Welcome to the Kilroy Realty Corporation 1Q25 earnings conference call. My name is Harry, and I'll be your operator today. All lines are currently in a listen-only mode, and there will be an opportunity for Q&A after management's prepared remarks. If you would like to enter the queue for questions, please dial STAR followed by one on your telephone keypad. In the interest of taking questions from as many of you as possible, we respectfully ask that you limit yourselves to one question and one follow-up per person. I would now like to hand the conference over to Doug Bettisworth, Vice President, Corporate Finance. Thank you. Please go ahead. Good morning, everyone. Thank you for joining us. On the call with me today are Angela Aman, CEO; Jeffrey Kuehling, EVP, CFO and Treasurer; and Eliott Trencher, EVP, CIO. In addition, Justin Smart, President; and Rob Paratte, EVP, Chief Leasing Officer, will be available for Q&A. Please note that some of the information we will be discussing during this call is forward-looking in nature. Please refer to our supplemental package for a statement regarding the forward-looking information on this call and in the supplemental. This call is being webcast live on our website and will be available for replay for the next eight days. Our earnings release and supplemental package have been filed on a Form 8-K with the SEC, and both are also available on our website. Angela will start the call with a strategic overview and quarterly highlights. Eliott will provide a transaction market outlook, and Jeffrey will discuss our financial results and provide you with updated 2025 guidance. We will be happy to take your questions. Angela. Thanks, Doug, and thank you all for joining today's call. Despite an environment defined by volatility and macroeconomic uncertainty, I'm pleased to report on a positive start to 2025 with solid leasing activity executed during the quarter and encouraging forward-leasing indicators across our portfolio. Office demand in our markets continues to rebound as we benefit from the ongoing solidification of return-to-office mandates, recent meaningful improvements in the health, safety, and vibrancy of some of our most important sub-markets, and materially growing demand from the burgeoning AI industry. San Francisco best represents the intersection of these important trends. The rapid expansion of new AI business formation and growth in the city of San Francisco, combined with recent RTO mandates from major employers in the market and a crime rate that is now the lowest in 23 years, have all contributed to growing foot traffic and the reactivation of major office corridors in the city. During Q1, we saw signs of this positive momentum playing out in our portfolio with the execution of a nearly 60,000 sq ft lease with a technology company at our 201 Third Street asset, representing our largest lease execution in the city since 2019. In addition, during the period, we also experienced a 60% year-over-year increase in tour activity in our San Francisco portfolio, providing strong visibility on the future pipeline. As discussed on prior calls, we have also seen some large, well-established AI users expand into other West Coast markets in the ongoing search for high-quality talent. As an example, during the first quarter, we signed a 34,000 sq ft expansion of a 9,000 sq ft data analytics and AI tenant that originally took occupancy just last year at our recently redeveloped West 8th asset in Seattle. This transaction represents a common theme in AI leasing. Tenants are being rational and disciplined as they initially lease space while placing a high priority on landlords who will work with them to accommodate future growth needs. Often, as in this example, anticipated future growth is materializing quickly as these businesses rapidly scale. Across the entirety of our office portfolio, the forward-leasing pipeline continues to expand in size and improve in quality. During the first quarter, we saw a 40% year-over-year portfolio-wide improvement in tour activity, despite the increase in volatility that defined the first few months of this year. Although it's reasonable to question if recent headlines will impact the pace of future leasing activity, we have to date seen a de minimis impact on transaction volume or velocity. Turning to life science, the industry entered 2025 with a combination of hope related to the economic and market backdrop for the sector and caution on the policy and regulatory outlook. Since then, market volatility has dampened some enthusiasm around a return of public market financing for the space, while the policy and regulatory outlook has proven more complicated than originally anticipated. That said, the scope of the opportunity for the life science sector remains unprecedented, and recent messaging from the newly appointed FDA Commissioner that emphasized a commitment to protecting innovation and maintaining a science-based approach to regulation has been broadly encouraging. While there's little question that the sector will need to continue to adapt to a rapidly evolving financial and regulatory climate, consistent with what we have seen play out on the office side, there has been, to date, no discernible impact on life science leasing momentum in our portfolio. During Q1, at our KOP Phase II development project in South San Francisco, we continued to experience meaningful tenant engagement, supported by the project's differentiated design, high-quality construction, broad amenity offerings, and importantly, scale, which provides confidence in our ability to meet the ambitious future growth objectives of many of these prospects. We have advanced our discussions with several potential tenants and are actively working with them on space plans and pricing. Active demand requirements currently include tenants interested in our spec suites, as well as several users in discussions for full floors or multiple floors on the campus. We understand and appreciate the attention and focus that this project continues to receive from the investment community, and we will provide timely updates on the status of lease-up when they are available. As Eliott will cover in a moment, we remain very active on the capital allocation front as we work towards monetizing those parcels in our future land bank with the highest and best use outside of the company's core competencies. Last night, announcing that the first phase of our Santa Fe Summit land parcel disposition is now under contract. In addition, we are also evaluating a number of operating property