KILROY REALTY CORP - FORM 8-K - EX-99.1

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Exhibit 99.1

Fourth Quarter 2010 Supplemental Financial Report

Some of the enclosed information presented in this supplemental and on the Company’s February 1, 2011 conference call is forward-looking in nature, including information concerning project development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels, our ability to complete and successfully integrate pending and recent acquisitions, and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise, except to the extent it is required to do so in connection with its ongoing requirements under Federal securities laws to disclose material information. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Risk Factors” in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2009. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplemental information and on the Company’s February 1, 2011 conference call might not occur.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Table of Contents


	Page
Corporate Data and Financial Highlights
Company Background		1
Financial Highlights		2
Common Stock Data		3
Consolidated Balance Sheets		4
Consolidated Statements of Operations		5
Funds From Operations and Funds Available for Distribution		6

Portfolio Data
Same Store Analysis		7
Stabilized Portfolio Occupancy Overview		8-14
Submarket Statistics		15
Lease Commencement Information by Segment		16
Stabilized Portfolio Capital Expenditures		17
Lease Expiration Summary and Lease Expirations by Region		18-21
Top Fifteen Tenants		22
2010 Acquisitions		23
2010 Dispositions		24

Development
In-Process Redevelopment Project		25
Future Development Pipeline		26

Debt and Capitalization Data
Capital Structure		27
Debt Analysis		28-29
Debt Covenants		30

Non-GAAP Supplemental Measures		31-35

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Company Background

Kilroy Realty Corporation (NYSE: KRC), a member of the S&P Small Cap 600 Index, is a real estate investment trust active in the premier office and industrial submarkets along the West Coast. The Company owns, develops, acquires and manages real estate assets primarily in the coastal regions of Los Angeles, Orange County, San Diego, greater Seattle, and the San Francisco Bay Area. As of December 31, 2010, the Company’s stabilized portfolio consisted of 100 office buildings and 40 industrial buildings, which encompassed an aggregate of 10.4 million and 3.6 million rentable square feet, respectively, and was 89.1% occupied.


Board of Directors		Senior Management		Investor Relations

John B. Kilroy, Sr.	Chairman	John B. Kilroy, Jr.	President and CEO	12200 W. Olympic Blvd., Suite 200
Edward F. Brennan, Ph.D.		Chris Corpuz	Executive VP, Strategic Initiatives	Los Angeles, CA 90064
William P. Dickey		Jeffrey C. Hawken	Executive VP and COO	(310) 481-8400
Scott S. Ingraham		Tyler H. Rose	Executive VP and CFO	Web: www.kilroyrealty.com
John B. Kilroy, Jr.		John T. Fucci	Sr. VP, Asset Management	E-mail: investorrelations@kilroyrealty.com
Dale F. Kinsella		Heidi R. Roth	Sr. VP and Controller
		Steve Scott	Sr. VP, San Diego
		Justin W. Smart	Sr. VP, Development


Equity Research Coverage
Bank of America Merrill Lynch		ISI Group
James Feldman	(646) 855-5808	Steve Sakwa	(212) 446-9462

Citigroup Investment Research		JMP Securities
Michael Bilerman	(212) 816-1383	Mitch Germain	(212) 906-3546

Cowen and Company		J.P. Morgan
James Sullivan	(646) 562-1380	Anthony Paolone	(212) 622-6682

Credit Suisse Group		RBC Capital Markets
Andrew Rosivach	(415) 249-7942	Dave Rodgers	(440) 715-2647

Deutsche Bank Securities, Inc.		Robert W. Baird & Company
John N. Perry	(212) 250-4912	David Aubuchon	(314) 863-4235

FBR Capital Markets		Stifel, Nicolaus & Company
Srikanth Nagarajan	(646) 885-5429	John W. Guinee III	(443) 224-1307

Green Street Advisors		UBS Investment Research
Michael Knott	(949) 640-8780	Ross T. Nussbaum	(212) 713-2484

Kilroy Realty Corporation is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Kilroy Realty Corporation’s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Kilroy Realty Corporation or its management. Kilroy Realty Corporation does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Financial Highlights
(unaudited, $ in thousands, except per share amounts)


	Three Months Ended
	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009
INCOME ITEMS (Including Discontinued Operations):
Revenues	$	82,941		$	79,804		$	72,416		$	66,819		$	67,379
Lease Termination Fees		277			186			303			192			177
Net Operating Income ⁽¹⁾		59,804			56,866			51,033			48,795			48,667
Capitalized Interest and Debt Costs		1,932			2,690			2,810			2,584			2,733
Net Income (Loss) Available to Common Stockholders		1,535			(126	)		(1,783	)		4,886			(3,009	)
EBITDA ⁽¹⁾⁽²⁾		52,574			49,576			43,330			41,771			30,978
Funds From Operations ^(1)(3)(4)		29,485			29,690			21,658			25,806			17,679
Funds Available for Distribution ^(1)(3)(4)		15,919			14,760			10,695			13,791			12,921
Net Income (Loss) Available to Common Stockholders per common share — diluted	$	0.02		$	(0.01	)	$	(0.04	)	$	0.11		$	(0.08	)
Funds From Operations per common share — diluted	$	0.54		$	0.54		$	0.41		$	0.57		$	0.39
Dividends per share	$	0.35		$	0.35		$	0.35		$	0.35		$	0.35
RATIOS (Including Discontinued Operations):
Operating Margins		72.1	%		71.3	%		70.5	%		73.0	%		72.2	%
Interest Coverage Ratio ⁽⁵⁾		3.1	x		3.4	x		3.5	x		3.8	x		2.9	x
Fixed Charge Coverage Ratio ⁽⁶⁾		2.5	x		2.7	x		2.7	x		2.8	x		2.2	x
FFO Payout Ratio ⁽⁷⁾		64.2	%		63.7	%		87.3	%		60.8	%		88.8	%
FAD Payout Ratio ⁽⁸⁾		118.9	%		128.0	%		176.8	%		113.7	%		121.5	%

	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009
ASSETS:
Real Estate Held for Investment before Depreciation	$	3,216,871		$	2,964,429		$	2,953,609		$	2,556,303		$	2,520,083
Total Assets		2,816,565			2,535,684			2,556,509			2,112,242			2,084,281
CAPITALIZATION:
Total Debt ⁽⁹⁾	$	1,451,152		$	1,174,421		$	1,181,970		$	1,031,514		$	1,006,074
Total Preferred Equity and Noncontrolling Interests ⁽⁹⁾		201,500			201,500			201,500			201,500			201,500
Total Common Equity and Noncontrolling Interests ⁽⁹⁾		1,972,035			1,791,973			1,605,996			1,382,129			1,376,221
Total Market Capitalization ⁽⁹⁾		3,624,687			3,167,894			2,989,466			2,615,143			2,583,795
Total Debt / Total Market Capitalization ⁽⁹⁾		40.2	%		37.1	%		39.6	%		39.4	%		39.0	%
Total Debt and Preferred / Total Market Capitalization ⁽⁹⁾		45.8	%		43.5	%		46.3	%		47.1	%		46.8	%


(1)		Please refer to pages 31 and 32 for Management Statements on Net Operating Income, EBITDA, Funds From Operations and Funds Available for Distribution.

(2)		Please refer to page 34 for a reconciliation of GAAP Net Income Available to Common Stockholders to EBITDA.

(3)		Please refer to page 6 for a reconciliation of GAAP Net Income Available to Common Stockholders to Funds From Operations and Funds Available for Distribution.

(4)		Reported amounts are attributable to common stockholders and common unitholders.

(5)		Calculated as EBITDA divided by interest expense (excluding amortization of deferred debt costs and debt discounts).

(6)		Calculated as EBITDA divided by interest expense (excluding amortization of deferred debt costs and debt discounts), current year accrued preferred dividends and distributions on Cumulative Redeemable Preferred units.

(7)		Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by Funds From Operations.

(8)		Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by Funds Available for Distribution.

(9)		See “Capital Structure” on page 27.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Common Stock Data (NYSE: KRC)


	Three Months Ended
	12/31/2010		9/30/2010		6/30/2010		3/31/2010		12/31/2009
High Price	$	36.72	$	34.39	$	33.92	$	32.60	$	31.99
Low Price	$	33.25	$	32.13	$	29.73	$	26.75	$	26.00
Closing Price	$	36.47	$	33.14	$	29.73	$	30.84	$	30.67

Dividends per share — annualized	$	1.40	$	1.40	$	1.40	$	1.40	$	1.40

Closing common shares (in 000’s) ⁽¹⁾⁽²⁾		52,350		52,350		52,296		43,093		43,149
Closing common partnership units (in 000’s) ⁽¹⁾		1,723		1,723		1,723		1,723		1,723

		54,073		54,073		54,019		44,816		44,872


(1)		As of the end of the period.

