Kilroy Realty (KRC) 8-K Third Quarter 2010 Supplemental Financial Report

Exhibit 99.1

Third Quarter 2010 Supplemental Financial Report

Some of the enclosed information presented in this supplemental and on the Company’s October 26, 2010 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 October 26, 2010 conference call might not occur.

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Table of Contents

	Page
Corporate Data and Financial Highlights
Company Background	1-2
Financial Highlights	3-4
Common Stock Data	5
Consolidated Balance Sheets	6-7
Consolidated Statements of Operations	8-9
Funds From Operations and Funds Available for Distribution	10-11
Portfolio Data
Same Store Analysis	12-13
Stabilized Portfolio Occupancy Overview	14-20
Submarket Statistics	21
Lease Commencement Information by Segment	22-23
Stabilized Portfolio Capital Expenditures	24
Lease Expiration Summary and Lease Expirations by Region	25-30
Top Fifteen Tenants	31
2010 Acquisitions	32
Development
In-Process Redevelopment Project	33
Future Development Pipeline	34
Debt and Capitalization Data
Capital Structure	35-36
Debt Analysis	37-39
Debt Covenants	40
Non-GAAP Supplemental Measures	41-45

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Company Background

Kilroy Realty Corporation (NYSE:KRC) owns, develops, and operates office and industrial real estate in Southern California. The Company operates as a self-administered real estate investment trust. As of September 30, 2010, the Company’s stabilized portfolio consisted of 99 office buildings and 41 industrial buildings, which encompassed an aggregate of 9.8 million and 3.7 million rentable square feet, respectively, and was 86.4% 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 Los Angeles, CA 90064 (310) 481-8400 Web: www.kilroyrealty.com E-mail: investorrelations@kilroyrealty.com
Edward F. Brennan, Ph.D.		Chris Corpuz	Executive VP, Acquisitions andStrategic Initiatives
William P. Dickey		Jeffrey C. Hawken	Executive VP and COO
Scott S. Ingraham		Tyler H. Rose	Executive VP and CFO
John B. Kilroy, Jr.		John T. Fucci	Sr. VP, Asset Management
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 James Feldman	(646) 855-5808	ISI Group Steve Sakwa	(212) 446-9462
Citigroup Investment Research Michael Bilerman	(212) 816-1383	JMP Securities Mitch Germain	(212) 906-3546
Cowen and Company James Sullivan	(646) 562-1380	J.P. Morgan Anthony Paolone	(212) 622-6682
Credit Suisse Group Andrew Rosivach	(415) 249-7942	RBC Capital Markets Dave Rodgers	(440) 715-2647
Deutsche Bank Securities, Inc. John N. Perry	(212) 250-4912	Robert W. Baird & Company David Aubuchon	(314) 863-4235
FBR Capital Markets Srikanth Nagarajan	(646) 885-5429	Stifel, Nicolaus & Company John W. Guinee III	(443) 224-1307

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Green Street Advisors
Michael Knott (949) 640-8780 UBS Investment Research
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.

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

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

	Three Months Ended
	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009
INCOME ITEMS (Including Discontinued Operations):
Revenues	$	79,804		$	72,416		$	66,819		$	67,379		$	68,494
Lease Termination Fees		186			303			192			177			94
Net Operating Income(1)		56,866			51,033			48,795			48,667			49,166
Capitalized Interest and Debt Costs		2,690			2,810			2,584			2,733			2,614
Net (Loss) Income Available to Common Stockholders		(126	)		(1,783	)		4,886			(3,009	)		8,111
EBITDA(1)(2)		49,576			43,330			41,771			30,978			42,005
Funds From Operations(1)(3)(4)		29,690			21,658			25,806			17,679			30,190
Funds Available for Distribution(1)(3)(4)		14,760			10,695			13,791			12,921			23,920
Net (Loss) Income Available to Common Stockholders per common share — diluted	$	(0.01	)	$	(0.04	)	$	0.11		$	(0.08	)	$	0.17
Funds From Operations per common share — diluted	$	0.54		$	0.41		$	0.57		$	0.39		$	0.66
Dividends per share	$	0.35		$	0.35		$	0.35		$	0.35		$	0.35
RATIOS (Including Discontinued Operations):
Operating Margins		71.3	%		70.5	%		73.0	%		72.2	%		71.8	%
Interest Coverage Ratio(5)		3.4	x		3.5	x		3.8	x		2.9	x		4.0	x
Fixed Charge Coverage Ratio(6)		2.7	x		2.7	x		2.8	x		2.2	x		3.0	x
FFO Payout Ratio(7)		63.7	%		87.3	%		60.8	%		88.8	%		52.0	%
FAD Payout Ratio(8)		128.0	%		176.8	%		113.7	%		121.5	%		65.7	%
	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009
ASSETS:
Real Estate Held for Investment before Depreciation	$	2,964,429		$	2,953,609		$	2,556,303		$	2,520,083		$	2,504,916
Total Assets		2,535,684			2,556,509			2,112,242			2,084,281			2,079,002
CAPITALIZATION:
Total Debt(9)	$	1,174,421		$	1,181,970		$	1,031,514		$	1,006,074		$	986,788
Total Preferred Equity and Noncontrolling Interests(9)		201,500			201,500			201,500			201,500			201,500
Total Common Equity and Noncontrolling Interests(9)		1,791,973			1,605,996			1,382,129			1,376,221			1,244,747
Total Market Capitalization(9)		3,167,894			2,989,466			2,615,143			2,583,795			2,433,035
Total Debt / Total Market Capitalization		37.1	%		39.6	%		39.4	%		39.0	%		40.6	%
Total Debt and Preferred / Total Market Capitalization		43.5	%		46.3	%		47.1	%		46.8	%		48.9	%

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

(1)	Please refer to pages 30 and 31 for Management Statements on Net Operating Income, EBITDA, Funds From Operations and Funds Available for Distribution.
(2)	Please refer to page 33 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 the noncash amortization of exchangeable debt discounts.
(6)	Calculated as EBITDA divided by interest expense, excluding the noncash amortization of exchangeable 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 26.

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Common Stock Data (NYSE: KRC)

	Three Months Ended
	9/30/2010		6/30/2010		3/31/2010		12/31/2009		9/30/2009
High Price	$	34.39	$	33.92	$	32.60	$	31.99	$	30.75
Low Price	$	32.13	$	29.73	$	26.75	$	26.00	$	18.67
Closing Price	$	33.14	$	29.73	$	30.84	$	30.67	$	27.74
Dividends per share — annualized	$	1.40	$	1.40	$	1.40	$	1.40	$	1.40
Closing common shares (in 000’s)(1)(2)		52,350		52,296		43,093		43,149		43,149
Closing common partnership units (in 000’s)(1)		1,723		1,723		1,723		1,723		1,723
		54,073		54,019		44,816		44,872		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.

