KRC - Earnings call transcript Q1 2024 | Kilroy Realty Corporation

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Operator

Good morning, everyone, and welcome to the KRC 1Q '24 Earnings Conference Call. My name is Angie, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Bill Hutcheson, Senior Vice President of Investor Relations and Capital Markets. Please go ahead.

William Hutcheson

Thank you, Angie. everyone. morning, Good joining for Thank us. you

is CIO On the information discussing the supplemental that our Officer; for nature. some are outset, for during our both a Aman, of the available will call forward-looking call me Justin to supplemental. with and the need Smart, be say Trencher, Leasing this the over today in CEO; and our be package phone webcast by our Chief President; on refer the Angela on our call Please regarding this is the will days, in we call live Rob website to CFO. At and being This information Eliott I statement Paratte, forward-looking internet. and next and X replay for

release quarterly and and be available both and a our the call happy strategic have the and Then results been your with Angela start to updated package discuss are with X-K provide 'XX supplemental questions. Angela? we'll will highlights, filed guidance. a Form Eliott and Our will on our SEC, financial on take website. our earnings overview

Angela Aman

fundamentals as from Bill, call, I takeaways tenants, a and team last the and our with our couple of portfolio relationships within my improving the Kilroy's market. including clear earnings our first and of good of initial some Thanks, our talented strong summarized morning. trend weeks positioning, CEO, strength On underlying the of quality

volumes for We we guidance. raised a to quarter first FFO were profile benefit recovery debt my our are takeaways The of platform take both maturities. quality I see us market. uniquely on and liquidity have night, over reinforced. report from Kilroy. be in we happy As continue our very NOI same-property and last extended to and three the our in growth strong. And to active last to initial settled beginning enhanced I'm hold the portfolio months, positions Leasing

increase square XXX,XXX markets, of represents We multiple we quarter industries, first across finance During gaming, services, since highest signed first volume the feet to California approximately leasing saw our Kilroy's XX% which technology. quarter of first and professional Southern and quarter, relative a the leases, in and strength including XXXX. XXXX

specific highlights a signed First, XX,XXX discussed, Some a foot the Games their arena, previously with West as event Riot L.A. Riot's include: leasing base for we campus. heart renewal square unique of in

Francisco our demand for in finally, AI both West the in AI growth the will in is demands to start-up We over lead platforms the both tech from in our an San portfolio. And notable AI accelerating fully companies talent lease floor. the is market markets expect space where Del XX,XXX with rate XX% rates XX%. has San Second, and feet in region which portfolio in a has certainty been strongest our of physical needs around company occupancy given leases Mar and our in strong real submarket. Diego, make we square new their in estate decisions, signed several pronounced. company tech street Xth to approaching Seattle, renewal next top alike. lease big High translated into a confidence across Del occupancy specifically and we results Mar that have partial in resulting and most fiscal first general took years and San Diego that of signed at aggregation The our new Seattle, where portfolio

six the Phase In has Oyster tours several particular, with at tour also Our weeks. XXXX Point accelerated over X, meaningfully last Kilroy large-format occurring forward remains leasing strong. pipeline user activity during

South smaller requirements the to as we'll demand of improving ready We on approach We in capture we also spec in this our track quality for from buildings with competitiveness are users delivery. shoots, we within deliver space remain by Phase and be to flows fundraising are suites in capital and starting the the one excited the sector. of green to see X submarket. Shifting remain three suggesting the to ready October and long-term some San technology uniqueness Francisco project environment, its move-in

tenant a KOP quarter, the valuation of year round from our raised Phase valuation, X, in Stripe, billion a funding private $XX just increase a ago. at During XX% a representing at

capital, Additionally, Blue-chip Reddit, a well valuation, indicated which completed Francisco, Xnd and the tech broader tech for at access our IPO ecosystem XXX companies its ultimately San high for tenant Street are at of estate range. their the billion successfully end demonstrating in $X.X to real requirements. bodes

the levels. record That to billion similar during height it capital appears saw of said, be of year, pre-pandemic years XXXX after levels. on the venture and for to higher As has than of pandemic, over significantly any XXXX activity, Life the deployment pace pace decelerated stand-alone relates Science, normalized to more $XX

