Kilroy CEO on California prosecutors: “We’re gonna throw these bums out”

For office landlords still fighting pandemic-related headwinds and the threat of remote work, street crime might seem like a secondary concern.

Not so for Kilroy Realty CEO John Kilroy, who on an earnings call this week had pointed words for the chief prosecutors he blamed for the crime waves sweeping San Francisco and Los Angeles.

“We’re gonna clean this up. We’re gonna throw these bums out — at least that’s what we hope will happen,” Kilroy told analysts, journalists and others on the call. “People are fed up.”

The “bums” in question are San Francisco district attorney Chesa Boudin, who is subject to a recall election on June 7, and Los Angeles County district attorney George Gascón, for whom a second recall effort began in December.

Both Boudin and Gascón have come under fire from business leaders and others recently for championing criminal justice reform over law enforcement, and for directing prosecutors to “go soft” on crime. Kilroy Realty has been involved in both recall campaigns, Kilroy Realty executives said Tuesday.

“In both cases, we have people that are not enforcing the laws,” the CEO said.

Reported crimes of all types in San Francisco rose in 2021 compared to 2020, but were still below pre-pandemic levels, police department data shows. Homicides and shootings, however, were up last year, and the Hoover Institution, a conservative think tank, estimates the average San Francisco resident has a 1-in-16 chance of being a victim of a property or violent crime.

Almost all types of crime increased in Los Angeles in 2021, and there were more homicides in the city last year than in any year since 2007.

Kilroy executives on Tuesday described street conditions today in San Francisco and Los Angeles as “terrible,” but said the robberies and rampant drug use have not yet impacted lease negotiations.

“No doubt [those] are very serious matters and considerations, but thus far they haven’t slowed deal momentum,” A. Robert Paratte, executive vice president for leasing and business development, said.

Earlier this week, Robert Pester, Boston Properties’ executive vice president for the San Francisco region, similarly described a groundswell of negative sentiment toward local officials.

“There’s clearly an outcry from the business community that things have changed,” Pester said on an earnings call.

Kilroy Realty owns some 15 million square feet of class A office space, most of it in San Francisco, Los Angeles and San Diego. The company also has space in Seattle, and it entered the Austin, Texas market last year with its purchase of the 730,000-square foot Indeed Tower.

On the Tuesday call, Kilroy signaled that the company would be expanding further in Austin in the coming months, likely via new development, and it has already moved personnel to the city.

“We’ve been very active and looking for the next act in Austin,” Kilroy said. “I think we’ll have something to address with all of you within the next quarter or two.”

Kilroy’s shares rose more than 4% in Tuesday trading after reporting funds from operations for 2021 of $125.5 million, or $1.05 per share, up from $112.7 million, or 95 cents per share, in the year-ago quarter.

Revenue ticked up to $261.1 million from $229.3 million a year ago.

Kilroy’s portfolio was 93.9% leased at year-end, after signing 312,000 square feet during the fourth quarter.

The comments regarding local politics in California came as prominent retail developer Rick Caruso considers a run for mayor of Los Angeles. Kilroy didn’t mention Caruso

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