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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-12675 (Kilroy Realty Corporation)

Commission File Number: 000-54005 (Kilroy Realty, L.P.)

KILROY REALTY CORPORATION

KILROY REALTY, L.P.

(Exact name of registrant as specified in its charter)



Kilroy Realty Corporation	Maryland	95-4598246
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Kilroy Realty, L.P.	Delaware	95-4612685
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

12200 W. Olympic Boulevard, Suite 200, Los Angeles, California, 90064

(Address of principal executive offices) (Zip Code)

(310) 481-8400


(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Registrant	Title of each class	Name of each exchange on which registered	Ticker Symbol
Kilroy Realty Corporation	Common Stock, $.01 par value	New York Stock Exchange	KRC


Securities registered pursuant to Section 12(g) of the Act:
Registrant			Title of each class
Kilroy Realty, L.P.			Common Units Representing Limited Partnership Interests

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Kilroy Realty Corporation Yes ☑ No ☐

Kilroy Realty, L.P. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Kilroy Realty Corporation Yes ☑ No ☐

Kilroy Realty, L.P. Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Kilroy Realty Corporation

Large accelerated filer ☑ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Kilroy Realty, L.P.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☑ Smaller reporting company ☐

Emerging growth company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Kilroy Realty Corporation Yes ☐ No ☑

Kilroy Realty, L.P. Yes ☐ No ☑

As of July 25, 2025, 118,294,328 shares of Kilroy Realty Corporation common stock, par value $.01 per share, were outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2025 of Kilroy Realty Corporation and Kilroy Realty, L.P. Unless stated otherwise or the context otherwise requires, references to “Kilroy Realty Corporation” or the “Company,” “we,” “our,” and “us” mean Kilroy Realty Corporation, a Maryland corporation, and its controlled and consolidated subsidiaries, and references to “Kilroy Realty, L.P.” or the “Operating Partnership” mean Kilroy Realty, L.P., a Delaware limited partnership and its controlled and consolidated subsidiaries.

The Company is a real estate investment trust, or REIT, and the general partner of the Operating Partnership. As of June 30, 2025, the Company owned an approximate 99.0% common general partnership interest in the Operating Partnership. The remaining approximate 1.0% common limited partnership interests are owned by non-affiliated investors. As the sole general partner of the Operating Partnership, the Company exercises exclusive and complete discretion over the Operating Partnership’s day-to-day management and control and can cause it to enter into certain major transactions, including acquisitions, dispositions, and refinancings and cause changes in its line of business, capital structure, and distribution policies.

There are a few differences between the Company and the Operating Partnership that are reflected in the disclosures in this Form 10-Q. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated, consolidated company. The Company is a REIT, the only material asset of which is the partnership interests it holds in the Operating Partnership. As a result, the Company generally does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time and guaranteeing certain debt of the Operating Partnership. The Company itself is not directly obligated under any indebtedness, but generally guarantees all of the debt of the Operating Partnership. The Operating Partnership owns substantially all of the assets of the Company either directly or through its subsidiaries, conducts the operations of the Company’s business, and is structured as a limited partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Company, which the Company generally contributes to the Operating Partnership in exchange for units of partnership interest, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness, or through the issuance of units of partnership interest.

Noncontrolling interests, stockholders’ equity, and partners’ capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and, to the extent not held by the Company, as noncontrolling interests in the Company’s financial statements. The differences between stockholders’ equity, partners’ capital, and noncontrolling interests result from the differences in the equity issued by the Company and the Operating Partnership.

We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:

•Combined reports better reflect how management and the analyst community view the business as a single operating unit;

•Combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

•Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort, and expense; and

•Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

•consolidated financial statements;

•the following notes to the consolidated financial statements:

◦Note 11, Net Income Available to Common Stockholders Per Share of the Company;

◦Note 12, Net Income Available to Common Unitholders Per Unit of the Operating Partnership;

◦Note 13, Supplemental Cash Flows Information of the Company; and

◦Note 14, Supplemental Cash Flows Information of the Operating Partnership;

•“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

◦—Liquidity and Capital Resources of the Company;” and

◦—Liquidity and Capital Resources of the Operating Partnership.”

This report also includes separate sections under “Part I – Financial Information, Item 4. Controls and Procedures” and separate Exhibit 31 and Exhibit 32 certifications for the Company and the Operating Partnership to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.

Available Information

We use our website (www.kilroyrealty.com) as a routine channel of distribution of company information, including press releases, presentations, and supplemental information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website in addition to following press releases, SEC filings, and public conference calls and webcasts. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

QUARTERLY REPORT FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025

TABLE OF CONTENTS


		Page
	PART I – FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY CORPORATION	1
	Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	1
	Consolidated Statements of Operations for the Three and Six Months ended June 30, 2025 and 2024	2
	Consolidated Statements of Equity for the Three and Six Months ended June 30, 2025 and 2024	3
	Consolidated Statements of Cash Flows for the Six Months ended June 30, 2025 and 2024	5
Item 1.	FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY, L.P.	6
	Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	6
	Consolidated Statements of Operations for the Three and Six Months ended June 30, 2025 and 2024	7
	Consolidated Statements of Capital for the Three and Six Months ended June 30, 2025 and 2024	8
	Consolidated Statements of Cash Flows for the Six Months ended June 30, 2025 and 2024	9
	Notes to Unaudited Consolidated Financial Statements	10
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	55
Item 4.	CONTROLS AND PROCEDURES (KILROY REALTY CORPORATION AND KILROY REALTY, L.P.)	55
	PART II – OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	56
Item 1A.	RISK FACTORS	56
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	56
Item 3.	DEFAULTS UPON SENIOR SECURITIES	56
Item 4.	MINE SAFETY DISCLOSURES	56
Item 5.	OTHER INFORMATION	56
Item 6.	EXHIBITS	57
SIGNATURES		58

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY CORPORATION

KILROY REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except share data)


	June 30, 2025		December 31, 2024
ASSETS
REAL ESTATE ASSETS:
Land and improvements	$	1,627,754	$	1,750,820
Buildings and improvements	8,427,405		8,598,751
Undeveloped land and construction in progress	2,364,938		2,309,624
Total real estate assets held for investment	12,420,097		12,659,195
Accumulated depreciation and amortization	(2,877,165)		(2,824,616)
Total real estate assets held for investment, net	9,542,932		9,834,579
REAL ESTATE AND OTHER ASSETS HELD FOR SALE, NET (Note 2)	255,795		—
CASH AND CASH EQUIVALENTS (Note 13)	193,129		165,690

MARKETABLE SECURITIES (Note 10)	31,629		27,965
CURRENT RECEIVABLES, NET	11,718		11,033
DEFERRED RENT RECEIVABLES, NET	436,964		451,996
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET	208,266		225,937
RIGHT OF USE GROUND LEASE ASSETS	128,674		129,222
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 3)	58,725		51,935

TOTAL ASSETS	$	10,867,832	$	10,898,357
LIABILITIES AND EQUITY
LIABILITIES:
Secured debt, net (Notes 4 and 10)	$	595,212	$	598,199
Unsecured debt, net (Notes 4 and 10)	4,002,507		3,999,566

Accounts payable, accrued expenses, and other liabilities	273,600		285,011
Ground lease liabilities	128,030		128,422
Accrued dividends and distributions	64,985		64,850
Deferred revenue and acquisition-related intangible liabilities, net	131,606		142,437
Rents received in advance and tenant security deposits	73,561		71,003
Liabilities related to real estate assets held for sale (Note 2)	4,887		—
Total liabilities	5,274,388		5,289,488
COMMITMENTS AND CONTINGENCIES (Note 9)
EQUITY:
Stockholders’ Equity (Note 5):
Common stock, $.01 par value, 280,000,000 shares authorized, 118,294,328 and 118,046,674 shares issued and outstanding	1,183		1,181
Additional paid-in capital	5,216,320		5,209,653
Retained earnings	148,952		171,212
Total stockholders’ equity	5,366,455		5,382,046
Noncontrolling Interests (Notes 1 and 6):
Common units of the Operating Partnership	52,192		52,472
Noncontrolling interests in consolidated property partnerships	174,797		174,351
Total noncontrolling interests	226,989		226,823
Total equity	5,593,444		5,608,869
TOTAL LIABILITIES AND EQUITY	$	10,867,832	$	10,898,357

See accompanying notes to consolidated financial statements.

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
REVENUES
Rental income (Note 8)	$	285,071	$	275,919	$	551,315	$	550,809
Other property income	4,821		4,812		9,421		8,503
Total revenues	289,892		280,731		560,736		559,312
EXPENSES
Property expenses	58,575		59,279		117,289		116,599
Real estate taxes	26,765		29,009		55,130		58,248

Ground leases	3,019		2,996		6,039		5,748
General and administrative expenses (Note 7)	18,475		18,824		35,376		36,116

Leasing costs	2,277		2,119		5,150		4,398
Depreciation and amortization	87,625		87,151		174,744		175,182
Total expenses	196,736		199,378		393,728		396,291
OTHER INCOME (EXPENSES)
Interest income	512		10,084		1,646		23,274
Interest expense (Note 4)	(30,844)		(36,763)		(61,992)		(75,634)


Other income (expense) (Note 1)	190		(127)		33		(414)
Gain on sale of depreciable operating property (Note 2)	16,554		—		16,554		—
Total other expenses	(13,588)		(26,806)		(43,759)		(52,774)
NET INCOME	79,568		54,547		123,249		110,247
Net income attributable to noncontrolling common units of the Operating Partnership	(663)		(458)		(1,038)		(960)
Net income attributable to noncontrolling interests in consolidated property partnerships	(10,456)		(4,878)		(14,754)		(10,156)
Total income attributable to noncontrolling interests	(11,119)		(5,336)		(15,792)		(11,116)




NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	68,449	$	49,211	$	107,457	$	99,131
Net income available to common stockholders per share – basic (Note 11)	$	0.58	$	0.41	$	0.91	$	0.83
Net income available to common stockholders per share – diluted (Note 11)	$	0.57	$	0.41	$	0.90	$	0.83
Weighted average shares of common stock outstanding – basic (Note 11)	118,285,328		117,375,262		118,240,208		117,356,464
Weighted average shares of common stock outstanding – diluted (Note 11)	118,683,337		117,663,190		118,673,935		117,810,298

See accompanying notes to consolidated financial statements.

