KILROY REALTY CORP (KRC) Business

ITEM 1.    BUSINESS

The Company

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. Our approach to modern business environments is designed to drive creativity and productivity for some of the world’s leading technology, media, life science, and business services companies and we have been consistently recognized for our leadership in sustainability and building operations. We own, develop, acquire, and manage real estate assets, consisting primarily of premier office and life science properties in the San Francisco Bay Area, Los Angeles, Seattle, San Diego, and Austin, which are markets we believe 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”).

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, of which we owned an approximate 99.1% common general partnership interest as of December 31, 2025. The remaining approximate 0.9% common limited partnership interest in the Operating Partnership as of December 31, 2025 was owned by non-affiliated investors. With the exception of the Operating Partnership and property partnerships that we consolidate, all of our subsidiaries are wholly-owned.

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.

Our stabilized portfolio of operating properties was comprised of the following at December 31, 2025:

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(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.

As of December 31, 2025, the following properties and projects were excluded from our stabilized portfolio:

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

(2)See Note 4 “Dispositions and 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 December 31, 2025, was comprised of eight potential future development sites.

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Business and Growth Strategies

Growth Strategies.  We believe that a number of strategies will enable us to continue to achieve our objectives of long-term sustainable growth in Net Operating Income (defined below), FFO (defined below), and the maximization of long-term stockholder value, including:

•Operating strategies;

•Capital recycling strategies;

•Development and redevelopment strategies;

•Financing strategies; and

•Sustainability strategies.

Net Operating Income (“NOI”) is defined as consolidated operating revenues (rental income and other property income) less consolidated operating expenses (property expenses, real estate taxes and ground leases). “FFO” is Funds From Operations available to common stockholders and common unitholders calculated in accordance with the 2018 Restated White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”). (See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations —Results of Operations” and “—Non-GAAP Supplemental Financial Measures: Funds From Operations” for a reconciliation of these measures to generally accepted accounting principles (“GAAP”) net income available to common stockholders.)

Operating Strategies.  We focus on enhancing our long-term sustainable growth in operating income and cash flow from our properties by:

•maximizing cash flows through new and renewal leasing activity;

•managing portfolio credit risk through effective underwriting, including the use of credit enhancements to mitigate individual tenant credit risks;

•maintaining and developing long-term relationships with industry-leading companies in our markets;

•managing operating expenses through the efficient use of internal property management, leasing, marketing, financing, accounting, legal, and construction and development management functions;

•investing in capital improvements to enhance the competitive advantages of our properties in their respective markets and integrating technology, including building management systems, security operation centers, and tenant experience solutions to provide a premium experience to our tenant base while reducing operating costs; and

•attracting and retaining motivated employees to meet our operating and financial goals.

Capital Recycling Strategies.  We believe we are well-positioned to acquire and/or dispose of properties due to our extensive experience and proven track record of capital allocation. Against the backdrop of market volatilities, we intend to evaluate opportunities based on:

•submarket dynamics for the property being evaluated, which may include job growth of companies or industries located in that area and/or current or future competitive supply;

•physical characteristics of the property, which help determine the revenue growth potential over time, as well as the capital required to maintain and/or grow that revenue; and

•investment returns, including both the in-place income and the future income, factoring in projections of occupancy and rents over time.

Development and Redevelopment Strategies. We and our predecessors have developed commercial real estate on the West Coast since 1947. We execute on our development and redevelopment strategies by:

•developing or redeveloping assets in highly populated, amenity rich, supply-constrained locations that are attractive to a broad array of tenants;

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•maintaining a disciplined approach and commencing development only when appropriate based on market conditions, focusing on pre-leasing, developing in stages / phasing, and cost control; and

•self-funding our development and redevelopment activities primarily through internally generated free cash flows and/or selective disposition activity;

We may engage in the additional development and redevelopment of office, life science, and mixed-use properties when market conditions support a favorable risk-adjusted return on such projects. We expect that our significant working relationships with tenants, municipalities, and landowners on the West Coast and in Austin, Texas will give us further access to additional opportunities in the future.

Financing Strategies.    Our financing policies and objectives are determined by our Board of Directors. Our goal is to maintain significant liquidity and a conservative leverage ratio. Our financing strategies include:

•maintaining financial flexibility, including a significant unencumbered asset base;

•maximizing our access to a variety of public and private capital sources;

•maintaining a staggered debt maturity schedule to limit risk exposure at any particular point in the capital and credit market cycles;

•completing financing in advance of capital needs;

•managing interest rate exposure by primarily financing on a fixed-rate basis; and

•maintaining an investment grade credit rating.