dispositions where we can achieve attractive valuations and advance our broader strategic goals for the portfolio. As we realize proceeds from these efforts, we will evaluate the full spectrum of redeployment opportunities, including acquisitions, leverage reductions, and/or stock buybacks, appropriately balancing economics, future growth plans, and balance sheet strength. I'm also pleased to highlight that in April, we published our annual sustainability report, introducing new ambitious goals that we hope to achieve by 2030 across a wide range of important environmental and social topics. Corporate responsibility is embedded into our culture at Kilroy, and I am excited about the significant milestones that we as a team are committed to realizing over the coming years to maintain our leadership in this important area. Looking ahead, our focus remains on staying agile, investing in our tenants, portfolio, and platform, and maintaining superior financial and operational flexibility. I want to thank the Kilroy team for their hard work and dedication throughout a challenging start to 2025, particularly for our Los Angeles-based team that continued to execute despite significant disruption associated with the January fires, and for continuing to respond to change with courage and innovation. Kilroy is well-positioned to execute on our near and long-term goals and to capitalize on the exciting trends playing out across our West Coast markets. Eliott? Thanks, Angela. Office sales volume in the first quarter was roughly flat year-over-year. That said, there is a wider array of capital pursuing deals, which can generally be grouped into three buckets: institutional, high net worth, and users. Institutional capital pulled back the most when rates increased in 2022 but has returned in recent quarters. For example, 300 Howard Street, a vacant 400,000 sq ft building in San Francisco, was recently recapitalized by two institutional groups for $111 million, or $265 per sq ft. The price per pound for this building is consistent with other trades of vacant properties in downtown San Francisco, but the transaction is meaningful for the city since it is the first standalone deal over $100 million since 2022. Furthermore, the recap is a great endorsement from sophisticated investors that the changes in the city are tangible and putting San Francisco on the right track. Additionally, users have been selectively buying office buildings over the past few years, filling a void in the market. The latest example is LendingClub, who recently went under contract to acquire 88 Kearny Street in San Francisco for $75 million, or roughly $320 per sq ft. The significance of this trend is that it reinforces the importance of and commitment to the office and highlights that companies place value in office buildings beyond what investors are currently underwriting. While both of these transactions are in the city of San Francisco, there are similar dynamics playing out across all of our markets with notable activity increases in Silicon Valley and Seattle, Bellevue. Turning to our land sites, we continue to work on maximizing value across the pipeline. As previously discussed at the Flower Mart in San Francisco, value maximization will come from both creating optionality in the ultimate use and optionality in the phasing of execution. To that end, we continue to work through our internal process, evaluating alternatives, and are hopeful of getting a warm receptivity from the new growth-oriented leadership at the city. There is still more work to be done, and we will provide further updates as appropriate over the coming quarters. The second way we are working to maximize value is through select sales. As Angela mentioned, we signed an agreement to sell a portion of our Santa Fe Summit site in San Diego for a gross price of $38 million. The sale covers five of the 22 acres, and the deal is scheduled to close upon the receipt of entitlements, which we estimate to be in 2026. We remain in active negotiations on multiple other sites in Southern California and continue to be on track to generate gross proceeds inclusive of this initial sale in excess of $150 million. As previously discussed, we anticipate the future land sales to have elongated closing timelines with proceeds to be realized over the next few years. With that, I will turn the call over to Jeffrey. Thanks, Eliott. Before we dive into quarterly results, I want to spend a few moments highlighting the enhancements we made to our disclosures this quarter. First, we provided additional details around the individual components of rental income. The added context highlights the strength of our operating portfolio by more readily identifying drivers of our rental income stream. Second, we added a reconciliation from cash NOI to total NOI. We hope the schedule provides a more intuitive view of our business and visibility into the earnings impacts of non-recurring items, specifically items like restoration and settlement income. Finally, we introduced an additional retention statistic that highlights the effect of direct leases executed with in-place subtenants. The new metric acknowledges where we've eliminated downtime and maintained occupancy by retaining the in-place subtenant. In the first quarter, the retention rate, including subtenants, was almost 1,500 basis points higher than our base retention rate. For comparison, our 2024 retention rate, including subtenants, would have been 42%, almost 1,100 basis points higher than our base retention rate. Now, turning to the first quarter, FFO was $1.02 per diluted share, and cash same property NOI declined 160 basis points year-over-year. During the period, we delivered cash same property base rent growth of 90 basis points despite a 300 basis point decline in average occupancy, reflecting the strong contractual rent escalations embedded throughout our portfolio. Occupancy ended the quarter at 81.4%, down from 82.8% at year-end. On our last earnings call, we discussed the known move-outs of several larger tenants in the first quarter, totaling 216,000 sq ft. The one meaningful variance from our previous expectations was the timing of DermTech downsize and renewal. The 110,000 sq ft lease expired in March and is shown as a month-to-month expiration on the lease expiration schedule in the supplemental as of March 31. In April, the downsize and renewal was executed, resulting in an 81,000 sq ft move-out in the second quarter. First quarter GAAP re-leasing spreads were - 15.8%, while cash releasing spreads were - 23%. Releasing spreads