(2)		In April 2010, the Company completed an underwritten public offering of 9,200,000 shares of its common stock.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Consolidated Balance Sheets
(unaudited, $ in thousands)


	12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009
ASSETS:
Land and improvements	$	491,333		$	432,289		$	434,792		$	338,684		$	335,932
Buildings and improvements		2,435,173			2,245,618			2,247,549			1,950,408			1,920,543
Undeveloped land and construction in progress		290,365			286,522			271,268			267,211			263,608

Total real estate held for investment		3,216,871			2,964,429			2,953,609			2,556,303			2,520,083
Accumulated depreciation and amortization		(672,429	)		(652,675	)		(644,246	)		(623,981	)		(605,976	)

Total real estate assets, net		2,544,442			2,311,754			2,309,363			1,932,322			1,914,107

Cash and cash equivalents		14,840			8,313			29,428			10,736			9,883
Restricted cash		1,461			3,265			3,485			32			2,059
Marketable securities		4,902			4,481			4,087			4,226			3,452
Current receivables, net		6,258			4,055			3,739			2,913			3,236
Deferred rent receivables, net		89,052			83,563			79,813			76,406			74,392
Note receivable		—			—			10,603			10,641			10,679
Deferred leasing costs and acquisition-related intangible assets, net		131,066			96,691			98,466			56,570			51,832
Deferred financing costs, net		16,447			14,574			10,078			7,651			8,334
Prepaid expenses and other assets, net		8,097			8,988			7,447			10,745			6,307

TOTAL ASSETS	$	2,816,565		$	2,535,684		$	2,556,509		$	2,112,242		$	2,084,281


LIABILITIES, NONCONTROLLING INTEREST AND EQUITY:
*Liabilities:*
Secured debt, net	$	313,009		$	315,150		$	316,570		$	267,014		$	294,574
Exchangeable senior notes, net		299,964			298,295			296,660			438,749			436,442
Unsecured senior notes, net		655,803			330,941			391,888			144,000			144,000
Unsecured line of credit		159,000			205,000			150,000			150,000			97,000
Accounts payable, accrued expenses and other liabilities		68,525			66,814			57,792			58,333			52,533
Accrued distributions		20,385			20,383			20,395			17,167			17,136
Deferred revenue and acquisition-related intangible liabilities, net		79,322			68,251			71,651			65,655			66,890
Rents received in advance and tenant security deposits		29,189			23,776			25,849			23,654			18,230

Total liabilities		1,625,197			1,328,610			1,330,805			1,164,572			1,126,805

*Noncontrolling Interest:*
7.45% Series A Cumulative Redeemable Preferred units of the Operating Partnership		73,638			73,638			73,638			73,638			73,638
*Equity:*
Stockholders’ Equity
7.80% Series E Cumulative Redeemable Preferred stock		38,425			38,425			38,425			38,425			38,425
7.50% Series F Cumulative Redeemable Preferred stock		83,157			83,157			83,157			83,157			83,157
Common stock		523			523			523			431			431
Additional paid-in capital		1,211,498			1,209,673			1,208,716			914,766			913,657
Distributions in excess of earnings		(247,252	)		(230,215	)		(211,555	)		(191,190	)		(180,722	)

Total stockholders’ equity		1,086,351			1,101,563			1,119,266			845,589			854,948

Noncontrolling Interest
Common units of the Operating Partnership		31,379			31,873			32,800			28,443			28,890

Total equity		1,117,730			1,133,436			1,152,066			874,032			883,838

TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY	$	2,816,565		$	2,535,684		$	2,556,509		$	2,112,242		$	2,084,281

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Consolidated Statements of Operations
(unaudited, $ in thousands, except per share amounts)


	Three Months Ended December 31,									Year Ended December 31,
	2010			2009			% Change			2010			2009			% Change
REVENUES:
Rental income	$	76,406		$	60,690			25.9	%	$	274,708		$	247,649			10.9	%
Tenant reimbursements		5,914			6,177			(4.3	)%		24,326			28,075			(13.4	)%
Other property income		621			512			21.3	%		2,946			3,710			(20.6	)%

Total revenues		82,941			67,379			23.1	%		301,980			279,434			8.1	%

EXPENSES:
Property expenses		15,659			12,099			29.4	%		58,067			49,709			16.8	%
Real estate taxes		7,362			6,069			21.3	%		27,494			24,330			13.0	%
Provision for bad debts		(220	)		174			(226.4	)%		(1,063	)		569			(286.8	)%
Ground leases		336			370			(9.2	)%		984			1,597			(38.4	)%
General and administrative expenses		6,867			17,915			(61.7	)%		27,963			39,938			(30.0	)%
Acquisition-related expenses		624			—			100.0	%		2,248			—			100.0	%
Depreciation and amortization		29,095			21,019			38.4	%		103,809			87,627			18.5	%

Total expenses		59,723			57,646			3.6	%		219,502			203,770			7.7	%

OTHER (EXPENSES) INCOME:
Interest income and other net investment gains		261			226			15.5	%		964			1,300			(25.8	)%
Interest expense		(19,044	)		(11,078	)		71.9	%		(59,941	)		(46,119	)		30.0	%
Gain (loss) on early extinguishment of debt		—			1,790			(100.0	)%		(4,564	)		4,909			(193.0	)%

Total other (expenses) income		(18,783	)		(9,062	)		107.3	%		(63,541	)		(39,910	)		59.2	%
INCOME FROM CONTINUING OPERATIONS		4,435			671			561.0	%		18,937			35,754			(47.0	)%
DISCONTINUED OPERATIONS
Loss from discontinued operations		—			—			—			—			(224	)		(100.0	)%
Net gain on dispositions of discontinued operations		949			—			100.0	%		949			2,485			(61.8	)%

Total income from discontinued operations		949			—			100.0	%		949			2,261			(58.0	)%
NET INCOME		5,384			671			702.4	%		19,886			38,015			(47.7	)%
Net (income) loss attributable to noncontrolling common units of the Operating Partnership		(50	)		119			(142.0	)%		(178	)		(1,025	)		82.6	%

NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION		5,334			790			575.2	%		19,708			36,990			(46.7	)%
PREFERRED DISTRIBUTIONS AND DIVIDENDS:
Distributions on noncontrolling cumulative redeemable preferred units of the Operating		(1,397	)		(1,397	)		—			(5,588	)		(5,588	)		—
Preferred dividends		(2,402	)		(2,402	)		—			(9,608	)		(9,608	)		—

Total preferred distributions and dividends		(3,799	)		(3,799	)		—			(15,196	)		(15,196	)		—

NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$	1,535		$	(3,009	)		151.0	%	$	4,512		$	21,794			(79.3	)%

Weighted average common shares outstanding — basic		52,275			42,936			21.8	%		49,497			38,705			27.9	%
Weighted average common shares outstanding — diluted		52,291			42,936			21.8	%		49,513			38,732			27.8	%
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS PER SHARE
Net income (loss) available to common stockholders per share — basic	$	0.02		$	(0.08	)		131.8	%	$	0.07		$	0.53			(87.2	)%

Net income (loss) available to common stockholders per share — diluted	$	0.02		$	(0.08	)		131.8	%	$	0.07		$	0.53			(87.2	)%

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Funds From Operations and Funds Available for Distribution
(unaudited, $ in thousands, except per share amounts)


	Three Months Ended December 31,									Year Ended December 31,
	2010			2009			% Change			2010			2009			% Change
FUNDS FROM OPERATIONS: ⁽¹⁾
Net income (loss) available to common stockholders	$	1,535		$	(3,009	)		151.0	%	$	4,512		$	21,794			(79.3	)%
Adjustments:
Net income (loss) attributable to noncontrolling common units of the Operating Partnership		50			(119	)		142.0	%		178			1,025			(82.6	)%
Depreciation and amortization of real estate assets		28,849			20,807			38.7	%		102,898			86,825			18.5	%
Net gain on dispositions of discontinued operations		(949	)		—			(100.0	)%		(949	)		(2,485	)		(61.8	)%

Funds From Operations ⁽²⁾	$	29,485		$	17,679			66.8	%	$	106,639		$	107,159			(0.5	)%

Weighted average common shares/units outstanding — basic ⁽³⁾		54,786			45,502			20.4	%		52,033			41,222			26.2	%
Weighted average common shares/units outstanding — diluted ⁽³⁾		54,802			45,557			20.3	%		52,049			41,249			26.2	%
FFO per common share/unit — basic ⁽²⁾	$	0.54		$	0.39			38.5	%	$	2.05		$	2.60			(21.2	)%

FFO per common share/unit — diluted ⁽²⁾	$	0.54		$	0.39			38.6	%	$	2.05		$	2.60			(21.1	)%

FUNDS AVAILABLE FOR DISTRIBUTION: ⁽¹⁾
Funds From Operations ⁽²⁾	$	29,485		$	17,679			66.8	%	$	106,639		$	107,159			(0.5	)%
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		(10,058	)		(12,434	)		(19.1	)%		(51,053	)		(31,131	)		64.0	%
Amortization of deferred revenue related to tenant improvements ⁽⁴⁾		(2,581	)		(2,326	)		11.0	%		(9,689	)		(9,757	)		(0.7	)%
Net effect of straight-line rents ⁽⁵⁾		(5,524	)		(1,769	)		212.3	%		(14,015	)		(7,248	)		93.4	%
Amortization of other deferred revenue, net ⁽⁶⁾		555			(50	)		1,210.0	%		638			(1,001	)		163.7	%
Amortization of net above (below) market rents ⁽⁷⁾		681			(10	)		6,910.0	%		1,377			(359	)		483.6	%
Noncash amortization of exchangeable debt discount, net ⁽⁸⁾		1,409			1,537			(8.3	)%		6,172			6,166			0.1	%
Adjustments to GAAP loss/gain on early extinguishment on debt		—			5,129			(100.0	)%		4,564			6,678			(31.7	)%
Amortization of deferred financing costs and debt discounts		1,249			826			51.2	%		4,501			3,126			44.0	%
Noncash amortization of share-based compensation awards		703			4,339			(83.8	)%		6,031			12,253			(50.8	)%

Funds Available for Distribution ⁽²⁾	$	15,919		$	12,921			23.2	%	$	55,165		$	85,886			(35.8	)%


(1)		See page 32 for Management Statements on Funds From Operations and Funds Available for Distribution.

(2)		Reported amounts are attributable to common shareholders and unitholders.

(3)		Calculated based on weighted average shares outstanding including participating share-based awards (i.e. restricted stock units) and assuming the exchange of all common limited partnership units outstanding.