We utilize multiple sources of capital, including net cash flows from operations, borrowings under our unsecured revolving credit facility and our unsecured term loan facility, proceeds from the issuance of public or private debt or equity securities, other bank and/or institutional borrowings, and our capital recycling program.

Sustainability Strategies. Our longstanding leadership in sustainability in real estate is globally recognized, and our commitment to sustainable operations remains strong. Our vision is to improve the environmental and social performance of our portfolio and Company, while delivering long term value to our tenants, employees, communities, and shareholders. Our Board of Directors, through the Corporate Social Responsibility and Sustainability Committee (the “CSR&S Committee”) in conjunction with management, currently oversee and advance our corporate social responsibility and sustainability initiatives. Our Board of Directors and management recognize that community engagement and sustainable operations benefit our investors, tenants, and other stakeholders and are key to preserving our value and credibility.

As a result of our commitment to sustainability, we have consistently received high rankings in sustainability performance by the Global Real Estate Sustainability Benchmark (“GRESB”). In 2025, we were proud to earn the highly competitive GRESB 5 Star designation for standing investments, and to be named the Regional Sector Leader in the Americas for development (technology/science). We maintain a longstanding relationship with the U.S. EPA ENERGY STAR® Program, and, as of December 31, 2025, we have achieved the most ENERGY STAR NextGen certifications of any building owner following the launch of this new certification program in 2024. We are listed on the U.S. EPA’s National Top 100 green power users. We have also been included on Newsweek’s list of America’s Most Responsible Companies since 2020, and in 2024, we were awarded the Green Lease Leader of the Decade award.

We manage our properties to offer the maximum degree of utility and operational efficiency to our tenants. Reducing energy use year over year is an ongoing aspect of our operational strategy. We pursue a variety of strategies to drive energy efficiency across the portfolio, such as utility use monitoring, systematic energy auditing, mechanical, lighting, and other building upgrades, optimizing operations and engaging tenants. We collaborate with our tenants on efforts to reduce their energy and water consumption and increase recycling diversion and compost rates. Many of our existing and prospective tenants have ambitious sustainability targets of their own, and we engage with tenants on a range of sustainability topics throughout each year. We aim to incorporate green lease language into all of our new leases, and the majority of our leases also include a cost recovery clause for resource-efficiency related capital expenditures. Green leases (also known as aligned leases, high performance leases or energy efficient leases) aim to align the financial and energy incentives of building owners and tenants so they can

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work together to save money, conserve resources, and ensure the efficient operation of buildings. We have received the Institute for Market Transformation’s (“IMT’s”) Green Lease Leaders award for 12 consecutive years.

We build our new development and redevelopment projects to Leadership in Energy and Environmental Design (“LEED”) specifications. All of our new office and life science development projects pursue LEED certification, at the Platinum or Gold level. In 2025, we completed two LEED Gold certifications covering over 900,000 square feet of development projects.

We identify climate change as a risk to our Company, its tenants, and our other stakeholders. These risks may include transitional risks such as policy, market, technology, and reputational concerns, as well as physical risks, and are a focus area for the Board of Directors and management. Climate-related risks are governed by the Board of Directors through the CSR&S Committee and by management through the ESG Steering Committee which includes members from Asset Management, Development & Construction, Finance, Accounting, Human Resources, Investments, Leasing, Legal, and Sustainability. We are proud to have achieved carbon neutral operations since 2020. This means that the entirety of our Scope 1 and Scope 2 emissions, and Scope 3 downstream leased assets emissions are offset through a combination of energy efficiency measures, onsite and offsite renewables, renewable energy credits (RECs), and verified carbon offsets. Our annual sustainability report includes additional detail on our carbon neutral operations strategy, other voluntary sustainability goals, as well as portfolio-wide energy, carbon, water, and waste data which are subject to a limited assurance process conducted by an independent third party.

Significant Tenants

Our modern business environments foster creativity and productivity for top global technology, life science and healthcare, and media companies. Technology companies accounted for 51% of our office portfolio annualized base rental revenues as of December 31, 2025, and this category spans a wide array of sectors such as software, social media, hardware, cloud computing, internet media, and technology services. Annualized base rental revenue is calculated as the annualized monthly contractual rents from existing tenants in occupancy, including the impact of straight-lining 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. As of December 31, 2025, our 20 largest tenants in terms of annualized base rental revenues represented approximately 53.7% of our total annualized base rental revenues.

For further information on our 20 largest tenants and the composition of our tenant base, see “Item 2. Properties —Significant Tenants.”

Competition

We compete with other developers, owners, operators, and acquirers of office and life science properties, undeveloped land, and other commercial real estate, including mixed-use, and residential real estate, many of which own properties similar to ours in the same submarkets in which our properties are located. For further discussion of the potential impact of competitive conditions on our business, see “Item 1A. Risk Factors.”

