February 10, 2025 04:49 PM Eastern Standard Time

LOS ANGELES--(BUSINESS WIRE)--Kilroy Realty Corporation (NYSE: KRC) (“Kilroy” or the “Company”) today reported financial results for the fourth quarter and full year ended December 31, 2024.

“Leasing activity meaningfully accelerated to more than 700,000 square feet in the fourth quarter, underscoring the recovery that we are seeing play out across our West Coast markets,” commented Angela Aman, CEO. “In addition to leasing execution, the team has remained active across all facets of our business, continuing our efforts to monetize significant components of our future land bank, selling our corporate aircraft, and, in January, successfully completing the development of Kilroy Oyster Point Phase 2. We are well positioned to capitalize on continued improvements in the leasing and transaction environments as we execute in 2025.”

Fourth Quarter Highlights

Financial Results

• Revenues of $286.4 million for the quarter ended December 31, 2024, as compared to $269.0 million for the quarter ended December 31, 2023
• Net income available to common stockholders of $59.5 million, or $0.50 per diluted share, for the quarter ended December 31, 2024 as compared to $47.3 million, or $0.40 per diluted share, for the quarter ended December 31, 2023
• Funds from operations (“FFO”) of $144.9 million, or $1.20 per diluted share, for the quarter ended December 31, 2024 as compared to $129.3 million, or $1.08 per diluted share, for the quarter ended December 31, 2023

Leasing and Occupancy

• Stabilized portfolio was 82.8% occupied and 84.9% leased at December 31, 2024
• During the quarter, signed approximately 708,000 square feet of leases, the highest quarterly leasing volume achieved since the fourth quarter of 2019
  • Leasing activity was comprised of 206,000 square feet of new leasing on previously vacant space, 356,000 square feet of new leasing on currently occupied space, and 146,000 square feet of renewal leasing
    • Includes 20,000 square feet of short-term leasing, primarily comprised of 14,000 square feet of short-term renewal leasing
• GAAP rents on leases signed during the quarter increased 3.4% and cash rents decreased 8.6% from prior levels on second generation leasing, excluding short-term leasing

Investment Activity

• In December 2024, committed to invest in a PropTech venture capital fund managed by Fifth Wall. This investment highlights the Company’s commitment to driving efficiencies throughout the portfolio by leveraging technology and the Company’s significant scale in its markets

Sale of Long-Lived Asset

• In November 2024, sold the Company’s corporate aircraft for gross proceeds of $19.8 million, which resulted in a gain on sale of approximately $6.0 million, or $0.05 per diluted share

Balance Sheet

• In December 2024, repaid the aggregate remaining principal balance of $403.7 million of senior unsecured senior notes on the maturity date

Dividend

• The Board declared and paid a regular quarterly cash dividend on its common stock of $0.54 per share, equivalent to an annual rate of $2.16 per share. The dividend was paid on January 9, 2025 to stockholders of record on December 31, 2024 (the ex-dividend date)

Full Year Highlights

Financial Results

• Revenues of $1,135.6 million for the year ended December 31, 2024, as compared to $1,129.7 million for the year ended December 31, 2023
• Net income available to common stockholders of $211.0 million, or $1.77 per diluted share, for the year ended December 31, 2024, as compared to $212.2 million, or $1.80 per diluted share for the year ended December 31, 2023
• Funds from operations (“FFO”) of $551.6 million, or $4.59 per diluted share, for the year ended December 31, 2024 as compared to $551.1 million, or $4.62 per diluted share, for the year ended December 31, 2023

Leasing and Occupancy

• During the year, signed approximately 1,778,000 square feet of leases, the highest annual leasing volume since 2019
  • Leasing activity was comprised of 536,000 square feet of new leasing on previously vacant space, 528,000 square feet of new leasing on currently occupied space, and 714,000 square feet of renewal leasing
    • Includes 361,000 square feet of short-term leasing, primarily comprised of 247,000 square feet of short-term renewal leasing
• During the quarter ended June 30, 2024, DermTech filed for bankruptcy and rejected its lease and, during the quarter ended September 30, 2024, the Company executed a 110,000 square foot short-term lease with the successor entity to facilitate DermTech’s interim operations. This lease has been excluded from the leasing productivity statistics above
• GAAP rents on leases signed during the year increased 8.2% and cash rents decreased 4.5% from prior levels on second generation leasing, excluding short-term leasing

Acquisition Activity

• During the third quarter of 2024, completed the acquisition of Junction at Del Mar, an approximately 104,000 square foot office property, comprised of two buildings in the Del Mar submarket of San Diego, for $35.0 million. The buildings are located adjacent to the Company’s One Paseo mixed-use project

Liquidity

• As of December 31, 2024, the Company had approximately $1.3 billion of total liquidity comprised of approximately $0.2 billion of cash and cash equivalents and approximately $1.1 billion available under the fully undrawn unsecured revolving credit facility

Sustainability and Corporate Social Responsibility

• During the year:
  • Achieved carbon neutral operations across the portfolio for the fifth consecutive year
  • Increased capacity from on-site solar at Company properties to over six megawatts of clean electricity
  • Listed on the U.S. EPA’s National Top 100 List of largest green power users
  • Awarded the ENERGY STAR Partner of the Year Sustained Excellence Award for the ninth consecutive year
  • Earned the highly competitive GRESB 5 Star designation for both Standing Assets and Development
  • Achieved 680,000 square feet of new ENERGY STAR certifications across the portfolio, bringing the total to over 10 million square feet of ENERGY STAR certified space

Recent Developments

• In January, received a temporary certificate of occupancy and progressed Kilroy Oyster Point Phase 2 from the under construction phase to the tenant improvement phase

Net Income Available to Common Stockholders / FFO Guidance and Outlook

The Company expects Nareit FFO for the full year 2025 of $3.85 to $4.05 per diluted share. In addition to the assumptions detailed below, 2025 guidance assumes a range of outcomes tied to the capitalization of interest expense and other carry costs related to future development projects and no impact from 2025 capital recycling activities.

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