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in thousands, except share and per share/unit data)


	Common Stock							Total Stock- holders’ Equity		Noncontrolling Interests		Total Equity
	Number of Shares	Common Stock		Additional Paid-in Capital		Retained Earnings
BALANCE AS OF DECEMBER 31, 2024	118,046,674	$	1,181	$	5,209,653	$	171,212	$	5,382,046	$	226,823	$	5,608,869
Net income						39,008		39,008		4,673		43,681

Issuance of share-based compensation awards				1,476				1,476				1,476
Non-cash amortization of share-based compensation (Note 7)				5,176				5,176				5,176

Settlement of restricted stock units for shares of common stock	377,801	4		(4)				—				—
Repurchase of common stock and restricted stock units	(155,716)	(2)		(6,007)				(6,009)				(6,009)


Distributions to noncontrolling interests in consolidated property partnerships								—		(7,234)		(7,234)
Adjustment for noncontrolling interest				121				121		(121)		—

Dividends declared per share of common stock and common unit ($0.54 per share/unit)						(65,353)		(65,353)		(621)		(65,974)
BALANCE AS OF MARCH 31, 2025	118,268,759	1,183		5,210,415		144,867		5,356,465		223,520		5,579,985
Net income						68,449		68,449		11,119		79,568

Issuance of share-based compensation awards				477				477				477
Non-cash amortization of share-based compensation (Note 7)				5,670				5,670				5,670

Settlement of restricted stock units for shares of common stock	31,774	—		—				—				—
Repurchase of common stock and restricted stock units	(6,205)	—		(197)				(197)				(197)


Distributions to noncontrolling interests in consolidated property partnerships								—		(7,074)		(7,074)
Adjustment for noncontrolling interest				(45)				(45)		45		—

Dividends declared per common share and common unit ($0.54 per share/unit)						(64,364)		(64,364)		(621)		(64,985)
BALANCE AS OF JUNE 30, 2025	118,294,328	$	1,183	$	5,216,320	$	148,952	$	5,366,455	$	226,989	$	5,593,444


	Common Stock							Total Stock- holders’ Equity		Noncontrolling Interests		Total Equity
	Number of Shares	Common Stock		Additional Paid-in Capital		Retained Earnings
BALANCE AS OF DECEMBER 31, 2023	117,239,558	$	1,173	$	5,205,839	$	221,149	$	5,428,161	$	231,532	$	5,659,693
Net income						49,920		49,920		5,780		55,700

Issuance of share-based compensation awards				4,017				4,017				4,017
Non-cash amortization of share-based compensation				4,727				4,727				4,727

Settlement of restricted stock units for shares of common stock	217,496	2		(2)				—				—
Repurchase of common stock and restricted stock units	(90,649)	(1)		(5,897)				(5,898)				(5,898)


Distributions to noncontrolling interests in consolidated property partnerships								—		(6,898)		(6,898)
Adjustment for noncontrolling interest				69				69		(69)		—

Dividends declared per share of common stock and common unit ($0.54 per share/unit)						(67,989)		(67,989)		(621)		(68,610)
BALANCE AS OF MARCH 31, 2024	117,366,405	1,174		5,208,753		203,080		5,413,007		229,724		5,642,731
Net income						49,211		49,211		5,336		54,547

Issuance of share-based compensation awards				1,085				1,085				1,085
Non-cash amortization of share-based compensation				6,942				6,942				6,942

Settlement of restricted stock units for shares of common stock	19,395	—		—				—				—
Repurchase of common stock and restricted stock units	(569)	—		(20)				(20)				(20)


Distributions to noncontrolling interests in consolidated property partnerships								—		(5,911)		(5,911)
Adjustment for noncontrolling interest				(61)				(61)		61		—

Dividends declared per common share and common unit ($0.54 per share/unit)						(64,495)		(64,495)		(621)		(65,116)
BALANCE AS OF JUNE 30, 2024	117,385,231	$	1,174	$	5,216,699	$	187,796	$	5,405,669	$	228,589	$	5,634,258

See accompanying notes to consolidated financial statements.

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)


	Six Months Ended June 30,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	123,249	$	110,247
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate assets and leasing costs	171,978		172,049
Depreciation of non-real estate furniture, fixtures, and equipment	2,766		3,133
Revenues deemed uncollectible	820		3,889
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements	(7,458)		(9,327)
Straight-line rents, net	7,967		(2,755)
Non-cash amortization of net below market rents	(1,691)		(1,790)
Non-cash amortization of deferred financing costs and debt discounts	2,397		3,317
Non-cash amortization of share-based compensation awards	8,509		8,691
Amortization of right of use ground lease assets	548		528
Gain on sale of depreciable operating property	(16,554)		—

Net change in other operating assets	(15,347)		(13,097)
Net change in other operating liabilities	3,483		(18,323)
Net cash provided by operating activities	280,667		256,562
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for development and redevelopment properties and undeveloped land	(81,743)		(180,571)
Expenditures for operating properties and other capital assets	(46,621)		(35,195)
Net proceeds received from dispositions (Note 2)	28,021		—
Maturity of certificates of deposit	—		256,581






Net cash (used in) provided by investing activities	(100,343)		40,815
CASH FLOWS FROM FINANCING ACTIVITIES:

Distributions to noncontrolling interests in consolidated property partnerships	(14,324)		(12,825)
Dividends and distributions paid to common stockholders and common unitholders	(128,855)		(127,930)
Repurchase of common stock and restricted stock units	(6,206)		(5,918)
Financing costs	(407)		(17,517)
Principal payments and repayments of secured debt	(3,093)		(2,973)


Proceeds from the issuance of unsecured debt	—		395,516
Repayments of unsecured debt	—		(200,000)







Net cash (used in) provided by financing activities	(152,885)		28,353
Net increase in cash and cash equivalents and restricted cash	27,439		325,730
Cash and cash equivalents and restricted cash, beginning of period	165,690		510,163
Cash and cash equivalents and restricted cash, end of period	$	193,129	$	835,893

See accompanying notes to consolidated financial statements.

ITEM 1: FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY, L.P.

KILROY REALTY, L.P.

CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except unit data)


	June 30, 2025		December 31, 2024
ASSETS
REAL ESTATE ASSETS:
Land and improvements	$	1,627,754	$	1,750,820
Buildings and improvements	8,427,405		8,598,751
Undeveloped land and construction in progress	2,364,938		2,309,624
Total real estate assets held for investment	12,420,097		12,659,195
Accumulated depreciation and amortization	(2,877,165)		(2,824,616)
Total real estate assets held for investment, net	9,542,932		9,834,579
REAL ESTATE AND OTHER ASSETS HELD FOR SALE, NET (Note 2)	255,795		—
CASH AND CASH EQUIVALENTS (Note 14)	193,129		165,690

MARKETABLE SECURITIES (Note 10)	31,629		27,965
CURRENT RECEIVABLES, NET	11,718		11,033
DEFERRED RENT RECEIVABLES, NET	436,964		451,996
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET	208,266		225,937
RIGHT OF USE GROUND LEASE ASSETS	128,674		129,222
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 3)	58,725		51,935

TOTAL ASSETS	$	10,867,832	$	10,898,357
LIABILITIES AND CAPITAL
LIABILITIES:
Secured debt, net (Notes 4 and 10)	$	595,212	$	598,199
Unsecured debt, net (Notes 4 and 10)	4,002,507		3,999,566

Accounts payable, accrued expenses, and other liabilities	273,600		285,011
Ground lease liabilities	128,030		128,422
Accrued distributions	64,985		64,850
Deferred revenue and acquisition-related intangible liabilities, net	131,606		142,437
Rents received in advance and tenant security deposits	73,561		71,003
Liabilities related to real estate assets held for sale (Note 2)	4,887		—
Total liabilities	5,274,388		5,289,488
COMMITMENTS AND CONTINGENCIES (Note 9)
CAPITAL:
Partner's Capital - Common units, 118,294,328 and 118,046,674 held by the general partner and 1,150,574 held by common limited partners issued and outstanding	5,418,647		5,434,518
Noncontrolling interests in consolidated property partnerships (Note 1)	174,797		174,351
Total capital	5,593,444		5,608,869
TOTAL LIABILITIES AND CAPITAL	$	10,867,832	$	10,898,357

See accompanying notes to consolidated financial statements.

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except unit and per unit data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
REVENUES
Rental income (Note 8)	$	285,071	$	275,919	$	551,315	$	550,809

Other property income	4,821		4,812		9,421		8,503
Total revenues	289,892		280,731		560,736		559,312
EXPENSES
Property expenses	58,575		59,279		117,289		116,599
Real estate taxes	26,765		29,009		55,130		58,248

Ground leases	3,019		2,996		6,039		5,748
General and administrative expenses (Note 7)	18,475		18,824		35,376		36,116

Leasing costs	2,277		2,119		5,150		4,398
Depreciation and amortization	87,625		87,151		174,744		175,182
Total expenses	196,736		199,378		393,728		396,291
OTHER INCOME (EXPENSES)
Interest income	512		10,084		1,646		23,274
Interest expense (Note 4)	(30,844)		(36,763)		(61,992)		(75,634)

Other income (expense) (Note 1)	190		(127)		33		(414)
Gain on sale of depreciable operating property (Note 2)	16,554		—		16,554		—
Total other expenses	(13,588)		(26,806)		(43,759)		(52,774)

NET INCOME	79,568		54,547		123,249		110,247
Net income attributable to noncontrolling interests in consolidated property partnerships	(10,456)		(4,878)		(14,754)		(10,156)




NET INCOME AVAILABLE TO COMMON UNITHOLDERS	$	69,112	$	49,669	$	108,495	$	100,091
Net income available to common unitholders per unit – basic (Note 12)	$	0.58	$	0.41	$	0.91	$	0.83
Net income available to common unitholders per unit – diluted (Note 12)	$	0.57	$	0.41	$	0.90	$	0.83
Weighted average common units outstanding – basic (Note 12)	119,435,902		118,525,836		119,390,782		118,507,038
Weighted average common units outstanding – diluted (Note 12)	119,833,911		118,813,764		119,824,509		118,960,872

See accompanying notes to consolidated financial statements.

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

(Unaudited; in thousands, except unit and per unit data)


	Partners’ Capital			Noncontrolling Interests in Consolidated Property Partnerships
	Number of Common Units	Common Units				Total Capital
BALANCE AS OF DECEMBER 31, 2024	119,197,248	$	5,434,518	$	174,351	$	5,608,869
Net income		39,383		4,298		43,681


Issuance of share-based compensation awards		1,476				1,476
Non-cash amortization of share-based compensation (Note 7)		5,176				5,176

Settlement of restricted stock units	377,801	—				—
Repurchase of common units and restricted stock units	(155,716)	(6,009)				(6,009)

Distributions to noncontrolling interests in consolidated property partnerships				(7,234)		(7,234)

Distributions declared per common unit ($0.54 per unit)		(65,974)				(65,974)
BALANCE AS OF MARCH 31, 2025	119,419,333	5,408,570		171,415		5,579,985
Net income		69,112		10,456		79,568

Issuance of share-based compensation awards		477				477
Non-cash amortization of share-based compensation (Note 7)		5,670				5,670

Settlement of restricted stock units	31,774	—				—
Repurchase of common units and restricted stock units	(6,205)	(197)				(197)
Contributions from noncontrolling interests in consolidated property partnerships						—
Distributions to noncontrolling interests in consolidated property partnerships				(7,074)		(7,074)

Distributions declared per common unit ($0.54 per unit)		(64,985)				(64,985)
BALANCE AS OF JUNE 30, 2025	119,444,902	$	5,418,647	$	174,797	$	5,593,444


	Partners’ Capital			Noncontrolling Interests in Consolidated Property Partnerships		Total Capital
	Number of Common Units	Common Units
BALANCE AS OF DECEMBER 31, 2023	118,390,132	$	5,481,436	$	178,257	$	5,659,693
Net income		50,422		5,278		55,700

Issuance of share-based compensation awards		4,017				4,017
Non-cash amortization of share-based compensation		4,727				4,727

Settlement of restricted stock units	217,496	—				—
Repurchase of common units and restricted stock units	(90,649)	(5,898)				(5,898)

Distributions to noncontrolling interests in consolidated property partnerships				(6,898)		(6,898)

Distributions declared per common unit ($0.54 per unit)		(68,610)				(68,610)
BALANCE AS OF MARCH 31, 2024	118,516,979	5,466,094		176,637		5,642,731
Net income		49,669		4,878		54,547

Issuance of share-based compensation awards		1,085				1,085
Non-cash amortization of share-based compensation		6,942				6,942

Settlement of restricted stock units	19,395	—				—
Repurchase of common units and restricted stock units	(569)	(20)				(20)

Distributions to noncontrolling interests in consolidated property partnerships				(5,911)		(5,911)

Distributions declared per common unit ($0.54 per unit)		(65,116)				(65,116)
BALANCE AS OF JUNE 30, 2024	118,535,805	$	5,458,654	$	175,604	$	5,634,258

See accompanying notes to consolidated financial statements.