(4)		Represents revenue recognized during the period as a result of the amortization of deferred revenue recorded for tenant-funded tenant improvements.

(5)		Represents the straight-line rent income recognized during the period offset by cash received during the period that was applied to deferred rents receivable balances for terminated leases and the provision for bad debts recorded for deferred rent receivable balances.

(6)		Represents amortization of deferred revenue related to cash received prior to or during the revenue recognition period in connection with tenants’ contractual lease obligations, net of such amounts received.

(7)		Represents the adjustment related to the acquisition of buildings with above and/or below market rents.

(8)		Represents the amortization of the noncash debt discounts on the Company’s exchangeable senior notes, net of amounts capitalized.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Same Store Analysis ⁽¹⁾
(unaudited, $ in thousands)

Same Store Analysis (GAAP Basis) ⁽²⁾


	Three Months Ended December 31,									Year Ended December 31,
	2010			2009			% Change			2010			2009			% Change
*Total Same Store Portfolio*
Number of properties		129			129						129			129
Square Feet		11,871,115			11,871,115						11,871,115			11,871,115
Percent of Stabilized Portfolio		84.8	%		99.6	%					84.8	%		99.6	%
Average Occupancy		88.9	%		83.5	%					85.6	%		85.6	%

*Operating Revenues:*
Rental income	$	61,913		$	59,171			4.6	%	$	242,083		$	241,072			0.4	%
Tenant reimbursements		5,661			5,714			(0.9	)%		22,698			25,733			(11.8	)%
Other property income		600			511			17.4	%		2,540			3,703			(31.4	)%

Total operating revenues		68,174			65,396			4.2	%		267,321			270,508			(1.2	)%


*Operating Expenses:*
Property expenses		11,785			11,374			3.6	%		48,787			47,121			3.5	%
Real estate taxes		5,559			5,763			(3.5	)%		22,742			22,876			(0.6	)%
Provision for bad debts		(220	)		174			(226.4	)%		(1,063	)		569			(286.8	)%
Ground leases		333			366			(9.0	)%		971			1,584			(38.7	)%

Total operating expenses		17,457			17,677			(1.2	)%		71,437			72,150			(1.0	)%

*GAAP Net Operating Income*	$	50,717		$	47,719			6.3	%	$	195,884		$	198,358			(1.2	)%

Same Store Analysis (Cash Basis) ⁽²⁾


	Three Months Ended December 31,							Year Ended December 31,
	2010		2009		% Change			2010		2009		% Change
Total operating revenues	$	61,974	$	61,218		1.2	%	$	247,647	$	252,292		(1.8	)%
Total operating expenses		17,677		17,503		1.0	%		72,500		71,581		1.3	%

*Cash Net Operating Income*	$	44,297	$	43,715		1.3	%	$	175,147	$	180,711		(3.1	)%


(1)		Same store defined as all stabilized properties owned as of January 1, 2009 and still owned and in the stabilized portfolio as of December 31, 2010.

(2)		Please refer to page 33 for a reconciliation of the Same Store measures on this page to Net Income Available to Common Stockholders.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview


			Portfolio Breakdown								Occupancy at: ⁽¹⁾
	# of		Year-to-Date						Total Square
	Buildings		NOI ⁽²⁾			Sq. Ft.			Feet		12/31/2010			9/30/2010			12/31/2009
STABILIZED PORTFOLIO:
OCCUPANCY BY PRODUCT TYPE:
*Office:*
Los Angeles and Ventura Counties		29		25.9	%		21.9	%		3,065,626		89.3	%		89.6	%		88.8	%
San Diego County		63		55.7	%		39.0	%		5,466,298		86.4	%		82.2	%		76.8	%
Orange County		5		2.7	%		3.9	%		540,656		93.1	%		78.7	%		49.8	%
San Francisco		2		5.1	%		8.6	%		1,200,525		84.3	%		89.4	%		—
Greater Seattle		1		0.3	%		0.9	%		122,103		100.0	%		—			—

Subtotal		100		89.7	%		74.3	%		10,395,208		87.5	%		84.8	%		80.6	%

*Industrial:*
Los Angeles County		1		1.4	%		1.4	%		192,053		100.0	%		100.0	%		100.0	%
Orange County		39		8.9	%		24.3	%		3,410,843		93.5	%		90.0	%		87.6	%

Subtotal		40		10.3	%		25.7	%		3,602,896		93.9	%		90.6	%		88.2	%


OCCUPANCY BY REGION:
Los Angeles and Ventura Counties		30		27.3	%		23.3	%		3,257,679		89.9	%		90.2	%		89.4	%
San Diego County		63		55.7	%		39.0	%		5,466,298		86.4	%		82.2	%		76.8	%
Orange County		44		11.6	%		28.2	%		3,951,499		93.5	%		88.3	%		84.8	%
San Francisco		2		5.1	%		8.6	%		1,200,525		84.3	%		89.4	%		—
Greater Seattle		1		0.3	%		0.9	%		122,103		100.0	%		—			—

TOTAL STABILIZED PORTFOLIO		140		100.0	%		100.0	%		13,998,104		89.1	%		86.4	%		82.8	%


REENTITLEMENT PROPERTY:
*Industrial:*
Orange County (17150 Von Karman)		1								157,458

TOTAL PORTFOLIO		141								14,155,562

Average Occupancy — Stabilized Portfolio


	Office			Industrial			Total
Quarter-to-Date		86.5	%		92.3	%		88.0	%
Year-to-Date		84.2	%		87.3	%		85.1	%

Average Occupancy — Same Store Portfolio


	Office			Industrial			Total
Quarter-to-Date		87.4	%		92.3	%		88.9	%
Year-to-Date		85.0	%		87.2	%		85.6	%


(1)		Occupancy percentages reported are based on the Company’s stabilized portfolio for the period presented.

(2)		Percentage of year-to-date Net Operating Income excluding Other Property Income and discontinued operations.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview


	City/
	Submarket	Square Feet		Occupancy
*Office:*
Los Angeles and Ventura, California
23925 Park Sorrento	Calabasas		11,789		100.0	%
23975 Park Sorrento	Calabasas		100,592		86.8	%
24025 Park Sorrento	Calabasas		102,264		96.8	%
26541 Agoura Road	Calabasas		90,156		100.0	%
5151 Camino Ruiz	Camarillo		187,861		89.4	%
5153 Camino Ruiz	Camarillo		38,655		100.0	%
5155 Camino Ruiz	Camarillo		38,856		100.0	%
2240 E. Imperial Highway	El Segundo		122,870		100.0	%
2250 E Imperial Highway	El Segundo		293,261		90.5	%
909 N. Sepulveda Boulevard	El Segundo		241,607		98.7	%
999 N. Sepulveda Boulevard	El Segundo		127,901		100.0	%
3750 Kilroy Airport Way	Long Beach		10,457		100.0	%
3760 Kilroy Airport Way	Long Beach		165,278		96.1	%
3780 Kilroy Airport Way	Long Beach		219,745		81.5	%
3800 Kilroy Airport Way	Long Beach		192,476		93.6	%
3840 Kilroy Airport Way	Long Beach		136,026		100.0	%
3880 Kilroy Airport Way	Long Beach		98,243		100.0	%
3900 Kilroy Airport Way	Long Beach		126,840		65.2	%
12100 W. Olympic Boulevard	Los Angeles		150,167		65.1	%
12200 W. Olympic Boulevard	Los Angeles		150,302		92.2	%
12312 W. Olympic Boulevard	Los Angeles		78,000		100.0	%
1633 26th Street	Santa Monica		44,915		100.0	%
2100 Colorado Avenue	Santa Monica		94,844		58.9	%
3130 Wilshire Boulevard	Santa Monica		88,339		80.3	%
501 Santa Monica Boulevard	Santa Monica		73,115		69.0	%
2829 Townsgate Road	Thousand Oaks		81,067		82.3	%

Total Los Angeles and Ventura Counties Office			3,065,626		89.3	%

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview


	City/
	Submarket	Square Feet		Occupancy
*Office:*
San Diego, California
12225 El Camino Real	Del Mar		60,148		24.5	%
12235 El Camino Real	Del Mar		54,673		81.0	%
12340 El Camino Real	Del Mar		87,405		80.2	%
12390 El Camino Real	Del Mar		72,332		100.0	%
12348 High Bluff Drive	Del Mar		38,710		93.5	%
12400 High Bluff Drive	Del Mar		208,464		100.0	%
3579 Valley Center Drive	Del Mar		52,375		79.0	%
3611 Valley Center Drive	Del Mar		130,178		100.0	%
3661 Valley Center Drive	Del Mar		129,752		96.9	%
3721 Valley Centre Drive	Del Mar		114,780		100.0	%
3811 Valley Centre Drive	Del Mar		112,067		100.0	%
6200 Greenwich Drive	Governor Park		71,000		100.0	%
6220 Greenwich Drive	Governor Park		141,214		100.0	%
15051 Avenue of Science	I-15 Corridor		70,617		100.0	%
15073 Avenue of Science	I-15 Corridor		46,759		100.0	%
15231 Avenue of Science	I-15 Corridor		65,638		72.3	%
15253 Avenue of Science	I-15 Corridor		37,437		100.0	%
15333 Avenue of Science	I-15 Corridor		78,880		36.3	%
15378 Avenue of Science	I-15 Corridor		68,910		100.0	%
15004 Innovation Drive	I-15 Corridor		150,801		100.0	%
15435 Innovation Drive	I-15 Corridor		51,500		63.5	%
15445 Innovation Drive	I-15 Corridor		51,500		100.0	%
13280 Evening Creek Drive South	I-15 Corridor		42,971		46.5	%
13290 Evening Creek Drive South	I-15 Corridor		61,176		—
13480 Evening Creek Drive North	I-15 Corridor		149,817		100.0	%
13500 Evening Creek Drive North	I-15 Corridor		147,533		100.0	%
13520 Evening Creek Drive North	I-15 Corridor		141,368		97.7	%
7525 Torrey Santa Fe	56 Corridor		103,979		100.0	%
7535 Torrey Santa Fe	56 Corridor		130,243		100.0	%
7545 Torrey Santa Fe	56 Corridor		130,354		100.0	%
7555 Torrey Santa Fe	56 Corridor		101,236		100.0	%