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Consolidated Balance Sheets

	(unaudited, $ in thousands)
	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009
ASSETS:
Land and improvements	$	432,289		$	434,792		$	338,684		$	335,932		$	335,932
Buildings and improvements		2,245,618			2,247,549			1,950,408			1,920,543			1,909,876
Undeveloped land and construction in progress		286,522			271,268			267,211			263,608			259,108
Total real estate held for investment		2,964,429			2,953,609			2,556,303			2,520,083			2,504,916
Accumulated depreciation and amortization		(652,675	)		(644,246	)		(623,981	)		(605,976	)		(587,968	)
Total real estate assets, net		2,311,754			2,309,363			1,932,322			1,914,107			1,916,948
Cash and cash equivalents		8,313			29,428			10,736			9,883			9,265
Restricted cash		3,265			3,485			32			2,059			2,936
Marketable securities		4,481			4,087			4,226			3,452			3,229
Current receivables, net		4,055			3,739			2,913			3,236			3,139
Deferred rent receivables, net		83,563			79,813			76,406			74,392			72,623
Note receivable		—			10,603			10,641			10,679			10,716
Deferred leasing costs and acquisition-related intangible assets, net		96,691			98,466			56,570			51,832			49,627
Deferred financing costs, net		14,574			10,078			7,651			8,334			4,393
Prepaid expenses and other assets, net		8,988			7,447			10,745			6,307			6,126
TOTAL ASSETS	$	2,535,684		$	2,556,509		$	2,112,242		$	2,084,281		$	2,079,002
LIABILITIES, NONCONTROLLING INTEREST AND EQUITY:
Liabilities:
Secured debt, net	$	315,150		$	316,570		$	267,014		$	294,574		$	296,788
Exchangeable senior notes, net		298,295			296,660			438,749			436,442			398,347
Unsecured senior notes, net		330,941			391,888			144,000			144,000			144,000
Unsecured line of credit		205,000			150,000			150,000			97,000			126,000
Accounts payable, accrued expenses and other liabilities		66,814			57,792			58,333			52,533			42,565
Accrued distributions		20,383			20,395			17,167			17,136			17,133
Deferred revenue and acquisition-related intangible liabilities, net		68,251			71,651			65,655			66,890			69,252
Rents received in advance and tenant security deposits		23,776			25,849			23,654			18,230			18,381
Total liabilities		1,328,610			1,330,805			1,164,572			1,126,805			1,112,466

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Third Quarter 2010 Supplemental Financial Report

	(unaudited, $ in thousands)
	9/30/2010			6/30/2010			3/31/2010			12/31/2009			9/30/2009
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			431			431			431
Additional paid-in capital		1,209,673			1,208,716			914,766			913,657			904,043
Distributions in excess of earnings		(230,215	)		(211,555	)		(191,190	)		(180,722	)		(162,391	)
Total stockholders’ equity		1,101,563			1,119,266			845,589			854,948			863,665
Noncontrolling Interest
Common units of the Operating Partnership		31,873			32,800			28,443			28,890			29,233
Total equity		1,133,436			1,152,066			874,032			883,838			892,898
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY	$	2,535,684		$	2,556,509		$	2,112,242		$	2,084,281		$	2,079,002

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

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

	Three Months Ended September 30,									Nine Months Ended September 30,
	2010			2009			%Change			2010			2009			%Change
REVENUES:
Rental income	$	72,608		$	61,297			18.5	%	$	198,302		$	186,959			6.1	%
Tenant reimbursements		6,211			6,843			(9.2	)%		18,412			21,898			(15.9	)%
Other property income		985			354			178.2	%		2,325			3,198			(27.3	%
Total revenues		79,804			68,494			16.5	%		219,039			212,055			3.3	%
EXPENSES:
Property expenses		15,845			12,699			24.8	%		42,408			37,611			12.8	%
Real estate taxes		7,614			5,988			27.2	%		20,132			18,260			10.3	%
Provision for bad debts		(857	)		243			(452.7	)%		(843	)		395			(313.4	)%
Ground leases		336			398			(15.6	)%		648			1,227			(47.2	)%
General and administrative expenses		7,273			7,662			(5.1	)%		21,096			22,023			(4.2	)%
Acquisition-related expenses		354			—			100.0	%		1,624			—			100.0	%
Depreciation and amortization		30,054			21,968			36.8	%		74,714			66,608			12.2	%
Total expenses		60,619			48,958			23.8	%		159,779			146,124			9.3	%
OTHER (EXPENSES) INCOME:
Interest income and other net investment gains		337			501			(32.7	)%		703			1,074			(34.5	)%
Interest expense		(15,853	)		(10,926	)		45.1	%		(40,897	)		(35,041	)		16.7	%
Gain (loss) on early extinguishment of debt		—			3,119			(100.0	)%		(4,564	)		3,119			(246.3	)%
Total other (expenses) income		(15,516	)		(7,306	)		112.4	%		(44,758	)		(30,848	)		45.1	%
INCOME FROM CONTINUING OPERATIONS		3,669			12,230			(70.0	)%		14,502			35,083			(58.7	)%
DISCONTINUED OPERATIONS
Loss from discontinued operations		—			—			—			—			(224	)		(100.0	)%
Net gain on dispositions of discontinued operations		—			—			—			—			2,485			(100.0	)%
Total income from discontinued operations		—			—			—			—			2,261			(100.0	)%
NET INCOME		3,669			12,230			(70.0	)%		14,502			37,344			(61.2	)%
Net loss (income) attributable to noncontrolling common units of the Operating Partnership		4			(320	)		101.3	%		(128	)		(1,144	)		88.8	%
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION		3,673			11,910			(69.2	)%		14,374			36,200			(60.3	)%
PREFERRED DISTRIBUTIONS AND DIVIDENDS:

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Third Quarter 2010 Supplemental Financial Report

	Three Months Ended September 30,									Nine Months Ended September 30,
	2010			2009			%Change			2010			2009			%Change
Distributions on noncontrolling cumulative redeemable preferred units of the Operating Partnership		(1,397	)		(1,397	)		—			(4,191	)		(4,191	)		—
Preferred dividends		(2,402	)		(2,402	)		—			(7,206	)		(7,206	)		—
Total preferred distributions and dividends		(3,799	)		(3,799	)		—			(11,397	)		(11,397	)		—
NET (LOSS) INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	(126	)	$	8,111			(101.6	)%	$	2,977		$	24,803			(88.0	)%
Weighted average common shares outstanding — basic		52,274			42,935			21.8	%		48,562			37,279			30.3	%
Weighted average common shares outstanding — diluted		52,274			42,935			21.8	%		48,565			37,297			30.2	%
NET (LOSS) INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE
Net (loss) income available to common stockholders per share — basic	$	(0.01	)	$	0.17			(105.9	)%	$	0.04		$	0.64			(93.8	)%
Net (loss) income available to common stockholders per share — diluted	$	(0.01	)	$	0.17			(105.9	)%	$	0.04		$	0.64			(93.8	)%

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Third Quarter 2010 Supplemental Financial Report