were impacted by a single large transaction in which we invested minimal capital to secure a three-year lease with an existing subtenant. The shorter lease term provides us with the opportunity to reset rents earlier when the market recovers. This deal resulted in a strong net effective rent. However, the minimal capital commitment led to lower base rents and spreads. Excluding the impact of that single lease, cash releasing spreads would have been approximately - 8.3%, which is consistent with last quarter. Turning to guidance, we're reaffirming our four-year guidance, including FFO, cash same property NOI growth, and average occupancy expectations. The midpoint of our range implies a modest deceleration of FFO, consistent with our average occupancy assumptions. As a reminder, the midpoint of guidance also assumes the cessation of interest capitalization at the Flower Mart in the second half of the year. As it relates to the balance sheet, Kilroy has a significant unencumbered asset base, a well-laddered debt maturity schedule, and substantial liquidity, which together create tremendous financial flexibility and position Kilroy to be nimble and responsive as we navigate a dynamic capital allocation environment with the coming quarters. With that, we're happy to answer your questions. Operator? Thank you. If you would like to ask a question, please dial star followed by one on your telephone keypad now. If you change your mind and would like to exit the queue, please dial star followed by two. When preparing to ask a question, please ensure that your phone is unmuted locally. Finally, please limit yourselves to one question and one follow-up per person. Our first question today will be from the line of Michael Carroll with RBC. Please go ahead. Your line is open. Yep, thanks. I got on a little late, so I'm not sure if I missed this or not. Angela, can you provide an update on how you're viewing the Flower Mart site right now? Maybe can you provide some potential options that Kilroy might have for that specific site and what you're analyzing today? Sure. Yeah, Eliott talked about this a little bit in his prepared remarks, but all we can say at this point is consistent with what we said last quarter. The exercise we're going through is intended to explore a wider range of uses for the Flower Mart site than what was originally programmed, and also to ensure that we can execute it in a way where it can be phased and we can be responsive to the market as it continues to improve and recover in San Francisco. As I mentioned earlier, we're very bullish about what we're seeing in the city of San Francisco from a leasing standpoint and from a safety and vibrancy standpoint, particularly just over the last few months. We are working hard on the Flower Mart site, and Eliott mentioned we're very hopeful that we'll get a warm receptivity from the new administration. Maybe can you talk a little bit about the timing? I mean, I'm not sure if that is visible right now, but I mean, is this a—when we're making these decisions, is it within the next year, or how long should we expect this kind of analyzation to take place? Yeah, I think we're actively underway on a number of different things as it relates to the site and having those conversations beginning and expect to continue to have those conversations with the city over the course of this year. There are a lot of different paths that this process could take. Excuse me, that makes it a little difficult to give perfect visibility on what we think the timing of an actual conclusion here is on the Flower Mart site. I would remind you that what we had incorporated into guidance was an assumption that at some point in the second half of the year, we stop capitalizing on the Flower Mart. To the extent we have more clarity on which of the various paths we're on at that point, we can update that assumption as appropriate. The next question today will be from the line of Jana Galan with Bank of America. Please go ahead. Your line is open. Thank you. Good morning. Just hoping you could comment a little bit more on the level of leasing this quarter. Maybe some was pulled forward in Q4, or perhaps the fires in L.A. impacted the leasing sales cycle there. Just any kind of commentary around what the forward pipeline looks like today, maybe geographically. Thank you. Yeah, I'll make a couple of comments and then turn it over to Rob to give a broader overview of kind of the pipeline and how it sits today. I would say the activity in the quarter represented a few things. I think you're right to highlight that Q4 was an exceptionally large leasing volume quarter for us. Without question, there were a couple of deals in that pool that would have otherwise occurred in the first quarter but ended up getting pulled forward into the fourth quarter. Positive in terms of our ability to get occupancy turned on as quickly as possible, but certainly impacted quarter-to-quarter leasing activity to some extent. We also had a couple of deals in the pool for the first quarter that just slipped into the first week of April. I think if those deals had happened just a week earlier, our leasing volume would have been a healthy increase on a quarter-over-quarter basis, excuse me, a year-over-year basis, relative to the first quarter of 2024. We feel really good about the pipeline and where it sits and the work that the team has done really across regions to rebuild the pipeline off of that really significant volume in the fourth quarter of last year. I'll let Rob touch on that. Yeah, I think, Jana, just to add to what Angela said, everything is—what's going on? I mean, our leasing teams are fully engaged and are very energized, working knee-deep in a lot of transactions. As Angela said, some quarters we are lucky and we pull in business from the forthcoming quarter and get it done like we did in Q4. In some quarters like Q1, some of it spilled into Q2. Our pipeline, I think the thing that's really important to know is that our leasing teams really focused on rebuilding the pipeline. We have numerous transactions right now that are promising. I think it's going to be a matter of time before it plays out. When you really look at the demand characteristics in our different markets, they do operate in different modes at different times, which is sort of a good thing for Kilroy. Right now, San Francisco is very active. It has had its first quarter of net positive absorption in five years, according to CBRE. That is a very promising trend. We have seen that activity show up in our portfolio, which is pretty