Kilroy Realty (KRC) Stock: Dividend vs FFO, FAD, Occupancy

Did anything change at Kilroy in 2026? Not the ownership, but the finance chief and the board

The premise worth checking before writing about a stock is whether it is still the same stock. For Kilroy it is. The Form 8-K cover for the second-quarter results of July 27, 2026 still names Kilroy Realty Corporation, a Maryland corporation, with common stock on the New York Stock Exchange under KRC, and the company still files combined reports with its operating partnership, Kilroy Realty, L.P. (CIK 1493976). We found no merger agreement, tender offer, going-private proposal or ticker change in the filings from January 2025 to the EDGAR index read on October 19, 2026. What did change is who runs the finance side and who sits on the board:

• August 11, 2026: the chief financial officer left. Form 8-K (Item 5.02) says Jeffrey Kuehling's departure “constitutes a termination without Cause” under his employment agreement, with severance payments and benefits plus two months of pay in lieu of notice. Eliott Trencher, the chief investment officer since December 2020 and the company's CFO from February 2022 to August 2024, became Executive Vice President, Chief Investment Officer and Interim Chief Financial Officer. The filing says: “The Company is conducting an external search for a permanent principal financial officer.” The August 11 press release, furnished with the 8-K, says the departure “is not the result of any disagreements related to the Company’s financial policies” and reaffirms the 2026 guidance given on July 27.
• February 24, 2026: a new board chair. Gary Stevenson succeeded Edward Brennan as Chair; the board went from seven to nine members with two independent directors added (one the CFO of VICI Properties), and one director said he would retire at the May 2026 meeting. At that meeting, held May 19, all eight nominees were elected, with the lowest support for a nominee at 103.5 million votes for and 2.5 million against, and the executive pay advisory vote passed with 98.4 million for and 8.2 million against.
• November 17, 2025: a severance plan. The compensation committee approved an Executive Severance Plan with one times salary plus target bonus (1.5 times after a change in control) and sent non-renewal notices on the employment agreements of four executives. It is the sort of change companies make for consistency; the filing says exactly that, and it is not a signal of a transaction.
• A residential exit. In April 2026 Kilroy sold the 200-unit Columbia Square Living and 193-unit Jardine towers in Hollywood for $202.0 million gross. It recorded a $61.8 million impairment in Q1 to bring them to fair value less closing costs. It still owns 608 residential units in San Diego (One Paseo).

The dividend as filed: $0.54 a quarter, $2.16 a year, three years running

The 10-K statements of equity show dividends declared of $2.16 a share in each of 2023, 2024 and 2025 ($258.5 million to common stockholders in 2025). Each supplemental report prints $0.54 per quarter, and the Q2 2026 press release says the board “declared and paid a regular quarterly cash dividend” of $0.54, “equivalent to an annual rate of $2.16 per share,” on July 8, 2026 to holders of record on June 30. On September 15, 2026 the board declared the same $0.54 payable October 14 to holders of record on September 30 (a Business Wire press release; there is no SEC filing for a Kilroy dividend declaration, and the 10-Q we read covers only the quarter that ended June 30).

Kilroy gives two yardsticks, Nareit FFO and funds available for distribution (FAD, which subtracts recurring tenant improvements, leasing commissions and capital expenditures and straight-line rent and similar items from FFO). Quarter by quarter:

For the full years, FFO per share was $4.59 in 2024 and $4.20 in 2025 (down 8.5%, our arithmetic) and the company-reported payouts were 46.5% and 51.0% of FFO, and 57.6% and 63.8% of FAD. In the first half of 2026, FFO was $218.2 million against $258.2 million (down 15.5%, our arithmetic), FFO per share $1.83 against $2.15, and FAD $174.7 million against $213.0 million (down 18.0%, our arithmetic), for payouts of 58.1% and 72.6%.

On the accounting measure that many data sites divide into the dividend, there is no coverage at all this year: net income available to common stockholders was $0.6 million in the first half of 2026 against $127.9 million of dividends and distributions paid in cash. That gap is mostly depreciation ($187.9 million in the half) and a $61.8 million impairment, which FFO adds back, so it overstates the strain, just as FFO understates the cost of keeping buildings leased. FAD is the company's attempt to include that cost. In Q2 recurring tenant improvements, leasing commissions and capital spending were $28.1 million, from $18.7 million in Q1.

