Kilroy Realty Reports Strong Q4 Leasing, Guides Lower 2026 Outlook

Company highlights improved West Coast office demand, major development projects

Published on Feb. 12, 2026

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Kilroy Realty (NYSE:KRC) reported fourth-quarter funds from operations (FFO) of $0.97 per diluted share and highlighted what management described as improved leasing conditions across its West Coast markets, alongside continued portfolio recycling and updates on two major development projects that will affect 2026 results.

Why it matters

As one of the leading office landlords on the West Coast, Kilroy Realty's earnings and outlook provide insights into the health of the regional commercial real estate market. The company's commentary on leasing trends, asset sales, and development projects offer a window into the broader office sector's recovery from pandemic-era challenges.

The details

Chief Executive Officer Angela Aman said 2025 was marked by 'meaningful progress and momentum,' citing leasing execution, asset sales, and capital redeployment. Fourth-quarter leasing totaled approximately 827,000 square feet, the company's strongest fourth-quarter performance in six years, bringing full-year leasing to about 2.1 million square feet. Management highlighted strong leasing at the Kilroy Oyster Point Phase Two (KOP2) project in South San Francisco, including a 280,000-square-foot lease with UCSF. However, the company revised cost and return expectations for KOP2, anticipating a stabilized cash yield in the mid-5% range, about 100 basis points below the original underwriting. Kilroy also continued its portfolio recycling, closing or entering into contracts on roughly $755 million of sales in 2025 and January 2026.

  • In December, the company sold Sunset Media Center in Hollywood for $61 million.
  • In January, it closed the sale of Kilroy Sabre Springs in San Diego for $125 million.
  • Kilroy entered into an agreement to sell the remaining portion of the Santa Fe Summit land parcel for $86 million, with the 17-acre portion requiring a zoning change for residential use and estimated to be complete in 2028.

The players

Kilroy Realty Corporation

A publicly traded real estate investment trust focused on the development, acquisition and management of high‐quality office and mixed‐use properties along the U.S. West Coast.

Angela Aman

Chief Executive Officer of Kilroy Realty.

Rob Paratte

Chief Leasing Officer of Kilroy Realty.

Eliott Trencher

Executive Vice President and Chief Investment Officer of Kilroy Realty.

Jeffrey Kuehling

Chief Financial Officer of Kilroy Realty.

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What they’re saying

“2025 was marked by 'meaningful progress and momentum,' citing leasing execution, asset sales, and capital redeployment.”

— Angela Aman, Chief Executive Officer (transcriptdaily.com)

“Premium sublease space in San Francisco is 'virtually gone' and highlighted a metric that 47% of the market's reported availability has not transacted since 2021, which he said reduces competitive impact on Kilroy's product.”

— Rob Paratte, Chief Leasing Officer (transcriptdaily.com)

What’s next

The company said the UCSF lease at Kilroy Oyster Point Phase Two provides long-term cash flow stability and an institutional-credit anchor, with the building in shell condition and the commencement timing reflecting space planning and build-out across multiple user groups.

The takeaway

Kilroy Realty's strong fourth-quarter leasing and asset sales highlight the improving office demand on the West Coast, though the company's revised expectations for its major Kilroy Oyster Point Phase Two development project point to some lingering challenges in the commercial real estate market.