growth As believe in we And continue the approvals portfolio the proceed is sector. pace. drug population science healthcare extremely these continue to increase cost continued to for life trends. continues benefit that The long-term set well an to to novel and stage is age, positioned our at accelerated from

market. Turning to the transaction

see softly The Sellers spread bid-ask that wide is We the are for has been test persist and debt some financing signs challenging last to properties of quarters over market. are life. to several observed quality starting secure. beginning the to

remain volumes low. transaction overall So

begin to that We the change quarters. we'll over coming are hopeful

and on exceptional when fundamentals conditions the financial opportunistic have returns, adhere buyer be to sheet. three pillars: needs to seller capital based this balance risk-adjusted estate strategic properties, real we market expect to continue and high-quality we and a based both decisions navigate our and an permit, will patient and not maintained environment, we capital core making flexibility. allocation we on strategic fortress liquidity as be Ultimately, As

opportunities of confident allocation are create that forward. will proud meaningful the record capital identify to and we for moving company's are shareholders value track We

quality turning the and look with we Eliott, collaboration. all over team, behalf this to I commitment so our year. Eliott? Before to execute who the forward And entire deliver colleagues of the specifically Kilroy have creativity I disciplines. to what together management motivation, extraordinarily to effectively coming can call on of and want over team, been thank the continued I've across impressed their

Eliott Trencher

Thank Angela. you,

FFO year $X.XX to from higher above increase offset straight-line G&A, good with NOI interest net lower The partially and fourth recent to basis, was expense same-store bond On by down first lower due $X.XX quarter quarter and The of represented predominantly occupancy lower rent quarter. first was our reserves a a the or start deal. X%. the roughly cash

XXXX square included in portfolio decrease partially in prior quarter end Of Austin. leased. a the of noted, back from previously was our mainly comparison. At the the Tower The was payments, move prior and the restoration million the As of of difficult XX.X% quarter in the period one stabilized the first in quarter, Redwood offset feet occupied making quarter by a Box, at Angeles, Indeed XX.X% due was to some roughly move outs, note, of City. gave during Los who XX,XXX move-outs $XX

a backfilled space with to lease to best-in-class by long-term in move a law this we is who However, already expect firm year-end.

Turning to EBITDA XX-month mid-Xx. the debt balance in trailing was Net to sheet. the

noted, As on supplemental. and are we Pages this information X now you XX disclosing may have of our

referenced, better pay announce the raised a date simultaneously to term loan An the million in we remaining executed maturity proceeds down Angela March, our $XXX $XXX a for $XXX changes to of the unsecured XX-month billion. options. In of the line extension $XXX to credit, tranche several million million, opportunistic portion the of by extension the million to the bonds over of about $XXX a maturity we thrilled were that quarter. of maintaining of In rate our XXXX million a interest January, portion feel to transaction, of productive years total As use including X.XX%. side XX-year even $X.X and for at of environment extending the capacity while we at given coupon bringing past on the today months. We date three markets the capital elected XXXX, recast

by and our across transactions appreciative these office investors are believe and syndicate sponsors continue life the that bank best-in-class support that of highlight credit and the science two of We income the and sectors. partnership fixed demonstrated lenders to support

the and March, in stock Finally, our announced we ATM programs. of buyback refreshment

current front, believe either is not particularly active have available of company important the it the in marketplace. we to we to in volatility light all have While been tools on the

of liquidity these a transactions, our As remains robust. result

end, we cash and comprised our securities billion $XXX marketable and available of $X.X liquidity, of available million $X on quarter of over of As billion line had of credit.

year of projected the of for of broken are million Our million of $XXX spend. and maturities million $XXX debt down the million $XXX million, between $XXX $XXX to remainder uses capital follows: development roughly and as

we to we guidance, enhancements the out supplemental wanted point get we quarter. some to this made Before to

our Pages debt XX maturities. XX XX disclosure Some of we stack and expanded annual XX tenant Pages and industry more around added these XX, and tenants classifications. information around added changes XX, and on our On to from list of top we debt capitalization included,

into bifurcated stabilize value-accretive renovations. to development redevelopment for two Page buckets. One projects CapEx moved portfolio. second of consists the on our been repositionings, one Finally, which And undergoing we XX, that material for and major had first-generation projects

beneficial in to the Amazon period, many is our the demonstrate of these early are renovation investment project which to provide sizable and For vacated Street a desire in the Seattle, undergoing reported hope Xth know, this last transparency only West as disclosures bucket you meaningful additional enhanced is community. proactively year. We after

on forecast, our we updated both discuss Angela let's or opportunistic as or dispositions remain guidance. though acquisitions No discussed, Now XXXX will fronts.