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)


	Six Months Ended June 30,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	123,249	$	110,247
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate assets and leasing costs	171,978		172,049
Depreciation of non-real estate furniture, fixtures, and equipment	2,766		3,133
Revenues deemed uncollectible	820		3,889
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements	(7,458)		(9,327)
Straight-line rents, net	7,967		(2,755)
Non-cash amortization of net below market rents	(1,691)		(1,790)
Non-cash amortization of deferred financing costs and debt discounts	2,397		3,317
Non-cash amortization of share-based compensation awards	8,509		8,691
Amortization of right of use ground lease assets	548		528
Gain on sale of depreciable operating property	(16,554)		—

Net change in other operating assets	(15,347)		(13,097)
Net change in other operating liabilities	3,483		(18,323)
Net cash provided by operating activities	280,667		256,562
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for development and redevelopment properties and undeveloped land	(81,743)		(180,571)
Expenditures for operating properties and other capital assets	(46,621)		(35,195)
Net proceeds received from dispositions (Note 2)	28,021		—
Maturity of certificates of deposit	—		256,581






Net cash (used in) provided by investing activities	(100,343)		40,815
CASH FLOWS FROM FINANCING ACTIVITIES:

Distributions to noncontrolling interests in consolidated property partnerships	(14,324)		(12,825)
Distributions paid to common unitholders	(128,855)		(127,930)
Repurchase of common units and restricted stock units	(6,206)		(5,918)
Financing costs	(407)		(17,517)
Principal payments and repayments of secured debt	(3,093)		(2,973)


Proceeds from the issuance of unsecured debt	—		395,516
Repayments of unsecured debt	—		(200,000)







Net cash (used in) provided by financing activities	(152,885)		28,353
Net increase in cash and cash equivalents and restricted cash	27,439		325,730
Cash and cash equivalents and restricted cash, beginning of period	165,690		510,163
Cash and cash equivalents and restricted cash, end of period	$	193,129	$	835,893

See accompanying notes to consolidated financial statements.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Ownership, and Basis of Presentation

Kilroy Realty Corporation (the “Company”) is a self-administered real estate investment trust (“REIT”) active in premier office, life science, and mixed-use property types in the United States. The Company’s approach to modern business environments is designed to drive creativity and productivity for some of the world’s leading technology, entertainment, life science, and business services companies and we have been consistently recognized for our leadership in sustainability and building operations. The Company owns, develops, acquires, and manages real estate assets, consisting primarily of premier properties in Los Angeles, San Diego, the San Francisco Bay Area, Seattle, and Austin, which are markets it believes have strategic advantages and strong barriers to entry. The Company qualifies as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “KRC.”

We own our interests in all of our real estate assets through Kilroy Realty, L.P. (the “Operating Partnership”) and conduct substantially all of our operations through the Operating Partnership. Unless stated otherwise or the context otherwise requires, the terms “Kilroy Realty Corporation” or the “Company,” “we,” “our,” and “us” refer to Kilroy Realty Corporation and its consolidated subsidiaries, including the Operating Partnership, and the term “Operating Partnership” refers to Kilroy Realty, L.P. and its consolidated subsidiaries. The descriptions of our business, employees, and properties apply to both the Company and the Operating Partnership.

Our stabilized portfolio includes all of our properties with the exception of development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, undeveloped land, and real estate assets held for sale, if any. We define redevelopment properties as those properties for which we expect to spend significant development and construction costs pursuant to a formal plan to change its use, the intended result of which is a higher economic return on the property. We define a property in the tenant improvement phase as a development or redevelopment property where the project has reached “cold shell condition” and is ready for tenant improvements, which may require additional major base building modifications before being placed in service. Projects in the tenant improvement phase are moved into our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities. Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets as the projects or phases of projects are placed in service.

Our stabilized portfolio of operating properties was comprised of the following properties at June 30, 2025:


	Number of Buildings	Rentable Square Feet	Number of Tenants	Percentage Occupied (1)
Stabilized Office Properties (2)	118	16,395,491	440	80.8	%

________________________

(1)Represents economic occupancy for space where we have achieved revenue recognition for the associated lease agreements.

(2)Includes stabilized life science and retail space.


	Number of Properties	Number of Units	2025 Average Occupancy
Stabilized Residential Properties	3	1,001	94.5	%

As of June 30, 2025, the following properties were excluded from our stabilized portfolio:


	Number of Properties / Projects	Actual / Estimated Rentable Square Feet (1)
Properties held for sale (2)	1	663,460
In-process development projects - tenant improvement	1	875,000
In-process redevelopment projects - tenant improvement	2	100,000

________________________

(1)For the property classified as held for sale, represents actual rentable square feet and consists of four buildings. For the in-process development and redevelopment projects in the tenant improvement phase, represents estimated rentable square feet upon completion.

(2)See Note 2 “Dispositions and Real Estate Held for Sale” for additional information.

Our stabilized portfolio also excludes our future development pipeline, which, as of June 30, 2025, was comprised of eight potential future development sites, representing approximately 64 gross acres of undeveloped land.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of June 30, 2025, all of our properties and development and redevelopment projects, and all of our business was conducted in the state of California, with the exception of ten stabilized office properties and one future development project located in the state of Washington, and one stabilized office property and one future development project located in Austin, Texas. All of our properties, and development and redevelopment projects are 100% owned, excluding the following four office properties owned by the following three consolidated property partnerships:

Consolidated Property Partnership

Property Address

Ownership Interest (1)

100 First Street Member, LLC

100 1st Street, San Francisco, CA 94105

56%

303 Second Street Member, LLC

303 2nd Street, San Francisco, CA 94107

56%

Redwood City Partners, LLC

900 Jefferson Avenue, Redwood City, CA 94063

93%

900 Middlefield Road, Redwood City, CA 94063

________________________

(1)The remaining interests in all three property partnerships were owned by unrelated third parties.

The consolidated financial statements of the Company include the consolidated financial position and results of operations of the Company, the Operating Partnership, 100 First Street Member, LLC (“100 First LLC”), 303 Second Street Member, LLC (“303 Second LLC”), Redwood City Partners, LLC (“Redwood LLC”), and all of our wholly-owned and controlled subsidiaries. The consolidated financial statements of the Operating Partnership include the consolidated financial position and results of operations of the Operating Partnership, 100 First LLC, 303 Second LLC, Redwood LLC, and all of our wholly-owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

As of June 30, 2025, the Company owned an approximate 99.0% common general partnership interest in the Operating Partnership. The remaining approximate 1.0% common limited partnership interest in the Operating Partnership as of June 30, 2025 was owned by non-affiliated investors. Both the general and limited common partnership interests in the Operating Partnership are denominated in common units. Generally, the number of common units held by the Company is equivalent to the number of outstanding shares of the Company’s common stock, and the rights of all the common units to quarterly distributions and payments in liquidation mirror those of the Company’s common stockholders. The common limited partners have certain redemption rights as provided in the Operating Partnership’s Seventh Amended and Restated Agreement of Limited Partnership, as amended (the “Partnership Agreement”). With the exception of the Operating Partnership and our consolidated property partnerships, all of our subsidiaries are wholly-owned.

The accompanying interim financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. The interim financial statements for the Company and the Operating Partnership should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2024.

Commencing January 1, 2025, the Company began presenting a new line item, Other income (expense), which includes tax expenses, acquisition and disposition expenses, and income or expenses related to environmental and sustainability initiatives, which were previously included in General and administrative expenses. Historical amounts for General and administrative expenses and Other income (expense) have been revised to conform with the current period presentation.

Variable Interest Entities

The Operating Partnership is a variable interest entity (“VIE”) that is consolidated by the Company as the primary beneficiary, as the Operating Partnership is a limited partnership in which the common limited partners do not have substantive kick-out or participating rights. At June 30, 2025, the consolidated financial statements of the Company included two VIEs in addition to the Operating Partnership: 100 First LLC and 303 Second LLC. At June 30, 2025, the Company and the Operating Partnership were determined to be the primary beneficiaries of these two VIEs since we had the ability to control the activities that most significantly impact each of the VIEs’ economic performance. As of June 30, 2025, the two VIEs’ total assets,

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

liabilities, and noncontrolling interests included on our consolidated balance sheet were approximately $403.1 million (of which $326.5 million related to real estate held for investment), approximately $17.7 million, and approximately $169.9 million, respectively. Revenues, income, and net assets generated by 100 First LLC and 303 Second LLC may only be used to settle their contractual obligations, which primarily consist of operating expenses, capital expenditures, and required distributions.

At December 31, 2024, the consolidated financial statements of the Company included three VIEs in addition to the Operating Partnership: 100 First LLC, 303 Second LLC, and one entity established during the third quarter of 2024 to facilitate a potential future Section 1031 Exchange. At December 31, 2024, the Company and the Operating Partnership were determined to be the primary beneficiaries of these three VIEs since we had the ability to control the activities that most significantly impact each of the VIEs’ economic performance. At December 31, 2024, the impact of consolidating the VIEs increased the Company’s total assets, liabilities, and noncontrolling interests on our consolidated balance sheet by approximately $435.5 million (of which $357.3 million related to real estate held for investment), approximately $18.0 million, and approximately $169.4 million, respectively.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09 “Income Taxes (Topic 740): Improvements to Tax Disclosures.” The ASU is effective for annual periods beginning after December 15, 2024. The Company does not currently anticipate that the guidance will have a material impact on our consolidated financial statements or notes to our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The ASU is effective for annual periods beginning after December 15, 2026. The Company is currently evaluating whether the guidance will have a material impact on our consolidated financial statements or notes to our consolidated financial statements.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2. Dispositions and Real Estate Held for Sale

Operating Property Dispositions

The following table summarizes the one operating property sold during the six months ended June 30, 2025:

Property

Month of Disposition

Number of Buildings

Rentable
Square Feet

Sales Price

(in millions) (1)

501 Santa Monica Boulevard

June

78,509

40.0

___________________________

(1)Represents gross sales price before the impact of broker commissions, closing costs, and purchase price credits.

The total gain on the sale of the operating property sold during the six months ended June 30, 2025 was $16.6 million.

Real Estate Assets Held for Sale

During the three months ended June 30, 2025, we classified a four-building office property in Silicon Valley as Held for Sale. The property totals 663,460 square feet and is expected to close late in the third quarter for a gross sales price of $365.0 million.

The major classes of assets and liabilities of the property classified as held for sale as of June 30, 2025 were as follows:


Real estate and other assets held for sale, net	(in thousands)
Land and improvements	$	118,514
Buildings and improvements	194,357
Total real estate held for sale	312,871
Accumulated depreciation and amortization	(72,526)
Total real estate held for sale, net	240,345
Current receivables, net	36
Deferred rent receivables, net	6,525
Deferred leasing costs and acquisition-related intangibles, net	7,782
Prepaid expenses and other assets, net	1,107
Total real estate and other assets held for sale, net	$	255,795

Liabilities related to real estate assets held for sale
Accounts payable, accrued expenses, and other liabilities	$	591
Deferred revenue and acquisition-related intangible liabilities, net	1,091
Rents received in advance and tenant security deposits	3,205
Total liabilities related to real estate assets held for sale	$	4,887

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

3. Prepaid Expenses and Other Assets, Net

Prepaid expenses and other assets, net consisted of the following at June 30, 2025 and December 31, 2024:


	June 30, 2025		December 31, 2024
	(in thousands)
Furniture, fixtures and other long-lived assets, net	$	25,300	$	26,316
Prepaid expenses, net	18,369		8,470
Deferred financing costs, net (1)	10,921		12,692
Other assets	4,135		4,457
Total prepaid expenses and other assets, net	$	58,725	$	51,935

________________________

(1)Refer to Note 4 “Secured and Unsecured Debt of the Operating Partnership” for a discussion of the deferred financing costs for the unsecured revolving credit facility.

4. Secured and Unsecured Debt of the Operating Partnership

The Company generally guarantees all of the Operating Partnership’s unsecured debt obligations, including the unsecured revolving credit facility, the unsecured term loan facility, and all of the unsecured senior notes.

