Kilroy Realty (KRC) 8-K Second Quarter 2001 Supplemental Financial Report

Exhibit 99.1

KILROY
REALTY

CORPORATION

Second Quarter 2001 Supplemental Financial Report

	Page
Financial Highlights	1
Consolidated Balance Sheets	2
Consolidated Statements of Operations	3
Funds From Operations and Funds Available for Distribution	4
Financial Results Excluding Effect of Second Quarter Lease Termination Fee	5
Net Operating Income Breakdown	6
Same Store Analysis	7
Stabilized Portfolio and Occupancy Overview	8
Leasing Activity	9
Lease Expiration Schedule	10
Dispositions	11
Stabilized Development	12
In-Process and Committed Development Projects	13
Future Development Pipeline	14
Capital Structure	15
Debt Analysis	16

Some of the enclosed information presented is forward-looking in nature, including information concerning 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 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. 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 "Business Risks" in Kilroy Realty Corporation's annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplement information might not occur.

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2001		2000		% Change		2001		2000		% Change
INCOME ITEMS:
Revenues	$  58,234		$  45,336		28.4	%	$  108,601		$  89,106		21.9	%
Net Operating Income	45,395		34,798		30.5	%	84,404		69,048		22.2	%
Net Income	15,097		12,804		17.9	%	21,523		22,381		(3.8	%)
Funds From Operations	28,237		20,153		40.1	%	50,113		40,832		22.7	%
Funds Available for Distribution	24,095		17,264		39.6	%	43,627		35,737		22.1	%
Funds From Operations per share—diluted	$      0.93		$      0.67		38.5	%	$        1.64		$      1.33		23.3	%
Funds Available for Distribution per share—diluted	0.79		0.57		38.0	%	1.43		1.17		22.7	%
Dividend per share	$      0.48		$      0.45		6.7	%	$        0.96		$      0.90		6.7	%
RATIOS:
Interest Coverage Ratio(1)	4.0x		3.4x				3.7x		3.7x
Fixed Charge Coverage Ratio(2)	3.0x		2.5x				2.8x		2.7x
FFO Payout Ratio(3)	51.6	%	67.4	%	(15.8	%)	58.0	%	66.4	%	(8.4	%)
FAD Payout Ratio(4)	60.4	%	78.7	%	(18.3	%)	66.7	%	75.8	%	(9.1	%)

	June 30, 2001	Dec. 31, 2000	% Change
ASSETS:
Investments in Real Estate before Depreciation	$ 1,583,957	$ 1,496,477	5.8	%
Total Assets	1,453,841	1,457,169	(0.2	%)
CAPITALIZATION:
Total Debt	$    723,947	$    723,688	0.0	%
Total Preferred Stock(5)	155,000	155,000	0.0	%
Total Market Equity Value(5)	882,558	848,162	4.1	%
Total Market Capitalization(5)	1,761,505	1,726,850	2.0	%
Total Debt / Total Market Capitalization	41.1%	41.9%	(0.8	%)

(1)	Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense plus loan cost amortization.
(2)	Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense plus loan cost amortization and current year paid and accrued preferred dividends.
(3)	Calculated as current year dividends paid and accrued to common shareholders divided by Funds From Operations.
(4)	Calculated as current year dividends paid and accrued to common shareholders divided by Funds Available for Distribution.
(5)	See "Capital Structure" on page 15.

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Consolidated Balance Sheets
(Unaudited, $ in thousands)