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

	Three Months Ended September 30,									Nine Months Ended September 30,
	2010			2009			%Change			2010			2009			%Change
FUNDS FROM OPERATIONS:(1)
Net (loss) income available to common stockholders	$	(126	)	$	8,111			(101.6	)%	$	2,977		$	24,803			(88.0	)%
Adjustments:
Net (loss) income attributable to noncontrolling common units of the Operating Partnership		(4	)		320			(101.3	)%		128			1,144			(88.8	)%
Depreciation and amortization of real estate assets		29,820			21,759			37.0	%		74,049			66,018			12.2	%
Net gain on dispositions of discontinued operations		—			—			—			—			(2,485	)		(100.0	)%
Funds From Operations(2)	$	29,690		$	30,190			(1.7	)%	$	77,154		$	89,480			(13.8	)%
Weighted average common shares/units outstanding — basic(3)		54,778			45,493			20.4	%		51,106			39,779			28.5	%
Weighted average common shares/units outstanding — diluted(3)		54,782			45,494			20.4	%		51,109			39,797			28.4	%
FFO per common share/unit — basic(2)	$	0.54		$	0.66			(18.3	)%	$	1.51		$	2.25			(32.9	)%
FFO per common share/unit — diluted (2)	$	0.54		$	0.66			(18.3	)%	$	1.51		$	2.25			(32.9	)%
FUNDS AVAILABLE FOR DISTRIBUTION:(1)
Funds From Operations(2)	$	29,690		$	30,190			(1.7	)%	$	77,154		$	89,480			(13.8	)%
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		(15,077	)		(9,017	)		67.2	%		(40,995	)		(18,697	)		119.3	%
Amortization of deferred revenue related to tenant improvements(4)		(2,333	)		(2,289	)		1.9	%		(7,108	)		(7,431	)		(4.3	)%
Net effect of straight-line rents(5)		(3,071	)		(1,266	)		142.6	%		(8,491	)		(5,479	)		55.0	%
Amortization of other deferred revenue, net(6)		284			158			79.7	%		83			(951	)		108.7	%
Amortization of net above(below) market rents(7)		664			(49	)		1,455.1	%		696			(349	)		299.4	%
Noncash amortization of exchangeable debt discount, net(8)		1,284			1,474			(12.9	)%		4,763			4,629			2.9	%
Adjustments to GAAP loss/gain on early extinguishment on debt		—			1,549			(100.0	)%		4,564			1,549			194.6	%
Amortization of deferred financing costs and debt discounts		1,510			799			89.0	%		3,252			2,300			41.4	%
Noncash amortization of share-based compensation awards		1,809			2,371			(23.7	)%		5,328			7,914			(32.7	)%
Funds Available for Distribution(2)	$	14,760		$	23,920			(38.3	)%	$	39,246		$	72,965			(46.2	)%

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Third Quarter 2010 Supplemental Financial Report

(1)	See page 31 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(below) market rents.
(8)	Represents the amortization of the noncash debt discounts on the Company’s exchangeable senior notes, net of amounts capitalized.

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

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

Same Store Analysis (GAAP Basis)

	Three Months Ended September 30,									Nine Months Ended September 30,
	2010			2009			%Change			2010			2009			%Change
Total Same Store Portfolio
Number of properties		132			132						132			132
Square Feet		12,029,473			12,029,473						12,029,473			12,029,473
Percent of Stabilized Portfolio		89.3	%		100.0	%					89.3	%		100.0	%
Average Occupancy		85.3	%		84.3	%					84.2	%		86.2	%
Operating Revenues:
Rental income	$	60,965		$	59,896			1.8	%	$	180,523		$	182,721			(1.2	)%
Tenant reimbursements		5,811			6,270			(7.3	)%		17,065			20,077			(15.0	)%
Other property income		799			354			125.7	%		1,938			3,198			(39.4	)%
Total operating revenues		67,575			66,520			1.6	%		199,526			205,996			(3.1	)%
Operating Expenses:
Property expenses		12,679			12,218			3.8	%		37,393			36,124			3.5	%
Real estate taxes		5,984			5,614			6.6	%		17,334			17,283			0.3	%
Provision for bad debts		(857	)		243			(452.7	)%		(843	)		395			(313.4	)%
Ground leases		333			395			(15.7	)%		638			1,217			(47.6	)%
Total operating expenses		18,139			18,470			(1.8	)%		54,522			55,019			(0.9	)%
GAAP Net Operating Income	$	49,436		$	48,050			2.9	%	$	145,004		$	150,977			(4.0	)%

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Same Store Analysis (Cash Basis)⁽²⁾

	Three Months Ended September 30,							Nine Months Ended September 30,
	2010		2009		%Change			2010		2009		%Change
Total operating revenues	$	64,223	$	63,049		1.9	%	$	186,102	$	192,020		(3.1	)%
Total operating expenses		18,996		18,227		4.2	%		55,365		54,624		1.4	%
Cash Net Operating Income	$	45,227	$	44,822		0.9	%	$	130,737	$	137,396		(4.8	)%

(1)	Same store defined as all stabilized properties owned as of January 1, 2009 and still owned and in the stabilized portfolio as of September 30, 2010.
(2)	Please refer to page 32 for a reconciliation of the Same Store measures on this page to Net Income Available to Common Stockholders.

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Kilroy Realty Corporation
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Stabilized Portfolio Occupancy Overview

			Portfolio Breakdown								Occupancy at:(1)
			Year-to-Date						Total Square
	# of Buildings		NOI (2)			Sq. Ft.			Feet		9/30/2010			6/30/2010			12/31/2009
STABILIZED PORTFOLIO:
OCCUPANCY BY PRODUCT TYPE:
Office:
Los Angeles and Ventura Counties		29		28.4	%		22.8	%		3,065,626		89.6	%		93.0	%		88.8	%
San Diego		62		55.7	%		39.8	%		5,362,398		82.2	%		81.5	%		76.8	%
Orange County		7		1.8	%		4.8	%		647,447		78.7	%		78.2	%		49.8	%
San Francisco		1		3.4	%		5.5	%		734,035		89.4	%		89.7	%		—
Subtotal		99		89.3	%		72.9	%		9,809,506		84.8	%		85.7	%		80.6	%
Industrial:
Los Angeles County		1		1.5	%		1.4	%		192,053		100.0	%		100.0	%		100.0	%
Orange County		40		9.2	%		25.7	%		3,462,410		90.0	%		82.4	%		87.6	%
Subtotal		41		10.7	%		27.1	%		3,654,463		90.6	%		83.3	%		88.2	%
OCCUPANCY BY REGION:
Los Angeles and Ventura Counties		30		29.9	%		24.2	%		3,257,679		90.2	%		93.3	%		89.4	%
San Diego		62		55.7	%		39.8	%		5,362,398		82.2	%		81.5	%		76.8	%
Orange County		47		11.0	%		30.5	%		4,109,857		88.3	%		81.7	%		84.8	%
San Francisco		1		3.4	%		5.5	%		734,035		89.4	%		89.7	%		—
TOTAL STABILIZED PORTFOLIO		140		100.0	%		100.0	%		13,463,969		86.4	%		85.1	%		82.8	%
REENTITLEMENT PROPERTY:
Industrial:
Orange County (17150 Von Karman)		1								157,458
TOTAL PORTFOLIO		141								13,621,427

Average Occupancy — Stabilized Portfolio

	Office			Industrial			Total
Quarter-to-Date		84.9	%		86.8	%		85.4	%
Year-to-Date		83.5	%		85.7	%		84.1	%

Average Occupancy — Same Store Portfolio

	Office			Industrial			Total
Quarter-to-Date		84.6	%		86.8	%		85.3	%
Year-to-Date		83.6	%		85.7	%		84.2	%

(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.