expected low to the remaining million. timing million, range we million to is year still our Straight-line to rent was the full million when $XXX the $XX between first to of quarter $XXX million combined for $X incurred and As $X is due in million which original million. negative first no to to $XX projected and is million. G&A of previously spend mentioned, anticipated development guidance costs. the certain with $XXX between be year quarter spend to change represents $XXX between G&A when be

$X.XX a projected XX.X% to increase deferred $X.XX increase average at is occupancy to a summary, be higher NOI first X.X%, of of quarterly to in of subtract slightly XX% be XX first can to items is spend. To the conclude, guidance or year point updated quarter. move-ins income in implies costs bridge lower Cash projected quarter. In G&A the about for correlates our and from increase between balance income as get of in financing due net range improvements down factors pleased basis to not lower-than-anticipated the lower interest midpoint. to XXXX basis, interest and is increase between $X.XX move-outs, the and and the of guidance follows: NOI FFO a portfolio. midpoint, nonrecurring X.X% better $X.XX over balance which midpoint will $X.XX and from Our seeing fee for our the better and lower for due timing or be broken negative than parking with income. On declines our $X.XX $X.XX the occupancy, mainly the interest in the we This expense $X.XX estimate The the as guidance recurring the year, are approximately due there results the with lower course cash believe to $X.XX and same-store are we at to changed. and has due quarter subtract income the subtract negative with

have set questions. up the take us sets Angie? multiple that, be balance resilient create your believe flexible to to We and to sheet years. With and enhance happy in the avenues liquidity to shareholder up coming value have and robust we're our

Operator

with [Operator Instructions] M. Heck Blaine from is question Fargo. The first Wells

Blaine Heck

that your we terms? those touch situations? this and commit while out? quarter. kind want being XXX,XXX just And you square of turn then Or feet longer just of to Are other deals? spaces short-term leases Just to you about their think any how tenants in to signed about of on talk Can wanted of ability more unsure built of feel do these business those don't as the general longer-term into are space this should swing of to

Angela Aman

can renewals. and there's short-term take Rob little jump of or wants in needing longer-term And I of if right? leasing Thanks, Blaine. advance people anything would into last he say, did whatever which here. go ahead we was I of kind to I'll space delaying and buckets two longer a making their fall renewals add would predominantly some just really in quarter, temporarily bit is. the those decisions sort mentioned, you it plan the say It's

was you in. of square amount. This signed preserve good to again, bit we revenue And XXX,XXX short-term XX,XXX a renewal that on square are putting immaterial capital so additional the as door. we're in deals a longer of not renewals, any occupancy short-term little the and side, about about quarter, know, feet get relatively some leases, short-term feet just Those

was of bulk up tenant, feet made of of short-term We who on may also able signed And Angeles an that basis. cautiously that to quarter our that put no within new as-is this as tenant we leases. convert we square We portfolio. took The really XX,XXX by long-term are, to one deal Los optimistic either. indicated, tenant that capital you a into sort space be

net view Kilroy at to team meet next in creative tenants right all growth all and the is of ways positive they here is to in really over leasing stability I'm this environment. efforts where the to sort effective really prioritize now And occupancy, leasing Our by rent leasing, certainly, be market is and the the leasing good and to of are several years. find actually good pleased

A. Paratte

did start the what we the future. the a is metric. said was tenants about The The different leasing is thing, Angela you that but that you Rob Blaine, this pandemic, largely Today, only because at add of sort it's I'd recall short-term thing were at to if look there, Paratte. of XXXX, uncertain only

You but company that that the have are still formations are have uncertain you about tenants future new happening.