	June 30, 2001		December 31, 2000
ASSETS:
Land and improvements	$      285,733		$           266,444
Buildings and improvements	1,154,660		1,054,995
Undeveloped land and construction in progress, net	143,564		162,633
Investment in unconsolidated real estate			12,405
Total investment in real estate	1,583,957		1,496,477
Accumulated depreciation and amortization	(224,157	)	(205,332	)
Investment in real estate, net	1,359,800		1,291,145
Cash and cash equivalents	13,898		17,600
Restricted cash	7,222		35,014
Tenant receivables, net	30,095		32,521
Note receivable from related party			33,274
Deferred financing and leasing costs, net	37,455		39,674
Prepaid expenses and other assets	5,371		7,941
TOTAL ASSETS	$   1,453,841		$        1,457,169
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Liabilities:
Secured debt	$      438,947		$           432,688
Unsecured line of credit	185,000		191,000
Unsecured term facility	100,000		100,000
Accounts payable and accrued expenses	38,554		33,911
Accrued distributions	14,558		13,601
Rents received in advance and tenant security deposits	16,302		17,810
Total liabilities	793,361		789,010
Minority Interests:
8.075% Series A Cumulative Redeemable Preferred unitholders	73,716		73,716
9.375% Series C Cumulative Redeemable Preferred unitholders	34,464		34,464
9.250% Series D Cumulative Redeemable Preferred unitholders	44,321		44,321
Common unitholders of the Operating Partnership	50,076		62,485
Minority interest in Development LLCs	12,177		11,748
Total minority interests	214,754		226,734
Stockholders’ Equity:
Common stock	273		265
Additional paid-in capital	474,864		460,390
Distributions in excess of earnings	(23,742	)	(19,230	)
Accumulated other comprehensive loss	(5,669	)
Total stockholders’ equity	445,726		441,425
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$1,453,841		$  1,457,169

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2001		2000		% Change		2001		2000		% Change
REVENUES:
Rental income	$ 46,029		$ 39,370		16.9	%	$90,408		$77,072		17.3	%
Tenant reimbursements	6,170		4,594		34.3	%	11,690		9,288		25.9	%
Interest income	277		1,016		(72.7	%)	713		1,302		(45.2	%)
Other income	5,758		356		1517.4	%	5,790		1,444		301.0	%
Total revenues	58,234		45,336		28.4	%	108,601		89,106		21.9	%
EXPENSES:
Property expenses	7,443		6,074		22.5	%	14,338		11,532		24.3	%
Real estate taxes	4,744		3,049		55.6	%	8,379		6,436		30.2	%
General and administrative expenses	3,034		2,555		18.7	%	6,388		5,187		23.2	%
Ground leases	375		399		(6.0	%)	767		788		(2.7	%)
Interest expense	10,612		9,948		6.7	%	21,403		17,776		20.4	%
Depreciation and amortization	12,521		9,645		29.8	%	25,954		18,968		36.8	%
Total expenses	38,729		31,670		22.3	%	77,229		60,687		27.3	%
INCOME FROM OPERATIONS	19,505		13,666		42.7	%	31,372		28,419		10.4	%
Net gains on dispositions of operating properties	1,234		4,273		(71.1	%)	1,539		3,968		(61.2	%)
INCOME BEFORE MINORITY INTERESTS      AND CUMULATIVE EFFECT OF CHANGE      IN ACCOUNTING PRINCIPLE	20,739		17,939		15.6	%	32,911		32,387		1.6	%
MINORITY INTERESTS:
Distributions on Cumulative Redeemable Preferred          units	(3,375	)	(3,375	)	0.0	%	(6,750	)	(6,750	)	0.0	%
Minority interest in earnings of Operating Partnership	(1,796	)	(1,843	)	(2.6	%)	(2,641	)	(3,215	)	(17.9	%)
Minority interest in earnings of Development LLCs	(471	)	83		(667.5	%)	(605	)	(41	)	1375.6	%
Total minority interests	(5,642	)	(5,135	)	9.9	%	(9,996	)	(10,006	)	(0.1	%)
NET INCOME BEFORE CUMULATIVE EFFECT      OF CHANGE IN ACCOUNTING PRINCIPLE	15,097		12,804		17.9	%	22,915		22,381		2.4	%
CUMULATIVE EFFECT OF CHANGE IN      ACCOUNTING PRINCIPLE							(1,392	)			(100.0	%)
NET INCOME	$ 15,097		$ 12,804		17.9	%	$21,523		$22,381		(3.8	%)
Weighted average shares outstanding—basic	27,160		26,259				26,938		26,744
Weighted average shares outstanding—diluted	27,380		26,348				27,177		26,788
NET INCOME PER COMMON SHARE:
Income per common share—basic	$     0.56		$     0.49		14.3	%	$    0.80		$    0.84		(4.8	%)
Income per common share—diluted	$     0.55		$     0.49		12.2	%	$    0.79		$    0.84		(6.0	%)