14

Kilroy Realty Corporation
Third 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		90.9	%
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		97.8	%
999 N. Sepulveda Boulevard	El Segundo		127,901		99.8	%
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		82.3	%
3800 Kilroy Airport Way	Long Beach		192,476		100.0	%
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		65.7	%
2829 Townsgate Road	Thousand Oaks		81,067		89.7	%
Total Los Angeles and Ventura Counties Office			3,065,626		89.6	%

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Kilroy Realty Corporation
Third 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		95.0	%
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		98.7	%
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		—
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		—
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		88.9	%
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	%

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Kilroy Realty Corporation
Third 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		87.4	%
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	%
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		—
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		74.1	%
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			5,362,398		82.2	%

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Kilroy Realty Corporation
Third 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		92.2	%
601 Valencia Avenue	Brea		60,891		—
603 Valencia Avenue	Brea		45,900		10.1	%
2211 Michelson Drive	Irvine		271,556		96.9	%
111 Pacifica	Irvine Spectrum		67,496		68.8	%
999 Town & Country	Orange		98,551		100.0	%
Total Orange County Office			647,447		78.7	%
San Francisco, California
303 Second Street	San Francisco		734,035		89.4	%
Total San Francisco County Office			734,035		89.4	%
Total Office			9,809,506		84.8	%
Industrial:
Los Angeles, California
2031 E. Mariposa Avenue	El Segundo		192,053		100.0	%
Total Los Angeles County Industrial			192,053		100.0	%

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Kilroy Realty Corporation
Third 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 Road	Anaheim		57,730		100.0	%
1250 N. Tustin Avenue	Anaheim		84,185		100.0	%
3125 E. Coronado Street	Anaheim		144,000		—
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		88.8	%
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		100.0	%
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		—
660 N. Puente Street	Brea		51,567		100.0	%
950 W. Central Avenue	Brea		24,000		100.0	%
1050 W. Central Avenue	Brea		30,000		100.0	%
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		100.0	%
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		75.0	%
12311 Industry Street	Garden Grove		25,000		100.0	%

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	City/
	Submarket	Square Feet		Occupancy
Industrial:
Orange County, California (Continued)
7261 Lampson Avenue	Garden Grove		47,092		100.0	%
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			3,462,410		90.0	%
Total Industrial			3,654,463		90.6	%

20

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Submarket Statistics as of September 30, 2010

	Market			Market			KRC			KRC
	Direct			Total			Percentage			Percentage
Submarket	Vacancy(1)			Vacancy(1)			Occupied			Leased
SAN DIEGO, CALIFORNIA
Del Mar		15.3	%		19.2	%		94.7	%		97.2	%
Sorrento Mesa
Two- Three Story Corporate		8.5	%		10.1	%		79.5	%		82.4	%
University Towne Center / Governor Park
Two- Three Story Corporate		10.4	%		13.1	%		53.9	%		86.7	%
I-15 Corridor
Class A Office Market		27.8	%		28.5	%		96.4	%		99.2	%
Two- Three Story Corporate		13.8	%		14.3	%		72.5	%		76.4	%
Mission Valley		21.8	%		23.3	%		79.3	%		79.3	%
ORANGE COUNTY, CALIFORNIA
Office		17.8	%		21.8	%		78.7	%		78.7	%
Industrial		6.0	%		10.4	%		90.0.	%		90.0	%
LOS ANGELES, CALIFORNIA
Westside		15.0	%		19.2	%		78.6	%		78.7	%
El Segundo (Class A)		19.8	%		20.3	%		96.6	%		96.6	%
Long Beach Airport (Class A)		17.3	%		17.5	%		90.6	%		91.3	%
101 Corridor (Class A)		18.4	%		18.4	%		92.2	%		93.1	%
SAN FRANCISCO, CALIFORNIA
South Financial District		11.3	%		12.6	%		89.4	%		95.7	%

(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.

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Lease Commencement Information by Segment

For Leases That Commenced During the Three Months Ended September 30, 2010

	1st & 2nd Generation								2nd Generation
											Maintenance											Weighted
	# of Leases(1)				Square Feet(1)				TI/LC		Capex Per		Changes in			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		14		16		136,401		356,753	$	14.96	$	0.28		(19.5	)%		(5.2	)%		43.3	%		49
Industrial		4		2		264,886		90,842		9.25		0.09		(22.3	)%		(30.9	)%		100.0	%		81
Total		18		18		401,287		447,595	$	12.46	$	0.22		(19.9	)%		(9.4	)%		48.9	%		59

For Leases That Commenced During the Nine Months Ended September 30, 2010

	1st & 2nd Generation								2nd Generation
											Maintenance											Weighted
	# of Leases(1)				Square Feet(1)				TI/LC		Capex Per		Changes in			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		41		37		625,866		578,554	$	29.81	$	0.94		(14.1	)%		(11.3	)%		52.2	%		63
Industrial		9		5		299,886		217,998		7.08		0.40		(22.0	)%		(28.3	)%		58.2	%		67
Total		50		42		925,752		796,552	$	22.46	$	0.78		(15.1	)%		(13.7	)%		53.7	%		64

(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.

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Third Quarter 2010 Supplemental Financial Report

(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.

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Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures
($ in thousands)

Nonrecurring Capital Expenditures:

	Q1 2010		Q2 2010		Q3 2010		YTD 2010
Capital Improvements	$	1,873	$	1,562	$	1,113	$	4,548
Tenant Improvements & Leasing Commissions		3,980		3,290		5,788		13,058
Total	$	5,853	$	4,852	$	6,901	$	17,606

Recurring Capital Expenditures:

	Q1 2010		Q2 2010		Q3 2010		YTD 2010
Capital Improvements
Office	$	2,445	$	3,339	$	2,453	$	8,237
Industrial		887		239		320		1,446
		3,332		3,578		2,773		9,683
Tenant Improvements & Leasing Commissions(1)
Office		8,170		9,501		9,814		27,485
Industrial		459		878		2,490		3,827
		8,629		10,379		12,304		31,312
Total
Office		10,615		12,840		12,267		35,722
Industrial		1,346		1,117		2,810		5,273
	$	11,961	$	13,957	$	15,077	$	40,995

