Rent trends were mixed. On second-generation leasing, excluding short-term deals, GAAP rents signed in the quarter fell 10.6% and cash rents fell 16.8% from prior levels. But excluding leases signed on space that had been vacant for more than 12 months, GAAP rents rose 19.2% and cash rents increased 5.2%.
The company also moved aggressively on capital recycling. It sold Kilroy Sabre Springs in January for $124.5 million and Del Mar Tech Center in March for $21.0 million. In addition, it agreed to sell the Columbia Square Living and Jardine residential towers in Los Angeles for $202.0 million, with that transaction closing in April. Combined, those property sales totaled about $347.5 million.
Kilroy repurchased about 2.4 million shares during the quarter at an average price of $30.80, spending $72.7 million. It also repaid the remaining $50.0 million of 4.300% private placement senior notes in April.
In development, the company acquired an interest in 1900 Broadway in Redwood City and signed a 20-year lease with Cooley for 145,000 square feet, bringing the project to 58% pre-leased. Total project costs are expected to run between $330 million and $350 million.
The quarterly dividend stayed at 54 cents a share, or $2.16 annualized.
For full-year 2026, Kilroy raised its FFO guidance to $3.49 to $3.63 per share from $3.25 to $3.45. The company also lifted its occupancy assumptions, narrowed its gross interest expense outlook to $208.0 million to $209.5 million from $212.0 million to $214.0 million, and increased expected capitalized interest to $48.5 million to $49.5 million from $32.0 million to $34.0 million. Operating property dispositions are now expected to total $347.5 million to $500.0 million, up from about $300 million previously. Today the company's shares have moved 1.33% to a price of $31.88. For more information, read the company's full 8-K submission here.