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2001		2000		% Change		2001		2000		% Change
FUNDS FROM OPERATIONS:
Net income	$15,097		$12,804		17.9	%	$21,523		$22,381		(3.8	%)
Adjustments:
Minority interest in earnings of Operating Partnership	1,796		1,843		(2.6	%)	2,641		3,215		(17.9	%)
Depreciation and amortization	12,030		9,645		24.7	%	25,000		18,968		31.8	%
Net gains on dispositions of operating properties	(1,234	)	(4,273	)	(71.1	%)	(1,539	)	(3,968	)	(61.2	%)
Cumulative effect of change in accounting principle							1,392				100.0	%
Non-cash amortization of restricted stock grants	548		134		309.0	%	1,096		236		364.4	%
Funds From Operations	$28,237		$20,153		40.1	%	$50,113		$40,832		22.7	%
Weighted average common shares/units outstanding-basic	30,260		30,041				30,243		30,586
Weighted average common shares/units outstanding-diluted	30,481		30,131				30,482		30,630
Funds From Operations per common share/unit-basic	$    0.93		$    0.67		39.1	%	$    1.66		$    1.33		24.1	%
Funds From Operations per common share/unit-diluted	$    0.93		$    0.67		38.5	%	$    1.64		$    1.33		23.3	%
FUNDS AVAILABLE FOR DISTRIBUTION:
Funds From Operations	$28,237		$20,153		40.1	%	$50,113		$40,832		22.7	%
Adjustments:
Amortization of deferred financing costs	399		487		(18.1	%)	780		693		12.6	%
Tenant improvements, leasing commissions and recurring                         capital expenditures	(3,668	)	(1,827	)	100.8	%	(4,679	)	(2,731	)	71.3	%
Net effect of straight-line rents	(873	)	(1,549	)	(43.6	%)	(2,587	)	(3,057	)	(15.4	%)
Funds Available for Distribution	$24,095		$17,264		39.6	%	$43,627		$35,737		22.1	%
Funds Available for Distribution per common share/unit-basic	$    0.80		$    0.57		38.6	%	$    1.44		$    1.17		23.5	%
Funds Available for Distribution per common share/unit-diluted	$    0.79		$    0.57		38.0	%	$    1.43		$    1.17		22.7	%

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report
Financial Results Excluding Impact of Second Quarter Lease Termination Fee
(unaudited, $ in thousands, except per share amounts)
	Three Months Ended June 30,					Six Months Ended June 30,
	2001		2000	% Change		2001		2000	% Change
FUNDS FROM OPERATIONS:
Funds From Operations as reported	$28,237		$20,153	40.1%		$50,113		$40,832	22.7%
Lease termination fee(1)	(5,352	)				(5,352	)
Funds From Operations excluding impact of lease termination fee	$22,885		$20,153	13.6%		$44,761		$40,832	9.6%
Weighted average common shares/units outstanding - diluted	30,481		30,131			30,482		30,630
Adjusted Funds From Operations per common share/unit - diluted	$0.75		$0.67	14.9%		$1.47		$1.33	12.0%
FUNDS AVAILABLE FOR DISTRIBUTION:
Funds Available for Distribution as reported	$24,095		$17,264	39.6%		$43,627		$35,737	22.1%
Lease termination fee(1)	(5,352	)				(5,352	)
Funds Available for Distribution excluding impact of lease termination fee	$18,743		$17,264	8.6%		$38,275		$35,737	7.1%
Adjusted Funds Available for Distribution per common share/unit - diluted	$0.61		$0.57	7.0%		$1.26		$1.17	6.8%
RATIOS:
Interest Coverage Ratio	3.5x		3.4x			3.4x		3.7x
Fixed Charge Coverage Ratio	2.6x		2.5x			2.6x		2.7x
FFO Payout Ratio	63.6x		67.4%	(3.8%	)	65.0%		66.4%	(1.4%	)
FAD Payout Ratio	77.7x		78.7%	(1.0%	)	76.0%		75.8%	0.2%
(1) The lease termination fee of $5.4 million represents the $15.0 million in letters of credit proceeds offset by $9.6 million of accounts receivable and other costs and obligations associated with the lease.