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

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Kilroy Realty Corporation
Third 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:
Remainder of 2010		15		185,942		2.3	%	$	3,833		1.6	%	$	20.61
2011		76		664,767		8.1	%		15,528		6.3	%		23.36
2012		68		780,878		9.5	%		21,789		8.9	%		27.90
2013		68		844,428		10.3	%		22,844		9.3	%		27.05
2014		54		1,078,147		13.1	%		29,194		11.9	%		27.08
2015		63		1,108,957		13.5	%		34,000		13.8	%		30.66
2016		18		353,274		4.3	%		8,296		3.4	%		23.48
2017		27		1,339,600		16.3	%		38,633		15.7	%		28.84
2018		15		765,681		9.3	%		31,041		12.6	%		40.54
2019		9		357,541		4.4	%		13,477		5.5	%		37.69
2020 and beyond		15		736,232		8.9	%		27,371		11.0	%		37.18
Subtotal		428		8,215,447		100.0	%	$	246,006		100.0	%	$	29.94
INDUSTRIAL:
Remainder of 2010		3		88,484		2.7	%	$	864		3.4	%	$	9.76
2011		10		288,845		8.7	%		2,528		9.8	%		8.75
2012		12		490,473		14.8	%		2,866		11.1	%		5.84
2013		8		610,455		18.4	%		4,463		17.3	%		7.31
2014		12		486,578		14.7	%		3,918		15.2	%		8.05
2015		10		544,864		16.5	%		3,839		14.9	%		7.05
2016		2		233,278		7.0	%		3,274		12.7	%		14.03
2017		3		111,566		3.4	%		676		2.6	%		6.06
2018		1		82,602		2.5	%		643		2.5	%		7.78
2019		2		168,200		5.1	%		1,467		5.7	%		8.72
2020 and beyond		2		204,162		6.2	%		1,238		4.8	%		6.06
Subtotal		65		3,309,507		100.0	%	$	25,776		100.0	%	$	7.79

25

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

	# 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)
TOTAL PORTFOLIO:
Remainder of 2010		18		274,426		2.4	%	$	4,697		1.7	%	$	17.12
2011		86		953,612		8.3	%		18,056		6.6	%		18.93
2012		80		1,271,351		11.0	%		24,655		9.1	%		19.39
2013		76		1,454,883		12.6	%		27,307		10.0	%		18.77
2014		66		1,564,725		13.6	%		33,112		12.2	%		21.16
2015		73		1,653,821		14.3	%		37,839		13.9	%		22.88
2016		20		586,552		5.1	%		11,570		4.3	%		19.73
2017		30		1,451,166		12.6	%		39,309		14.5	%		27.09
2018		16		848,283		7.4	%		31,684		11.7	%		37.35
2019		11		525,741		4.6	%		14,944		5.5	%		28.42
2020 and beyond		17		940,394		8.1	%		28,609		10.5	%		30.42
Total		493		11,524,954		100.0	%	$	271,782		100.0	%	$	23.58

(1)

The information presented for all lease expiration activity reflects leasing activity through September 30, 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 September 30, 2010.

(2)

Reflects annualized contractual base rent calculated on a straight-line basis.

26

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Lease Expiration Schedule Detail by Region
($ in thousands)

	Los Angeles/Ventura Counties														Orange County
										% of Total														% of Total
	# of Expiring		Total		% of Total			Annualized		Annualized			Annualized Rent		# of Expiring		Total		% of Total			Annualized		Annualized			Annualized Rent
Year of Expiration	Leases		Square Feet		Regional Sq. Ft.			Base Rent(2)		Base Rent(2)			per Sq. Ft.(2)		Leases		Square Feet		Regional Sq. Ft.			Base Rent(2)		Base Rent(2)			per Sq. Ft.(2)
OFFICE:
Remainder of 2010		12		163,676		6.1	%	$	2,882		3.9	%	$	17.61		—		—		—			—		—			—
2011		53		460,026		17.2	%		9,701		13.1	%		21.09		10		30,027		6.0	%		838		5.1	%		27.91
2012		36		199,834		7.5	%		5,865		7.9	%		29.35		15		62,307		12.5	%		1,699		10.4	%		27.27
2013		39		389,903		14.6	%		10,245		13.8	%		26.28		13		52,842		10.6	%		1,622		10.0	%		30.70
2014		31		573,396		21.4	%		16,078		21.7	%		28.04		12		50,335		10.1	%		1,543		9.5	%		30.65
2015		29		327,827		12.2	%		10,195		13.8	%		31.10		7		56,652		11.4	%		1,434		8.8	%		25.31
2016		7		73,624		2.8	%		2,733		3.7	%		37.12		1		7,067		1.4	%		283		1.7	%		40.05
2017		9		136,326		5.1	%		4,782		6.5	%		35.08		3		55,101		11.1	%		2,339		14.4	%		42.45
2018		3		35,140		1.3	%		1,196		1.6	%		34.04		2		106,935		21.5	%		3,307		20.3	%		30.93
2019		2		170,596		6.4	%		6,348		8.6	%		37.21		1		61,885		12.5	%		2,775		17.0	%		44.84
2020 and beyond		3		146,053		5.4	%		4,041		5.4	%		27.67		1		13,397		2.9	%		438		2.8	%		32.69
Subtotal		224		2,676,401		100.0	%	$	74,066		100.0	%	$	27.67		65		496,548		100.0	%	$	16,278		100.0	%	$	32.78
INDUSTRIAL:
Remainder of 2010		—		—		—			—		—			—		3		88,484		2.8	%	$	864		3.8	%	$	9.76
2011		—		—		—			—		—			—		10		288,845		9.3	%		2,528		11.1	%		8.75
2012		—		—		—			—		—			—		12		490,473		15.7	%		2,866		12.6	%		5.84
2013		—		—		—			—		—			—		8		610,455		19.6	%		4,463		19.6	%		7.31
2014		—		—		—			—		—			—		12		486,578		15.6	%		3,918		17.2	%		8.05
2015		—		—		—			—		—			—		10		544,864		17.5	%		3,839		16.8	%		7.05
2016		1		192,053		100.0	%		2,960		100.0	%		15.41		1		41,225		1.3	%		314		1.4	%		7.62
2017		—		—		—			—		—			—		3		111,566		3.6	%		676		3.0	%		6.06
2018		—		—		—			—		—			—		1		82,602		2.6	%		643		2.8	%		7.78
2019		—		—		—			—		—			—		2		168,200		5.4	%		1,467		6.4	%		8.72
2020 and beyond		—		—		—			—		—			—		2		204,162		6.6	%		1,238		5.3	%		6.06
Subtotal		1		192,053		100.0	%	$	2,960		100.0	%	$	15.41		64		3,117,454		100.0	%	$	22,816		100.0	%	$	7.32
TOTAL PORTFOLIO:
Remainder of 2010		12		163,676		5.7	%	$	2,882		3.7	%	$	17.61		3		88,484		2.4	%	$	864		2.2	%	$	9.76
2011		53		460,026		16.0	%		9,701		12.6	%		21.09		20		318,872		8.8	%		3,366		8.6	%		10.56
2012		36		199,834		7.0	%		5,865		7.6	%		29.35		27		552,780		15.3	%		4,565		11.7	%		8.26
2013		39		389,903		13.6	%		10,245		13.3	%		26.28		21		663,297		18.4	%		6,085		15.6	%		9.17
2014		31		573,396		20.0	%		16,078		20.9	%		28.04		24		536,913		14.9	%		5,461		14.0	%		10.17
2015		29		327,827		11.4	%		10,195		13.2	%		31.10		17		601,516		16.6	%		5,273		13.5	%		8.77
2016		8		265,677		9.3	%		5,693		7.4	%		21.43		2		48,292		1.3	%		597		1.5	%		12.36
2017		9		136,326		4.8	%		4,782		6.2	%		35.08		6		166,667		4.6	%		3,015		7.7	%		18.09
2018		3		35,140		1.2	%		1,196		1.6	%		34.04		3		189,537		5.2	%		3,950		10.1	%		20.84
2019		2		170,596		5.9	%		6,348		8.2	%		37.21		3		230,085		6.4	%		4,242		10.9	%		18.44
2020 and beyond		3		146,053		5.1	%		4,041		5.3	%		27.67		3		217,559		6.1	%		1,676		4.2	%		7.70
Total		225		2,868,454		100.0	%	$	77,026		100.0	%	$	26.85		129		3,614,002		100.0	%	$	39,094		100.0	%	$	10.82

(1)

The information presented for all lease expiration activity reflects leasing activity through September 30, 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 September 30, 2010.