because And tenants tenants latter make that for the is, in so parts and to being market, taking we Those bets these space, we're being vigilant we're selective point immediate portfolio Seattle we they making L.A. plug-and-play a to large in that short-term intend want grow we're to also the become as some it's about and are the not space limited segment just and and down also and San not capital, of we're grow. And happening it's are Francisco, road. who on component Angela's And will money. of the take, about companies -- of they here very and they

Blaine Heck

Great. That's really helpful color.

short-term are continue you think I something of be leasing the in quarterly So sizable relatively guess these could future. follow up, near to your just deals part to

to artificially that perception be tenants, in could bit the But the more inflating volatility number. little a rate guess is able continue and bring I leasing be if these you're short-term think I brings into it might to stable. it

Angela Aman

where Well, it's exactly to hard I mean, things would I go. of -- sort say

continually to long-term number new short-term to I which, doesn't quarter, to think pretty volatility situation, able as number. in convert one more the pretty opposed we we're tenant. leases tenancy a ultimately, unusual say this lead of leases the volatility leasing special hope short-term again, them new you a particularly in saw, leasing But conversion short-term that because lease I that's long-term situation, it's would prevent a the to to focus, signing to that the

Operator

Lynch. The next question is from Camille Bonnel with Bank of America Merrill

Camille Bonnel

I raise. wanted behind guidance better understanding start with drivers to the the

beep on First year quarter with that the full a [ Eliott. you can't looked like good provided, core, I reconcile to breakdown but ] seem

versus you of So core the items can how much noncore clarify the increase? drove

Eliott Trencher

Yes.

which the those XX-XX referenced core the I fee touched two then I within roughly in on -- parking, income. then remarks, and again, expense/interest core bucket, interest the then the portfolio components roughly we the the XX-XX to income, split between So split increase between is buckets. my that And two and

Camille Bonnel

peers your on strategic one looking business. some And parts helpful. my of yesterday, as its commented off spinning public alternatives follow-up, at with of That's

pivoting point you a consider office Would So given life in Angela. term? challenged strategy and for or question what the you science supply might for at medium is the how the consider

Angela Aman

Yes. everything. I being thoughtful and think we're I about creative mean,

and good synergies life portfolio. science think I of lot between portfolio our our a office there's

project a X, in Kilroy tenants. tenants combination like a Phase in that office see science we and have where both You Oyster life Point of

business have business certain not clearly It's here. So the or different really the don't of the the business situation distinct a I from situations where we unlike think, other primary that's and there's core company.

of are as across and platform leasing a synergies lot and certainly think well. good synergies a teams the development I lot of there

for always makes synergies business while everything, of that So a good from be do we'll sense. looking spin-off any to think I maximize consider we'll and value in within is prevent a ton that shareholders way making sense. our there

Operator

Citigroup. The next Griffin is with Michael from question

Michael Griffin

to second. kind back want the for to outlook I leasing Great. go of a

this a X-year was to On looks through it the XXXX. renewal, like it up, looking about Riot renewal

I I the chunk the how of them lease? safe we ask I a maybe leases some -- tenant XXXX. are locking big probably also for some down think that a like that they same have given around LinkedIn And longer-term think year. you've should this still this that just guess expiring is in for year, expiring got about would but

A. Paratte

we're Michael, it's it's say, that But I Rob a Paratte. we strategic. the layout us, these a of but trying critical either or I at said Riot to that. And have to safe conversations And of know, for have also infrastructure you that being firm, as again, I lot Riot, we strategic arena, very has using. companies with can't get as sort with they're LinkedIn. with buildings the detail are into looking are to very about here other their here Blaine, they accommodate think earlier headquarters as their that

seen, we over and in going ready we conversion tenant remains it LinkedIn, sublease plan, the marketing but renovation which in conversations tenant. a XXX when lease where foot is, So have did Mathilda, on. And plan with we're a on direct we'll campus, working with recall XXX,XXX you to and the expires. is QX, And be to of that a active LinkedIn be

Michael Griffin

color I Francisco? tenants Are there Rob. on on And can demand, San the stabilized give maybe have still up KOP in Indeed. but there. on what leasing development just realized some down And just finishing particularly there, then pipeline, you're seeing in seeing us you any then you're Phase Appreciate that any the X, now, vacancy big it's color, there? South