Unsecured Revolving Credit Facility and Term Loan Facility

The following table summarizes the balance and terms of our unsecured revolving credit facility as of June 30, 2025 and December 31, 2024:


	Unsecured Revolving Credit Facility
	June 30, 2025			December 31, 2024
	($ in thousands)
Outstanding borrowings	$	—		$	—
Remaining borrowing capacity (1)	1,100,000			1,100,000
Total borrowing capacity (1)	$	1,100,000		$	1,100,000
Interest rate (2)	5.65		%	5.69		%
Facility fee-annual rate (3)	0.250%
Unamortized deferred financing costs (3)	$	10,921		$	12,692
Maturity date (4)	July 31, 2028

________________________

(1)Remaining and total borrowing capacity are further reduced by the amount of our outstanding letters of credit which total approximately $5.2 million as of June 30, 2025 and December 31, 2024. We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $500.0 million under an accordion feature pursuant to the terms of the unsecured revolving credit facility.

(2)Our unsecured revolving credit facility interest rate was calculated using the Secured Overnight Financing Rate (“SOFR”) plus a SOFR adjustment of 0.10% (“Adjusted SOFR”) and a margin of 1.100% based on our credit rating as of June 30, 2025 and December 31, 2024. We may be entitled to a temporary 0.01% reduction in the interest rate provided we meet certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions.

(3)Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs in connection with the amendment and restatement of the unsecured revolving credit facility in 2024. These costs are included in Prepaid expenses and other assets, net on our consolidated balance sheets, which remain to be amortized through the maturity date of our unsecured revolving credit facility.

(4)The maturity date may be extended by two six-month periods, at the Operating Partnership’s election.

The Operating Partnership intends to borrow under the unsecured revolving credit facility from time to time for general corporate purposes, including to finance development and redevelopment expenditures, to fund potential acquisitions, to repay long-term debt, and to supplement cash balances in response to market conditions.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes the balance and terms of our 2024 Term Loan Facility as of June 30, 2025:


	2024 Term Loan Facility
	June 30, 2025			December 31, 2024
	($ in thousands)
Outstanding borrowings (1)	$	200,000		$	200,000
Interest rate (2)	5.62		%	5.70		%
Unamortized deferred financing costs (3)	$	419		$	1,229
Maturity date (4)	October 3, 2025

____________________

(1)We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $130.0 million as of June 30, 2025 and December 31, 2024, under an accordion feature pursuant to the terms of the 2024 Term Loan Facility.

(2)Our 2024 Term Loan Facility interest rate was calculated using Adjusted SOFR plus a margin of 1.200% based on our credit rating as of June 30, 2025 and December 31, 2024.

(3)We incurred debt origination and legal costs in connection with the amendment and restatement of the unsecured revolving credit facility in 2024, which remain to be amortized through the maturity date of the 2024 Term Loan Facility.

(4)The maturity date may be extended by two 12-month periods, at the Operating Partnership’s election.

Financial Covenants and Restrictions

The unsecured revolving credit facility, unsecured term loan facility, unsecured senior notes, including the private placement notes, and certain other secured debt arrangements contain covenants and restrictions requiring us to meet certain financial ratios and reporting requirements. Some of the more restrictive financial covenants include a maximum ratio of total debt to total asset value, a minimum fixed-charge coverage ratio, a maximum ratio of secured debt to total asset value, a minimum unsecured debt ratio, and a minimum unencumbered asset pool debt service coverage ratio. Noncompliance with one or more of the covenants and restrictions could result in the full principal balance of the associated debt becoming immediately due and payable. We were in compliance with all of our financial covenants as of June 30, 2025.

Debt Maturities

The following table summarizes the stated debt maturities and scheduled amortization payments for all outstanding debt as of June 30, 2025:


Year	(in thousands)
Remaining 2025	$	603,153
2026	401,317
2027	249,125
2028	400,000
2029	475,000
2030	500,000
Thereafter	2,000,000
Total aggregate principal value	4,628,595
Less: unamortized net discounts and deferred financing costs (1)	(30,876)
Total debt, net	$	4,597,719

________________________

(1)Includes $23.1 million of unamortized deferred financing costs for the unsecured term loan facility, unsecured senior notes, and secured debt, and $7.7 million of unamortized discounts for the unsecured senior notes. Excludes unamortized deferred financing costs on the unsecured revolving credit facility, which are included in Prepaid expenses and other assets, net on our consolidated balance sheets.

Capitalized Interest

The following table sets forth gross interest expense and capitalized interest for the three and six months ended June 30, 2025 and 2024. The interest expense capitalized was recorded as a cost of development and redevelopment and increased the carrying value of undeveloped land and construction in progress currently under construction.


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)
Gross interest expense	$	52,177	$	57,278	$	103,873	$	115,956
Capitalized interest	(21,333)		(20,515)		(41,881)		(40,322)
Interest expense	$	30,844	$	36,763	$	61,992	$	75,634

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5. Stockholders’ Equity of the Company

At-The-Market Stock Offering Program

Under our at-the-market (“ATM”) stock offering program (the “2024 ATM Program”), which commenced in March 2024, we may offer and sell shares of our common stock having an aggregate gross sales price up to $500.0 million from time to time in “at-the-market” offerings. In connection with the 2024 ATM Program, the Company may also, at its discretion, enter into forward equity sale agreements. The use of forward equity sale agreements allows the Company to lock in a share price on the sale of shares of our common stock at the time an agreement is executed, but defer settling the forward equity sale agreements and receiving the proceeds from the sale of shares until a later date. The Company did not have any outstanding forward equity sale agreements to be settled at June 30, 2025. Since commencement of the 2024 ATM Program, we have not completed any sales of common stock.

Share Repurchase Program

Under our current share repurchase program, which commenced in February 2024 (the “Share Repurchase Program”), we are authorized to repurchase shares of the Company’s common stock having an aggregate gross purchase price of up to $500.0 million. Under the Share Repurchase Program, repurchases may be made from time to time using a variety of methods, which may include open market purchases and privately negotiated transactions. The specific timing, price, and size of purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations. The Share Repurchase Program does not have a termination date and repurchases may be discontinued at any time. Since commencement of the Share Repurchase Program, we have not completed any common stock repurchases.

6. Noncontrolling Interests on the Company’s Consolidated Financial Statements

Common Units of the Operating Partnership

The Company owned an approximate 99.0% common general partnership interest in the Operating Partnership as of June 30, 2025 and December 31, 2024. The remaining approximate 1.0% common limited partnership interest as of June 30, 2025 and December 31, 2024 was owned by non-affiliated investors in the form of noncontrolling common units. There were 1,150,574 common units outstanding held by these investors as of June 30, 2025 and December 31, 2024.

The noncontrolling common units may be redeemed by unitholders for cash. Except under certain circumstances, we, at our option, may satisfy the cash redemption obligation with shares of the Company’s common stock on a one-for-one basis. If satisfied in cash, the value for each noncontrolling common unit upon redemption is the amount equal to the average of the closing quoted price per share of the Company’s common stock, par value $0.01 per share, as reported on the NYSE for the ten trading days immediately preceding the applicable redemption date. The aggregate value upon redemption of the then-outstanding noncontrolling common units was $40.1 million and $46.8 million as of June 30, 2025 and December 31, 2024, respectively. This redemption value does not necessarily represent the amount that would be distributed with respect to each noncontrolling common unit in the event of our termination or liquidation. In the event of our termination or liquidation, it is generally expected that each common unit would be entitled to a liquidating distribution equal to the liquidating distribution payable in respect of each share of the Company’s common stock.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

7. Share-Based Compensation

Share-Based Incentive Compensation Plan

As of June 30, 2025, we maintained one share-based incentive compensation plan, the Kilroy Realty 2006 Incentive Award Plan, as amended (the “2006 Plan”). The Company has a currently effective registration statement registering 12.6 million shares of our common stock for possible issuance under our 2006 Plan. As of June 30, 2025, approximately 1.9 million shares were available for grant under the 2006 Plan. The calculation of shares available for grant is presented after taking into account a reserve for a sufficient number of shares to cover the vesting and payment of 2006 Plan awards that were outstanding on that date, including performance-based vesting awards at (i) levels actually achieved for the performance conditions (as defined below) for which the performance period has been completed, and (ii) at maximum levels for the other performance and market conditions (as defined below) for awards still in a performance period.

2025 Share-Based Compensation Grants

In February 2025, the Executive Compensation Committee of the Company’s Board of Directors awarded 535,398 restricted stock units to certain officers of the Company under the 2006 Plan, which included 308,671 RSUs (at the target level of performance) that are subject to time, market, and/or performance-based vesting requirements (the “2025 Performance-Based RSUs”) and 226,727 RSUs that are subject to time-based vesting requirements (the “2025 Time-Based RSUs”). Each RSU granted is entitled to earn dividend equivalents in the form of RSUs that vest upon vesting of the underlying RSU award.

2025 Performance-Based RSU Grant

The 2025 Performance-Based RSUs are scheduled to vest at the end of a three year period (consisting of calendar years 2025-2027. A target number of 2025 Performance-Based RSUs were awarded, and the final number of 2025 Performance-Based RSUs that vest (which may be more or less than the target number) will be based upon (i) during the first calendar year of the three year performance measurement period, the achievement of pre-set FFO per share goals that applies to 100% of the Performance-Based RSUs awarded (the “FFO Performance Condition”), and (ii) a performance measure that applies to 50% of the award based upon a measure of the Company’s average net debt to EBITDAre ratio for the three year performance period (the “Net Debt to EBITDAre Ratio Performance Condition”), and a market measure that applies to the other 50% of the award based upon the relative ranking of the Company’s total stockholder return for the three year performance period compared to the total stockholder returns of an established comparison group of companies over the same period (the “Market Condition”). The 2025 Performance-Based RSUs are also subject to a three year service vesting provision (the “service vesting condition”) and are scheduled to cliff vest on the date the final vesting percentage is determined following the end of the three year performance period under the awards. The number of 2025 Performance-Based RSUs ultimately earned could fluctuate from the target number of 2025 Performance-Based RSUs granted based upon the levels of achievement for the FFO Performance Condition, the Net Debt to EBITDAre Ratio Performance Condition, the Market Condition, and the extent to which the service vesting condition is satisfied. The estimate of the number of 2025 Performance-Based RSUs earned is evaluated quarterly during the performance period based on our estimate for each of the performance conditions measured against the applicable goals.

Compensation expense for the 2025 Performance-Based RSUs is recognized on a straight-line basis over the requisite service period for each participant, which is generally the three year service period. During the three and six months ended June 30, 2025, we recognized $0.8 million and $1.2 million of compensation expense, respectively, for the 2025 Performance-Based RSUs assuming the 2025 FFO Performance Condition is met at 100% of target level of achievement and the 2025 Net Debt to EBITDAre Ratio Performance Condition is met at 100% of the target level of achievement. In the event we achieve a lower level of performance or fail to meet the FFO Performance Condition, we would reverse a portion or all of the $0.8 million and $1.2 million of compensation expense.

Each 2025 Performance-Based RSU represents the right to receive one share of our common stock in the future subject to, and as modified by, the Company’s level of achievement of the applicable performance and market conditions. The fair value of the portion of the award subject to the Net Debt to EBITDAre Ratio Performance Condition was calculated using the closing price of the Company’s common stock on the valuation date noted below. The fair value of the portion of the award subject to the Market Condition was calculated using a Monte Carlo simulation pricing model based on the assumptions in the table below, which resulted in the following grant date fair value per share.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


			Fair Value Assumptions
Valuation date			February 14, 2025
Fair value per share on valuation date (1)			$37.76
Expected share price volatility			38.0%
Risk-free interest rate			4.35%

________________________

(1)For one participant, the fair value per share on the valuation date for their 2025 Performance-Based RSUs is $38.93.