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview


	City/
	Submarket	Square Feet		Occupancy
*Office:*
San Diego, California (Continued)
2355 Northside Drive	Mission Valley		50,425		59.4	%
2365 Northside Drive	Mission Valley		91,260		82.4	%
2375 Northside Drive	Mission Valley		48,949		78.6	%
2385 Northside Drive	Mission Valley		88,795		71.8	%
2305 Historic Decatur Road	Point Loma		103,900		95.4	%
10020 Pacific Mesa Boulevard	Sorrento Mesa		318,000		100.0	%
4910 Directors Place	Sorrento Mesa		50,925		24.5	%
4921 Directors Place	Sorrento Mesa		55,500		85.9	%
4939 Directors Place	Sorrento Mesa		60,662		100.0	%
4955 Directors Place	Sorrento Mesa		76,246		100.0	%
5005 Wateridge Vista Drive	Sorrento Mesa		61,460		—
5010 Wateridge Vista Drive	Sorrento Mesa		111,318		—
10243 Genetic Center Drive	Sorrento Mesa		102,875		—
6055 Lusk Avenue	Sorrento Mesa		93,000		100.0	%
6260 Sequence Drive	Sorrento Mesa		130,536		100.0	%
6290 Sequence Drive	Sorrento Mesa		90,000		100.0	%
6310 Sequence Drive	Sorrento Mesa		62,415		100.0	%
6340 Sequence Drive	Sorrento Mesa		66,400		100.0	%
6350 Sequence Drive	Sorrento Mesa		132,600		100.0	%
10390 Pacific Center Court	Sorrento Mesa		68,400		100.0	%
10394 Pacific Center Court	Sorrento Mesa		59,630		100.0	%
10398 Pacific Center Court	Sorrento Mesa		43,645		100.0	%
10421 Pacific Center Court	Sorrento Mesa		79,871		63.0	%
10445 Pacific Center Court	Sorrento Mesa		48,709		100.0	%
10455 Pacific Center Court	Sorrento Mesa		90,000		100.0	%
10350 Barnes Canyon	Sorrento Mesa		38,018		100.0	%
10120 Pacific Heights	Sorrento Mesa		52,540		100.0	%
5717 Pacific Center Boulevard	Sorrento Mesa		67,995		100.0	%
4690 Executive Drive	University Towne Center		47,212		88.3	%
9455 Towne Center Drive	University Towne Center		45,195		—
9785 Towne Center Drive	University Towne Center		75,534		100.0	%
9791 Towne Center Drive	University Towne Center		50,466		100.0	%

Total San Diego County Office			5,466,298		86.4	%

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview


	City/
	Submarket	Square Feet		Occupancy
*Office:*
Orange County, California
4175 E. La Palma Avenue	Anaheim		43,263		96.6	%
8101 Kaiser Boulevard	Anaheim		59,790		100.0	%
2211 Michelson Drive	Irvine		271,556		93.7	%
111 Pacifica	Irvine Spectrum		67,496		72.3	%
999 Town & Country	Orange		98,551		100.0	%

Total Orange County Office			540,656		93.1	%


San Francisco, California
303 Second Street	San Francisco		734,035		89.4	%
100 First Street	San Francisco		466,490		76.2	%

Total San Francisco Office			1,200,525		84.3	%


Greater Seattle, Washington
15050 NE 36th Street	Redmond		122,103		100.0	%

Total Greater Seattle Office			122,103		100.0	%


Total Office			10,395,208		87.5	%


*Industrial:*
Los Angeles, California
2031 E. Mariposa Avenue	El Segundo		192,053		100.0	%

Total Los Angeles County Industrial			192,053		100.0	%

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview


	City/
	Submarket	Square Feet		Occupancy
*Industrial:*
Orange County, California
1000 E. Ball Road	Anaheim		100,000		100.0	%
1230 S. Lewis Street	Anaheim		57,730		100.0	%
1250 N. Tustin Avenue	Anaheim		84,185		100.0	%
3125 E. Coronado Street	Anaheim		144,000		100.0	%
3130/3150 Miraloma Avenue	Anaheim		144,000		100.0	%
3250 E. Carpenter Avenue	Anaheim		41,225		100.0	%
3340 E. La Palma Avenue	Anaheim		153,320		100.0	%
3355 E. La Palma Avenue	Anaheim		98,200		100.0	%
4123 E. La Palma Avenue	Anaheim		70,863		100.0	%
4155 E. La Palma Avenue	Anaheim		74,618		85.8	%
5115 E. La Palma Avenue	Anaheim		286,139		100.0	%
5325 E. Hunter Avenue	Anaheim		110,487		100.0	%
1145 N. Ocean Boulevard	Anaheim		65,447		—
1201 N. Miller Street	Anaheim		119,612		37.9	%
1211 N. Miller Street	Anaheim		200,646		100.0	%
1231 N. Miller Street	Anaheim		113,242		56.7	%
950 W. Central Avenue	Brea		24,000		100.0	%
1050 W. Central Avenue	Brea		30,000		80.0	%
1150 W. Central Avenue	Brea		30,000		100.0	%
895 Beacon Street	Brea		54,795		100.0	%
955 Beacon Street	Brea		37,916		100.0	%
1125 Beacon Street	Brea		49,178		100.0	%
925 Lambert Road	Brea		80,000		100.0	%
1075 Lambert Road	Brea		98,811		100.0	%
1675 MacArthur Boulevard	Costa Mesa		50,842		100.0	%
25202 Towne Center Drive	Foothill Ranch		309,685		100.0	%
12681/12691 Pala Drive	Garden Grove		84,700		82.6	%
7421 Orangewood Avenue	Garden Grove		82,602		100.0	%
7091 Belgrave Avenue	Garden Grove		70,000		100.0	%
12271 Industry Street	Garden Grove		20,000		100.0	%
12311 Industry Street	Garden Grove		25,000		100.0	%
7261 Lampson Avenue	Garden Grove		47,092		100.0	%

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview


	City/
	Submarket	Square Feet		Occupancy
*Industrial:*
Orange County, California (Continued)
12472 Edison Way	Garden Grove		55,576		100.0	%
12442 Knott Street	Garden Grove		58,303		100.0	%
2055 S.E. Main Street	Irvine		47,583		100.0	%
1951 E. Carnegie Avenue	Santa Ana		100,000		100.0	%
2525 Pullman Street	Santa Ana		103,380		100.0	%
14831 Franklin Avenue	Tustin		36,256		100.0	%
2911 Dow Avenue	Tustin		51,410		100.0	%

Total Orange County Industrial			3,410,843		93.5	%


Total Industrial			3,602,896		93.9	%

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Submarket Statistics as of December 31, 2010


	Market			Market			KRC			KRC
	Direct			Total			Percentage			Percentage
Submarket	Vacancy ⁽¹⁾⁽²⁾			Vacancy ⁽¹⁾⁽²⁾			Occupied ⁽²⁾			Leased ⁽²⁾
SAN DIEGO
Del Mar		14.9	%		19.3	%		94.1	%		97.1	%
Sorrento Mesa
Two- Three Story Corporate		11.1	%		11.8	%		82.1	%		87.7	%
University Towne Center / Governor Park
Two- Three Story Corporate		11.3	%		20.1	%		88.2	%		88.2	%
I-15 Corridor
Class A Office Market		14.5	%		14.9	%		99.2	%		99.2	%
Two- Three Story Corporate		18.5	%		19.7	%		76.4	%		78.1	%
Mission Valley		18.9	%		19.4	%		74.2	%		74.2	%
Point Loma		4.2	%		4.2	%		95.4	%		95.4	%
ORANGE COUNTY
Office		16.6	%		17.4	%		93.1	%		93.7	%
Industrial		5.7	%		9.6	%		93.5	%		96.9	%
LOS ANGELES
Westside		16.3	%		20.2	%		78.9	%		78.9	%
El Segundo (Class A)		23.4	%		23.9	%		96.0	%		96.0	%
Long Beach Airport (Class A)		16.8	%		17.0	%		89.1	%		90.1	%
101 Corridor (Class A)		18.3	%		18.5	%		92.2	%		92.8	%
SAN FRANCISCO
South Financial District		10.8	%		11.7	%		84.3	%		95.1	%
GREATER SEATTLE
Eastside		16.0	%		18.0	%		100.0	%		100.0	%


(1)		Market direct and market total vacancy data was obtained from market research data from third parties. Kilroy Realty Corporation uses market research data from third parties to analyze the current and projected real estate fundamentals in each of its existing submarkets as well as potential acquisition submarkets. Recent market research data from third parties suggests improvement in real estate fundamentals in each of Kilroy Realty’s primary submarkets over the next few years. Please note that Kilroy Realty Corporation does not verify the market research data from third parties and further that such data does not represent views or forecasts of Kilroy Realty Corporation or its management.