impressive. Bellevue, Washington, again, very strong market. Oftentimes, we wish we had more space there to lease. I think that Seattle itself is benefiting from some of the same things Angela said in her script in terms of the political environment, law enforcement, and cleaning up the streets. We are seeing at West 8th quite a good uptick of activity from a variety of tenants. To your point in the latter part of your question, L.A., particularly on the West Side, has been slower. I think part of that is a natural disruption from the fires. We have seen a slight uptick in tour activity, so we're hoping that that trend continues. L.A. has had, as in last quarter, L.A. just had more issues surrounding it than other markets. However, I will say that Long Beach, our asset, and Long Beach, Aero continues to perform quite well from a leasing perspective. The last two markets, San Diego and Austin, are doing fine. We have good pipeline in both those regions. Yeah, I just reiterate also the tour activity we mentioned in the prepared remarks. We're up 40% portfolio-wide and, importantly, up 60% in the city of San Francisco. We really are seeing good momentum build. I think the team is working hard to take advantage of that, capitalize on it. Thank you. Very helpful. That's it for me. The next question today will be from the line of Steve Sakwa with Evercore ISI. Please go ahead. Your line is now open. Yeah, thanks. Angela, I just wanted to come back to the leasing pipeline and the deal activity you mentioned that slipped. I guess, one, could you just kind of actually quantify what the leasing pipeline is and what level of deals kind of slipped, I guess, from Q1 into April? Yeah, I think the pipeline is up something like 15% on a quarter-over-quarter basis. We do not typically talk about the absolute size of the pipeline, but you have seen really healthy momentum kind of rebuilding that pipeline. I think tour activity tends to be one of the most important leading indicators in terms of forward lease activity. We are seeing really good progress there, as I mentioned, with a 40% portfolio-wide improvement, really driven by the city of San Francisco, but certainly more broad-based as well. Across the different markets, as Rob was highlighting, we have got different dynamics playing out in many of our markets. I think across the board, seeing that improvement in return to office across many of our metrics, seeing the last election results, and the way that several of our cities are improving from a health, safety, and vibrancy perspective, all of that is certainly contributing to the pipeline. Really in San Francisco and to some degree, Seattle, Bellevue, a little bit in San Diego as well, we're seeing AI as a real driver of leasing activity and momentum more broadly across the board. I'm sorry, but were you able to quantify the April—I think you said some deals that you thought would get done in Q1 kind of slipped into Q2. Is there a quantification you can put around that? Yeah, there was probably at least, I'm going to say, 50,000 sq ft-60,000 sq ft of deals that just slipped into the first quarter of April. Again, the pipeline at March 31, the forward pipeline, was about 15% of where it had been at 12/31. The next question today will be from the line of Seth Bergey with Citigroup. Please go ahead. Your line is open. Hi, this is Sydney McEntee for Seth. On the sale of land at Santa Fe Summit for $38 million, is the plan for a second phase of the sale of the other 17 acres? More broadly, how are you thinking about monetizing the land bank versus other existing operating portfolio dispositions? Hey, Sydney and Eliott. We are evaluating a few different sales that I referenced in the prepared remarks. That is one of them. The way we have sort of thought about the land sales is to kind of focus on where we think that there is appetite from third-party capital. Today, that is really around land where there is a higher and better use outside of office and life science. It also kind of aligns well because, frankly, that is our core competency. If we have well-located land, that should ultimately go towards office and life science. Those are sites that we ought to be developing when the time is right, which is not yet. That is how we have thought about the prioritization of the land bank. The second piece of your question, anything that we do in terms of monetizing the land bank does not preclude us from looking at operating property sales. We are looking at some of those as well. Similarly, the strategy there is to kind of look at where we think that there is appetite from third-party capital, where we think that there is good value. That value is—and our view of what the outlook of that asset or that market will be is less optimistic than maybe where third-party capital is valuing it. That is how we have tried to prioritize what assets we look to monetize. Great. Thanks. One more for me. In terms of renewals, are you still seeing companies reduce space on renewals, or have you seen more of a trend of expansions like the one at West 8th? I thought I—if I misunderstood the question, I apologize. In terms of renewals, we're seeing, for the most part, companies retaining the footprint they've had. I know you are asking about renewals, but in many cases, in San Francisco particularly, new companies coming to market are actually looking for more—the space requirement changes, particularly for AI companies where flexibility is very important to them. That is how, as Angela mentioned in her remarks, the large deal that we did in San Francisco was the result of being able to accommodate a dynamic sort of growth pattern they have. On a renewal basis, it's much better than it was a year and a half ago where most companies were trying to adjust 5% or 10%. We're seeing people stay in the same footprint. The next question will be from the line of Caitlin Burrows with Goldman Sachs. Please go ahead. Your line is open. Hi, good morning. Maybe just—or yeah, I think it's morning there. Just a question on the capitalized interest point. It seems like the two big movers to capitalize interest over the next 12 months will be KOP2 and Flower Mart. Maybe just starting with KOP2, is the right way to think about it the $828 million that you've incurred so far, that could go up to, it seems like, roughly a billion, that that will come off in early 2026? And then similarly for Flower Mart, I'm wondering, since it's not specifically listed as how much you've spent on it, I don't think, how much—or if there's a way you could quantify better