The company's 58.0% and the 59% that our office REIT comparison shows are the same dividend on different bases: the company divides what it paid on July 8 ($63.4 million), while our comparison used what was declared in the quarter ($64.5 million, including units) against $109.3 million of FFO.

The price the filings print: $34.31, $42.25, $28.21, $37.47

Each supplemental report prints the closing price on the last day of the quarter, which the company uses to value its equity. They are not today's price, and this page does not quote one because no filing contains it. The yield on the unchanged $2.16 is our arithmetic.

From $42.25 on September 30, 2025 to $28.21 on March 31, 2026 the printed price fell 33.2% (our arithmetic), and then recovered to $37.47 on June 30. Those are the five dates the filings give; the path between them is not in any SEC document we read. The company chose the low point to buy back stock: it repurchased 2,357,739 shares in the first quarter at a weighted average of $30.80, for $72.7 million, and none in the second quarter. A $500.0 million program that began in February 2024 has $427.3 million of capacity left, and the 10-Q says it has not sold any shares under its 2024 at-the-market program.

What changed in the second quarter of 2026

• FFO fell 19.5% in dollars. $109.3 million against $135.9 million; per share $0.92 against $1.13. Net income available to common stockholders was $19.9 million ($0.17 a share) against $68.4 million ($0.57), but the Q2 2025 figure included gains on sales.
• Revenue and operating income slipped. Revenues were $272.4 million against $289.9 million, and net operating income $180.3 million against $190.8 million. Same-property cash NOI, on 113 properties and 15.6 million square feet, rose 1.5% in the quarter and 1.7% in the half.
• Interest expense rose 35.0%, but the debt did not get much more expensive. The income statement line was $41.6 million against $30.8 million. The 10-Q table shows gross interest of $53.3 million (up 2.1%) and capitalized interest of $11.6 million against $21.3 million (down 45.5%) as qualifying development costs halved, from $1.915 billion to $1.007 billion on average. Capitalized interest on the Flower Mart in San Francisco continues through December 2026 in the guidance.
• Leasing was 376,000 square feet and the cash spread turned positive. 226,000 square feet were new leases on vacant space, 7,000 new on occupied space and 143,000 renewals. Rents on second-generation space rose 21.0% (GAAP) and 6.1% (cash), against declines of 10.6% and 16.8% in Q1. Excluding space vacant for more than 12 months, the Q2 numbers were +27.3% and +15.6%. First-quarter leasing of 568,000 square feet was, in the company's words, “the Company’s strongest first-quarter performance since 2017.”
• A credit facility recast. In June the revolver was raised from $1.10 billion to $1.25 billion with maturity moved to July 31, 2030 (two six-month extension options) and the term loan from $200.0 million to $250.0 million to July 31, 2031. The additional $50.0 million can be drawn through June 11, 2027.
• Two more repayments. $50.0 million of 4.300% notes due July 2026 in April and $200.0 million of 4.350% notes due October 2026 on July 20, both at par.

The CEO's quote in the Q2 release is: “Our second quarter results highlight continuing improvement in commercial real estate fundamentals across our West Coast markets.” The tables below are what that statement sits on.

Occupancy: 77.0% occupied, 81.5% leased, and one building explains four points

Stabilized portfolio, period end, from the supplemental reports:

The step from 81.6% to 77.6% in Q1 2026 is Kilroy Oyster Point Phase 2 in South San Francisco joining the stabilized count: 871,738 square feet, 5.1% of the portfolio's 17,128,056 square feet (our arithmetic), 7% occupied and 49% leased at June 30 on a total estimated investment of $1.175 billion. The company reports leases signed but not commenced at 450 basis points (250 excluding KOP 2); when those start the portfolio would be at the leased figure. Without KOP 2, occupancy has still slipped 0.7 points in a quarter.

Inside those regions the spread is wide. San Francisco CBD is 81.3% occupied (82.0% leased) and South San Francisco 47.9% (69.5% leased, with KOP 2 in it); El Segundo is 65.4% occupied, West Los Angeles 55.2%, Hollywood and West Hollywood 86.1% (95.6% leased), Del Mar 89.2%, Lake Union and Denny Regrade in Seattle 80.7% and Bellevue 74.9%. The CSV carries all 16 submarket figures.

