Kilroy Realty Corp filed its 10-Q with the SEC, and its figures are now in our data. Revenue over the twelve months to Q3 2026 was $1.09 billion, which fell 3.6% on the year before. That growth rate was up 0.1 percentage points on the rate a quarter earlier.

What stands out

Reported profit and cash are moving at different speeds. Net income fell 91.2% over the year while free cash flow fell 25.8%.

Capital spending outpaced cash generation. Capital spending rose 41.7%, faster than operating cash flow’s 12.6%, so less of the cash generated was left over.

Growth and profit

The trailing net margin was 2.6%. Net income over the twelve months was $28.6 million, which fell 91.2% on the year before.

Cash flow

Operating cash flow over the twelve months was $494.1 million, down 12.6% on the year before. Capital spending was $156.5 million, or 14.4% of revenue. Free cash flow, operating cash flow less capital spending, was $337.7 million, down 25.8% on the year before. Free cash flow was 31.1% of revenue (the free-cash-flow margin), down 9.3 percentage points from a year earlier. The average diluted share count fell 0.8% over the year.

In context

Today’s free-cash-flow margin of 31.1% is higher than 11% of the company’s own past quarterly readings, which have ranged from 28.5% to 46.3%. Today’s twelve-month revenue growth rate of −3.6% is higher than 3% of the company’s own past quarterly readings, which have ranged from −3.8% to 16.3%.

Guidance

The company gave its full year 2026 guidance for Nareit Funds From Operations (FFO) per diluted share/unit (adjusted): $3.55 to $3.59. The company raised its Full Year 2026 Range as of October 2026 guidance for Net income available to common stockholders per share - diluted: $0.23 to $0.27. The company gave its full year 2026 guidance for Average full year occupancy excluding KOP 2 for excluding KOP 2: 80.75% to 81.25%. The company gave its full year 2026 guidance for Same Property Cash Net Operating Income (NOI) growth for Same Property: 0.75% to 1%.

What it means for value

In our model, growth 5 percentage points lower would lower the value by 25.6%, and 5 percentage points higher would raise it by 33.7%. A free-cash-flow margin 1 percentage point lower would lower it by 2.4%.

What to watch

The next filing will reveal whether the divergence between net income and free cash flow continues. It will also show if capital spending remains elevated relative to operating cash flow. Finally, it will indicate if the free-cash-flow margin stabilizes or trends further from its historical range.