what that impact could be. Sure, Caitlin. This is Jeffrey. You nailed it with KOP2. It will come off in early 2026. Last quarter, we did touch on some of the individual components for the Flower Mart. There is about $7 million of capitalized interest per quarter and an additional $1 million of carry costs for the parcel, such as insurance or taxes. Okay. Yeah. Got it. And then maybe just in terms of the types of users that are active, you guys have talked about AI a bunch, which is great to hear. I know finance is not the biggest exposure for you guys. But I guess, could you talk a little bit about the types of users you are talking to and if, I guess, who is most active outside of AI and how that has been evolving over the past couple of months? Yeah, Caitlin, this is Rob. I'll talk about a couple of markets. If you look at Bellevue, for example, there is an AI component to it. Our transaction in Bellevue was the third largest of the quarter in Q1. There are other uses, such as private services, law firms. Tommy Bahama was a large renewal that happened in South Lake Union, a retailer. That was office space, not retail space. Lululemon being another retailer that used office space. In San Francisco, the most notable additions, aside from technology, were really JPMorgan and their large renewal with the city and Morgan Lewis moving to the Transamerica Pyramid. I think just one side note that is really, I think, compelling about the change in San Francisco related to JPMorgan, through a combination of their expanding business, it is a key market for them. The combination of their expanding business and philanthropy, on their own account, they're saying that they're contributing up to $1.2 billion to the economic growth and prosperity of San Francisco. We're seeing more companies doing that. This tracks exactly with what Angela was saying about the improving environment. Professional services have always been part of San Francisco, and you're going to continue to see that, I think, particularly with the large law firms that are either wanting to come here for technology or just other specific business. The next question today will be from the line of Nick Yulico with Scotiabank. Please go ahead. Your line is open. Hi, thanks. I guess just going to the occupancy guidance range for the year. If we adjust for Derm Tech happening in second quarter or not first quarter, it looks like you're sort of right in the middle of that average occupancy guidance right now with that impact. Can you just maybe flesh out a bit what the assumptions are to get to bottom or high-end of the range in terms of what does that mean for leasing activity, picking up or not, and any major known move-outs still expected? Thanks. Yeah, thanks, Nick. This is Jeffrey. You nailed the Derm Tech comment. There's one more lease that looks like it might be a Q2 effect, 23andMe in South San Francisco, about 65,000 sq ft. That's contemplated within our guidance range. Obviously, if that happens in the quarter, you'll see the occupancy move down just a bit. When we think about the third quarter, I just want to remind everyone that we do have two development properties that will be coming into the stabilized pool, which will affect occupancy and is included within our guidance range. That will bring it down a touch in the third quarter as well. When we get to the fourth quarter, our projections are pretty stable at that point. As you see with the signed but not occupied range this quarter, there is a bunch of rent starts that are coming online at the end of the year. You will see the final number kind of bounce around, give or take, on how many of those we get started. Yeah, I think the other thing to note is just Rob did a good job on hitting, particularly in San Francisco, which is our largest market, the degree to which tenants are looking for plug-and-play space and flexibility and the ultimate footprint and use and really working to get into space as quickly as possible. That is where our spec suites program is particularly effective. We do have a number of market-ready spec suites available in that market, as well as across other markets as well. To the extent, over the next quarter or two, we really can accelerate leasing activity, we've got a shot at getting some of those in occupancy by year-end, which would drive us to the upper end of the range. That's really the focus in terms of, or the variability in terms of what could get us to the top end of the range. But even just based on things that are signed to date, we expect Q4 to be a positive net absorption quarter. Okay. Yes. Thanks. That's helpful. I guess just then following up too on the spec suites at KOP Phase II. It sounds like maybe that getting some leasing there could be in the upper end of the guidance range. Is that right? Also just sort of a timing standpoint, I mean, if you were to get any sort of lease signing done, how fast that could actually hit occupancy in the spec suites. Thanks. Right. When Jeffrey mentioned the redevelopment assets that are coming into the stabilized occupancy pool in Q3, those are redevelopment properties, not KOP. KOP would not come in until 2026. Lease up at KOP is not a driver of the occupancy guidance we have given or our performance within that range. I do want Rob to spend a minute, though, just talking a little bit and expanding on the momentum we have seen at KOP, which has been notable and, as I mentioned earlier, has included activity both on the spec suites as well as full-floor, multiple-floor uses on the campus. Sure. Hi, Nick. We continue—we've said this before, but we continue to entertain steady interest and activity from early-stage and mid-emerging science companies. We also still see a variety of users in tech and fintech, but really the predominant user is related to life science. I can't really speak to what others have said or the macro environment, but we're very busy on the ground at KOP. It's actually pretty exciting. We've got ongoing conversations going with two larger users right now, both of whom are in need of scale and a path to future growth. Obviously, our campus and the land we have plays into that very well. I would say also, just giving more color, that we're commencing space planning and design planning dialogue with several of these users. With a couple, we're into detailed cost estimation analysis with a variety of single-floor users. Those are really—I am giving that color because those are really important precursors to the next step of getting to either a completed LOI or a lease. We do have a lot going