Rent that expires, and who pays it

Rollover through 2028 is 17.7% of base rent (our arithmetic). Adjusting for leases already backfilled but not started, the 2026, 2027 and 2028 expirations would be smaller by 89,457, 9,283 and 26,850 square feet. The big near-term item is a media tenant: DIRECTV, LLC, 2.1% of base rent, has 49,255 square feet ending September 30, 2026 and 483,701 square feet ending September 30, 2027, and the supplemental gives it a weighted remaining term of 1.2 years.

The top ten are 35.8% of base rent (our arithmetic). The company's lease mix is 53% net and 47% gross. Kilroy's own description of its customers is technology, media, life science and professional services; the table shows how much of that is a handful of San Francisco and Seattle technology leases.

Debt: $4.57 billion at 4.26%, and the next four dates

Every instrument at June 30, 2026, from the capital structure page of the supplemental report. The table is as of June 30, so the $200.0 million of notes due in October 2026 still appear; they were repaid on July 20.

Unsecured debt is $3.975 billion at a weighted 4.13%; secured is $597.2 million at 5.15%. After the July repayment, principal is about $4.37 billion (our arithmetic). The company's maturity table by year (2026 is the remainder of the year) reads $348.1 million, $249.1 million, $400.0 million, $475.0 million, $500.0 million, $550.0 million, $425.0 million, $450.0 million, $375.0 million, $400.0 million and $400.0 million for 2026 through 2036; the 2026 figure includes the $200.0 million since repaid. Two things stand out. Kilroy's recent bonds cost more than its old ones: the 2035 and 2036 notes carry 5.88% and 6.25% against 2.50% to 3.05% on the 2030, 2032 and 2033 notes, so each refinancing resets interest expense up. And the covenants have room: total debt to total asset value is 34% against a 60% limit, fixed charge coverage 3.1 times against 1.5, and unencumbered asset pool value 297% of unsecured debt against 150%.

The 10-Q puts the company's view this way: “We believe our disciplined capital structure and staggered debt maturities provide us with financial flexibility and enhance our ability to obtain additional sources of liquidity if necessary.” The measure that moved against it is leverage: net debt to the Company's share of EBITDAre was 6.4 times at September 30, 2025 and 7.0 times at each of the next three quarter-ends, because the trailing EBITDAre denominator fell from $660.3 million to $615.7 million while net debt barely changed.

Guidance: raised in April, affirmed in July, 15% below 2025

The July assumptions: average full-year occupancy 76.5% to 78.0% (80.5% to 81.5% excluding KOP 2), gross interest expense $208.0 to $209.5 million, capitalized interest $48.5 to $49.5 million, net income of $0.08 to $0.22 a share, and $347.5 to $500.0 million of operating property sales, of which $347.5 million had closed by June 30. A further $165.0 million of development land is under contract, with closings expected in phases from late 2026 when residential entitlements arrive. The midpoint of $3.56 is 15.2% below 2025's $4.20 (our arithmetic). The first half delivered $1.83, so the midpoint leaves about $1.73 for the second half, or $0.87 a quarter (our arithmetic), against $0.92 in Q2.

Cash: what the dividend is paid from

Operating cash flow fell 18.4% (our arithmetic). It paid the dividend 1.8 times in the half. Spending on development ($126.9 million) and on existing buildings ($68.4 million) came to $195.3 million, so asset sales are what funded growth, buybacks and the debt repayments. That is a deliberate plan, not a problem on its own, but the dividend is not paid out of free cash flow after development this year. The 10-K also reminds holders why a REIT's dividend has a floor of its own: “To qualify as a REIT, the Company generally must distribute to its stockholders at least 90% of the Company’s net taxable income each year”. Kilroy's filings do not give taxable income per share, so we cannot say how the $2.16 compares with that floor.