Just as that well? demand for tracking how is

Angela Aman

two remarks activity X report that prepared seen my user over in the while I last certainly the this even certainly last weeks, six the activity point in important very large that but over can't the without going you're see to tour have included that tours. I leasing Yes. -- several uptick I accelerating. material we at certainly, but That tour and in quarters, activity execution, no last really you term, over KOP mean a mean doesn't to think find are has those at questions. leases near mentioned there's

really that. to we're encouraged So see

or KOP I while really gone suites. I that X out think that And where see X, have do which important is going we the it's need. and San first building that we're lease really the we move-in-ready aware, in Francisco as X those quarter any format last meet haven't I we're because or of The been really we buildings, is last quarter execution smaller so, is thing over and looking taken that where is think South in mentioned other for deals submarket space. And over have think multi-tenant, lost there everybody at we to demand spec X, immediate been are can't users

X So that the the X in at deliver buildings quarter. space when those X KOP we that of in -- fourth

that ready lab As more we space -- to we'll those immediately. prebuilt space much competitive take looking that smaller be space date, approach for are -- format users

well I this demand we're the XX% at sure So activity working at at Indeed, is that capturing level encouraged to fact that very think by least we're all preliminary we're accelerating. At around hard market. I make leased point. the there, a is think positioned very tour in I'm the

new we looking more We to vacancy well. in the one expand. there. than users interestingly at now existing also activity good tenant right think building. from chip that And That's we have remaining that's coming We're have and I continue the seeing to away building in as working activity

A. Paratte

color tracking and we're on Bay demand. Angela's add comments, of million Francisco. just that Area only now, feet some San XX% life square QX. I'd X.X That's are from up on thing the South The in science Michael, to Right

] X- up. And $X starts popping QX bump. tenant pretty lag good a X-month being And IPOs to the around between requirements [ That's point there's funding square And bigger in terms to successful the billion. a demand, roughly VC that usually of year a in XX% I'd increase throughout make over and that's flat $X.X about three had last the X.X funding Area the was X.X first QX. million companies increasing, funding million then is So was feet. Bay quarter QX. that in when then billion,

And So we said in -- got the San her trails. Angela remarks, any the in are South project bike in bay. market We've the think -- the Francisco our unlike market. improving. We've got fundamental is other as fundamentals the this

our really have because through landscaping now walk are showing prospects tenants in amenities and the that project, well built pretty the starting space and can much We every now. we're

Angela turning it's corner. And really Austin. with agree the So I on

we and see of of it's to you the big in about space the amount left us firms Indeed best Austin need a outside tower, looking but at as space, as numbers Austin to the look a convert You firms foot and sublease building have well CBD, and professional are in and services have finite of we giving Austin the to leases. traffic lot

Operator

Sakwa Evercore The next question ISI. is Steve from

Steve Sakwa

not I the what for to just about trades? on of seeing talking the opportunistic. are where order know today, of given trigger I'm a, for the acquisition acquisitions rates and of budgeting there? an sort wondering, you're you're pull kind And kind in where of being kind are stock you, out hurdle or dispositions, Angela, you

Angela Aman

that's seeing That's really Thanks, really Steve. question. the of looking good at market. for. mean the point, quality come just fact not Those we're Yes. this to and I much that is we're important are

date. of exercise So it's been academic a an bit to

the As mentioned to X more over and my testing in transaction going prepared to remarks, do XX think next on more there's lead activity will market months. we I ultimately that

table to drive so really the large. we've market at something is outcomes a and and certainly trying in interesting lot the seen capable that we better we can more team opportunities And than over special to XX the find last of and underwriting bring the ready think transactions months

view IRRs you're perspective are sure Again, of the is, of a exactly of from on be with. It's underwriting, I variables, that now, into of expected to transaction talk your that. is question as kind the in the really the importantly, submarket repositioned if gets one very seen capital, physicality that deployed or about needs things much we're environment. how mean, activity to IRR just of cost But think, making about to we high the challenging cognizant rates a need current haven't in about line and and be sort in something preliminary it's unlevered a double-digit what a big basis, really an I based we'd of reposition order or rate of might to to underwriting. to where as understand fact the little we certainly our on you capital as or those begin that on basis, those question terms based sort to in a which hurdle particularly realistic terms In to vacancy think cost assets, get to of have transaction we stabilize. And hurdle like about a IRR excited capital at looking of an time think quality on right much those transactions of have and but perspective, be expected range low assets