The computation of expected volatility was based on a blend of the historical volatility of our shares of common stock over a period of twice the remaining performance period as of the grant date and implied volatility data based on the observed pricing of six month publicly-traded options on shares of our common stock. The risk-free interest rate was based on the yield curve on zero-coupon U.S. Treasury STRIP securities in effect at February 14, 2025.

The fair value of the 2025 Performance-Based RSU grant as of the valuation date noted above, based on a target level of achievement, was $11.2 million. For the three and six months ended June 30, 2025, we recorded compensation expense based upon the grant date fair value per share for each component multiplied by the estimated number of RSUs to be earned.

2025 Time-Based RSU Grants

The 2025 Time-Based RSUs are scheduled to vest in three equal annual installments beginning on January 5, 2026 through January 5, 2028. Compensation expense for the 2025 Time-Based RSUs is recognized on a straight-line basis over the requisite service period, which is generally the explicit service period. Each 2025 Time-Based RSU represents the right to receive one share of our common stock in the future, subject to continued employment through the applicable vesting date, unless accelerated upon separation of employment, provided certain conditions are met. The total grant date fair value of the 2025 Time-Based RSU awards was $7.9 million, which was based on the $34.91 closing share price of the Company’s common stock on the NYSE on the February 14, 2025 grant date.

2024 and 2023 Performance-Based RSUs

Consistent with the 2025 Performance-Based RSU grant discussed above, the final number of 2024 and 2023 Performance-Based RSUs that vest will be based upon (i) the FFO Performance Condition that applies to 100% of the Performance-Based RSUs awarded as determined at the end of the first calendar year of the performance measurement period, and (ii) the Net Debt to EBITDA Ratio Performance Condition that applies to 50% of the award and the Market Condition that applies to the other 50% of the award, both of which are based on the full three-year performance measurement period. The 2024 FFO Performance Condition was achieved at 175% of the target level of achievement for one participant and 150% for all other participants. The 2023 FFO Performance Condition was achieved at 150% of the target level of achievement for all participants.

Compensation cost for the 2024 Performance-Based RSUs for the three and six months ended June 30, 2025 assumes the 2024 Net Debt to EBITDA Ratio Performance Condition is met at 158% of the target level of achievement for one participant and 139% for all other participants. Compensation cost for the 2023 Performance-Based RSUs for the three and six months ended June 30, 2025 assumes the 2023 Net Debt to EBITDA Ratio Performance Condition is met at 150% of the target level of achievement.

Share-Based Compensation Cost Recorded During the Period

The total compensation cost for all share-based compensation programs was $5.7 million and $6.9 million for the three months ended June 30, 2025 and 2024, respectively, and $10.8 million and $11.7 million for the six months ended June 30, 2025 and 2024, respectively. Of the total share-based compensation costs, $1.1 million and $2.3 million were capitalized as part of real estate assets for the three and six months ended June 30, 2025, respectively, and $1.6 million and $3.0 million was capitalized as part of real estate assets for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, there was approximately $33.4 million of total unrecognized compensation cost related to nonvested RSUs granted under share-based compensation arrangements. Such amount is based in part upon the estimated future outcome of the performance metrics as of June 30, 2025, and the actual compensation cost ultimately recognized could increase or decrease from this estimate based upon actual performance results. These costs are expected to be recognized over a weighted-average period of 2.0 years. The remaining compensation cost related to these nonvested RSU awards had been recognized in periods prior to June 30, 2025.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

8. Rental Income and Future Minimum Rent

Our rental income is primarily comprised of payments defined under leases and generally are subject to scheduled fixed increases. Additionally, rental income includes variable payments for tenant reimbursements of property-related expenses and payments based on a percentage of tenant sales.

The table below sets forth the allocation of rental income between fixed and variable payments and net collectability recoveries or reserves for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)
Fixed lease payments	$	236,910	$	226,469	$	457,925	$	456,784
Variable lease payments	48,086		49,456		94,507		97,914
Net collectability recoveries (reserves) (1)	75		(6)		(1,117)		(3,889)
Total rental income	$	285,071	$	275,919	$	551,315	$	550,809

_____________________

(1)Represents adjustments to rental income related to our assessment of the collectability of amounts due under leases with our tenants, including recognition of deferred rent balances associated with tenants moved to / restored from a cash basis of revenue recognition and allowances for uncollectible receivables.

We have operating leases with tenants that expire at various dates through 2055 and may be subject to scheduled fixed increases and future renewal options. Generally, the leases grant tenants renewal options. Leases also provide for additional rents based on certain operating expenses. Future contractual minimum rent under operating leases, which includes amounts contractually due from leases that are on a cash basis of reporting due to creditworthiness considerations, as of June 30, 2025 for future periods is summarized as follows:


Year Ending	(in thousands)
Remaining 2025	$	389,469
2026	768,433
2027	746,063
2028	701,989
2029	609,393
2030	527,275
Thereafter	1,117,031
Total (1)	$	4,859,653

_____________________

(1)Excludes residential leases, leases at properties classified as held for sale, and leases with a term of one year or less.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

9. Commitments and Contingencies

Development and Construction Commitments

As of June 30, 2025, we had commitments of approximately $158.0 million, excluding our ground lease commitments, for contracts and executed leases directly related to our operating and development and redevelopment properties.

Environmental Matters and Asset Retirement Obligations

As of June 30, 2025 and December 31, 2024, we had the following accrued environmental remediation liabilities in connection with certain of our in-process and future development projects, and the following asset retirement obligations associated with certain of our stabilized portfolio properties and in-process and future development projects:


	June 30, 2025		December 31, 2024
	(in thousands)
Environmental liabilities	$	70,163	$	72,003
Asset retirement obligations	$	4,440	$	4,634

10. Fair Value Measurements and Disclosures

Assets and Liabilities Reported at Fair Value

The only assets we record at fair value on a recurring basis in our consolidated financial statements are the marketable securities related to our Deferred Compensation Plan. The following table sets forth the fair value of our Deferred Compensation Plan assets as of June 30, 2025 and December 31, 2024:


	Fair Value (Level 1) (1)
	June 30, 2025		December 31, 2024
Description	(in thousands)
Deferred Compensation Plan assets (2)	$	31,629	$	27,965

________________________

(1) Based on quoted prices in active markets for identical securities.

(2) The Deferred Compensation Plan assets are held in a limited rabbi trust.

Financial Instruments Disclosed at Fair Value

The following table sets forth the carrying value and the fair value of our other financial instruments as of June 30, 2025 and December 31, 2024:


	June 30, 2025				December 31, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)


Liabilities
Secured debt, net	$	595,212	$	581,153	$	598,199	$	569,061
Unsecured debt, net	$	4,002,507	$	3,750,933	$	3,999,566	$	3,681,914

Fair value is calculated using Level 2 inputs, which are based on model-derived valuations in which significant inputs and significant value drivers are observable in active markets.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

11. Net Income Available to Common Stockholders Per Share of the Company

The following table reconciles the numerator and denominator in computing the Company’s basic and diluted per-share computations for net income available to common stockholders for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands, except share and per share amounts)
Numerator:
Net income available to common stockholders	$	68,449	$	49,211	$	107,457	$	99,131

Allocation to participating securities (1)	(228)		(820)		(440)		(1,619)
Numerator for basic and diluted net income available to common stockholders	$	68,221	$	48,391	$	107,017	$	97,512
Denominator:
Basic weighted average vested shares outstanding	118,285,328		117,375,262		118,240,208		117,356,464
Effect of dilutive securities	398,009		287,928		433,727		453,834
Diluted weighted average vested shares and common stock equivalents outstanding	118,683,337		117,663,190		118,673,935		117,810,298
Basic earnings per share:
Net income available to common stockholders per share	$	0.58	$	0.41	$	0.91	$	0.83
Diluted earnings per share:
Net income available to common stockholders per share	$	0.57	$	0.41	$	0.90	$	0.83

________________________

(1)Participating securities include certain time-based RSUs and vested market measure-based RSUs.

Share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities. The impact of potentially dilutive common shares, including RSUs, are considered in our diluted earnings per share calculation for the three and six months ended June 30, 2025 and 2024. Certain market measure-based RSUs are not included in dilutive securities for the three and six months ended June 30, 2025 and 2024, as not all performance metrics had been met by the end of the applicable reporting periods. Additionally, certain unvested time-based RSUs are not included in dilutive securities for the six months ended June 30, 2024, as they were anti-dilutive. See Note 7 “Share-Based Compensation” for additional information regarding share-based compensation.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

12. Net Income Available to Common Unitholders Per Unit of the Operating Partnership

The following table reconciles the numerator and denominator in computing the Operating Partnership’s basic and diluted per-unit computations for net income available to common unitholders for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands, except unit and per unit amounts)
Numerator:
Net income available to common unitholders	$	69,112	$	49,669	$	108,495	$	100,091

Allocation to participating securities (1)	(228)		(820)		(440)		(1,619)
Numerator for basic and diluted net income available to common unitholders	$	68,884	$	48,849	$	108,055	$	98,472
Denominator:
Basic weighted average vested units outstanding	119,435,902		118,525,836		119,390,782		118,507,038
Effect of dilutive securities	398,009		287,928		433,727		453,834
Diluted weighted average vested units and common unit equivalents outstanding	119,833,911		118,813,764		119,824,509		118,960,872
Basic earnings per unit:
Net income available to common unitholders per unit	$	0.58	$	0.41	$	0.91	$	0.83
Diluted earnings per unit:
Net income available to common unitholders per unit	$	0.57	$	0.41	$	0.90	$	0.83

________________________

(1)Participating securities include certain time-based RSUs and vested market measure-based RSUs.

Share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities. The impact of potentially dilutive common units, including RSUs, are considered in our diluted earnings per share calculation for the three and six months ended June 30, 2025 and 2024. Certain market measure-based RSUs are not included in dilutive securities for the three and six months ended June 30, 2025 and 2024, as not all performance metrics had been met by the end of the applicable reporting periods. Additionally, certain unvested time-based RSUs are not included in dilutive securities for the six months ended June 30, 2024, as they were anti-dilutive. See Note 7 “Share-Based Compensation” for additional information regarding share-based compensation.

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

13. Supplemental Cash Flows Information of the Company

Supplemental cash flows information as follows (in thousands):


	Six Months Ended June 30,
	2025		2024
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for interest, net of capitalized interest of $39,053 and $38,115 as of June 30, 2025 and 2024, respectively	$	58,692	$	59,946
Cash paid for amounts included in the measurement of ground lease liabilities	$	4,669	$	3,525

NON-CASH INVESTING TRANSACTIONS:
Accrual for expenditures for operating properties and development and redevelopment properties	$	32,027	$	74,624
Tenant improvements funded directly by tenants	$	1,652	$	857
Remeasurement of ground lease liability and related right of use ground lease asset	$	—	$	4,782







NON-CASH FINANCING TRANSACTIONS:
Accrual of dividends and distributions payable to common stockholders and common unitholders	$	64,985	$	65,118

The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the six months ended June 30, 2025 and 2024:


	Six Months Ended June 30,
	2025		2024
	(in thousands)
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents at beginning of period	$	165,690	$	510,163
Restricted cash at beginning of period	—		—
Cash and cash equivalents and restricted cash at beginning of period	$	165,690	$	510,163

Cash and cash equivalents at end of period	$	193,129	$	835,893
Restricted cash at end of period	—		—
Cash and cash equivalents and restricted cash at end of period	$	193,129	$	835,893

14. Supplemental Cash Flows Information of the Operating Partnership

Supplemental cash flows information as follows (in thousands):


	Six Months Ended June 30,
	2025		2024
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for interest, net of capitalized interest of $39,053 and $38,115 as of June 30, 2025 and 2024, respectively	$	58,692	$	59,946
Cash paid for amounts included in the measurement of ground lease liabilities	$	4,669	$	3,525

NON-CASH INVESTING TRANSACTIONS:
Accrual for expenditures for operating properties and development and redevelopment properties	$	32,027	$	74,624
Tenant improvements funded directly by tenants	$	1,652	$	857
Remeasurement of ground lease liability and related right of use ground lease asset	$	—	$	4,782







NON-CASH FINANCING TRANSACTIONS:
Accrual of distributions payable to common unitholders	$	64,985	$	65,118

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the six months ended June 30, 2025 and 2024:


	Six Months Ended June 30,
	2025		2024
	(in thousands)
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents at beginning of period	$	165,690	$	510,163
Restricted cash at beginning of period	—		—
Cash and cash equivalents and restricted cash at beginning of period	$	165,690	$	510,163

Cash and cash equivalents at end of period	$	193,129	$	835,893
Restricted cash at end of period	—		—
Cash and cash equivalents and restricted cash at end of period	$	193,129	$	835,893

15. Segments

Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses and about which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”). The CODM decides how resources are allocated and assesses performance on a recurring basis, at least quarterly. Our CODM is our CEO, who evaluates the operating performance and financial results of our consolidated portfolio based on Net Income through the monthly operations meetings.