on. I think the macro situation does not help expedite getting things signed, but we have people that are very focused and have not seen a pullback to date. Lastly, to your question to Angela, the spec suites, by building those and marketing them now, we actually have quite a bit of activity on those. That is a good 2025 possibility. The next question today will be from the line of John P. Kim with BMO. Please go ahead. Your line is open. Thank you. Just following up on KOP Phase II, we've seen this quarter that you were a little bit more, I would say, aggressive on lease spreads and higher TIs. Is that something that you're doing now at KOP Phase II to help stimulate demand as you look for anchor tenants? Yeah. I want to first address sort of the question about spreads and leasing activity that was executed in the quarter, and then I'll let Rob kind of touch again on the leasing strategy at KOP2. Just remember what Jeffrey mentioned in his remarks, that really the driver of the negative spreads during the quarter, the most significant driver of the negative spreads was one larger lease we signed. It was a direct deal with an existing subtenant that had very little capital in it. That drove, as a result of having no capital and comping off of a deal that had a full capital market TI package, that optically looks like a lower spread, but as Jeffrey mentioned, was a very positive net effective rent. I think the right decision for that building. It's also a three-year lease, which gives us the ability to get another bite at the apple and reset rents in a few years as the market continues to improve. I think across the board, that was the right decision, though obviously contributing to a negative spread number in the quarter. I think if you just look at second-generation leasing, I think that the TI LC number was pretty consistent, actually, with where we had been throughout all of 2024. If there was any increase, it was only in first-gen space, and it's just a function of the build-out of those tenants. I think a very small pool there as well. Sure. Kudos to you, John, on your Cinco de Mayo comment yesterday. That was clever. Back to KOP specifically, we have a variety of offerings, whether it's shell or whether it's the existing spec suites. We have a variety of sizes in the spec suites. We have a really good handle on what the competition's doing. We price everything. We're going aggressively after tenants based on a variety of factors, meaning who's the tenant, when's their occupancy or expected occupancy, how much space do they need. There are other factors. I don't want to go too much into what our strategy is because I know a lot of people listen to this call, but we're seeing every transaction that's in the market. We're talking to a lot of folks right now. As I said earlier to Nick, I think that we're working on some really promising transactions. Yeah. I think, obviously, it's a very competitive environment right now, given the amount of supply in South San Francisco. We have an incredibly high-quality, well-amenitized project. I think the biggest thing that's been driving forward some of the conversations we've been having on the leasing side at KOP2 really has been the scale of our project and our ability to accommodate future growth for a lot of these tenants. That's been much more important in the conversations, or at least as important as just economics and the competitive environment there. Maybe a follow-up for Rob. Can you rank your market in terms of where you see the most leasing activity and the likelihood of occupancy growth? I noticed this quarter, Seattle and Austin had an increase in lease rates. I do not know if that is representative of what you are seeing on the ground with your pipeline. Yeah. I mean, I think Bellevue is our strongest market, most activity. San Diego is also extremely strong. The problem we have at One Paseo is we run out of space quickly. But we've had some recent expansions, and it continues to be our second strongest market. Austin rates maintain, and we're still in the high 40s to low 50s, triple net, depending on the other parts of the package, the concessions and things like that. But those markets are all very promising. I think San Francisco, even there is still a dichotomy between top-tier rents and the lower-tier rents. Because the product we have right now and the reason we're getting activity on it is it's really well-suited to these emerging technology companies, both AI and regular tech. On one hand, at projects like 201 Third, we have a lot of tech interest. At projects like 303 Second, we have a mix of technology and more FIRE category, I would say, tenants. And 100 First sort of has that mix as well. I think that San Francisco is just going to take time. We're seeing positive movement on sublease space. It's now down to 6 million sq ft. That's partly absorption and partly converting to direct space. We have, as I said earlier, positive absorption for the first time in Q1. Notably, demand is at 7 million sq ft right now. I think that I can't predict rent growth there, but I think we're seeing better circumstances than we did not that long ago. Yeah. Just add to that. One thing we talked about on last quarter's call was the opportunity embedded in the portfolio from just some of our highest quality vacancies, which included West 8th in Seattle, Indeed Tower in Austin, and 2100 Kettner. The improvements in the lease rate you mentioned in Seattle and at Indeed really were those and in Austin were really two of those three assets. I would also say one of the leases that slipped from late March into early April was at 2100 Kettner. We are making really good progress at leasing up at, I think, very compelling economics, some of the highest quality vacancies in the portfolio, and putting us in a position to realize that growth as quickly as possible. The next question will be from the line of Dylan Burzinski with Green Street Advisors. Please go ahead. Your line is open. Hi, morning. Thanks for taking the question. I guess just going back to some of the comments made on KOP Phase II, are you guys able to sort of give a square footage of the overall pipeline that is sort of touring or looking at that space today? Maybe if you can comment on sort of the two larger users that are interested, just how big of a potential space needs those are? Yeah. I mean, I guess to start with that, the second part of your question first. I mentioned in the prepared marks, we've got some users looking at the spec suites. We have a number of users looking at spec