(2)

Reflects annualized contractual base rent calculated on a straight-line basis.

27

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Lease Expiration Schedule Detail by Region
($ in thousands)

	San Diego														San Francisco
										% of Total														% of Total
	# of Expiring		Total		% of Total			Annualized		Annualized			Annualized Rent		# of Expiring		Total		% of Total			Annualized		Annualized			Annualized Rent
Year of Expiration	Leases		Square Feet		Regional Sq. Ft.			Base Rent(2)		Base Rent(2)			per Sq. Ft.(2)		Leases		Square Feet		Regional Sq. Ft.			Base Rent(2)		Base Rent(2)			per Sq. Ft.(2)
OFFICE:
Remainder of 2010		3		22,266		0.5	%	$	951		0.7	%	$	42.71		—		—		—			—		—			—
2011		9		152,123		3.5	%		4,278		3.3	%		28.12		4		22,591		3.5	%		711		2.9	%		31.47
2012		13		463,179		10.6	%		12,395		9.4	%		26.76		4		55,558		8.5	%		1,830		7.5	%		32.94
2013		7		275,990		6.3	%		6,547		5.0	%		23.72		9		125,693		19.2	%		4,430		18.2	%		35.24
2014		8		379,138		8.6	%		8,763		6.7	%		23.11		3		75,278		11.5	%		2,810		11.6	%		37.33
2015		19		522,180		11.9	%		14,327		10.9	%		27.44		8		202,298		31.0	%		8,044		33.1	%		39.76
2016		8		259,889		5.9	%		4,754		3.6	%		18.29		2		12,694		1.9	%		526		2.2	%		41.44
2017		14		1,144,892		26.1	%		31,395		23.9	%		27.42		1		3,281		0.5	%		117		0.5	%		35.66
2018		9		612,560		14.0	%		26,094		19.9	%		42.60		1		11,046		1.7	%		444		1.8	%		40.20
2019		3		77,465		1.8	%		2,371		1.8	%		30.61		3		47,595		7.3	%		1,983		8.2	%		41.66
2020 and beyond		8		479,579		10.8	%		19,501		14.8	%		40.66		3		97,203		14.9	%		3,391		14.0	%		34.89
Subtotal		101		4,389,261		100.0	%	$	131,376		100.0	%	$	29.93		38		653,237		100.0	%	$	24,286		100.0	%	$	37.18
INDUSTRIAL:
Remainder of 2010		—		—		—			—		—			—		—		—		—			—		—			—
2011		—		—		—			—		—			—		—		—		—			—		—			—
2012		—		—		—			—		—			—		—		—		—			—		—			—
2013		—		—		—			—		—			—		—		—		—			—		—			—
2014		—		—		—			—		—			—		—		—		—			—		—			—
2015		—		—		—			—		—			—		—		—		—			—		—			—
2016		—		—		—			—		—			—		—		—		—			—		—			—
2017		—		—		—			—		—			—		—		—		—			—		—			—
2018		—		—		—			—		—			—		—		—		—			—		—			—
2019		—		—		—			—		—			—		—		—		—			—		—			—
2020 and beyond		—		—		—			—		—			—		—		—		—			—		—			—
Subtotal		—		—		—			—		—			—		—		—		—			—		—			—

28

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

	San Diego														San Francisco
										% of Total														% of Total
	# of Expiring		Total		% of Total			Annualized		Annualized			Annualized Rent		# of Expiring		Total		% of Total			Annualized		Annualized			Annualized Rent
Year of Expiration	Leases		Square Feet		Regional Sq. Ft.			Base Rent(2)		Base Rent(2)			per Sq. Ft.(2)		Leases		Square Feet		Regional Sq. Ft.			Base Rent(2)		Base Rent(2)			per Sq. Ft.(2)
TOTAL PORTFOLIO:
Remainder of 2010		3		22,266		0.5	%	$	951		0.7	%	$	42.71		—		—		—			—		—			—
2011		9		152,123		3.5	%		4,278		3.3	%		28.12		4		22,591		3.5	%		711		2.9	%		31.47
2012		13		463,179		10.6	%		12,395		9.4	%		26.76		4		55,558		8.5	%		1,830		7.5	%		32.94
2013		7		275,990		6.3	%		6,547		5.0	%		23.72		9		125,693		19.2	%		4,430		18.2	%		35.24
2014		8		379,138		8.6	%		8,763		6.7	%		23.11		3		75,278		11.5	%		2,810		11.6	%		37.33
2015		19		522,180		11.9	%		14,327		10.9	%		27.44		8		202,298		31.0	%		8,044		33.1	%		39.76
2016		8		259,889		5.9	%		4,754		3.6	%		18.29		2		12,694		1.9	%		526		2.2	%		41.44
2017		14		1,144,892		26.1	%		31,395		23.9	%		27.42		1		3,281		0.5	%		117		0.5	%		35.66
2018		9		612,560		14.0	%		26,094		19.9	%		42.60		1		11,046		1.7	%		444		1.8	%		40.20
2019		3		77,465		1.8	%		2,371		1.8	%		30.61		3		47,595		7.3	%		1,983		8.2	%		41.66
2020 and beyond		8		479,579		10.8	%		19,501		14.8	%		40.66		3		97,203		14.9	%		3,391		14.0	%		34.89
Total		101		4,389,261		100.0	%	$	131,376		100.0	%	$	29.93		38		653,237		100.0	%	$	24,286		100.0	%	$	37.18

(1)

The information presented for all lease expiration activity reflects leasing activity through September 30, 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 September 30, 2010.

(2)

Reflects annualized contractual base rent calculated on a straight-line basis.