Segment and Geographic Financial Information

During 2025 and 2024, we had one reportable segment. See Note 23 “Segments” to our consolidated financial statements included in this report for information regarding our reportable segment.

As of December 31, 2025, all of our properties and development and redevelopment projects were owned 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.

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Human Capital Resources

As of December 31, 2025, we had 241 employees, of which 52% were female and 43% were ethnically diverse. We believe our people are our greatest resource and managing and developing talent is our most important responsibility. Our human capital development goals and initiatives demonstrate our commitment to enhancing employee growth, satisfaction, and wellness while promoting a collaborative and inclusive culture. Our approach is designed to attract, retain, develop, and incentivize talented and experienced individuals in the highly competitive employment and commercial real estate markets in which we operate. Our human capital development initiatives include the following:

Training and Education. We support the continuous growth and development of our employees through various training and education programs throughout their tenure at the Company, offering a portfolio of learning experiences to elevate their knowledge, skills, and abilities. During 2025, across all teams and regions, employees participated in various training and developmental experiences, including virtual workshops, self-paced training, in-person sessions, online webinars, and conferences. We also conducted annual goal setting, talent development, and performance assessment processes for all employees.

Employee Health, Wellness, and Compensation. The physical and mental health and well-being of our employees is of central importance to our culture. We evaluate our health and ancillary benefits annually to ensure our benefits package is robust and competitive. We are proud to offer a comprehensive health benefits program that provides employees and their families with care and coverage built around their total health.

Strong Communities and Healthy Planet. We are deeply aware that our properties impact the larger community, and we are proud to help them thrive through our volunteerism and philanthropy initiatives. For the third year in a row, our transformed “Month of Service” program delivered a robust and intentional effort dedicated to give back to the communities in which we operate. The company-wide initiatives provided our employees with opportunities to connect with local organizations and meaningful causes in the spirit of community enrichment and volunteerism. Over 145 employees assisted 13 organizations, dedicating more than 1,200 hours.

Environmental Regulations and Potential Liabilities

Existing Conditions at Our Properties. We conduct Phase I environmental site assessments, following American Society for Testing and Materials (“ASTM”) standards, on all properties before acquisition and update them as needed. These assessments typically include historical and public records reviews, visual inspections, and written reports, but generally exclude subsurface testing unless recommended. Where asbestos-containing materials are identified or suspected, we implement operations and maintenance plans. Some properties have historical contamination from prior uses, such as underground storage tanks or hazardous waste disposal. Remediation may be required by us or may have been performed by prior owners. As of December 31, 2025, we have accrued approximately $70.0 million in environmental remediation liabilities for certain development projects, covering costs such as soil and groundwater remediation and closure activities. Actual costs may vary due to site conditions and project changes. Other than these accrued liabilities, we are not aware of material environmental liabilities. However, unknown or future conditions, regulatory changes, or third-party actions could result in additional liabilities.

Use of Hazardous Materials by Tenants. Some tenants, primarily in life sciences, handle hazardous substances (e.g., diesel fuel, lab chemicals) on about 1-2% of the aggregate square footage of our stabilized properties as part of their business operations. Leases require compliance with environmental laws and indemnification for related liabilities. We are not aware of any material noncompliance or claims related to tenant activities.

Costs and Insurance. We may be liable for remediation costs under environmental laws, regardless of fault. We maintain environmental insurance and may obtain indemnities or holdbacks in transactions, but coverage may not be sufficient to address all liabilities. Environmental costs could adversely affect our financial condition, results of operations, cash flows, and ability to meet obligations to security holders.

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Available Information; Website Disclosure

Kilroy Realty Corporation was incorporated in the state of Maryland on September 13, 1996 and Kilroy Realty, L.P. was organized in the state of Delaware on October 2, 1996. Our principal executive offices are located at 12200 W. Olympic Boulevard, Suite 200, Los Angeles, California 90064. Our telephone number at that location is (310) 481-8400. Our website is www.kilroyrealty.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this annual report on Form 10-K or any other report or document we file with or furnish to the SEC. All reports we will file with the SEC are available free of charge via EDGAR through the SEC website at www.sec.gov. All reports that we will file with the SEC will also be available free of charge on our website at www.kilroyrealty.com as soon as reasonably practicable after we file those materials with, or furnish them to, the SEC.

We use our website 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.

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SUMMARY RISK FACTORS

The following section sets forth a summary of material factors that may adversely affect our business and operations. For a more extensive discussion of these factors, see “1A. Risk Factors” contained in this report.