suites, and those generally range from 15,000 sq ft- 25,000 sq ft. Floor plates at KOP2 are in the 40,000 sq ft-44,000 sq ft range. So when I mention other larger tenants exploring full-floor uses or multiple-floor uses, I would say it's somewhere between one and three floors at other parts of the campus. That's helpful. I guess just maybe touching on sort of net effectives, especially in San Francisco. Eliott, I think you alluded to that deal that Blackstone and DivcoWest did. As you start to see potential bases reset across your various markets, do you guys sort of view that as a potential for a further step down in terms of net effective rents, given the much lower bases that these buyers are coming in at? I think it's a little early to say. Without talking about any individual owners' bases specifically, I think that there's a balance between where someone has sort of bought a building and then what kind of capital they're intending to put into the building. Certainly, some of the trades earlier in this cycle, which had a lower basis, our view was those buildings needed a fair amount of capital. It will be interesting to see how different folks' business plans play out, what the total amenity offerings are, and how they kind of contrast to market to see what that means in terms of tenant preference. The next question today will be from the line of Peter Abramowitz with Jefferies. Please go ahead. Your line is open. Yes. Thank you for taking the question. Just wanted to ask, have you commented on DirecTV and their expiration 2026 and 2027? And can you kind of handicap what you think the likelihood of a renewal is? I won't handicap it, but we have discussions with them. They've been a long-term tenant. I don't have much more to say right now. The 2027 expiration is one we're focused on, as well as 2026. Yeah. I think that, yeah, the team over the last couple of quarters has done a great job at trying to really get ahead of the 2026 expirations and having active dialogue and conversations with really everybody expiring next year. Starting to have those conversations as well with 2027. It is a little bit early on some of the 2027s. Plans for many of our tenants continue to shift and change, particularly as return-to-office policies continue to solidify. Even conversations we had six months ago have changed, I think, for the better in terms of renewal intention over the recent quarters. Okay. That's helpful. Just to follow up on Eliott's comments earlier, I believe he mentioned the possibility of selling operating properties in addition to land. I am just wondering if you could comment on any kind of comparable trades in your markets and if you could give us any more info on maybe markets that you're looking to trim exposure in or characteristics of those assets you might be looking to sell and what you think pricing would be like today. Yeah. We touched on a few comps in San Francisco. Those were for buildings that were much less occupied than market. It is just important when you think about basis to kind of factor that in. As we have thought about our dispos, it is not necessarily catered to a particular strategy of getting out of this market or getting into that market. It is really as we have evaluated each asset and tried to make a determination on how we see the next few years playing out at that particular asset. Then based on other characteristics or qualities, how big the asset is, how much capital it will require, who the likely buyer pool is, trying to make a determination of where we think we can get great execution. Where the concentric circle of something that does not fit in our medium-term strategic plan overlaps with where we think that there is capital that is going to price this efficiently is how we have kind of concentrated on our dispo strategy. Thank you. The next question will be from the line of Upal Rana with KeyBanc. Please go ahead. Your line is open. Great. Thank you. Just on DermTech, their downsizing was communicated on prior calls, but was the result what you expected? What has been the demand on the space that they're giving back? Thanks. I'd say the result is better than we expected. I mean, obviously, keeping them in the whole space would have been better, but the outcome was good for us. We're marketing the remaining space. It's actually a really good building and fitted out nicely. We have seen some activity on it. Yeah. I remember DermTech was a bankruptcy, and so there's new ownership there. It just has taken them a little bit longer than we expected for them to really get their arms around the business and understand what their needs were going to be. I think this was roughly in line with what we had expected. Okay. Great. In regards to the recovery in L.A., how is it progressing? How would you characterize the office demand? Have any requirements shifted at all from potential tenants across the various submarkets? Yeah. LA is such a fragmented large market, meaning there's so many smaller submarkets. If you look at Long Beach, for example, it's actually, as I said earlier, done very well. It's due to the campus. We renovated the campus, and that's paid off. We're located right between LAX, basically, and Orange County. It's a very convenient stop-off point, and there's a lot of business going on between those areas. Hollywood has, for us, we don't have studio space in Hollywood. Hollywood, for us, has had some activity, and it's improved a little bit over the last year or so. We're working on some things that we hope to bring to fruition. I think the West Side, it's a matter of how much space was absorbed in the past. You kind of hit this plateau usually when there's a lot of leasing. There was a lot of big tech leasing on the West Side over the past two years. I think part of that is tenants just either trying to right-size or figure out that they've got enough space. I mean, we're seeing a little bit of thawing. We've had some uptick in tour activity at our assets on the West Side. It's just going to take time. The last thing I'd say is I think the political environment in L.A. is just getting better but a little bit behind where we are in Seattle and San Francisco. Okay. Great. Thank you. The next question will be from the line of Young Ku with Wells Fargo. Please go ahead. Your line is now open. Oh, great. Thank you. I just want to go back to your occupancy guidance commentary. It looks like the redevelopment assets that's coming back online in Q3 with estimated stabilization date in Q3. Are you saying that those are going to be coming back online at 100% lease? How