Development: land, not construction

The supplemental lists no project under construction at June 30, 2026. The future pipeline carries $1.53 billion of cash costs incurred, of which $683 million is the Flower Mart site in San Francisco (2.3 million developable square feet) and $249 million Kilroy Oyster Point phases 3 and 4. The one new start is 1900 Broadway in Redwood City, acquired in a joint venture in February 2026: 251,000 square feet, 58% pre-leased to Cooley LLP (145,000 square feet, 20 years), $330.0 to $350.0 million total cost, construction in 2027 and delivery in 2030 with Kilroy at 97% ownership. Development is where the interest-capitalization benefit to FFO sat; with fewer qualifying costs the benefit is shrinking.

How this compares with other office REITs and with non-traded vehicles

In our ten-company office REIT table, built from the June 30, 2026 10-Qs, Kilroy was one of four that held their dividend, with a 77.0% occupancy that sat just above Douglas Emmett's 75.6%; SL Green and BXP cut theirs. For the life-science half of the business, see Alexandria's page, for the largest listed life-science landlord.

Against a non-traded vehicle, the contrast is price and information. A listed REIT's share price moved 33.2% between two quarter-ends while the dividend did not; a non-traded REIT or interval fund does not show that move. Our comparison of non-traded and publicly traded REITs and the listing discount page cover what that difference means when you want out. What a stock like KRC does give you is a quarterly supplemental with the numbers above, filed with the SEC, which is where this page comes from.

What the next report will show, and when

Kilroy announced on September 24, 2026 (a company press release distributed by Business Wire, not an SEC filing) that it will release third-quarter 2026 results after the market closes on Thursday, October 22, 2026, with a conference call at 10:00 a.m. Pacific on Friday, October 23. In the last three cycles the Form 10-Q was filed the day after the earnings 8-K (October 27 to 28, 2025; April 27 to 28, 2026; July 27 to 28, 2026), which points to October 23 for the Q3 10-Q (our arithmetic; Kilroy does not announce it). As of October 19, 2026 neither the Q3 8-K nor the 10-Q is filed. The latest 10-Q is the one for June 30, 2026, filed July 28, and the latest 8-K is the one of August 11.

What a holder or reader can do with this

This page is analysis of public documents, not investment, legal or tax advice. Things the filings let you check yourself:

• Say which yardstick. 58.0% of FFO, 75.8% of FAD and “more than net income” describe the same $0.54. A data site that prints 150% or more is dividing by GAAP earnings, which carry $187.9 million of half-year depreciation and impairments.
• Watch FAD, not just FFO. The company's payout of FAD rose 20 points in two years; that is the line where leasing costs and capital spending appear.
• Read the denominator. The four-point occupancy drop is one finished building joining the count; the 0.7-point drop without it is the cleaner trend.
• Mark the dates. Next bills on the debt table are December 1, 2026 and February 17, 2027; guidance is a range that implies a weaker second half than the first.
• Compare like with like. Use the office REIT table for the same dates and remember Kilroy's tenant base is technology and life science, not a general office mix.

FAQ

All figures are from Kilroy Realty Corporation (SEC CIK 1025996) filings read on EDGAR on October 19, 2026: Form 10-Q for the quarter ended June 30, 2026 (accession 0001628280-26-050215); Form 10-K for 2025 (0001628280-26-007051); the supplemental reports (Exhibit 99.1) and press releases (Exhibit 99.2) attached to the Forms 8-K for Q2 2025 (0001025996-25-000245), Q3 2025 (0001628280-25-046429), Q4 2025 (0001628280-26-006492), Q1 2026 (0001628280-26-027543) and Q2 2026 (0001628280-26-049820); and the Forms 8-K of November 21, 2025 (0001193125-25-291606), February 26, 2026 (0001628280-26-012017), May 19, 2026 (0001628280-26-036502), June 17, 2026 (0001628280-26-043919) and August 11, 2026 (0001193125-26-344730). The October 22, 2026 earnings date and the September 15, 2026 dividend declaration come from Business Wire press releases, not SEC filings. Share prices are the quarter-end closing prices printed in the supplemental reports, not current quotes. Dividend-to-price yields, changes between periods, the share of debt, rent and tenants by bucket, the guidance midpoint, cash-flow differences, the 10-Q timing and combined percentages are our arithmetic from those rows; FFO, FAD, net debt to EBITDAre and the payout ratios are the company's own non-GAAP measures and definitions. This is analysis of public documents, not investment, legal or tax advice.