Kilroy Realty Loses CFO as Occupancy Slides, Guidance Holds
Kilroy Realty reaffirmed its full-year guidance even as it announced the departure of Chief Financial Officer Jeffrey Kuehling and reported stabilized occupancy stuck at 77.0%.
Kilroy Realty (KRC) announced Chief Financial Officer Jeffrey Kuehling departed effective August 11, 2026, with Eliott Trencher, the real estate investment trust's chief investment officer since 2020 and a former CFO from 2022 to 2024, stepping in as interim finance chief and treasurer while Russell Reynolds runs a search for a permanent replacement. The departure was not related to any disagreement over accounting or financial disclosures.
The leadership change landed alongside a reaffirmation of full-year 2026 guidance, unchanged from the outlook the office and residential landlord set in its second-quarter earnings release on July 27. That continuity papers over a portfolio that has been losing ground for two straight quarters. Stabilized occupancy fell to 77.0% as of June 30, 2026, from 77.6% at the end of the first quarter, part of a decline that traces back to 77.6% in the fourth quarter of 2025; the leased rate slipped in tandem, to 81.5% from 82.3%. Those figures were restated without change in the CFO-transition release.
Revenue and earnings tell a similar story of erosion. Second-quarter revenue of $272.4 million was down roughly 6% from $289.9 million a year earlier, following a first quarter that was essentially flat year over year at $270.1 million versus $270.8 million. Net income available to common stockholders fell to $19.9 million, or $0.17 a diluted share, in the second quarter from $68.4 million, or $0.57 a share, a year earlier — a decline of about 71% — after the first quarter swung to a net loss of $19.3 million, or $(0.16) a share, from net income of $39.0 million in the prior-year period. Funds from operations, the REIT industry's preferred earnings measure, declined to $0.92 a diluted share in the second quarter from $1.13 a year earlier, after first-quarter FFO of $0.91 a share came in below the $1.02 a share posted a year prior.
Leasing activity showed a split picture. Re-leasing spreads on second-generation space turned sharply positive in the second quarter, at 27.0% on a GAAP basis and 16.0% on a cash basis, reversing negative spreads of (10.6)% and (16.8)% in the first quarter. Leasing volume moved the other direction, falling to about 376,000 square feet signed in the second quarter from 568,000 square feet in the first quarter, which the company had called its strongest first quarter since 2017.
Kilroy Realty continued to reshape its balance sheet. The company closed an expansion of its unsecured revolving credit facility to $1.25 billion from $1.10 billion and its term loan to $250 million from $200 million, announced June 17, while extending the revolver's maturity two years to July 31, 2030 and the term loan's to July 31, 2031. It also repaid $50.0 million of 4.300% private placement senior notes in April and $200.0 million of 4.350% notes at par in July.
Capital recycling slowed after an active start to the year. The first quarter included the $124.5 million sale of Sabre Springs, the $21.0 million sale of Del Mar Tech Center, and an agreement to sell two residential towers for $202.0 million; the second quarter closed that residential tower sale but disclosed no new dispositions. Share repurchases also went quiet: after buying back 2.4 million shares for $72.7 million at an average of $30.80 apiece in the first quarter, Kilroy Realty reported no buyback activity in either the second-quarter or the CFO-transition release.
The company's board also underwent changes earlier in the year, naming Gary Stevenson chair, adding two directors, expanding to nine members from seven, and disbanding its corporate social responsibility committee — moves disclosed in the fourth-quarter 2025 release but not referenced again in subsequent quarterly filings.