Steve Sakwa

much Okay. for you mixed-use whether think not guess and kind whether again, spent taking of time you of projects on on those? about how do may how And just that? sort the of kind do get they're or office Or a which, line. any value And need about think may purchased evaluating about you even question, land several be where today? you that to guys thinking impairment it's or into And but a was or for obviously years -- there lot of converted residential. little out your kind shifting maybe last those sitting books your have on I you may over to the list, maybe that further second of finish over have

Angela Aman

Yes.

do use back We And about a now? it. I really a best parcel the different being about some terms in significant spending in in and time really today and We where of at have spending value? So of of perspective, land team, the where value. thinking every it. development drive were through The on of we we future we fair depth pipeline when to to how that amount were acquired. parcels of right a in of exploring that bank different outcomes highest for and lot are evaluating are time market we and such future and relative those capital on maximize from creative tied stepping right? thinking that, thinking are experience up alternatives a amount has think, We're look order to And what's

So focus top us single capital maximizing the nothing parcel on And at it our for on today, have really to there value we point. is just commitment just but mind every in given of is there. report this

Operator

The next question with Kim is from BMO. John P.

John Kim

Angela, green similar tech the mostly you anything and if on was any I shoots you talked wondering about seen [indiscernible] in on LA, side. had biotech on demand the horizon.

there's around? anything which is I but if it turn that was You've occupancy your could not in the wondering portfolio, unique, in mid-XXs

Angela Aman

quarter our I interestingly, our quarter, even I activity. fourth Yes. into activity mean would say, the first and April

lots of of in different uses. sizes range L.A. portfolio activity the of in have We a

so I'll specifically more to to Rob a we about your are little that need pick see fair seeing momentum we point, But So some up. But a let that momentum addressed, be amount needs of vacancy to we there. it. talk have

A. Paratte

color, so we've John, L.A. give XX year-to-date, in just square just to that our you some about XXX,XXX done deals portfolio. feet total

XXX,XXX had over piece tours another square that we've, total feet. of Just color, XX year-to-date,

to So by the and the people talking. and buildings getting through fill way the is start negotiating vacancy

quite of being period I active Beach dormant as of been long Long very the has markets after if a been kind you has fairly and think well. further, Hollywood active segment

understand submarkets going So again, L.A. and is to segment a really very broad, vacancy. really what's big on have market, with and to the we demand

John Kim

executed square that that's leasing and leases and during if just was your for 'XX or update your on occupancy stats? expirations there's reflected on And if also, in existing ask Can pipeline? feet? I How of your quarter XXX,XXX vacant space, much done an addressing the already leasing exploration of

Eliott Trencher

So to I'll break in our be this we start with the more press to really first half. explicit. out release, But tried

square XX,XXX of XXX,XXX vacant can see on feet square feet XXX,XXX renewal square said you So space leasing, feet of on leasing occupied currently leasing. we space, on of new and previously

A. Paratte

portfolio? I'll in John, mean I on XX% the and that portfolio. Austin San Diego. an And talking both in about uptick seeing us Or activity. had leasing about pipeline, I you're to contacting we're the mean, fact pointed expanding. the the about we're board, San tenants We've across Diego L.A.? in leased just talk Angela

better we're conversations actually in decision-making has going tenant time long So having. been a more, in I our with pipeline on think, is than it definitive the

Operator

Burrows Caitlin The next is with from Sachs. question Goldman

Caitlin Burrows

before monetizing and/or Maybe lower-quality you've the that land stabilized flip parcels. consider side could you of high-quality assets Steve's mentioned question assets, earlier,

So I'm see behind How you we it working on first? kind type the of something of that it is you wondering do already what think be? scenes? an assets just of big And sell opportunity could you're could

Angela Aman

I point the there's stage about is that's to out at think that this really mean talk on. or appropriate I nothing of report

You're right.