29

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Quarterly Lease Expirations for 2010 and 2011⁽¹⁾
($ in thousands)

	# of Expiring		Total Square		% of Total			Annualized		% of Total Annualized			Annualized Rent
	Leases		Feet		Leased Sq. Ft.			Base Rent(2)		Base Rent(2)			per Sq. Ft.(2)
OFFICE:
Q4 2010		15		185,942		2.3	%	$	3,833		1.6	%	$	20.61
Q1 2011		16		94,959		1.1	%	$	2,857		1.2	%	$	30.09
Q2 2011		24		308,723		3.8	%		5,155		2.1	%		16.70
Q3 2011		26		220,666		2.7	%		6,286		2.5	%		28.49
Q4 2011		10		40,419		0.5	%		1,230		0.5	%		30.43
Subtotal 2011		76		664,767		8.1	%	$	15,528		6.3	%	$	23.36
INDUSTRIAL:
Q4 2010		3		88,484		2.7	%	$	864		3.4	%	$	9.76
Q1 2011		1		6,000		0.2	%	$	62		0.2	%	$	10.33
Q2 2011		4		140,647		4.2	%		1,066		4.1	%		7.58
Q3 2011		4		63,593		1.9	%		667		2.6	%		10.49
Q4 2011		1		78,605		2.4	%		733		2.9	%		9.33
Subtotal 2011		10		288,845		8.7	%	$	2,528		9.8	%	$	8.75
TOTAL PORTFOLIO:
Q4 2010		18		274,426		2.4	%	$	4,697		1.7	%	$	17.12
Q1 2011		17		100,959		1.0	%	$	2,919		1.1	%	$	28.91
Q2 2011		28		449,370		3.9	%		6,221		2.3	%		13.84
Q3 2011		30		284,259		2.4	%		6,953		2.5	%		24.46
Q4 2011		11		119,024		1.0	%		1,963		0.7	%		16.49
Total 2011		86		953,612		8.3	%	$	18,056		6.6	%	$	18.93

(1)	The information presented reflects leasing activity through September 30, 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 September 30, 2010.
(2)	Reflects annualized contractual base rent calculated on a straight-line basis.

30

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Top Fifteen Tenants ⁽¹⁾
($ in thousands)

						Percentage of
						Total Annualized			Percentage of
	Product	Annualized Base		Rentable		Base Rental			Total Rentable
Tenant Name	Type	Rental Revenue(2)		Square Feet		Revenue(2)			Square Feet
Intuit, Inc.	Office	$	15,126		536,812		5.6	%		4.0	%
Bridgepoint Education, Inc.	Office		14,886		310,276		5.5	%		2.3	%
Scripps Health	Office		12,562		262,868		4.6	%		2.0	%
CareFusion Corporation(3)	Office		10,087		459,709		3.7	%		3.4	%
DIRECTV, Inc.	Office		8,540		314,207		3.2	%		2.3	%
AMN Healthcare, Inc.	Office		8,341		175,672		3.1	%		1.3	%
Fish & Richardson P.C.	Office		6,071		139,538		2.2	%		1.0	%
Hewlett-Packard Company	Office		5,838		162,017		2.0	%		1.2	%
Wells Fargo(3)	Office		5,346		137,149		1.9	%		1.0	%
BP Biofuels North America LLC(4)	Office		5,158		136,908		1.8	%		1.0	%
Epson America, Inc.	Office		4,915		136,026		1.4	%		1.0	%
Avnet, Inc.	Office		3,768		114,780		1.3	%		0.9	%
Scan Health Plan(3)	Office		3,637		124,598		1.0	%		0.9	%
Young & Rubicam, Inc.	Office		3,391		97,203		1.3	%		0.7	%
Northrop Grumman Systems Corporation	Office		3,268		117,376		1.2	%		0.9	%
Total Top Fifteen Tenants		$	110,934		3,225,139		39.8	%		23.9	%

(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 September 30, 2010.
(3)	The Company has entered into leases with various affiliates of the tenant name listed above.
(4)	During the third quarter of 2010, the leases previously associated with Verenium Corporation were assigned to BP Biofuels North America LLC.

31

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

2010 Acquisitions
($ in millions)

COMPLETED ACQUISITIONS⁽¹⁾

				Rentable
			Month of	Square		Purchase
Property	Submarket	Type	Acquisition	Feet		Price
1st Quarter:
2385 Northside Drive	Mission
San Diego, CA	Valley	Office	March		88,795	$	18.0
2nd Quarter:
303 Second Street San Francisco, CA	South Financial District	Office	May		734,035	$	233.3
999 Town & Country
Orange, CA	Orange	Office	June		98,551	$	22.3
2211 Michelson	Airport
Irvine, CA	Area	Office	June		271,556	$	103.2
2355, 2365, and 2375 Northside Drive	Mission
San Diego, CA	Valley	Office	June		190,634	$	52.6
3rd Quarter:
NONE
TOTAL					1,383,571	$	429.4

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

32

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

In-Process Redevelopment Project
($ in millions)

REDEVELOPMENT PROJECT:

Estimated

Construction period

Estimated

Estimated

Rentable

Estimated

Total

Compl.

Stabilization

Square

Existing

Redevelopment

Estimated

Costs as of

Project

Location

Start Date

Date

Date(1)

Feet

Investment(2)

Costs

Investment

9/30/10(3)

% Leased

PROJECT UNDER CONSTRUCTION:

2260 E. Imperial Highway

El Segundo

3Q 2010

3Q 2011

3Q 2012

300,000

$

9.1

$

39.7

$

48.8

$

12.2

0

%

(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.
(3)	Represents cash paid and costs incurred as of September 30, 2010. Includes existing investment at the commencement of redevelopment.

33

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Future Development Pipeline
($ in millions)

			Gross		Estimated		Total Costs
			Site		Rentable		as of
Project	Location	Type	Acreage		Square Feet		9/30/2010 (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
San Diego Corporate Center — Phase I and II	Del Mar	Office		23.0		500,000		109.0
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	$	264.1

(1) Represents cash paid and costs incurred as of September 30, 2010.

34

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Capital Structure
As of September 30, 2010
($ in thousands)

			Aggregate
			Principal
			Amount or		% of Total
	Shares/Units		$ Value		Market
	As of September 30, 2010		Equivalent		Capitalization
DEBT:
Unsecured Line of Credit			$	205,000		6.5	%
Unsecured Exchangeable Senior Notes due 2012(1)				148,000		4.7	%
Unsecured Exchangeable Senior Notes due 2014(2)				172,500		5.4	%
Unsecured Senior Notes due 2014				83,000		2.6	%
Unsecured Senior Notes due 2020(3)				250,000		7.9	%
Secured Debt(4)				315,921		10.0	%
Total Debt			$	1,174,421		37.1	%
EQUITY AND NONCONTROLLING INTERESTS:
7.450% Series A Cumulative Redeemable Preferred Units(5)		1,500,000	$	75,000		2.4	%
7.800% Series E Cumulative Redeemable Preferred Stock(6)		1,610,000		40,250		1.3	%
7.500% Series F Cumulative Redeemable Preferred Stock(6)		3,450,000		86,250		2.7	%
Common Units Outstanding(7)		1,723,131		57,105		1.8	%
Common Shares Outstanding(7)		52,349,670		1,734,868		54.7	%
Total Equity and Noncontrolling Interests			$	1,993,473		62.9	%
TOTAL MARKET CAPITALIZATION			$	3,167,894		100.0	%

(1)	Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $4.7 million as of September 30, 2010.
(2)	Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $17.5 million as of September 30, 2010.
(3)	Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $2.0 million as of September 30, 2010.

35

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

(4)	Includes the $52.0 million gross aggregate principal amount of the loan due in April 2012 before the effect of the unamortized discount of approximately $0.7 million as of September 30, 2010.
(5)	Value based on $50.00 per share liquidation preference.
(6)	Value based on $25.00 per share liquidation preference.
(7)	Value based on closing share price of $33.14 on September 30, 2010.

