Oct 23, 2026 earnings call — Strong leasing and pipeline growth
Leasing of approximately 815,000 square feet in Q3, bringing year-to-date volume to over 1.75 million square feet.
Revenue $0.3B (est $0.3B) · EPS $0.13 (est $0.13)
Key quotes
"During the third quarter, we executed approximately 815,000 square feet of new and renewal leases, substantially all of which were long term in nature, bringing year-to-date leasing volume to over 1.75 million square feet, an increase of nearly 44% versus the first 9 months of 2025."
"At Kilroy Oyster Point Phase 2, the momentum that we discussed last quarter has continued unabated, with ongoing active negotiations for all remaining vacancy within our multi-tenant building and a growing list of larger potential users for our full building on the campus."
"Based on our current expectations, we now believe the process will conclude at the end of January 2027, at which time capitalization will cease."
Analyst Q&A 13
pipeline strength by market
Q (Jana Galan · BofA): Analyst asked if the 20% forward pipeline increase is broad across markets or driven by San Francisco, and how to model the elevated FAD payout ratio going forward.
A: Management said the pipeline expansion is broadly distributed across markets, though San Francisco has higher concentration; they expect quarter-to-quarter FAD payout fluctuations tied to upfront capital and said excluding one large upfront Q3 payment the ratio would have been in the mid-80% range.
"I think the pipeline sort of speaks to that broad-based demand across the portfolio." — Angela Aman
KOP 2 leasing progress
Q (Seth Bergey · Citi): Analyst asked for detail on negotiations for the remaining vacancy at KOP 2 and whether underwriting expectations changed, plus return hurdles and options for Flower Mart and DIRECTV space.
A: Management said they are well beyond LOI stage on KOP 2 and feel very good about the depth of the pipeline, including multi-tenant and larger users. For Flower Mart, return targets depend on pre-leasing, tenant credit and project size, using 1900 Broadway (low- to mid-9s stabilized yield on cost with 60% pre-leased) as a framework; on DIRECTV they are exploring many options from leasing to monetization.
"I guess I would say that I don't want to predict, but I feel very strongly about the pipeline we've got and where we are in the negotiations." — A. Paratte
selling and buying strategy
Q (Steve Sakwa · Evercore): Analyst asked how the company thinks about dispositions and acquisitions in the current rate environment and specifics on L.A. market leasing and vacancies.
A: Management said it's early to see how transaction markets react to rates but they plan to be active on both selling and buying, and can deploy proceeds to acquisitions, debt paydowns, or buybacks. On L.A., they focused on submarkets they operate in, noting strong leasing in Century City, Culver City, Long Beach and activity at Columbia Square, with trophy product tightness benefiting their assets.
"We're going to be active and the plan has been to be active on sort of both sides of the equation, right?" — Angela Aman
DIRECTV renewal and repositioning
Q (Blaine Heck · Wells Fargo): Analyst asked if a partial renewal by DIRECTV is possible and what time and capital would be needed for repositioning or redevelopment.
A: Management said a renewal in some form is possible but they expect either a full vacate or meaningful downsize; if redevelopment is pursued they will assess capital needs and expected ROI and only proceed if returns are acceptable.
"There is a chance of a renewal in some form." — Eliott Trencher
KOP 2 timing for NOI
Q (Nicholas Yulico · Scotiabank): Analyst asked whether leases signed this year at KOP 2 (multi-tenant or full-building) would start NOI next year or in 2028, and how build-outs affect timing.
A: Management said spec suites in the existing multi-tenant building can turn on revenue more quickly as leases are executed over coming quarters. The full-building opportunity is in shell condition and will take longer to build out, with timing depending on tenant design needs.
"there's certainly an opportunity to get revenue turned on more quickly in that building as we get leases executed over the coming quarters." — Angela Aman
AI/robotics demand size and land sale risk
Q (Anthony Paolone · JPMorgan): Analyst asked what size and type of space AI/robotics tenants need and whether residential land sale closings face more risk after recent rate and housing moves.