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Net Operating Income Breakdown

	As of June 30, 2001(1)
% OF TOTAL NOI BY PRODUCT TYPE:
Office:
Los Angeles	42.7	%
Orange County	3.6	%
San Diego	25.7	%
Other	5.2	%
Subtotal	77.2	%
Industrial:
Los Angeles	2.9	%
Orange County	17.4	%
Other	2.5	%
Subtotal	22.8	%
% OF TOTAL NOI BY REGION:
Los Angeles	45.6	%
Orange County	21.0	%
San Diego	25.7	%
Other	7.7	%
Total	100.0	%

(1) Based on Net Operating Income for the six months ended June 30, 2001.

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Same Store Analysis⁽³⁾
($ in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2001	2000	$ Change		% Change		2001	2000	$ Change		% Change
TOTAL SAME STORE PORTFOLIO
Operating Revenues:
Rental income	$35,773	$34,908	$  865		2.5	%	$71,615	$69,345	$2,270		3.3	%
Tenant reimbursements(1)	5,308	4,104	1,204		29.3	%	9,842	8,365	1,477		17.7	%
Other income(2)	363	362	1		0.3	%	417	1,436	(1,019	)	(71.0	%)
Total operating revenues	$41,444	$39,374	$2,070		5.3	%	$81,874	$79,146	$2,728		3.4	%
Operating Expenses:
Property expenses(2)	$  5,838	$  5,542	$  296		5.3	%	$11,046	$10,491	$  555		5.3	%
Real estate taxes(1)	3,565	2,644	921		34.8	%	6,571	5,672	899		15.8	%
Ground leases	325	389	(64	)	(16.5	%)	657	770	(113	)	(14.7	%)
Total operating expenses	$  9,728	$  8,575	$1,153		13.4	%	$18,274	$16,933	$1,341		7.9	%
Net Operating Income	$31,716	$30,799	$  917		3.0	%	$63,600	$62,213	$1,387		2.2	%

(1) The results for the three and six months ended June 30, 2000 include $0.3 million of real estate tax refunds. The results for the three and six months ended June 30, 2001 include $0.6 million in supplemental real estate taxes, and $0.5 million in related tenant reimbursements which represents an estimate of the amount of supplemental real estate taxes collectible from tenants.

(2) The results for the six months ended June 30, 2000 include a net lease termination fee of $0.5 million. The results for the six months ended June 30, 2001 include $140,000 for repairs at the Sea Tac Office Center due to damage resulting from the Seattle earthquake that occurred February 28, 2001. Net of these non-recurring revenues and expenses, the increase in total operating revenues, total operating expenses and net operating income for the six months ended June 30 would have been 4.1%, 7.1% and 3.3%, respectively.

(3) Same store defined as all stabilized properties owned at January 1, 2000 and still owned at June 30, 2001.