potential capital So of we we harvest across the could of buckets portfolio. sources that laid out different

you raise we On out the always the capital it's to buckets I the call places think to the be last in laid reiterated going attractively pretty portfolio. quarter We're within most or think well. just buckets priced looking

don't it of trajectory a bank. different may in of where at where that be So potential like those well. creation have assets be It that be about as and point might just in we in of lot there's view the assets asset, higher-quality the we land future value may future assets a additional feel

current be below today. raise of implied by debt cost on could price basis, and can we our all well our by where IRR capital those how implied as stock an So implied all

returns risk-adjusted So places really, the as to goal, is possible. capital trying attractively again, as raise to and just find

Caitlin Burrows

guess, office, lack you I earlier. I debt more think is for mentioned broadly, a Okay. of availability even And then, as there

have partners on deploy of peers that funds. the alongside capital this East you taking through so advantage are And Coast debt to

or mezz to in considered willing you have investments buildings you it? So that preferred to would equity came if attractive be it own

Eliott Trencher

lack said, Yes. you This creative Eliott. type like the we're is about think at financing where that be is for as that. of look opportunities to certainly And there product. that are. and We a We've of thought to going

there to be clear us ownership. think the path for is challenge I has a to

can't see that, we life would isn't office buildings. then building Our is something if it core science we operating, competency seriously buying, consider. and And

Operator

Dylan Green next Street with from question The Advisors. is Burzinski

Dylan Burzinski

few how disclosure XX% guess think best that you highest mean, of sort as is some across I of I and sort classes? should development composition I guess use XX% office, XX% it And of land residential thinking it's sort of best life parcels the assets the -- that? as across of and I for and might land are noticed think about sale today, a mixed opportunities, asset portfolio you acquisition we added these use. that suggest at that the and all underwrite you Or to we look any going are expectation of about science, parcels. be disposition three those up to be your

Angela Aman

perspective a been you science does properties additional projects few East from I'll than Diego mixed-use the in at across a a say Well, were those the a as as San potential development more disclosure disclosure a disclosure. Yes. understanding anything those expectations things. managing have just like value thought and across One, potential clarification disclosure record And and That's additional units and company, noted, in relates I a really to and East else. think, office, people for for Seattle. of there residential multifamily developing Village, least I life component the think, we [indiscernible] was parcels. The helpful That it are quite potential of Paseo. One across around on strong Village track in in at was we and TBD, for maximizing value while,

asset I any those the expertise think the of in capabilities to we and classes. have play

risk-adjusted every execution best opportunity where are joint the comes where it again, capabilities best going on to it path extent or, the As of future that, to assume the path parcels up platform in that or the returns would some in I and outside a as we're is or deployed. focusing land basis our parcel of capital be is the to this of or for core only a it's on look stand-alone reasonable this the that, each sale execution at of the a of of in and a ground-up like that. But point think competency venture our a development cases, bank, primary and parcel at to use some that really deployed and relates is something likely and

Operator

The Key is Rana with next question from Upal Corp.

Upal Rana

Francisco Angela, AI-related. office of year? how think And so be in kind this saw do curious XX% tracking was that leasing last to you of I'm year, San for it about this forward? we going how trends

Angela Aman

of I think a Francisco. activity I'll is that real in it, the do I this Rob signed AI my San Xth in driver in we let think, Seattle lease an mean and mentioned at also remarks, Yes. I but mentioned company. we we West talk more a little was leasing about prepared specifically first do

talent seeing as to we technology So driven I resides. really Seattle AI again, by are where think top migrate well,

well. that to you so And But going a to... do that's be Rob, as think in want driver market we

A. Paratte

Yes. Sure.

Just Francisco. a on little color San more

Anthropic significantly pushed looking and in very recall, over XXX,XXX of you were our companies expanding in in can't at leasing transactions As QX, happened I They what open the detail, those feet. talk there taken. that beyond one large three AI Hive up were XXXst they've is already building. that but

being almost leases QX, leases that's that we of of meaning companies. already, for are signed the signature. very watched either AI-backed two out have And those or been feet So XXX,XXX pending like have carefully. In

in of smaller It or we're is -- formation very encouraged as earlier what by the the see trend to implied So said momentum we of a earlier, from and also QX. business. we're we going building. And QX the new company seeing, seems lot end see I