(2)		All information is presented for office properties with the exception of Orange County Industrial.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Lease Commencement Information by Segment

For Leases That Commenced During the Three Months Ended December 31, 2010


	1st & 2nd Generation								2nd Generation
											Maintenance					Changes in						Weighted
	# of Leases ⁽¹⁾				Square Feet ⁽¹⁾				TI/LC		Capex Per		Changes in			Cash			Retention			Average Lease
	New		Renewal		New		Renewal		Per Sq.Ft. ⁽²⁾		Sq. Ft. ⁽³⁾		Rents ⁽⁴⁾			Rents ⁽⁵⁾			Rates ⁽⁶⁾			Term (Mo.)
Office		16		16		272,224		162,098	$	24.44	$	0.42		(4.1	)%		(10.1	)%		80.9	%		67
Industrial		2		3		208,219		60,702		5.28		0.01		(35.3	)%		(38.4	)%		45.2	%		108

Total		18		19		480,443		222,800	$	14.39	$	0.30		(12.8	)%		(17.8	)%		66.6	%		91

For Leases That Commenced During the Year Ended December 31, 2010


	1st & 2nd Generation								2nd Generation
											Maintenance					Changes in						Weighted
	# of Leases ⁽¹⁾				Square Feet ⁽¹⁾				TI/LC		Capex Per		Changes in			Cash			Retention			Average Lease
	New		Renewal		New		Renewal		Per Sq.Ft. ⁽²⁾		Sq. Ft. ⁽³⁾		Rents ⁽⁴⁾			Rents ⁽⁵⁾			Rates ⁽⁶⁾			Term (Mo.)
Office		57		53		898,090		740,652	$	28.82	$	1.36		(2.3	)%		(9.5	)%		56.7	%		63
Industrial		11		8		508,105		278,700		6.47		0.41		(26.5	)%		(31.7	)%		54.8	%		81

Total		68		61		1,406,195		1,019,352	$	20.51	$	1.08		(6.1	)%		(12.9	)%		56.1	%		70


(1)		Represents leasing activity for leases that commenced during the period shown, including first and second generation space, net of month-to-month leases. Excludes leasing on new construction.

(2)		Amounts exclude tenant-funded tenant improvements.

(3)		Calculated over entire stabilized portfolio.

(4)		Calculated as the change between GAAP rents for new/renewed leases and the expiring GAAP rents for the same space. Excludes leases for which the space was vacant longer than one year, or vacant when the property was acquired by the Company.

(5)		Calculated as the change between stated rents for new/renewed leases and the expiring stated rents for the same space. Excludes leases for which the space was vacant longer than one year, or vacant when the property was acquired by the Company.

(6)		Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures
($ in thousands)

Nonrecurring Capital Expenditures:


	Q1 2010		Q2 2010		Q3 2010		Q4 2010		Total 2010
Capital Improvements	$	1,873	$	1,562	$	1,113	$	1,548	$	6,096
Tenant Improvements & Leasing Commissions		3,980		3,290		5,788		1,394		14,452

Total	$	5,853	$	4,852	$	6,901	$	2,942	$	20,548

Recurring Capital Expenditures:


	Q1 2010		Q2 2010		Q3 2010		Q4 2010		Total 2010
Capital Improvements
Office	$	2,445	$	3,339	$	2,453	$	3,649	$	11,886
Industrial		887		239		320		35		1,481

		3,332		3,578		2,773		3,684		13,367

Tenant Improvements & Leasing Commissions ⁽¹⁾
Office		8,170		9,501		9,814		5,303		32,788
Industrial		459		878		2,490		1,071		4,898

		8,629		10,379		12,304		6,374		37,686

Total
Office		10,615		12,840		12,267		8,952		44,674
Industrial		1,346		1,117		2,810		1,106		6,379

	$	11,961	$	13,957	$	15,077	$	10,058	$	51,053


(1)		Represents costs incurred for leasing activity during the period shown. Amounts exclude tenant-funded tenant improvements.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Lease Expiration Summary Schedule ⁽¹⁾
($ in thousands)


	# of Expiring		Total Square		% of Total			Annualized		% of Total Annualized			Annualized Rent
Year of Expiration	Leases		Feet		Leased Sq. Ft.			Base Rent ⁽²⁾		Base Rent ⁽²⁾			per Sq. Ft. ⁽²⁾
OFFICE:
2011		72		565,860		6.3	%	$	13,111		4.8	%	$	23.17
2012		75		816,845		9.1	%		22,808		8.3	%		27.92
2013		72		861,486		9.6	%		23,451		8.5	%		27.22
2014		57		1,139,710		12.7	%		30,298		11.0	%		26.58
2015		87		1,501,743		16.7	%		49,544		18.0	%		32.99
2016		31		454,198		5.1	%		10,977		4.0	%		24.17
2017		30		1,387,122		15.5	%		40,375		14.7	%		29.11
2018		15		765,681		8.5	%		33,609		12.2	%		43.89
2019		9		357,541		4.0	%		13,477		4.9	%		37.69
2020		11		460,774		5.1	%		14,507		5.3	%		31.48
2021 and beyond		9		660,878		7.4	%		22,771		8.3	%		34.46

Subtotal		468		8,971,838		100.0	%	$	274,928		100.0	%	$	30.64

INDUSTRIAL:
2011		6		149,852		4.4	%	$	1,393		5.5	%	$	9.30
2012		11		452,557		13.4	%		2,647		10.4	%		5.85
2013		9		628,386		18.6	%		4,671		18.4	%		7.43
2014		13		501,364		14.8	%		4,088		16.1	%		8.15
2015		10		544,864		16.1	%		3,839		15.1	%		7.05
2016		3		297,497		8.8	%		3,576		14.1	%		12.02
2017		4		149,482		4.4	%		888		3.5	%		5.94
2018		2		137,397		4.1	%		1,043		4.1	%		7.59
2019		2		168,200		5.0	%		1,467		5.8	%		8.72
2020		1		50,842		1.5	%		577		2.3	%		11.35
2021 and beyond		2		297,320		8.9	%		1,259		4.7	%		4.23

Subtotal		63		3,377,761		100.0	%	$	25,448		100.0	%	$	7.53

TOTAL PORTFOLIO:
2011		78		715,712		5.8	%	$	14,504		4.8	%	$	20.27
2012		86		1,269,402		10.3	%		25,455		8.5	%		20.05
2013		81		1,489,872		12.1	%		28,122		9.4	%		18.88
2014		70		1,641,074		13.3	%		34,386		11.4	%		20.95
2015		97		2,046,607		16.6	%		53,383		17.8	%		26.08
2016		34		751,695		6.1	%		14,553		4.8	%		19.36
2017		34		1,536,604		12.4	%		41,263		13.7	%		26.85
2018		17		903,078		7.3	%		34,652		11.5	%		38.37
2019		11		525,741		4.3	%		14,944		5.0	%		28.42
2020		12		511,616		4.1	%		15,084		5.0	%		29.48
2021 and beyond		11		958,198		7.7	%		24,030		8.1	%		25.08

Total		531		12,349,599		100.0	%	$	300,376		100.0	%	$	24.32


(1)		The information presented for all lease expiration activity reflects leasing activity through December 31, 2010. For leases that have been renewed early or space that has been released to a new tenant, the expiration date and annual base rent information presented takes into consideration the renewed or released lease terms. Excludes space leased under month-to-month leases and vacant space as of December 31, 2010.

(2)		Reflects annualized contractual base rent calculated on a straight-line basis in accordance with GAAP excluding the amortization of deferred revenue related to tenant-funded tenant improvements and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Lease Expiration Schedule Detail by Region ⁽¹⁾
($ in thousands)


	Los Angeles/Ventura Counties														Orange County
					% of Total					% of Total			Annualized						% of Total					% of Total			Annualized
Year of	# of Expiring		Total		Regional Sq.			Annualized		Annualized			Rent		# of Expiring		Total		Regional Sq.			Annualized		Annualized			Rent
Expiration	Leases		Square Feet		Ft.			Base Rent ⁽²⁾		Base Rent ⁽²⁾			per Sq. Ft. ⁽²⁾		Leases		Square Feet		Ft.			Base Rent ⁽²⁾		Base Rent ⁽²⁾			per Sq. Ft. ⁽²⁾
OFFICE:
2011		51		435,269		16.4	%	$	8,988		12.2	%	$	20.65		8		23,897		4.8	%		596		3.7	%	$	24.94
2012		40		215,167		8.1	%		6,391		8.7	%		29.70		15		58,166		11.8	%		1,420		8.9	%		24.41
2013		39		389,903		14.7	%		10,245		14.0	%		26.28		14		55,206		11.2	%		1,673		10.5	%		30.30
2014		32		570,361		21.5	%		15,961		21.7	%		27.98		13		55,303		11.2	%		1,682		10.5	%		30.41
2015		31		332,211		12.5	%		10,357		14.1	%		31.18		7		56,652		11.5	%		1,434		9.0	%		25.31
2016		15		113,281		4.3	%		3,368		4.6	%		29.73		2		8,229		1.7	%		309		1.9	%		37.55
2017		10		148,115		5.6	%		5,240		7.1	%		35.38		3		55,101		11.1	%		2,339		14.6	%		42.45
2018		3		35,140		1.3	%		1,196		1.6	%		34.04		2		106,935		21.6	%		3,307		20.7	%		30.93
2019		2		170,596		6.4	%		6,348		8.6	%		37.21		1		61,885		12.5	%		2,775		17.4	%		44.84
2020		—		—		—			—		—			—		1		13,397		2.6	%		438		2.8	%		32.69
2021 and beyond		4		244,296		9.2	%		5,330		7.4	%		21.82		—		—		—			—		—			—

Subtotal		227		2,654,339		100.0	%	$	73,424		100.0	%	$	27.66		66		494,771		100.0	%	$	15,973		100.0	%	$	32.28