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Stabilized Portfolio and Occupancy Overview

	# of Buildings	Square Feet			Occupancy at:
		Total	Leased	Available	6/30/2001		3/31/2001		12/31/2000
OCCUPANCY BY PRODUCT TYPE:
Office:
Los Angeles	31	3,199,985	2,874,741	325,244	89.8	%	96.6	%	97.3	%
Orange County	13	624,866	506,369	118,497	81.0	%	71.2	%	73.6	%
San Diego	37	2,700,483	2,700,483	—	100.0	%	100.0	%	100.0	%
Other	6	709,575	696,528	13,047	98.2	%	98.2	%	98.2	%
Subtotal	87	7,234,909	6,778,121	456,788	93.7	%	95.7	%	96.2	%
Industrial:
Los Angeles	7	554,490	550,979	3,511	99.4	%	99.9	%	99.8	%
Orange County	62	4,393,537	4,199,594	193,943	95.6	%	97.0	%	97.1	%
Other	6	657,921	657,921	—	100.0	%	100.0	%	100.0	%
Subtotal	75	5,605,948	5,408,494	197,454	96.5	%	97.7	%	97.8	%
OCCUPANCY BY REGION:
Los Angeles	38	3,754,475	3,425,720	328,755	91.2	%	97.1	%	97.7	%
Orange County	75	5,018,403	4,705,963	312,440	93.8	%	93.8	%	94.2	%
San Diego	37	2,700,483	2,700,483	—	100.0	%	100.0	%	100.0	%
Other	12	1,367,496	1,354,449	13,047	99.0	%	99.1	%	99.1	%
TOTAL PORTFOLIO	162	12,840,857	12,186,615	654,242	94.9	%	96.6	%	97.0	%

AVERAGE OCCUPANCY – STABILIZED PORTFOLIO				AVERAGE OCCUPANCY – SAME STORE PORTFOLIO
	Office	Industrial	Total		2001	2000	% Change
Quarter-to-Date	94.7%	97.1%	95.8%	Quarter-to-Date	95.7%	97.5%	(1.8%)
Year-to-Date	94.9%	97.1%	96.0%	Year-to-Date	96.1%	97.3%	(1.2%)

Kilroy Reality Corporation
Second Quarter 2001 Supplemental Financial Report

Leasing Activity

Quarter-to-Date

					2nd Generation					Weighted Average Lease Term (Mo.)
	# of  Leases(1)		Square Feet(1)		TI/LC Per Sq.Ft.	Maintenance Capex Per Sq.Ft.(2)	Changes in Rents(3)	Changes in Cash Rents(4)	Retention Rates(5)
	New	Renewal	New	Renewal
Office	10	14	79,068	319,707	$8.61	$0.04	24.3%	14.5%	76.0%	81
Industrial	11	14	28,752	249,168	$2.57	$0.01	20.8%	3.1%	70.9%	70
Total	21	28	107,820	568,875	$6.13	$0.03	23.5%	11.5%	74.4%	76

 
Year-to-Date

					2nd Generation					Weighted Average Lease Term (Mo.)
	# of  Leases(1)		Square Feet(1)		TI/LC Per Sq.Ft.	Maintenance Capex Per Sq.Ft.(2)	Changes in Rents(3)	Changes in Cash Rents(4)	Retention Rates(5)
	New	Renewal	New	Renewal
Office	16	22	115,386	406,262	$7.33	$0.07	24.1%	13.9%	63.3%	70
Industrial	18	22	52,682	418,436	$2.44	$0.02	38.9%	18.4%	77.1%	64
Total	34	44	168,068	824,698	$4.96	$0.05	28.4%	15.3%	64.8%	67

(1) Includes first and second generation space, net of month-to-month leases. Excludes leasing on new construction. First generation space is defined as the space first leased by the Company.

(2) Calculated over entire stabilized portfolio.

(3) Calculated as the change between GAAP rents for new/renewed leases and the expiring GAAP rents for the same space.

(4) Calculated as the change between stated rents for new/renewed leases and the expiring stated rents for the same space.