36

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Debt Analysis
As of September 30, 2010
($ in millions)

TOTAL DEBT COMPOSITION

	% of			Weighted Average
	Total Debt			Interest Rate			Maturity
Secured vs. Unsecured Debt:
Unsecured Debt(1)		73.1	%		4.7	%		5.0
Secured Debt		26.9	%		6.0	%		3.1
Floating vs. Fixed-Rate Debt:
Floating-Rate Debt		17.5	%		2.9	%		2.9
Fixed-Rate Debt(1)		82.5	%		5.5	%		4.8
Total Debt(1)					5.0	%		4.5
Total Debt Including Loan Fees(1)					5.6	%
GAAP Effective Interest Rate(2)					6.3	%

CAPITALIZED INTEREST, LOAN FEES, AND DEBT DISCOUNTS

Quarter-to-Date	Year-to-Date
$2.7		$8.1

(1)	Excludes the impact of the amortization of the noncash debt discounts on the Company’s exchangeable senior notes
(2)	Represents the GAAP effective interest rate for total debt, which includes the impact of the amortization of the noncash debt discount related to the accounting for theCompany’s exchangeable senior notes.

37

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Debt Analysis
As of September 30, 2010
($ in thousands)

DEBT MATURITY SCHEDULE

Floating/				Maturity		Remaining
Fixed Rate	Stated Rate			Date		2010		2011		2012		2013		2014		After 2014		Total
Unsecured Debt:
Floating		2.98	%		8/10/2013							$	205,000					$	205,000
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		6.63	%		6/1/2020												250,000		250,000	(3)
							—		—		148,000		205,000		255,500		250,000		858,500
Secured Debt:
Fixed		6.70	%		12/27/2011		372		69,980										70,352
Fixed		5.10	%		4/1/2012						52,000								52,000	(4)
Fixed		5.57	%		8/1/2012		369		1,532		71,517								73,418
Fixed		4.95	%		8/1/2012		166		687		29,754								30,607

38

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Floating/				Maturity		Remaining
Fixed Rate	Stated Rate			Date		2010		2011		2012		2013		2014		After 2014		Total
Fixed		6.51	%		2/1/2017		200		836		892		952		1,016		66,648		70,544
Fixed		7.15	%		5/1/2017		463		1,941		2,084		2,238		2,404		6,569		15,699
Fixed	Various			Various			20		52		55		58		59		3,057		3,301	(5)
							1,590		75,028		156,302		3,248		3,479		76,274		315,921
Total		5.03	%			$	1,590	$	75,028	$	304,302	$	208,248	$	258,979	$	326,274	$	1,174,421

(1)	Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $4.7 million as of September 30, 2010.
(2)	Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $17.5 million as of September 30, 2010.
(3)	Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $2.0 million as of September 30, 2010.
(4)	Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $0.7 million as of September 30, 2010.
(5)	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 onSeptember 1, 2010 through September 1, 2038, with interest rates ranging from 4.20% to 6.20%.

39

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

Debt Covenants
As of September 30, 2010
($ in millions)

KEY DEBT COVENANTS

		Actual Performance
	Covenant	as of September 30, 2010
Unsecured Line of Credit (as defined per Credit Agreement):
Total debt to total asset value	less than 60%		31	%
Fixed charge coverage ratio	greater than 1.5x		2.7	x
Unsecured debt ratio	greater than 1.67x		2.95	x
Unencumbered asset pool debt service coverage	greater than 2.0x		5.2	x
Unencumbered debt yield	greater than 12%		19	%
Unsecured Senior Notes due 2020 (as defined per Indenture):
Total debt/total asset value	less than 60%		38	%
Interest coverage	greater than 1.5x		3.7	x
Secured debt/total asset value	less than 40%		10	%
Unencumbered asset pool value to unsecured debt	greater than 150%		302	%

40

Kilroy Realty Corporation
Third 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 October 25, 2010 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, gains and losses from property dispositions, and extraordinary items, 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.

41

Kilroy Realty Corporation
Third 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 and contractual cash rents received in advance of revenue recognition, then subtracting tenant improvements, leasing commissions and recurring 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 and amortization of above (below) market rents for acquisition properties. 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.

42

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Same Store Cash Net Operating Income	$	45,227		$	44,822		$	130,737		$	137,396
Adjustments:
GAAP Operating Revenues Adjustments, net		3,352			3,471			13,424			13,976
GAAP Operating Expenses Adjustments, net		857			(243	)		843			(395	)
Same Store GAAP Net Operating Income		49,436			48,050			145,004			150,977
Non-Same Store GAAP Net Operating Income		7,430			1,116			11,690			3,585
Net Operating Income excluding discontinued operations		56,866			49,166			156,694			154,562
Net Operating Loss from discontinued operations		—			—			—			(199	)
Net Operating Income, as defined(1)		56,866			49,166			156,694			154,363
Adjustments:
General and administrative expenses		(7,273	)		(7,662	)		(21,096	)		(22,023	)
Acquisition-related expenses		(354	)		—			(1,624	)		—
Depreciation and amortization (including discontinued operations)		(30,054	)		(21,968	)		(74,714	)		(66,633	)
Interest income and other net investment gains		337			501			703			1,074
Interest expense		(15,853	)		(10,926	)		(40,897	)		(35,041	)
Gain (loss) on early extinguishment of debt		—			3,119			(4,564	)		3,119
Net gain on dispositions of discontinued operations		—			—			—			2,485
Net Income		3,669			12,230			14,502			37,344
Net loss (income) attributable to noncontrolling common units of the Operating Partnership		4			(320	)		(128	)		(1,144	)
Preferred distributions and dividends		(3,799	)		(3,799	)		(11,397	)		(11,397	)
Net (Loss) Income Available to Common Stockholders	$	(126	)	$	8,111		$	2,977		$	24,803

(1) Please refer to page 30 for Management Statements on Net Operating Income and Same Store Net Operating Income.

43

Kilroy Realty Corporation
Third Quarter 2010 Supplemental Financial Report

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

	Three Months Ended
	September 30,
	2010			2009
Net (Loss) Income Available to Common Stockholders	$	(126	)	$	8,111
Interest expense		15,853			10,926
Depreciation and amortization		30,054			21,968
Gain on early extinguishment of debt		—			(3,119	)
Net (loss) income attributable to noncontrolling common units of the Operating Partnership		(4	)		320
Preferred distributions and dividends		3,799			3,799
EBITDA (1)	$	49,576		$	42,005

(1) Please refer to page 31 for a Management Statement on EBITDA.

44

Kilroy Realty Corporation
Third 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						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Funds Available for Distribution (1)	$	14,760		$	23,920		$	39,246		$	72,965
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		15,077			9,017			40,995			18,697
Gain on early extinguishment of debt		—			(3,119	)		—			(3,119	)
Additional cash gain on early extinguishment of debt		—			(1,549	)		—			(1,549	)
Depreciation for furniture, fixtures and equipment		234			209			665			615
Preferred distributions and dividends		3,799			3,799			11,397			11,397
Provision for uncollectible tenant receivables		(127	)		243			(113	)		401
Changes in assets and liabilities and other adjustments, net(2)		3,797			4,578			2,738			(1,407	)
GAAP Net Cash Provided by Operating Activities	$	37,540		$	37,098		$	94,928		$	98,000

(1)	Please refer to page 31 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.

45