INDUSTRIAL:
2011		—		—		—			—		—			—		6		149,852		4.7	%	$	1,393		6.2	%	$	9.30
2012		—		—		—			—		—			—		11		452,557		14.2	%		2,647		11.8	%		5.85
2013		—		—		—			—		—			—		9		628,386		19.7	%		4,671		20.8	%		7.43
2014		—		—		—			—		—			—		13		501,364		15.7	%		4,088		18.2	%		8.15
2015		—		—		—			—		—			—		10		544,864		17.1	%		3,839		17.1	%		7.05
2016		1		192,053		100.0	%		2,960		100.0	%		15.41		2		105,444		3.3	%		616		2.7	%		5.84
2017		—		—		—			—		—			—		4		149,482		4.7	%		888		3.9	%		5.94
2018		—		—		—			—		—			—		2		137,397		4.3	%		1,043		4.6	%		7.59
2019		—		—		—			—		—			—		2		168,200		5.3	%		1,467		6.5	%		8.72
2020		—		—		—			—		—			—		1		50,842		1.6	%		577		2.6	%		11.35
2021 and beyond		—		—		—			—		—			—		2		297,320		9.4	%		1,259		5.6	%		4.23

Subtotal		1		192,053		100.0	%	$	2,960		100.0	%	$	15.41		62		3,185,708		100.0	%	$	22,488		100.0	%	$	7.06

TOTAL PORTFOLIO:
2011		51		435,269		15.3	%	$	8,988		11.8	%	$	20.65		14		173,749		4.7	%	$	1,989		5.2	%	$	11.45
2012		40		215,167		7.6	%		6,391		8.4	%		29.70		26		510,723		13.9	%		4,067		10.6	%		7.96
2013		39		389,903		13.7	%		10,245		13.4	%		26.28		23		683,592		18.6	%		6,344		16.5	%		9.28
2014		32		570,361		20.0	%		15,961		20.9	%		27.98		26		556,667		15.1	%		5,770		15.0	%		10.37
2015		31		332,211		11.7	%		10,357		13.6	%		31.18		17		601,516		16.3	%		5,273		13.7	%		8.77
2016		16		305,334		10.7	%		6,328		8.3	%		20.72		4		113,673		3.1	%		925		2.4	%		8.14
2017		10		148,115		5.2	%		5,240		6.9	%		35.38		7		204,583		5.6	%		3,227		8.4	%		15.77
2018		3		35,140		1.2	%		1,196		1.6	%		34.04		4		244,332		6.6	%		4,350		11.3	%		17.80
2019		2		170,596		6.0	%		6,348		8.3	%		37.21		3		230,085		6.3	%		4,242		11.0	%		18.44
2020		—		—		—			—		—			—		2		64,239		1.7	%		1,015		2.6	%		15.80
2021 and beyond		4		244,296		8.6	%		5,330		6.8	%		21.82		2		297,320		8.1	%		1,259		3.3	%		4.23

Total		228		2,846,392		100.0	%	$	76,384		100.0	%	$	26.84		128		3,680,479		100.0	%	$	38,461		100.0	%	$	10.45


(1)		The information presented for all lease expiration activity reflects leasing activity through December 31, 2010. For leases that have been renewed early or space that has been released to a new tenant, the expiration date and annual base rent information presented takes into consideration the renewed or released lease terms. Excludes space leased under month-to-month leases and vacant space as of December 31, 2010.

(2)		Reflects annualized contractual base rent calculated on a straight-line basis in accordance with GAAP excluding the amortization of deferred revenue related to tenant-funded tenant improvements and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Lease Expiration Schedule Detail by Region ⁽¹⁾
($ in thousands)


	San Diego														San Francisco
					% of Total					% of Total			Annualized						% of Total					% of Total			Annualized
Year of	# of Expiring		Total		Regional Sq.			Annualized		Annualized			Rent		# of Expiring		Total		Regional Sq.			Annualized		Annualized			Rent
Expiration	Leases		Square Feet		Ft.			Base Rent ⁽²⁾		Base Rent ⁽²⁾			per Sq. Ft. ⁽²⁾		Leases		Square Feet		Ft.			Base Rent ⁽²⁾		Base Rent ⁽²⁾			per Sq. Ft. ⁽²⁾
OFFICE TOTAL:
2011		8		76,594		1.6	%	$	2,565		1.8	%	$	33.49		5		30,100		3.0	%		962		2.4	%	$	31.96
2012		13		463,179		9.9	%		12,395		8.7	%		26.76		7		80,333		8.0	%		2,602		6.5	%		32.39
2013		7		275,990		5.9	%		6,547		4.6	%		23.72		12		140,387		14.0	%		4,986		12.5	%		35.52
2014		9		438,768		9.3	%		9,859		6.9	%		22.47		3		75,278		7.5	%		2,796		7.0	%		37.14
2015		18		504,679		10.7	%		13,600		9.5	%		26.95		30		486,098		48.5	%		21,023		52.9	%		43.25
2016		11		301,069		6.4	%		5,843		4.1	%		19.41		3		31,619		3.2	%		1,457		3.7	%		46.08
2017		16		1,180,625		25.1	%		32,679		22.9	%		27.68		1		3,281		0.3	%		117		0.3	%		35.66
2018		9		612,560		13.0	%		28,662		20.1	%		46.79		1		11,046		1.1	%		444		1.1	%		40.20
2019		3		77,465		1.6	%		2,371		1.7	%		30.61		3		47,595		4.7	%		1,983		5.0	%		41.66
2020		7		350,174		7.5	%		10,678		7.5	%		30.49		3		97,203		9.7	%		3,391		8.6	%		34.89
2021 and beyond		5		416,582		9.0	%		17,441		12.2	%		41.87		—		—		—			—		—			—

Total		106		4,697,685		100.0	%	$	142,640		100.0	%	$	30.36		68		1,002,940		100.0	%	$	39,761		100.0	%	$	39.64


	Greater Seattle
					% of Total					% of Total			Annualized
Year of	# of Expiring		Total		Regional Sq.			Annualized		Annualized			Rent
Expiration	Leases		Square Feet		Ft.			Base Rent ⁽²⁾		Base Rent ⁽²⁾			per Sq. Ft. ⁽²⁾
OFFICE TOTAL:
2011		—		—		—			—		—			—
2012		—		—		—			—		—			—
2013		—		—		—			—		—			—
2014		—		—		—			—		—			—
2015		1		122,103		100.0	%		3,130		100.0	%		25.63
2016		—		—		—			—		—			—
2017		—		—		—			—		—			—
2018		—		—		—			—		—			—
2019		—		—		—			—		—			—
2020		—		—		—			—		—			—
2021 and beyond		—		—		—			—		—			—

Total		1		122,103		100.0	%		3,130		100.0	%	$	25.63


(1)		The information presented for all lease expiration activity reflects leasing activity through December 31, 2010. For leases that have been renewed early or space that has been released to a new tenant, the expiration date and annual base rent information presented takes into consideration the renewed or released lease terms. Excludes space leased under month-to-month leases and vacant space as of December 31, 2010.

(2)		Reflects annualized contractual base rent calculated on a straight-line basis in accordance with GAAP excluding the amortization of deferred revenue related to tenant-funded tenant improvements and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Quarterly Lease Expirations for 2011 ⁽¹⁾
($ in thousands)


										% of Total
	# of Expiring		Total Square		% of Total			Annualized		Annualized			Annualized Rent
	Leases		Feet		Leased Sq. Ft.			Base Rent ⁽²⁾		Base Rent ⁽²⁾			per Sq. Ft. ⁽²⁾
OFFICE:
Q1 2011		14		76,927		0.9	%	$	2,369		0.9	%	$	30.80
Q2 2011		26		319,151		3.6	%		5,473		2.0	%		17.15
Q3 2011		22		119,212		1.3	%		3,822		1.4	%		32.06
Q4 2011		10		50,570		0.5	%		1,447		0.5	%		28.61

Subtotal 2011		72		565,860		6.3	%	$	13,111		4.8	%	$	23.17

INDUSTRIAL:
Q1 2011		1		6,000		0.2	%	$	62		0.2	%	$	10.33
Q2 2011		1		19,585		0.6	%		128		0.5	%		6.54
Q3 2011		3		45,662		1.4	%		470		1.8	%		10.29
Q4 2011		1		78,605		2.2	%		733		3.0	%		9.33

Subtotal 2011		6		149,852		4.4	%	$	1,393		5.5	%	$	9.30

TOTAL PORTFOLIO:
Q1 2011		15		82,927		0.7	%	$	2,431		0.8	%	$	29.31
Q2 2011		27		338,736		2.7	%		5,601		1.9	%		16.54
Q3 2011		25		164,874		1.3	%		4,292		1.4	%		26.03
Q4 2011		11		129,175		1.1	%		2,180		0.7	%		16.88

Total 2011		78		715,712		5.8	%	$	14,504		4.8	%	$	20.27


(1)		The information presented reflects leasing activity through December 31, 2010. For leases that have been renewed early or space that has been released to a new tenant, the expiration date and annual base rent information presented takes into consideration the renewed or released lease terms. Excludes space leased under month-to-month leases and vacant space as of December 31, 2010.