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

Kilroy Reality Corporation
Second Quarter 2001 Supplemental Financial Report

Lease Expiration Schedule

($ in thousands)

Year of Expiration	# of Expiring Leases	Total Square Feet(1)		% of Total Leased Sq. Ft.		Annual Base Rent	Annual Rent per Sq. Ft.
OFFICE:
Remaining 2001	32	275,524		4.5	%	$    4,999	$18.14
2002	63	498,125		8.1	%	9,224	18.52
2003	57	453,551		7.4	%	7,809	17.22
2004	55	795,102		12.9	%	17,683	22.24
2005	51	885,903		14.4	%	16,178	18.26
2006	37	593,864		9.6	%	14,224	23.95
2007	16	659,998		10.7	%	12,738	19.30
2008	8	391,302		6.3	%	8,660	22.13
2009	10	687,213		11.1	%	17,281	25.15
2010 and beyond	18	921,887		15.0	%	26,659	28.92
Subtotal	347	6,162,469		100.0	%	$135,455	$21.98
INDUSTRIAL:
Remaining 2001	37	237,198		4.4	%	$    1,989	$  8.39
2002	59	339,641		6.3	%	3,119	9.18
2003	53	745,075		13.7	%	5,185	6.96
2004	21	564,287		10.4	%	4,092	7.25
2005	16	756,702		13.9	%	5,758	7.61
2006	10	590,638		10.9	%	4,572	7.74
2007	3	164,595		3.0	%	1,396	8.48
2008	5	839,712		15.5	%	6,268	7.46
2009	7	505,976		9.3	%	3,654	7.22
2010 and beyond	7	686,422		12.6	%	7,715	11.24
Subtotal	218	5,430,246		100.0	%	$  43,748	$  8.06
TOTAL PORTFOLIO:
Remaining 2001	69	512,722		4.4	%	$    6,988	$13.63
2002	122	837,766		7.2	%	12,343	14.73
2003	110	1,198,626		10.3	%	12,994	10.84
2004	76	1,359,389		11.7	%	21,775	16.02
2005	67	1,642,605		14.3	%	21,936	13.35
2006	47	1,184,502		10.2	%	18,796	15.87
2007	19	824,593		7.1	%	14,134	17.14
2008	13	1,231,014		10.6	%	14,928	12.13
2009	17	1,193,189		10.3	%	20,935	17.55
2010 and beyond	25	1,608,309		13.9	%	34,374	21.37
Total	565	11,592,715	(1)	100.0	%	$179,203	$15.46

(1) Excludes space leased under month-to-month leases at June 30, 2001.

Kilroy Reality Corporation
Second Quarter 2001 Supplemental Financial Report

2001 Dispositions

($ in thousands)

Project	Location	Type	Month of Disposition	Square Feet	Sales Price
1st QUARTER:
6828 Nancy Ridge Drive	San Diego, CA	Industrial	February	39,669	$  3,300
2nd QUARTER:
199 & 201 N. Sunrise Avenue	Roseville, CA	Industrial	April	162,203	$15,400
TOTAL YEAR-TO-DATE DISPOSITIONS				201,872	$18,700

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Stabilized Development

($ in thousands)

Project	Location	Type	Start Date	Completion Date	Rentable Square Feet	Total Est. Investment	Occupancy
1st QUARTER:
None
2nd QUARTER:
Pacific Technology Center	San Diego, CA	Office	1Q 2000	2Q 2001	67,995	$12,190	100	%
Sorrento Rim Business Park II	San Diego, CA	Office	2Q 2000	2Q 2001	102,875	25,342	100	%
Subtotal					170,870	$37,532
TOTAL YEAR-TO-DATE      STABILIZED DEVELOPMENT					170,870	$37,532	100	%

Some of the enclosed information presented is forward-looking in nature, including information concerning 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 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. 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 “Business Risks“ in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions, the forward-looking events contained contained in this supplement information might not occur.