We conduct our business in one operating segment and therefore have one reportable segment. Asset information by segment is not reported because the Company does not use this measure to assess performance.

Our reportable segment derives its revenues primarily from rental revenue and other related income through the leasing of office space to tenants. We recognize revenue from base rent (fixed lease payments), additional rent (variable lease payments, which consist of amounts due from tenants for common area maintenance, real estate taxes, and other recoverable costs), parking, and other lease-related revenue.

The following table presents Net Income for the three and six months June 30, 2025 and 2024:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)
REVENUES:
Rental income	$	285,071	$	275,919	$	551,315	$	550,809
Other property income	4,821		4,812		9,421		8,503
Total revenues	289,892		280,731		560,736		559,312
EXPENSES:
Property expenses	58,575		59,279		117,289		116,599
Real estate taxes	26,765		29,009		55,130		58,248
Ground leases	3,019		2,996		6,039		5,748
General and administrative expenses	18,475		18,824		35,376		36,116
Leasing costs	2,277		2,119		5,150		4,398
Depreciation and amortization	87,625		87,151		174,744		175,182
Total expenses	196,736		199,378		393,728		396,291
OTHER INCOME (EXPENSES):
Interest income	512		10,084		1,646		23,274
Interest expense	(30,844)		(36,763)		(61,992)		(75,634)
Other income (expense)	190		(127)		33		(414)
Gain on sale of depreciable operating property	16,554		—		16,554		—



Total other expenses	(13,588)		(26,806)		(43,759)		(52,774)
NET INCOME	$	79,568	$	54,547	$	123,249	$	110,247

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion relates to our consolidated financial statements and should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. The results of operations discussion is combined for the Company and the Operating Partnership because there are no material differences in the results of operations between the two reporting entities.

Forward-Looking Statements

Statements contained in this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are not historical facts may be forward-looking statements. Forward-looking statements include, among other things, statements or information concerning our plans, objectives, capital resources, portfolio performance, results of operations, projected future occupancy and rental rates, lease expirations, debt maturities, potential investments, strategies such as capital recycling, development and redevelopment activity, projected construction costs, projected construction commencement and completion dates, projected square footage of space that could be constructed on undeveloped land that we own, projected rentable square footage of or number of units in properties under construction or in the development pipeline, anticipated proceeds from capital recycling activity or other dispositions and anticipated dates of those activities or dispositions, projected increases in the value of properties, dispositions, future executive incentive compensation, pending, potential or proposed acquisitions, plans to grow our Net Operating Income and FFO, our ability to re-lease properties at or above current market rates, anticipated market conditions and demographics and other forward-looking financial data, as well as the discussion in “—Factors That May Influence Future Results of Operations,” “—Liquidity and Capital Resource of the Company,” and “—Liquidity and Capital Resources of the Operating Partnership.” Forward-looking statements can be identified by the use of words such as “believes,” “expects,” “projects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates”, or “anticipates” and the negative of these words and phrases and similar expressions that do not relate to historical matters. Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends, and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results, and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results, or events. Numerous factors could cause actual future performance, results, and events to differ materially from those indicated in the forward-looking statements, including, among others: global market and general economic conditions, including actual and potential tariffs and periods of heightened inflation, and their effect on our liquidity and financial conditions and those of our tenants; adverse economic or real estate conditions generally, and specifically, in the states of California, Texas, and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses, including bankruptcy, lack of liquidity or lack of funding, and the impact labor disruptions or strikes, such as episodic strikes in the entertainment industry, may have on our tenants’ businesses; our ability to re-lease property at or above current market rates; reduced demand for office space, including as a result of remote working and flexible working arrangements that allow work from remote locations other than an employer’s office premises; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service, and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; changes in interest rates and the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment, and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices, or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed, and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use, and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement, and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations, or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; risks associated with climate change and our sustainability strategies, and our ability to achieve our sustainability goals; and our ability to maintain our status as a REIT. The factors included in this report are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that

could materially adversely affect the Company’s and the Operating Partnership’s business and financial performance, see the discussion below, as well as in “Part I, Item 1A. Risk Factors” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s and the Operating Partnership’s annual report on Form 10-K for the year ended December 31, 2024, and their respective other filings with the SEC. All forward-looking statements are based on currently available information and speak only as of the dates on which they are made. We assume no obligation to update any forward-looking statement that becomes untrue because of subsequent events, new information, or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.

Overview and Background

We are a self-administered REIT active in premier office, life science, and mixed-use property types in the United States. We own, develop, acquire, and manage real estate assets, consisting primarily of premier properties in Los Angeles, San Diego, the San Francisco Bay Area, Seattle, and Austin, which are markets we believe have strategic advantages and strong barriers to entry. We own our interests in all of our real estate assets through the Operating Partnership and conduct substantially all of our operations through the Operating Partnership. We owned an approximate 99.0% common general partnership interest in the Operating Partnership as of June 30, 2025 and December 31, 2024. As of June 30, 2025, all of our properties are held in fee except for the fourteen office buildings that are held subject to long-term ground leases.

Stabilized Portfolio Information

As of June 30, 2025, our stabilized portfolio was comprised of 118 office, life science, and mixed-use buildings encompassing an aggregate of approximately 16.4 million rentable square feet and 1,001 residential units. Our stabilized portfolio includes all of our properties with the exception of development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, undeveloped land, and real estate assets held for sale, if any. We define redevelopment properties as those properties for which we expect to spend significant development and construction costs pursuant to a formal plan to change its use, the intended result of which is a higher economic return on the property. We define a property in the tenant improvement phase as a development or redevelopment property where the project has reached “cold shell condition” and is ready for tenant improvements, which may require additional major base building modifications before being placed in service. Projects in the tenant improvement phase are moved into our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities. Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets as the projects or phases of projects are placed in service.

As of June 30, 2025, the following properties were excluded from our stabilized portfolio:


	Number of Properties / Projects	Actual / Estimated Rentable Square Feet (1)
Properties held for sale (2)	1	663,460
In-process development projects - tenant improvement	1	875,000
In-process redevelopment projects - tenant improvement	2	100,000

________________________

(2)See Note 2 “Dispositions and Real Estate Held for Sale” to our consolidated financial statements included in this report for additional information.

Our stabilized portfolio also excludes our future development pipeline, which, as of June 30, 2025, was comprised of eight potential development sites, representing approximately 64 gross acres of undeveloped land, on which we believe we could develop more than 6.0 million rentable square feet of office space and approximately 1,750 residential units.

The following table reconciles the changes in the rentable square feet in our stabilized office portfolio of operating properties from June 30, 2024 to June 30, 2025:


	Number of Buildings	Rentable Square Feet
Total as of June 30, 2024 (1)	121	17,040,239
Acquisitions	2	103,731


Dispositions and Properties Held for Sale	(5)	(741,969)
Remeasurement	—	(6,510)
Total as of June 30, 2025 (1)	118	16,395,491

________________________

(1)Includes four properties owned by consolidated property partnerships (see Note 1 “Organization, Ownership, and Basis of Presentation” to our consolidated financial statements included in this report for additional information).

Occupancy Information

The following table sets forth certain information regarding our stabilized portfolio as of the end of the period presented:


	6/30/2025				3/31/2025
Region	Number of Buildings	Rentable Square Feet	Occupancy		Number of Buildings	Rentable Square Feet	Occupancy

Los Angeles	52	4,261,793	74.4	%	53	4,340,302	72.7	%

San Diego	26	2,871,241	85.0	%	26	2,869,598	87.5	%
San Francisco Bay Area	29	5,507,135	84.8	%	33	6,170,595	86.8	%
Seattle	10	2,996,347	78.5	%	10	2,996,347	78.6	%
Austin	1	758,975	79.9	%	1	758,975	76.4	%
Total Stabilized Portfolio	118	16,395,491	80.8	%	123	17,135,817	81.4	%

The following table sets forth the average occupancy of certain property groups within our stabilized portfolio for the periods presented:


	Average Occupancy
	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Stabilized Office Portfolio (1)	80.8	%	83.8	%	81.1	%	84.1	%
Same Property Portfolio (1)(2)	80.5	%	83.2	%	80.8	%	83.5	%
Residential Portfolio (3)	93.8	%	92.8	%	94.5	%	92.9	%

________________________

(1)Occupancy percentages reported are calculated as the average of the daily ending occupancy percentages for the period presented. Represents economic occupancy for space where we have achieved revenue recognition for the associated lease agreements.

(2)Occupancy percentages reported are based on properties owned and stabilized as of January 1, 2024 and still owned and stabilized as of June 30, 2025, and exclude our residential portfolio. See discussion under “Results of Operations” for additional information.

(3)Our residential portfolio consists of our 200-unit residential tower and 193-unit Jardine property in Hollywood, California and 608 residential units at our One Paseo mixed-use property in Del Mar, California.

Significant Tenants

The following table sets forth information about our 20 largest tenants based upon annualized base rental revenues, as defined below, as of June 30, 2025:


	Tenant Name (1)	Region	Annualized Base Rental Revenue (in thousands) (2)		Rentable Square Feet	Percentage of Total Annualized Base Rental Revenue (2)		Percentage of Total Rentable Square Feet		Year(s) of Significant Lease Expiration(s) (3)	Weighted Average Remaining Lease Term (Years)

1	Global technology company	Seattle / San Diego	$	44,851	849,826	5.9	%	5.2	%	2032 - 2033 / 2037	8.1
2	Cruise LLC	San Francisco Bay Area	35,449		374,618	4.7	%	2.3	%	2031	6.4
3	Stripe, Inc.	San Francisco Bay Area	33,110		425,687	4.4	%	2.6	%	2034	9.0
4	Adobe Systems, Inc.	San Francisco Bay Area / Seattle	27,897		537,799	3.7	%	3.3	%	2027 / 2031	5.9
5	Salesforce, Inc.	San Francisco Bay Area / Seattle	24,706		472,988	3.3	%	2.9	%	2029 - 2030 / 2032	4.9
6	Okta, Inc.	San Francisco Bay Area	24,206		293,001	3.2	%	1.8	%	2028	3.3
7	DoorDash, Inc.	San Francisco Bay Area	23,842		236,759	3.2	%	1.4	%	2032	6.6
8	Netflix, Inc.	Los Angeles	21,854		361,388	2.9	%	2.2	%	2032	7.1
9	Cytokinetics, Inc.	San Francisco Bay Area	18,167		234,892	2.4	%	1.4	%	2033	8.3
10	Box, Inc.	San Francisco Bay Area	16,853		287,680	2.2	%	1.8	%	2028	3.0
11	Neurocrine Biosciences, Inc. (4)	San Diego	16,365		299,064	2.2	%	1.8	%	2025 / 2029 / 2031	5.2
12	DIRECTV, LLC (5)	Los Angeles	16,085		532,956	2.1	%	3.3	%	2026 - 2027	2.2
13	Tandem Diabetes Care, Inc.	San Diego	15,884		181,949	2.1	%	1.1	%	2035	9.8
14	Synopsys, Inc.	San Francisco Bay Area	15,492		342,891	2.1	%	2.1	%	2030	5.2
15	Viacom International, Inc.	Los Angeles	13,718		220,330	1.8	%	1.3	%	2028	3.5
16	Indeed, Inc.	Austin CBD	13,430		330,394	1.8	%	2.0	%	2034	9.5
17	Sony Interactive Entertainment, LLC	San Francisco Bay Area	13,059		127,760	1.7	%	0.8	%	2030	4.8
18	Amazon.com	Seattle	12,921		284,307	1.7	%	1.7	%	2030	4.6
19	Nektar Therapeutics, Inc.	San Francisco Bay Area	12,297		135,974	1.6	%	0.8	%	2030	4.6
20	Riot Games, Inc. (6)	Los Angeles	12,234		197,676	1.6	%	1.2	%	2026 / 2031	3.2
	Total		$	412,420	6,727,939	54.6	%	41.0	%		5.9

________________________

(1)Includes subsidiaries of the tenant listed. Excludes tenants at properties classified as held for sale.