That's and government of demand And science, and switched tech past, -- you life San in Francisco et the in XX% today. XX% talked about always the XX% we've tech. services. or services, quarters professional If now to about balance years services is is firms, cetera, law sort professional

in move, there's So a move been tech significant demand. up

of well the well not all it only technology in bodes for but Francisco. AI, bodes San So that market for and

Upal Rana

helpful. of forward? true seasonality for you one Eliott. a do of And decent increase? time-related a Great. How in see was versus was how tenant quarter. That amount reimbursements There one was that or And much increase going then this last that trending

Eliott Trencher

Yes.

the period, you're impacted you the if refunds I to of think I that last have prior it estate numbers. had real think material to that comparing we amounts and tax recall period,

first fourth So unusual that quarter. It's the in quarter. the nothing more really all

Operator

Nicholas from is question with Scotiabank. Yulico next The

Nicholas Yulico

away is In us terms just remind the spec suite KOP, situation? as on space you that And could of that there much some us year, that is as development the basis? remind want can year. commence the end of clear be going still in timing I to to X, Or And this delay just footage the square something delivering happen? leased be for under revenue be if well that and of would you're a Phase got delivered how on you that that right sort later would spec

A. Paratte

Nick, this Rob. is

So we're doing. we two that floors have

over about will and So We've XX,XXX feet. at people October year. Angela total upon of earlier, occupancy be is yes, tour roughly just already little could in And activity this we had, looking myself, They square between a that immediate and deliver as them. talked completion.

Angela Aman

where year-to-date. most of QX has needs. a even light to been But of in saw in really people immediate been. submarket was QX, for we has activity or -- And lot that's of sort activity in whole the mentioned the I looking demand fill the

that see we the a commencement delivered, think see spec those pretty have quickly. To do lease could we suites occupancy. you once a extent you'd signed, So

Nicholas Yulico

drove the Okay. rate I down -- quarter? in if I'm of on And a is this, sorry Hollywood lease then but just the terms missed in the follow-up portfolio, what

Eliott Trencher

of just XX,XXX couple particularly at few Sunset move-outs We Nothing square had foot a chunky Media a Center. move-outs.

Operator

from question next Jefferies. is with Peter Abramowitz The

Peter Abramowitz

to want life to market. Rob's of just before about go back science comments I the some

from mentioned some the now, to changed and funding leasing of look that a funding uncertainty? demand it to a lag You some by in at think rule decisions, issues historically, X- that right seeing Has all what recovery? is the the just seems you're the thumb. or macro of market still kind X-month between time I generally or line you what of kind be of at Or as of been extended

A. Paratte

Yes, it's a question. good

by by boards I First office. a the would if of examination then by something X same part. it feeling they're a on to that the with this and the reexamination still through all, thumb, that's that just that saying as caveat have very up on months, depends There's FDA, immediacy senior for goes But tenant's rule drive lot positive management. there's of about example, they in typically on. and lease floats tenant, of immediacy the it's could the lot of that a -- X of scrutiny potential a as

delay we little conviction. seeing could but bit, acting that potentially a are tenants with So it's

certainty there's there feeling it's in So out of like terms closure. overall, more

Peter Abramowitz

It's helpful have market. terms I vacancies. Okay. That's you in you you're South huge another the life helpful. Francisco figures tracking. you're that demand much science some that San on on But don't And one spaces know of with. smaller gave any dealing

of outlook Just terms curious the general could in Diego. the San you kind of and if same give pipeline in the

A. Paratte

yet, fundings haven't vacancy, companies market large-format Yes. other them Torrey we are and Pines. there tenants, any back trying UTC it's we do to always The have We we're in talk submarkets, but again, San I Diego, about four come and Torrey -- of we activity. have has but are opportunities just seeing San an to track don't Pines -- in three is increase or the in tour outside encouraging. users Diego the that been Honestly, of some think

are typically I in a Torrey meaningful Pines recovery in but way. large-format UTC surfaced and there well, down just are haven't a users, as mode So think which

Operator

We currently questions. have no further

So to I hand to back will conclude. Bill

William Hutcheson

continued and Angie, joining everyone, you, KRC. We for today. Thank thank your you, interest appreciate in us

Operator

everyone. you, Thank call. concludes you today's Thank for This joining.

You your may now lines.. disconnect

Kilroy Realty (KRC) 3 May 242024 Q1 Earnings call transcript