A: Management said robotics needs are specialized and causing spillover into KOP and other markets; they estimated about 500,000 square feet of AI/robotics demand in San Francisco and noted 100 Hooper can serve some of that with PDR space. On land sales, they see no evidence today that closing risk is higher despite elevated rates.
"Right now, there's about 500,000 square feet of AI/robotics." — A. Paratte
sustainability of leasing volume
Q (Caitlin Burrows · Goldman Sachs): Analyst asked if strong quarterly leasing can be sustained and whether the pipeline is new deals or renewals, and about acquisition opportunities.
A: Management said their leasing team drove 815,000+ square feet this quarter and the pipeline continues to grow, with many large deals moving into Q4; most of the pipeline is new deals rather than renewals. On acquisitions, they are evaluating selective opportunities where they can create value.
"The first comment I'll make is that across the platform, our leasing team is unparalleled, and that's largely the result of what you're seeing in terms of the 800-plus thousand square feet of leasing that we've done." — A. Paratte
tenant spread south of Oyster Point
Q (Michael Carroll · RBC): Analyst asked whether larger tenants are expanding into the North Peninsula or farther south and whether KOP 3 interest is mostly life science.
A: Management said tenants are looking at broader options south of Oyster Point including North Peninsula and South Silicon Valley, and that KOP 3 interest is primarily life science and AI users tied to life science.
"tenants are having to look at a broader range of options south of Oyster Point." — A. Paratte
office utilization outside AI
Q (Peter Abramowitz · Deutsche Bank): Analyst asked about demand trends from legacy big tech and non-AI tenants and overall office utilization across the portfolio.
A: Management said AI is about 40% of demand in San Francisco, but sectors like law firms and FIRE still provide balanced demand. Office utilization is generally improving across the portfolio, with some tenants bringing employees back and AI companies often in-office 4 to 5 days a week, boosting foot traffic.
"I would say, kind of across the board, office utilization is improving, even still on the margin within tenants that have been back in office." — Angela Aman
rent growth in Bay Area class A
Q (Dylan Burzinski · Green Street): Analyst asked about prospects for net effective rent growth in Bay Area, especially Class A/Trophy, and replacement cost and rents in San Francisco.
A: Management said asking rents in San Francisco are up 7% from last quarter and the market is tightening, especially for high-quality product; replacement cost varies but can be $1,300 to $1,700 per square foot, implying 20% to 40% rent growth needed vs. second-gen rents.
"we're already seeing it thus far asking rents in San Francisco are up 7% from last quarter, and it is a tightening market." — A. Paratte
Flower Mart development options
Q (John Kim · BMO): Analyst asked why interest capitalization stopped in January and whether Flower Mart will shift to a higher office mix.
A: Management said the city process was intended to give flexibility to phase the project and to retain optionality between office and residential uses; they remain in a holding pattern until either a significant office tenant appears or market dynamics make one use clearly preferable.
"The process we've gone through with the city over the last few years has really been oriented around sort of realizing more flexibility and optionality on the site without committing ourselves to one specific plan." — Angela Aman
tenant improvements and concessions
Q (Upal Rana · KeyBanc): Analyst asked about TIs and concessions trending after a quarter with $94 per square foot and whether early renewal talks with Okta are happening.
A: Management said look at TIs and LCs over longer time frames, noting year-to-date annualized TI and LC per square foot is down almost 2.5% versus the same period in 2025 despite better spreads; they avoid commenting on specific tenants but said early renewal conversations are increasing in the Bay Area.
"if you look at the annualized TI and LC per square foot for all year-to-date activity relative to the same period in 2025, we're actually down almost 2.5%," — Angela Aman
CFO transition status
Q (Nicholas Yulico · Scotiabank): Analyst asked about the abrupt CFO departure, the replacement search progress, and whether a new CFO will be in place before 4Q guidance.
A: Management said the search is going very well with high-quality candidates and the finance team is well supported; Eliott is interim CFO and the accounting team is handling operations while they carefully and methodically hire a permanent replacement.
"We're excited about the quality and the caliber of candidates we're seeing, the interest in joining the team and all the exciting things that I think are going on here at Kilroy." — Angela Aman