(2)Annualized base rental revenue is calculated as the annualized monthly contractual rents from existing tenants, including the impact of straight-lined rent escalations and the amortization of free rent periods and excluding the impact of the following: amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Includes 100% of the annualized base rental revenues of consolidated property partnerships.

(3)Significant lease expirations include those greater than 25,000 rentable square feet.

(4)The 2025 lease expiration represents 26,043 rentable square feet that expired on June 30, 2025.

(5)The 2026 lease expiration represents 49,255 rentable square feet that expires on September 30, 2026.

(6)The 2026 lease expiration represents 110,834 rentable square feet that expires on November 30, 2026.

Factors That May Influence Future Results of Operations

Leasing Activity and Changes in Rental Rates

The amount of net rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, newly developed or redeveloped properties, newly acquired properties with vacant space, and space available from unscheduled lease terminations. The amount of rental income we generate also depends on our ability to maintain or increase rental rates at our properties. Negative trends in one or more of these factors could adversely affect our rental income in future periods. The following tables set forth certain information regarding leasing activity during the three and six months ended June 30, 2025:

Leases Executed (1)(2)


Quarter to Date	Number of Leases		Rentable Square Feet			Weighted Average Lease Term (in months)	TI / LC per Sq. Ft. (3)		TI / LC per Sq. Ft. / Year (3)		Changes in Rents (4)		Changes in Cash Rents (5)
	New	Renewal	New	Renewal	Total
2nd Gen Leasing (6)	17	12	161,845	120,634	282,479	54	$	46.69	$	10.38	(11.2)	%	(15.2)	%

1st Gen / Major Repositioning / In-Process Development & Redevelopment Leasing (7)	5	—	63,464	—	63,464	139	$	147.86	$	12.76
Total	22	12	225,309	120,634	345,943

	Number of Leases		Rentable Square Feet			Weighted Average Lease Term (in months)	TI / LC per Sq. Ft. (3)		TI / LC per Sq. Ft. / Year (3)		Changes in Rents (4)		Changes in Cash Rents (5)
Year to Date	New	Renewal	New	Renewal	Total
2nd Gen Leasing (6)	35	26	276,425	208,435	484,860	59	$	48.75	$	9.91	(13.1)	%	(18.5)	%

1st Gen / Major Repositioning / In-Process Development & Redevelopment Leasing (7)	8	—	105,272	—	105,272	111	$	146.57	$	15.85
Total	43	26	381,697	208,435	590,132


Retention Rate Calculations (8)	Quarter to Date		Year to Date

Retention Rate	32.5	%	25.2	%
Retention Rate, including subtenants (9)	35.0	%	34.4	%

________________________

(1)Includes 100% of consolidated property partnerships. Excludes leases with a lease term of less than one year.

(2)During the three months ended June 30, 2025, 13 new leases totaling 123,963 rentable square feet were signed and commenced. During the six months ended June 30, 2025, 40 new leases totaling 241,827 rentable square feet were signed and commenced.

(3)Includes tenant improvements and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs.

(4)Calculated as the change between the expiring GAAP rent and the new GAAP rent for the same space. Space that was vacant when the property was acquired is excluded from our change in rents calculations to provide a more meaningful market comparison.

(5)Calculated as the change between the expiring cash rent and the new cash rent for the same space. Space that was vacant when the property was acquired is excluded from our change in rents calculations to provide a more meaningful market comparison.

(6)Represents leases executed at properties in the stabilized portfolio during the period, excluding leases with a lease term of less than one year. Excludes leases executed at space not previously leased at recently completed development projects that have been added to the stabilized portfolio and at space in the stabilized portfolio for which we are incurring significant non-recurring capital expenditures to reposition and is expected to result in additional revenue generated when re-leased. Tenant improvement and leasing commission capital expenditures for projects classified as Major Repositioning are captured in 2nd Gen Capital Expenditures.

(7)Represents leases executed at space not previously leased, recently completed development projects that have been added to the stabilized portfolio, at space in the stabilized portfolio for which we are incurring significant non-recurring capital expenditures to reposition and is expected to result in additional revenue generated when re-leased, and at projects in our development and redevelopment portfolios.

(8)Calculated as the percentage of square footage renewed by existing tenants at lease expiration or termination divided by the square footage of space renewed by existing tenants and lease expirations during the period.

(9)Represents the retention rate, inclusive of leases with subtenants where the Company does not expect to experience significant downtime in occupancy between leases.

Lease Expirations(1)(2)

The following tables set forth certain information regarding our scheduled lease expirations for our stabilized portfolio, excluding our residential properties, for the remainder of 2025 and the next five years and by region for the remainder of 2025 and in 2026:


Year of Lease Expiration	Number of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annualized Base Rent (in thousands) (3)		% of Total Annualized Base Rent (3)		Annualized Base Rent per Sq. Ft. (3)

Month-to-Month	20	19,020	N/A		N/A		N/A		N/A

Remainder of 2025 (4)	38	321,100	2.4	%	$	16,980	2.2	%	$	52.88
2026 (4)	69	1,303,220	10.0	%	60,747		8.1	%	46.61
2027 (4)	72	1,004,126	7.7	%	39,109		5.1	%	38.95
2028	64	1,169,196	8.9	%	72,687		9.6	%	62.17
2029	52	1,261,850	9.6	%	68,648		9.1	%	54.40
2030	68	1,690,170	12.9	%	99,332		13.1	%	58.77
Total	363	6,749,662	51.5	%	$	357,503	47.2	%	$	52.97


Year	Region	Number of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annualized Base Rent (in thousands) (3)		% of Total Annualized Base Rent (3)		Annualized Rent per Sq. Ft. (3)

2025 (4)	Los Angeles	23	67,982	0.5	%	$	2,817	0.4	%	$	41.44

	San Diego	6	60,485	0.5	%	4,042		0.5	%	66.82
	San Francisco Bay Area	6	93,381	0.6	%	6,332		0.8	%	67.81
	Seattle	3	99,252	0.8	%	3,789		0.5	%	38.17
	Austin	—	—	—	%	—		—	%	—
	Total	38	321,100	2.4	%	$	16,980	2.2	%	$	52.88

2026 (4)	Los Angeles	31	532,611	4.1	%	$	20,487	2.7	%	$	38.46

	San Diego	11	158,231	1.2	%	8,648		1.1	%	54.66
	San Francisco Bay Area	13	316,514	2.4	%	20,241		2.8	%	63.95
	Seattle	14	295,864	2.3	%	11,371		1.5	%	38.43
	Austin	—	—	—	%	—		—	%	—
	Total	69	1,303,220	10.0	%	$	60,747	8.1	%	$	46.61

________________________

(1)Represents all in-place leases as of June 30, 2025, except intercompany leases.

(2)Includes 100% of annualized base rent of consolidated property partnerships.

(3)Represents annualized monthly contractual rents from existing tenants, including the impact of straight-lined rent escalations and the amortization of free rent periods and excluding the impact of the following: amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross, and triple net. Amounts represent percentage of total portfolio annualized contractual base rental revenue. For additional information on tenant improvement and leasing commission costs incurred by the Company for the current reporting period, please see further discussion under the caption “Leases Executed.”

(4)Adjusting for leases that have been backfilled or renewed by a subtenant as of June 30, 2025 but not yet commenced, the 2025, 2026, and 2027 expirations would be reduced by 90,492, 1,272, and 5,875 square feet, respectively.

In addition to the 3.2 million rentable square feet, or 19.2%, of unoccupied space in our stabilized portfolio as of June 30, 2025, leases representing approximately 12.4% of the occupied square footage of our stabilized portfolio are scheduled to expire during the remainder of 2025 and in 2026. The leases scheduled to expire during the remainder of 2025 and in 2026 represent approximately 1.6 million rentable square feet, or 10.3% of our total annualized base rental revenue. Adjusting for leases that have been backfilled or renewed by a subtenant as of June 30, 2025 but not yet commenced, the remaining 2025, 2026, and 2027 expirations would be 230,608, 1,301,948, and 998,251 square feet, respectively.

Our rental rates and occupancy are impacted by general economic conditions, including the pace of regional economic growth and access to capital. Therefore, we cannot guarantee that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates.

Sublease Space

Of our occupied space as of June 30, 2025, approximately 2.0 million rentable square feet, or 12.1% of the square footage in our stabilized portfolio, was available for sublease, primarily in the San Francisco Bay Area, in addition to the rentable square feet currently subleased. Of the approximately 2.0 million rentable square feet available for sublease as of June 30, 2025, approximately 18,663 rentable square feet representing one lease is scheduled to expire in 2025 and approximately 117,369 rentable square feet representing two leases are scheduled to expire in 2026.

Capital Recycling Program

We continuously evaluate opportunities for the potential disposition of non-core properties and undeveloped land in our portfolio, or the formation of strategic ventures, with the intent of using the proceeds generated to acquire new operating and development properties, to finance development and redevelopment expenditures, to repay long-term debt, and for other general corporate purposes. We continue to evaluate strategic opportunities and remain a disciplined buyer of core, value-add, and strategic operating properties. We historically have focused on markets populated by knowledge and creative-based tenants in a variety of industries, including technology, entertainment, healthcare, life sciences, and business services. As part of our capital recycling strategy, we may attempt to enter into transactions intended to qualify as like-kind exchanges pursuant to Section 1031 of the Code (“Section 1031 Exchanges”), and other tax deferred transaction structures, when possible, to defer some or all of the taxable gains on the sales, if any, for federal and state income tax purposes. See the “Liquidity and Capital Resources of the Operating Partnership – Liquidity Sources” section for further discussion of our capital recycling activities.

As of June 30, 2025, we had one operating property, comprised of four buildings, classified as held for sale, with an expected sales price of $365.0 million. The sale of this property is expected to close late in the third quarter of 2025. The timing of any potential future disposition or strategic venture transactions will depend on market conditions and other factors, including, but not limited to, our capital needs, the availability of financing for potential buyers (which has been and may continue to be constrained due to current economic and market conditions), and our ability to absorb or defer some or all of the taxable gains on the sales. We cannot assure that we will dispose of any additional properties, enter into any additional strategic ventures, or that we will be able to effect a Section 1031 Exchange or be able to use other tax deferred structures in connection with our strategy. See the “Liquidity and Capital Resources of the Operating Partnership – Liquidity Sources” section for further information.

In connection with our capital recycling strategy, we may have one or more potential acquisitions of properties and/or undeveloped land under consideration that are in varying stages of negotiation and due diligence review, or under contract, at any point in time. However, we cannot guarantee that we will enter into any agreements to acquire properties or undeveloped land, or that the potential acquisitions contemplated by any agreements we may enter into in the future will be completed. In addition, acquisitions are subject to various risks and uncertainties, and we may be unable to complete an acquisition after making a nonrefundable deposit or incurring acquisition-related costs.

