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Call sheet · Q2'26

Kilroy Realty (KRC)

Q2'26 earnings call · held July 28, 2026 · compared with the Q1'26 call · management-credibility review
9/12
Disclosure score
3 high, 4 medium, 1 low flags
Financial quality
Bottom line
The market will celebrate positive releasing spreads and San Francisco momentum, but the real story is KRC's $78M signed-not-commenced pool at $75/sqft, representing a 30% rent uplift that hasn't hit the P&L yet. While occupancy ticked down, this phantom pipeline is the binding constraint, not demand. Angela Aman revealed the key dynamic: 'Existing tenants are demonstrating greater urgency' because only 20-25 quality blocks remain in SF. The $32M Flower Mart capitalization headwind starting in 2027 is being soft-pedaled but represents $0.30 of FFO drag. My view changes if the signed pipeline starts shrinking or if Q3 commencements disappoint, signaling tenant delays.

The 30-second version

  • The signed-not-commenced pool is the real sleeper: $78M of locked-in ABR at $75/sqft, 30% above portfolio average
  • San Francisco's 'recovery' narrative masks the real story: it's now a seller's market for trophy space
  • Flower Mart capitalization extension is a $32M annual earnings headwind they're soft-pedaling

What changed this quarter

MetricQ1'26Q2'26Change
FFO per share$0.91 (Q1 2026)$0.92 (Q2 2026)+1.1% sequential
Portfolio occupancy77.6% (Q1 2026)77.0% (Q2 2026)-60bps despite 140bps headwind
Leasing volume568k sqft (Q1 2026)376k sqft (Q2 2026)-34% sequential but +40% YTD vs 2025
GAAP releasing spreads-10.6% (Q1 2026)+21.0% (Q2 2026)First positive in 2 years
Cash releasing spreads-16.8% (Q1 2026)+6.1% (Q2 2026)Inflection to positive
Signed not commenced ABR$78M (Q1 2026)$78M+ (Q2 2026)Grew despite commencements
Cash same-property NOI+1.8% (Q1 2026)+1.5% (Q2 2026)-30bps deceleration
Forward pipeline square footageQ1 baseline+34% vs Q1LOI/late-stage up 77%
Retention rate30% YTD (Q1 2026)27.9% Q2, 30% YTDStable but low
ABR per sqft (signed pool)Not disclosed$7530% premium to portfolio

Accountability tracked

8 new promises made5 narrative shifts flagged8 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
Read the full KRC Q2'26 report Subscribe
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This is a free preview. The full write-up and promise ledger are published to subscribers on Substack.
Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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