(2)		Reflects annualized contractual base rent calculated on a straight-line basis in accordance with GAAP excluding the amortization of deferred revenue related to tenant-funded tenant improvements and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Top Fifteen Tenants ⁽¹⁾
($ in thousands)


						Percentage of
		Annualized				Total Annualized			Percentage of
	Product	Base Rental		Rentable		Base Rental			Total Rentable
Tenant Name	Type	Revenue ⁽²⁾		Square Feet		Revenue ⁽²⁾			Square Feet
Intuit, Inc.	Office	$	15,126		536,812		5.0	%		3.8	%
Bridgepoint Education, Inc.	Office		15,099		317,678		5.0	%		2.3	%
Scripps Health	Office		12,562		262,868		4.2	%		1.9	%
Delta Dental of California	Office		10,834		249,363		3.6	%		1.8	%
CareFusion Corporation ⁽³⁾	Office		10,087		459,709		3.4	%		3.3	%
DIRECTV, Inc.	Office		8,540		314,207		2.8	%		2.2	%
AMN Healthcare, Inc.	Office		8,192		175,672		2.7	%		1.3	%
Fish & Richardson P.C.	Office		6,071		139,538		2.0	%		1.0	%
Hewlett-Packard Company	Office		5,803		162,017		1.9	%		1.2	%
Wells Fargo ⁽³⁾	Office		5,346		137,149		1.8	%		1.0	%
BP Biofuels North America LLC	Office		5,128		136,908		1.7	%		1.0	%
Epson America, Inc.	Office		4,915		136,026		1.6	%		1.0	%
Mitchell International, Inc.	Office		3,775		141,214		1.3	%		1.0	%
Avnet, Inc.	Office		3,768		114,780		1.3	%		0.8	%
Scan Health Plan ⁽³⁾	Office		3,626		124,598		1.2	%		0.9	%


Total Top Fifteen Tenants		$	118,872		3,408,539		39.5	%		24.5	%


(1)		The information presented is as of the date of this filing.

(2)		Based upon annualized contractual base rental revenue, which is calculated on a straight-line basis in accordance with GAAP, for leases for which rental revenue is being recognized by the Company as of December 31, 2010.

(3)		The Company has entered into leases with various affiliates of the tenant name listed above.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

2010 Acquisitions ⁽¹⁾
($ in millions)

Month of

Rentable

Purchase

Property

Submarket

Type

Acquisition

Square

Price

1st Quarter:

2385 Northside Drive

Mission Valley

Office

March

88,795

18.0

San Diego, CA

2nd Quarter:

303 Second Street

South Financial District

Office

May

734,035

233.3

San Francisco, CA

999 Town & Country

Orange

Office

June

98,551

22.3

Orange, CA

2211 Michelson

Airport Area

Office

June

271,556

103.2

Irvine, CA

2355, 2365, and 2375 Northside Drive

Mission Valley

Office

June

190,634

52.6

San Diego, CA

3rd Quarter:

NONE

4th Quarter:

15050 NE 36th Street

Eastside

Office

October

122,103

46.0

Redmond, WA

100 First Street

South Financial District

Office

November

466,490

191.5

San Francisco, CA

2305 Historic Decatur Road

Point Loma

Office

November

103,900

30.9

San Diego, CA

TOTAL

2,076,064

697.8


(1)		Acquisitions were added to the Company’s stabilized portfolio upon acquisition.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

2010 Dispositions
($ in millions)

Month of

Rentable

Sales

Property

City / Submarket

Type

Disposition

Square

Price

1st Quarter:

NONE

2nd Quarter:

NONE

3rd Quarter:

NONE

4th Quarter:

660 N. Puente Street

Brea

Industrial

October

51,567

5.0

Brea, CA

601 Valencia Avenue

Brea

Office

December

60,891

5.4

Brea, CA

603 Valencia Avenue

Brea

Office

December

45,900

5.4

Brea, CA

TOTAL

158,358

15.8

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

In-Process Redevelopment Project
($ in millions)

Estimated

Construction Period

Estimated

Rentable

Estimated

Total

Total Costs

Start

Compl.

Stabilization

Square

Existing

Redevelopment

Estimated

as of

Redevelopment Project

Location

Date

Date ⁽¹⁾

Feet

Investment ⁽²⁾

Costs

Investment

12/31/10 ⁽³⁾

% Leased

2260 E. Imperial Highway

El Segundo

3Q 2010

3Q 2011

3Q 2012

300,000

9.1

40.1

49.2

15.2


(1)		Based on management’s estimation of the earlier of stabilized occupancy (95%) or one year from the date of substantial completion.

(2)		Represents the depreciated carrying value at the commencement of redevelopment for the space being redeveloped.

(3)		Represents cash paid and costs incurred as of December 31, 2010. Includes existing investment at the commencement of redevelopment.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Future Development Pipeline
($ in millions)


			Gross		Estimated		Total Costs
			Site		Rentable		as of
Project	Location	Type	Acreage		Square Feet		12/31/2010 ⁽¹⁾
SAN DIEGO, CALIFORNIA
Carlsbad Oaks — Lots 4, 5, 7 & 8	Carlsbad	Office		32.0		288,000	$	18.2
Pacific Corporate Center — Lot 8	Sorrento Mesa	Office		5.0		170,000		11.3
Rancho Bernardo Corporate Center	I-15 Corridor	Office		21.0		320,000 - 1,000,000		27.2
One Paseo (San Diego Corporate Center) ⁽²⁾	Del Mar	Office		23.0		500,000		111.6
Santa Fe Summit — Phase II and III	56 Corridor	Office		21.8		600,000		77.3
Sorrento Gateway — Lot 2	Sorrento Mesa	Office		6.3		80,000		11.1
Sorrento Gateway — Lot 7	Sorrento Mesa	Office		7.6		57,000		10.0

TOTAL FUTURE DEVELOPMENT PIPELINE				116.7		2,015,000 - 2,695,000	$	266.7


(1)		Represents cash paid and costs incurred as of December 31, 2010.

(2)		Estimated rentable square feet reflects existing office entitlements. The Company is currently pursuing mixed-use entitlements for this project which if successfully obtained, would increase the estimated rentable square feet.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Capital Structure
As of December 31, 2010
($ in thousands)


			Aggregate
			Principal
			Amount or		% of Total
	Shares/Units As of		$ Value		Market
	December 31, 2010		Equivalent		Capitalization
DEBT:
Unsecured Line of Credit			$	159,000		4.4	%
Unsecured Exchangeable Senior Notes due 2012 ⁽¹⁾				148,000		4.1	%
Unsecured Exchangeable Senior Notes due 2014 ⁽¹⁾				172,500		4.8	%
Unsecured Senior Notes due 2014				83,000		2.3	%
Unsecured Senior Notes due 2015 ⁽¹⁾				325,000		9.0	%
Unsecured Senior Notes due 2020 ⁽¹⁾				250,000		6.9	%
Secured Debt ⁽¹⁾				313,652		8.7	%

Total Debt			$	1,451,152		40.2	%

EQUITY AND NONCONTROLLING INTERESTS:
7.450% Series A Cumulative Redeemable Preferred Units ⁽²⁾		1,500,000	$	75,000		2.1	%
7.800% Series E Cumulative Redeemable Preferred Stock ⁽³⁾		1,610,000		40,250		1.1	%
7.500% Series F Cumulative Redeemable Preferred Stock ⁽³⁾		3,450,000		86,250		2.4	%
Common Units Outstanding ⁽⁴⁾		1,723,131		62,843		1.7	%
Common Shares Outstanding ⁽⁴⁾		52,349,670		1,909,192		52.5	%

Total Equity and Noncontrolling Interests			$	2,173,535		59.8	%

TOTAL MARKET CAPITALIZATION			$	3,624,687		100.0	%


(1)		Represents gross aggregate principal amount before the effect of the unamortized discounts as of December 31, 2010.

(2)		Value based on $50.00 per share liquidation preference.

(3)		Value based on $25.00 per share liquidation preference.

(4)		Value based on closing share price of $36.47 on December 31, 2010.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Debt Analysis
As of December 31, 2010
($ in millions)

TOTAL DEBT COMPOSITION


	% of			Weighted Average
	Total Debt			Interest Rate			Maturity
*Secured vs. Unsecured Debt:*
Unsecured Debt ⁽¹⁾		78.4	%		4.8	%		4.8
Secured Debt		21.6	%		6.0	%		2.8
*Floating vs. Fixed-Rate Debt:*
Floating-Rate Debt		11.0	%		2.9	%		2.6
Fixed-Rate Debt ⁽¹⁾		89.0	%		5.3	%		4.6

*Total* ⁽¹⁾					5.1	%		4.4

*Total Including Debt Issuance Costs* ⁽¹⁾					5.7	%

*Total GAAP Effective Rate* ⁽²⁾					6.3	%

CAPITALIZED INTEREST, LOAN FEES, AND DEBT DISCOUNTS


Quarter-to-Date		Year-to-Date
$1.9		$10.0


(1)		Excludes the impact of the amortization of the noncash debt discount related to the accounting required for the Company’s exchangeable senior notes.

(2)		Includes the impact of the amortization of the noncash debt discount related to the accounting required for the Company’s exchangeable senior notes.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Debt Analysis
As of December 31, 2010
($ in thousands)

DEBT MATURITY SCHEDULE


Floating/				Maturity
Fixed Rate	Stated Rate			Date		2011		2012		2013		2014		2015		After 2015		Total
Unsecured Debt:
Floating		2.99	%		8/10/2013					$	159,000							$	159,000
Fixed		3.25	%		4/15/2012				148,000										148,000	⁽¹⁾
Fixed		4.25	%		11/15/2014								172,500						172,500	⁽²⁾
Fixed		6.45	%		8/4/2014								83,000						83,000
Fixed		5.00	%		11/3/2015										325,000				325,000	⁽³⁾
Fixed		6.63	%		6/1/2020												250,000		250,000	⁽⁴⁾


							—		148,000		159,000		255,500		325,000		250,000		1,137,500


Secured Debt:
Fixed		6.70	%		12/27/2011		69,980												69,980
Fixed		5.10	%		4/1/2012				52,000										52,000	⁽⁵⁾
Fixed		5.57	%		8/1/2012		1,531		71,517										73,048
Fixed		4.95	%		8/1/2012		687		29,754										30,441
Fixed		6.51	%		2/1/2017		837		892		952		1,016		1,084		65,563		70,344
Fixed		7.15	%		5/1/2017		1,940		2,084		2,238		2,404		2,581		3,988		15,235
Fixed	Various			Various			42		45		46		49		51		2,371		2,604	⁽⁶⁾


							75,017		156,292		3,236		3,469		3,716		71,922		313,652


Total		5.09	%			$	75,017	$	304,292	$	162,236	$	258,969		328,716	$	321,922	$	1,451,152


(1)		Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $4.0 million as of December 31, 2010.