Development and Redevelopment Programs

We believe that a portion of our long-term future growth will indirectly continue to come from the completion of our in-process development and redevelopment projects and, subject to market conditions, from identifying new redevelopment opportunities and executing on our future development pipeline. Our future development pipeline may also expand in the future through targeted acquisitions of development opportunities on the West Coast and in Austin, Texas, subject to market conditions.

We have a proactive planning process by which we continually evaluate the size, timing, costs, and scope of our development and redevelopment programs and, as necessary, scale activity to reflect the economic conditions and the real estate fundamentals that exist in our submarkets. We expect to execute on our development and redevelopment programs with prudence and will be pursuing opportunities with attractive economic returns in strategic locations with proximity to public transportation or transportation access, retail amenities, and in markets with strong fundamentals and visible demand. We generally plan to develop projects in phases, as appropriate, and we favor starting projects with significant pre-leasing activity.

In-Process Development - Tenant Improvement

As of June 30, 2025, we had one development project in the tenant improvement phase:

•Kilroy Oyster Point (Phase 2), South San Francisco, California. In June 2021, we commenced construction on Phase 2 of this 39-acre life science campus situated on the waterfront in South San Francisco and progressed the property to the tenant improvement phase during the first quarter of 2025. The second phase encompasses approximately 875,000 square feet of office and life science space across three buildings with a total estimated investment of $1.0 billion. We expect this property to be added to the stabilized portfolio upon the completion of the 12-month lease up period which is expected to end in the first quarter of 2026.

In-Process Redevelopment - Tenant Improvement

As of June 30, 2025, we had two redevelopment projects in the tenant improvement phase:

•4690 Executive Drive, University Towne Center, San Diego, California. In March 2022, we began the phased redevelopment of this property and completed base building components and moved the building to the tenant improvement phase during the third quarter of 2024. This project is comprised of approximately 52,000 square feet of life science space with a total estimated investment of $30.0 million, inclusive of the depreciated basis of the building. We expect this property to be added to the stabilized portfolio upon the completion of the 12-month lease up period which is expected to end in the third quarter of 2025. We executed one lease this quarter for one floor of the building, bringing the project to 47% leased.

•4400 Bohannon Drive, Menlo Park, California. In December 2022, we began the redevelopment of this property in the Other Peninsula submarket and completed base building components and moved the building to the tenant improvement phase during the third quarter of 2024. This project is comprised of approximately 48,000 square feet of life science space with a total estimated investment of $55.0 million, inclusive of the depreciated basis of the building. We expect this property to be added to the stabilized portfolio upon the completion of the 12-month lease up period which is expected to end in the third quarter of 2025.

Future Development Pipeline

As of June 30, 2025, our future development pipeline included eight future projects located in Los Angeles, San Diego, the San Francisco Bay Area, Seattle, and Austin with an aggregate cost basis of approximately $1.5 billion, at which we believe we could develop more than 6.0 million rentable square feet of office space and approximately 1,750 residential units.

The following table sets forth information about our future development pipeline:

Future Development Pipeline

Location

Approx. Developable Square Feet / Residential Units (1)

Total Costs

as of 6/30/2025

($ in millions) (2)

Los Angeles

1633 26th Street (3)

West Los Angeles

190,000

15.1

San Diego

Santa Fe Summit (3)(4)

56 Corridor

600,000 - 650,000

116.3

2045 Pacific Highway

Little Italy / Point Loma

275,000

61.1

Kilroy East Village

East Village

1,100 units

68.0

San Francisco Bay Area

Kilroy Oyster Point - Phases 3 and 4

South San Francisco

875,000 - 1,000,000

243.4

Flower Mart

San Francisco CBD

2,300,000

683.6

Seattle

SIX0

Lake Union / Denny Regrade

925,000 and 650 units

201.4

Austin

Stadium Tower

Stadium District / Domain

493,000

75.8

TOTAL:

1,464.7

________________________

(1)Project scope, including the estimated developable square feet or number of residential units, could change materially from estimates provided due to one or more of the following: significant changes in the economy, market conditions, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes, or project design.

(2)Represents costs incurred, net of municipal bonds proceeds received related to public infrastructure improvements, including accrued liabilities in accordance with GAAP, as of June 30, 2025.

(3)Subject to a signed agreement and non-refundable deposit as of the date of this filing. Both development sites are anticipated to close upon receipt of entitlements, which is likely to occur in 2026.

(4)Approximately five acres of the 22-acre future development site is under contract.

Fluctuations in our development activities could cause fluctuations in the average development asset balances qualifying for interest and other carrying cost and internal cost capitalization in future periods. A slowdown in development activities could result in fewer projects qualifying for interest capitalization under GAAP, resulting in higher interest expense. The following table sets forth our capitalized interest and internal overhead cost capitalization in our stabilized portfolio:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)
Capitalized Interest
Average Qualifying Costs	$	1,914,978	$	1,863,652	$	1,890,610	$	1,819,653
Capitalized Interest	$	21,333	$	20,515	$	41,881	$	40,322

Capitalized Internal Overhead Costs
Development & Redevelopment Projects	$	1,840	$	3,067	$	4,107	$	5,942
Capital Improvement Projects	$	1,967	$	2,267	$	4,334	$	4,616

Incentive Compensation

Our Executive Compensation Committee determines compensation, including cash bonuses and equity incentives, for our executive officers, as defined in Rule 16 under the Exchange Act. For 2025, the annual cash bonus program was structured to allow the Executive Compensation Committee to evaluate the Company’s performance against pre-established goals under a variety of key quantitative and qualitative metrics at the end of the year and make a determination based on the Company’s and management’s overall performance. Our Executive Compensation Committee also grants equity incentive awards from time to time that include performance-based and/or market-measure based vesting requirements and time-based vesting requirements. As a result, accrued incentive compensation and compensation expense for future awards may be affected by our operating and development performance, financial results, stock price, market conditions, liquidity measures, and other factors. Consequently, we cannot predict the amounts that will be recorded in future periods related to such incentive compensation.

As of June 30, 2025, there was approximately $33.4 million of total unrecognized compensation costs related to outstanding nonvested RSUs granted under share-based compensation arrangements. Such amount is based in part upon the estimated future outcome of the performance metrics as of June 30, 2025, and the actual compensation cost ultimately recognized could increase or decrease from this estimate based upon actual performance results. These costs are expected to be recognized over a weighted-average period of 2.0 years. The $33.4 million of unrecognized compensation cost does not reflect the future compensation costs for any share-based awards that may be granted subsequent to June 30, 2025. Share-based compensation expense for potential future awards could be affected by our operating and development performance, financial results, stock price, market conditions, and other factors. For additional information regarding our equity incentive awards, see Note 7 “Share-Based Compensation” to our consolidated financial statements included in this report.

Results of Operations

Net Operating Income

Management internally evaluates the operating performance and financial results of our stabilized portfolio based on Net Operating Income. We define “Net Operating Income” as consolidated operating revenues (rental income and other property income) less consolidated operating expenses (property expenses, real estate taxes, and ground leases). Commencing January 1, 2025, the Company also began excluding lease termination fees from the calculation of rental income for Net Operating Income as they are non-recurring in nature and its exclusion will provide a measure that we believe is more indicative of our core operating performance. Historical amounts for Net Operating Income have been revised to conform with current period presentation.

Net Operating Income is considered by management to be an important and appropriate supplemental performance measure to net income because we believe it helps both investors and management to understand the core operations of our properties excluding corporate and financing-related costs and non-cash depreciation and amortization. Net Operating Income is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. This measure thereby provides an operating perspective not immediately apparent from net income. In addition, Net Operating Income is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. Other real estate companies may use different methodologies for calculating Net Operating Income and, accordingly, our presentation of Net Operating Income may not be comparable to other real estate companies. Because of the exclusion of the items shown in the reconciliation below, Net Operating Income should only be used as a supplemental measure of our financial performance and not as an alternative to GAAP net income.

Management further evaluates Net Operating Income by evaluating the performance from the following property groups:

•Same Property Portfolio – includes the consolidated results of all of the properties that were owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1, 2024 and still owned and included in the stabilized portfolio as of June 30, 2025, including our three residential properties in Hollywood and Del Mar, California;

•Acquisition Properties – includes the results, from the date of acquisition through the periods presented, for the one property acquired in the third quarter of 2024;

•Development Properties – includes the results generated by certain of our in-process development and redevelopment projects, and expenses for certain of our future development projects; and

•Disposition & Held for Sale Properties – includes the results of one property disposed of in the second quarter of 2025 and one property, comprised of four buildings, classified as held for sale as of June 30, 2025.

The following table sets forth certain information regarding the property groups within our stabilized office portfolio as of June 30, 2025:


Group	# of Buildings	Rentable Square Feet
Same Property Portfolio	116	16,291,760

Acquisition Properties	2	103,731
Total Stabilized Portfolio	118	16,395,491

Comparison of the Three Months Ended June 30, 2025 to the Three Months Ended June 30, 2024

The following table summarizes our Net Operating Income for our total portfolio for the three months ended June 30, 2025 and 2024:


	Three Months Ended June 30,				Dollar Change		Percentage Change
	2025		2024
	($ in thousands)
Reconciliation of Net Income Available to Common Stockholders to Net Operating Income, as defined:
Net Income Available to Common Stockholders	$	68,449	$	49,211	$	19,238	39.1	%



Net income attributable to noncontrolling common units of the Operating Partnership	663		458		205		44.8	%
Net income attributable to noncontrolling interests in consolidated property partnerships	10,456		4,878		5,578		114.4	%
Net income	$	79,568	$	54,547	$	25,021	45.9	%
Unallocated expense (income):
Lease termination fees (1)	(10,754)		(1,451)		(9,303)		641.1	%
General and administrative expenses	18,475		18,824		(349)		(1.9)	%
Leasing costs	2,277		2,119		158		7.5	%
Depreciation and amortization	87,625		87,151		474		0.5	%
Interest income	(512)		(10,084)		9,572		(94.9)	%
Interest expense	30,844		36,763		(5,919)		(16.1)	%
Other income (expense)	(190)		127		(317)		(249.6)	%


Gain on sale of depreciable operating property	(16,554)		—		(16,554)		(100.0)	%
Net Operating Income	$	190,779	$	187,996	$	2,783	1.5	%

____________________

(1)Commencing January 1, 2025, the Company began excluding lease termination fees from the calculation of rental income for Net Operating Income. Net Operating Income as presented has been conformed to our new definition.

The following tables summarize our Net Operating Income for our total portfolio for the three months ended June 30, 2025 and 2024:


	Three Months Ended June 30,
	2025										2024
	Same Property		Develop- ment		Acquisi- tion		Disposition & Held for Sale		Total		Same Property		Develop- ment		Acquisi- tion		Disposition & Held for Sale		Total
	(in thousands)
Operating revenues:
Rental income (1)	$	263,060	$	109	$	1,542	$	9,606	$	274,317	$	262,471	$	819	$	—	$	11,178	$	274,468

Other property income	4,576		183		—		62		4,821		4,711		77		—		24		4,812
Total	267,636		292		1,542		9,668		279,138		267,182		896		—		11,202		279,280
Property and related expenses:
Property expenses	56,751		338		280		1,206		58,575		57,672		250		—		1,357		59,279
Real estate taxes	24,677		724		107		1,257		26,765		27,307		456		—		1,246		29,009

Ground leases	3,019		—		—		—		3,019		2,996		—		—		—		2,996
Total	84,447		1,062		387		2,463		88,359		87,975		706		—		2,603		91,284
Net Operating Income	$	183,189	$	(770)	$	1,155	$	7,205	$	190,779	$	179,207	$	190

KILROY REALTY CORP 10-Q