•Global market, economic, and geopolitical conditions may adversely affect us and our tenants.

•Many of our costs, such as operating and general and administrative expenses, interest expense, and real estate construction costs, as well as the value of our assets, could be adversely impacted by periods of heightened inflation.

•All of our properties are located in California, the Seattle, Washington Metropolitan Area, and the Austin, Texas Metropolitan Area and we may therefore be susceptible to adverse economic conditions and regulations, as well as natural disasters, in those areas.

•Potential casualty losses, such as earthquake losses, may adversely affect us.

•Continuing uncertainty in the office leasing market could adversely affect us.

•Our performance and the market value of our securities are subject to risks associated with our investments in real estate assets and with trends in the real estate industry.

•We depend upon significant tenants, and the loss of a significant tenant could adversely affect us.

•Downturns in tenants’ businesses may reduce our revenues and cash flows.

•A large percentage of our tenants operate in a concentrated group of industries and downturns in these industries could adversely affect us.

•We may be unable to renew leases or re-lease available space.

•We are subject to governmental regulations that may affect the development, redevelopment, and use of our properties.

•Epidemics, pandemics or other outbreaks, and restrictions intended to prevent their spread, could adversely impact us.

•We face significant competition, which may decrease the occupancy and rental rates of our properties.

•In order to maintain the quality of our properties and successfully compete against other properties, we must periodically spend money to maintain, repair, and renovate our properties, which reduces our cash flows.

•We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties.

•Our business is subject to risks associated with climate change.

•We are subject to environmental and health and safety laws and regulations, and any costs to comply with, or liabilities arising under, such laws and regulations could be material.

•Real estate assets are illiquid, and we may not be able to sell our properties when we desire.

•We may be unable to complete acquisitions and successfully operate acquired properties.

•There are significant risks associated with property acquisitions as well as development and redevelopment.

•We face risks associated with the development and operation of mixed-use commercial properties.

•The actual density of our undeveloped land holdings and/or any particular land parcel may not be consistent with our potential density estimates.

•Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition, and disputes between us and our co-venturers, and could expose us to potential liabilities and losses.

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•We own certain properties subject to ground leases and other restrictive agreements that limit our uses of the properties, restrict our ability to sell or otherwise transfer the properties, and expose us to the loss of the properties if such agreements are breached by us, terminated, or not renewed.

•We may invest in securities related to real estate, which could adversely affect us.

•We face risks associated with short-term liquid investments.

•Our property taxes could increase due to reassessment or property tax rate changes.

•Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting.

•We face risks associated with perceived or actual security breaches, cyberattacks, cyber intrusions, or other significant disruptions of our information technology ("IT") systems, operational technology ("OT") systems, networks and related systems, including those of our third‑party service providers.

•We face risks associated with compliance with ever evolving federal and state laws relating to the handling of information about individuals, which involves significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability, negative publicity, and/or an erosion of trust, which could materially adversely affect us.

•Loss of key executive officers or our inability to successfully transition key executive officers could harm our operations and financial performance, and adversely affect the quoted trading price of our securities.

•We could be adversely affected by labor disputes, strikes, or other union job actions.

•We may not be able to meet our debt service obligations.

•The covenants in the agreements governing the Operating Partnership’s unsecured revolving credit facility, unsecured term loan facility, and note purchase agreements may limit our ability to make distributions to the holders of our common stock.

•A downgrade in our credit ratings could materially adversely affect us.

•We are not limited in our ability to incur debt.

•An increase in interest rates would increase our interest costs on variable rate debt and new debt, and could adversely affect our ability to refinance existing debt, conduct development, redevelopment, and acquisition activity, and recycle capital.

•Our growth depends on external sources of capital that are outside of our control and the inability to obtain capital on terms that are acceptable to us, or at all, could adversely affect us.

•Our common limited partners have limited approval rights, which may prevent us from completing a change of control transaction that may be in the best interests of all our security holders.

•There are restrictions on the ownership of the Company’s capital stock that limit the opportunities for a change of a control at a premium to existing security holders.

•The Company’s charter contains provisions that may delay, deter, or prevent a change of control transaction.

•The Board of Directors may change investment and financing policies without stockholder or unitholder approval.

•We may issue additional common units and shares of capital stock without unitholder or stockholder approval, as applicable, which may dilute unitholder or stockholder investment.

•Sales of a substantial number of shares of the Company’s securities, or the perception that this could occur, could result in decreasing the quoted trading price per share of the Company’s common stock and of the Operating Partnership’s publicly-traded notes.

•Loss of the Company’s REIT status would have significant adverse consequences to us and the value of the Company’s common stock.