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

In-Process and Committed Development Projects

($ in thousands)

Project	Location	Type	Estimated Construction Period		Est. Stabilization Date(2)	Rentable Square Feet	Total Estimated Investment	% Committed(3)
			Start Date	Compl. Date
PROJECTS IN LEASE-UP:
Calabasas Park Centre—Phase II	Calabasas, CA	Office	2Q 2000	1Q 2001	1Q 2002	98,706	$  21,166	58	%
Calabasas Park Centre—Phase III(4)	Calabasas, CA	Office	3Q 2000	1Q 2001	3Q 2001	11,789	2,676	100	%
Innovation Corporate Center—Lot 8	San Diego, CA	Office	2Q 2000	2Q 2001	2Q 2002	46,759	9,093	51	%
Innovation Corporate Center—Lot 12	San Diego, CA	Office	2Q 2000	2Q 2001	2Q 2002	70,617	11,926	0	%
Peregrine Systems Corporate Ctr—Bld 3(1),(5)	Del Mar, CA	Office	2Q 2000	2Q 2001	4Q 2001	129,752	27,168	100	%
Subtotal						357,623	$  72,029	62	%
PROJECTS UNDER CONSTRUCTION:
Imperial & Sepulveda	El Segundo, CA	Office	1Q 2001	4Q 2001	4Q 2002	133,678	$  35,752	0	%
Pacific Corporate Center—Lots 25 & 27	San Diego, CA	Office	2Q 2001	1Q 2002	1Q 2003	68,400	13,907	0	%
Sorrento Gateway—Lot 4(1)	San Diego, CA	Office	2Q 2001	1Q 2002	1Q 2002	60,662	15,888	100	%
Westside Media Center—Phase III	West LA, CA	Office	4Q 2000	1Q 2002	1Q 2003	151,000	53,527	0	%
Subtotal						413,740	$119,074	15	%
TOTAL PROJECTS IN LEASE UP AND UNDER CONSTRUCTION						771,363	$191,103	37	%
COMMITTED DEVELOPMENT:
Brobeck, Phleger & Harrison Expansion	Del Mar, CA	Office	3Q 2001	3Q 2002	3Q 2002	89,168	$  22,910	100	%
Peregrine Systems Corporate Ctr—Bld 4(1)	Del Mar, CA	Office	3Q 2001	4Q 2002	2Q 2003	114,780	26,050	100	%
						203,948	$  48,960	100	%
TOTAL IN-PROCESS AND COMMITTED DEVELOPMENT PROJECTS:						975,311	$240,063	50	%

(1) Project is being developed by a Development LLC in which the Company holds a 50% managing interest. The estimated investment figure includes the capital required to purchase the remaining 50% interest in the project.

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

(3) Includes executed leases, calculated on a square footage basis.

(4) This project is 100% leased to one tenant. It is expected that the tenant will take occupancy of 100% of the space during the third quarter of 2001.

(5) This project is 100% leased to one tenant. The tenant occupied 82% of the project at June 30, 2001 under a staged move-in plan.
It is expected that the tenant will take occupancy of the remaining space during the fourth quarter of 2001.

Some of the enclosed information presented is forward-looking in nature, including information concerning 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 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. 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 “Business Risks“ in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions the forward-looking events contained in this supplemental information might not occur.

Kilroy Reality Corporation
Second Quarter 2001 Supplemental Financial Report

Future Development Pipeline

($ in thousands)

Project	Location	Type	Rentable Square Feet	Total Estimated Investment
SAN DIEGO COUNTY:
Innovation Corporate Center—Lot 2	San Diego, CA	Office	51,187	$    9,681
Innovation Corporate Center—Lot 4	San Diego, CA	Office	75,000	13,150
Innovation Corporate Center—Lot 9	San Diego, CA	Office	65,867	11,803
Innovation Corporate Center—Lot 10	San Diego, CA	Office	37,405	7,554
Pacific Corporate Center—Lots 3, 4 & 6	San Diego, CA	Office	225,000	44,128
Pacific Corporate Center—Lot 8	San Diego, CA	Office	116,157	24,992
San Diego Corporate Center—Lot 7	Del Mar, CA	Office	207,842	62,200
Santa Fe Summit—Phase I	San Diego, CA	Office	150,000	32,243
Santa Fe Summit—Phase II	San Diego, CA	Office	150,000	33,958
Sorrento Gateway—Lot 1	San Diego, CA	Office	54,878	11,052
Sorrento Gateway—Lot 2(1)	San Diego, CA	Office	70,000	13,730
Sorrento Gateway—Lot 3(1)	San Diego, CA	Office	56,800	11,064
Sorrento Gateway—Lot 7(1)	San Diego, CA	Office	57,000	11,484
Subtotal			1,317,136	$287,039
TOTAL FUTURE DEVELOPMENT PIPELINE			1,317,136	$287,039