should we think about that? They're not going to be coming on at 100% lease. As we reported in the supplemental this quarter, they are 0% leased. There is some progress that's being made on those. I would assume that, obviously, the full basis goes into the denominator, and there might be some amount of leasing when they stabilize. Okay. When you're talking about estimated stabilization date, how should we think about that? Yeah. The stabilization is basically, it's communicated in the supplemental as Q3. It's not based on hitting a leasing target. It's based on the time since substantial completion of those projects. They will come on in Q3 regardless of what percent lease they're at at that point in time. Gotcha. Thank you for that. And then just one last from me. You talked about DirecTV lease in 2026. How should we think about the LinkedIn lease that's expiring in 2026 also? We have some things going on there that we, I don't want to name tenants, but we have, I guess, explain more about your question because we did announce that we took care of some of that leasing. Yeah. If you remember last quarter, that's our largest expiration in 2026, which is just under 600,000 sq ft. We've announced as of last quarter that we had addressed, I believe, 430,000 sq ft of that. And it's footnoted on the lease expiration page in the supplemental. The next question today will be from the line of Brendan Lynch with Barclays. Please go ahead. Your line is open. Great. Thank you for taking my question. Eliott, entitlements in California can be quite challenging. What do you see as the risk that the Santa Fe Summit site doesn't receive the entitlements that the buyer is seeking? The transaction that we've completed has residential as-of-right use. And that's the reason that this portion was the first portion to be sold. Can't predict how any process will go, but this is something as-of-right we are confident we can do. Okay. Thank you. It sounds like you're a bit tight on capacity in San Diego. What is the prospect of developing the rest of the space at Santa Fe Summit into incremental office space? That's not our expectation. I think, one, development in a lot of markets does not make sense today, and that's why we have not undertaken any kind of development. As I kind of mentioned earlier, the balance of the Santa Fe Summit land site is something that we are evaluating as one of our potential land sales. That area has really transformed. There's been a lot more residential that's come into that part of town. We think there's a higher and better use there. Yeah. To your point, though, I mean, San Diego has been a great market for us. We've performed extraordinarily well, particularly in submarkets like Del Mar, which is what drove the acquisition we did last year to continue to increase exposure and capacity in San Diego and give the team more to lease in that market since it's been going as well as it has. We are certainly interested in continuing to grow that portfolio. This site just does not, to Eliott's point, really is not office or life science are not the best uses for this site. Thank you. The next question will be from the line of Steve Sakwa of Evercore ISI. Steve, please go ahead. Your line is open. Please limit yourself to one question. Hi, Steve. Yes. Just wanted to—hi, sorry. Just wanted to follow up on the land and the sale at Santa Fe Summit. If you do kind of the quick math, the five acres you're selling is, I think, north of $7 million an acre. I realize it's only a piece of that whole land parcel, but it kind of would suggest that maybe there's not impairments and maybe there's even upside. Just trying to think through kind of the value there and maybe how to think about value for the overall land portfolio. I guess what would ultimately precipitate you to kind of think about taking impairments on the land bank? I'll start on that. I think that to Brendan's question, part of why the deal was structured the way it was is because this first phase is as-of-right. The balance of the site is not. There will be a change in use required there if it does go residential. When you think about what that means on a per-acre basis, oftentimes there's a negotiation with a city to effectuate a change in use. It's not an unreasonable starting point, but our expectation is that anything that happens on the balance would not quite be at the per-acre value that we executed on the first phase. As far as the $150 million-plus that we've talked about for land sales in the works, our expectation for those is that they are at or better than where we're carrying them. Thank you. Our next question will be from the line of Caitlin Burrows with Goldman Sachs. Caitlin, your line is open. Please go ahead and limit yourself to one question. Thank you. Disclosure. I was just wondering if you could go through your thinking. My apologies to interrupt. Caitlin, do you mind just starting your question again? Oh, sorry. Thank you. My apologies. We missed the first part of your question. Yes. I know you guys made some updates to your disclosure. I was just wondering if you could go through your thinking on taking out the same-store NOI GAAP trends and the commenced leasing if you thought it was creating confusion or being understood incorrectly. Sure. We tried to just reevaluate the entire package to make sure it was really clear on what the economic drivers of our business were. Specifically, when we're looking at cash versus GAAP NOI, the revenue recognition timing with some of the non-recurring items seemed to be causing a lot of volatility and maybe confusion for understanding our business. We tried to step back and simplify the same property NOI disclosure to make sure that it actually tracked more closely with the economics of the day-to-day business. By expanding kind of the reconciliation between cash and total NOI, we hope that it's much easier to see just how those kind of items flow through the financial statements. As we think about kind of the leases commenced, we think there's a lot of information on kind of the forward-looking part of our business, specifically with the signed but not occupied spreads available, the leases that we executed in the period that we thought gave enough context for people to understand where the business was going from a forward perspective. I decided that that was probably the best disclosure to keep. Thank you, everyone. This will conclude today's Kilroy Realty Corporation 1Q25 earnings conference call. Thank you again for everyone who joined us. You may now disconnect your line.