(2)		Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $16.5 million as of December 31, 2010.

(3)		Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $0.2 million as of December 31, 2010.

(4)		Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $2.0 million as of December 31, 2010.

(5)		Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $0.6 million as of December 31, 2010.

(6)		Represents balance outstanding related to public facility bonds (the “Bonds”) issued in February 2008 by the City of Carlsbad. The Bonds have annual maturities beginning on September 1, 2011 through September 1, 2038, with interest rates ranging from 4.40% to 6.20%.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Debt Covenants
As of December 31, 2010
($ in millions)

KEY DEBT COVENANTS


		Actual Performance
	Covenant	as of December 31, 2010
*Unsecured Line of Credit (as defined per Credit Agreement):*
Total debt to total asset value	less than 60%		37	%
Fixed charge coverage ratio	greater than 1.5x		2.8	x
Unsecured debt ratio	greater than 1.67x		2.48	x
Unencumbered asset pool debt service coverage	greater than 2.0x		4.9	x
Unencumbered debt yield	greater than 12%		16	%

*Unsecured Senior Notes due 2015 and 2020 (as defined per Indenture):*
Total debt/total asset value	less than 60%		43	%
Interest coverage	greater than 1.5x		3.4	x
Secured debt/total asset value	less than 40%		9	%
Unencumbered asset pool value to unsecured debt	greater than 150%		248	%

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures

Included in this section are management’s statements regarding certain non-GAAP financial measures provided in this supplemental financial report and, with respect to Funds From Operations (“FFO”), in the Company’s earnings release on January 31, 2011 and the reasons why management believes that these measures provide useful information to investors about the Company’s financial condition and results of operations.

Net Operating Income:

Management believes that Net Operating Income (“NOI”) is a useful supplemental measure of the Company’s operating performance. The Company defines NOI as operating revenues (rental income, tenant reimbursements and other property income) less property and related expenses (property expenses, real estate taxes, provision for bad debts and ground leases). Other real estate investment trusts (“REITs”) may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to other REITs.

Because NOI excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expenses, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. The Company uses NOI to evaluate its operating performance on a segment basis since NOI allows the Company to evaluate the impact that factors such as occupancy levels, lease structure, rental rates, and tenant base, which vary by segment type, have on the Company’s results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company’s financial and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of performance in the real estate industry.

However, NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.

Same Store Net Operating Income:

Management believes that Same Store NOI is a useful supplemental measure of the Company’s operating performance. Same Store NOI represents the NOI for the stabilized properties that were operational for two comparable reporting periods. Because Same Store NOI excludes the change in NOI from properties developed, redeveloped, acquired and disposed of, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties that were operational for two comparable periods. Other REITs may use different methodologies for calculating Same Store NOI, and accordingly, the Company’s Same Store NOI may not be comparable to other REITs.

However, Same Store NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect the operations of the Company’s entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures

EBITDA:

Management believes that earnings before interest expense, depreciation and amortization, gain/loss on early extinguishment of debt, net gains and losses on disposition of discontinued operations, net income attributable to noncontrolling interests, preferred dividends and distributions, and impairment losses (“EBITDA”) is a useful supplemental measure of the Company’s operating performance. When considered with other GAAP measures and FFO, management believes EBITDA gives the investment community a more complete understanding of the Company’s operating results, including the impact of general and administrative expenses and acquisition-related expenses, before the impact of investing and financing transactions and facilitates comparisons with competitors. Management also believes it is appropriate to present EBITDA as it is used in several of the Company’s financial covenants for both its secured and unsecured debt. However, EBITDA should not be viewed as an alternative measure of the Company’s operating performance since it excludes financing costs as well as depreciation and amortization costs which are significant economic costs that could materially impact the Company’s results of operations and liquidity. Other REITs may use different methodologies for calculating EBITDA and, accordingly, the Company’s EBITDA may not be comparable to other REITs.

Funds From Operations:

The Company calculates FFO in accordance with the White Paper on FFO approved by the Board of Governors of NAREIT. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable operating property, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships and joint ventures.

Management believes that FFO is a useful supplemental measure of the Company’s operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of the Company’s activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, the Company’s FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, management believes that FFO along with the required GAAP presentations provides a more complete measurement of the Company’s performance relative to its competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide.

However, FFO should not be viewed as an alternative measure of the Company’s operating performance since it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties, which are significant economic costs and could materially impact the Company’s results from operations.

Funds Available for Distribution:

Management believes that Funds Available for Distribution (“FAD”) is a useful supplemental measure of the Company’s liquidity. The Company computes FAD by adding to FFO the noncash amortization of deferred financing costs, debt discounts and share-based compensation awards, adjustment to GAAP gain/loss on early extinguishment of debt, amortization of above (below) market rents for acquisition properties and contractual cash rents received in advance of revenue recognition, then subtracting recurring tenant improvements, leasing commissions and capital expenditures, and eliminating the net effect of straight-line rents, amortization of deferred revenue related to tenant improvements and cash received prior to revenue recognition. FAD provides an additional perspective on the Company’s ability to fund cash needs and make distributions to stockholders by adjusting FFO for the impact of certain cash and noncash items, as well as adjusting FFO for recurring capital expenditures and leasing costs. Management also believes that FAD provides useful information to the investment community about the Company’s financial position as compared to other REITs since FAD is a liquidity measure used by other REITs. However, other REITs may use different methodologies for calculating FAD and, accordingly, the Company’s FAD may not be comparable to other REITs.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Reconciliation of Same Store Net Operating Income to Net Income (Loss) Available to Common Stockholders
(unaudited, $ in thousands)


	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009
Same Store Cash Net Operating Income	$	44,297		$	43,715		$	175,147		$	180,711
Adjustments:
GAAP Operating Revenues Adjustments, net		6,200			4,178			19,674			18,216
GAAP Operating Expenses Adjustments, net		220			(174	)		1,063			(569	)

Same Store GAAP Net Operating Income		50,717			47,719			195,884			198,358
Non-Same Store GAAP Net Operating Income		9,087			948			20,614			4,871

Net Operating Income excluding discontinued operations		59,804			48,667			216,498			203,229
Net Operating Loss from discontinued operations		—			—			—			(199	)

Net Operating Income, as defined ⁽¹⁾		59,804			48,667			216,498			203,030
Adjustments:
General and administrative expenses		(6,867	)		(17,915	)		(27,963	)		(39,938	)
Acquisition-related expenses		(624	)		—			(2,248	)		—
Depreciation and amortization (including discontinued operations)		(29,095	)		(21,019	)		(103,809	)		(87,652	)
Interest income and other net investment gains		261			226			964			1,300
Interest expense		(19,044	)		(11,078	)		(59,941	)		(46,119	)
Gain (loss) on early extinguishment of debt		—			1,790			(4,564	)		4,909
Net gain on dispositions of discontinued operations		949			—			949			2,485

Net Income		5,384			671			19,886			38,015
Net (income) loss attributable to noncontrolling common units of the Operating Partnership		(50	)		119			(178	)		(1,025	)
Preferred distributions and dividends		(3,799	)		(3,799	)		(15,196	)		(15,196	)

Net Income (Loss) Available to Common Stockholders	$	1,535		$	(3,009	)	$	4,512		$	21,794


(1)		Please refer to page 31 for Management Statements on Net Operating Income and Same Store Net Operating Income.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Reconciliation of EBITDA to Net Income Available to Common Stockholders
(unaudited, $ in thousands)


	Three Months Ended December 31,
	2010			2009
Net Income (Loss) Available to Common Stockholders	$	1,535		$	(3,009	)
Interest expense		19,044			11,078
Depreciation and amortization		29,095			21,019
Gain on early extinguishment of debt		—			(1,790	)
Net gain on discontinued operations		(949	)
Net income (loss) attributable to noncontrolling common units of the Operating Partnership		50			(119	)
Preferred distributions and dividends		3,799			3,799

EBITDA ⁽¹⁾	$	52,574		$	30,978


(1)		Please refer to page 32 for a Management Statement on EBITDA.

Kilroy Realty Corporation
Fourth Quarter 2010 Supplemental Financial Report

Reconciliation of Funds Available for Distribution to GAAP Net Cash Provided by Operating Activities
(unaudited, $ in thousands)


	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009
Funds Available for Distribution ⁽¹⁾	$	15,919		$	12,921		$	55,165		$	85,886
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		10,058			12,434			51,053			31,131
Gain on early extinguishment of debt		—			(1,790	)		—			(4,909	)
Additional cash gain on early extinguishment of debt		—			(5,129	)		—			(6,678	)
Depreciation for furniture, fixtures and equipment		245			212			911			827
Preferred distributions and dividends		3,799			3,799			15,196			15,196
Provision for uncollectible tenant receivables		129			174			16			575
Changes in assets and liabilities and other adjustments, net ⁽²⁾		(5,251	)		4,344			(2,514	)		2,937

GAAP Net Cash Provided by Operating Activities	$	24,899		$	26,965		$	119,827		$	124,965


(1)		Please refer to page 32 for a Management Statement on Funds Available for Distribution.

(2)		Primarily includes changes in the following assets and liabilities: marketable securities; current receivables; deferred leasing costs; prepaid expenses and other assets; accounts payable, accrued expenses and other liabilities; and rents received in advance and tenant security deposits.

Attached files

KILROY REALTY CORP Reports

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