(1) Project is being developed by a Development LLC in which the Company holds a 50% interest. The estimated investment figure includes the capital required to purchase the remaining 50% interest in the project.

Some of the enclosed information presented is forward-looking in nature, including information concerning 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 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. 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 “Business Risks“ in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2000. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplement information might not occur.

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Capital Structure

At June 30, 2001

($ in thousands)

	Shares/Units at June 30, 2001	Aggregate Principal Amount or $ Value Equivalent	% of Total Market Capitalization
DEBT:
Secured Debt		$    438,947	24.9%
Unsecured Line of Credit		185,000	10.5%
Unsecured Term Facility		100,000	5.7%
Total Debt		$    723,947	41.1%
EQUITY:
8.075% Series A Cumulative Redeemable Preferred Units(1)	1,500,000	$      75,000	4.3%
9.375% Series C Cumulative Redeemable Preferred Units(1)	700,000	35,000	2.0%
9.250% Series D Cumulative Redeemable Preferred Units(1)	900,000	45,000	2.5%
Common Units Outstanding(2)	3,062,854	89,129	5.1%
Common Shares Outstanding(2)	27,265,614	793,429	45.0%
Total Equity		$1,037,558	58.9%
TOTAL MARKET CAPITALIZATION		$1,761,505	100.0%

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

(2)   Valued based on closing share price of $29.10 at June 30, 2001.

Kilroy Realty Corporation
Second Quarter 2001 Supplemental Financial Report

Debt Analysis
At June 30, 2001
($ in thousands)

SECURED DEBT AND UNSECURED TERM FACILITY PRINCIPAL REPAYMENT SCHEDULE
	2001	2002		2003		2004			2005	Thereafter		Total
$	12,175	$	6,148	$	173,678	$	127,719	$	16,965	$	202,262	$	538,947

TOTAL DEBT COMPOSITION
		% of Total Debt		Weighted Average
				Interest Rate		Maturity
Secured vs. Unsecured Debt:
	Secured Debt	60.6	%	6.9	%	5.3
	Unsecured Debt	39.4	%	7.6	%	2.0
Floating vs. Fixed Rate Debt:
	Fixed Rate Debt(1),(2),(4)	77.1	%	7.5	%	4.6
	Floating Rate Debt (3)	22.9	%	6.0	%	2.0
Total Debt				7.2	%	4.0

UNSECURED LINE OF CREDIT
Total Line	Outstanding Balance	Expiration Date
$400,000	$185,000	November 2002

CAPITALIZED INTEREST
Quarter-to-Date	Year-to-Date
$3.4 million	$6.7 million

(1)	The Company currently has an interest-rate swap agreement to fix LIBOR on $150 million of its floating rate debt at 6.95% which expires in February 2002.
(2)	The Company currently has an interest-rate swap agreement to fix LIBOR on $150 million of its floating rate debt at 5.48% which expires in November 2002.
(3)	The Company, through one of its Development LLCs, currently has an interest-rate cap agreement to cap LIBOR on its floating rate construction debt at 8.5% which expires in April 2002. The notional amount of the cap increases over the life of the agreement as the balance of the related construction loan increases. At June 30, 2001, the notional amount of the cap agreement was approximately$54.4 million.
(4)	The percentage of fixed rate debt to total debt does not take into consideration the portion of floating rate debt capped by the Company's interest-rate cap agreement. Including the effects of the interest-rate cap agreement, the Company had fixed or capped approximately 84.7% of its total outstanding debt at June 30, 2001.