Kilroy Realty (KRC) 8-K Third Quarter 2015 Supplemental Financial Report

Exhibit 99.1

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Table of Contents

	Page
Corporate Data and Financial Highlights
Company Background	1
Executive Summary	2
Financial Highlights	3
Common Stock Data	4
Consolidated Balance Sheets	5
Consolidated Statements of Operations	6
Funds From Operations and Funds Available for Distribution	7
Portfolio Data
Same Store Analysis	8
Stabilized Portfolio Occupancy Overview by Region	9-14
Information on Leases Commenced & Leases Executed	15
Stabilized Portfolio Capital Expenditures	16
Stabilized Portfolio Lease Expirations	17-19
Top Fifteen Tenants	20
2015 Dispositions	21
Development
Development Projects in Lease-up	22
In-Process, Near-Term and Future Development Pipeline	23
Debt and Capitalization Data
Capital Structure	24
Debt Analysis	25-26
Non-GAAP Supplemental Measures	27-29
Definitions	30-31
Reconciliations	32-35

This Supplemental Financial Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, among other things, information concerning lease expirations, debt maturity, potential investments, development and redevelopment activity, projected construction costs, dispositions and other forward-looking financial data. In some instances, forward-looking statements can be identified by the use of forward-looking terminology such as “expect,” “future,” “will,” “would,” “pursue,” or “project” and variations of such words and similar expressions that do not relate to historical matters. Forward-looking statements are based on Kilroy Realty Corporation’s current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of Kilroy Realty Corporation’s control. Accordingly, actual performance, results and events may vary materially from those indicated in forward-looking statements, and you should not rely on forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in forward-looking statements, including, among others, risks associated with: investment in real estate assets, which are illiquid; trends in the real estate industry; significant competition, which may decrease the occupancy and rental rates of properties; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired properties; the availability of cash for distribution and debt service and exposure of risk of default under debt obligations; adverse changes to, or implementations of, applicable laws, regulations or legislation; and the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts. These factors are not exhaustive. For a discussion of additional factors that could materially adversely affect Kilroy Realty Corporation’s business and financial performance, see the factors included under the caption “Risk Factors” in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2014, and its other filings with the Securities and Exchange Commission. All forward-looking statements are based on information that was available and speak only as of the date on which they are made. Kilroy Realty Corporation assumes no obligation to update any forward-looking statement made in this Supplemental Financial Report that becomes untrue because of subsequent events, new information or otherwise, except to the extent required in connection with ongoing requirements under U.S. securities laws.

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Company Background

Kilroy Realty Corporation (NYSE: KRC), a member of the S&P MidCap 400 Index, is a real estate investment trust active in premier office submarkets along the West Coast. The Company owns, develops, acquires and manages real estate assets primarily in the coastal regions of Los Angeles, Orange County, San Diego, the San Francisco Bay Area and greater Seattle. As of September 30, 2015, the Company’s stabilized portfolio consisted of 101 office buildings, which encompassed an aggregate of 13.1 million rentable square feet and was 95.6% occupied.

Board of Directors		Executive Management Team		Investor Relations
John Kilroy	Chairman	John Kilroy	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.	Lead Independent	Jeffrey C. Hawken	Executive VP and COO
Jolie Hunt		Robert Paratte	Executive VP, Leasing and Business Development
Scott S. Ingraham		Tyler H. Rose	Executive VP and CFO
Gary R. Stevenson		Heidi R. Roth	Executive VP, CAO and Controller
Peter B. Stoneberg		Mike L. Sanford	Executive VP, Northern California
		David Simon	Executive VP, Southern California
		Justin W. Smart	Executive VP, Development and Construction Services

Equity Research Coverage
Bank of America Merrill Lynch		J.P. Morgan
James Feldman	(646) 855-5808	Anthony Paolone	(212) 622-6682
BMO Capital Markets Corp.		KeyBanc Capital Markets
John P. Kim	(212) 885-4115	Craig Mailman	(917) 368-2316
Citigroup Investment Research		Morgan Stanley
Michael Bilerman	(212) 816-1383	Vance Edelson	(212) 761-0078
Cowen and Company		RBC Capital Markets
James Sullivan	(646) 562-1380	Richard Moore	(440) 715-2646
Credit Suisse		Robert W. Baird & Co.
Ian Weissman	(212) 538-6889	David B. Rodgers	(216) 737-7341
D. A. Davidson		Stifel, Nicolaus & Company
Barry Oxford	(212) 240-9871	John W. Guinee III	(443) 224-1307
Deutsche Bank Securities, Inc.		UBS Investment Research
Vincent Chao	(212) 250-6799	Ross T. Nussbaum	(212) 713-2484
Evercore ISI		Wells Fargo
Steve Sakwa	(212) 446-9462	Brendan Maiorana	(443) 263-6516
Green Street Advisors
Jed Reagan	(949) 640-8780

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 2015 Supplemental Financial Report

Executive Summary

Quarterly Financial Highlights	Quarterly Operating Highlights
•FFO per share of $0.77 • Net income available to common stockholders per share of $1.09; includes gains on sales of operating properties of $0.85 • Revenues of $141.6 million • Same Store cash net operating income (“NOI”) decreased 2.5%; adjusted for a $5.7 million lease termination payment in September 2014 cash NOI increased 5.4% • Same Store GAAP NOI increased 1.6%; adjusted for $1.5 million lease termination fee income in the third quarter of 2014 GAAP NOI increased 3.6% • FFO Guidance range for 2015 is $3.36 to $3.40 per share with a midpoint of $3.38 per share compared to the 2Q 2015 range of $3.30 to $3.40 per share with a midpoint of $3.35 per share	• Stabilized portfolio was 95.6%occupied and 97.2% leased at quarter-end • 386,342 square feet of leases commenced in the stabilized portfolio • 385,026square feet of leases executed in the stabilized portfolio
Capital Markets Highlights	Strategic Highlights
• Completed the sale of $249.6 million of common stock equity through a registered direct placement • Issued $400.0 million of 10-year senior unsecured notes at 4.375% due October 2025 in an underwritten public offering • In October, re-paid at par, two secured mortgages totaling approximately $90.1 million • As of the date of this report, no outstanding balance on the line of credit and approximately $430.0 million of unrestricted cash on hand	• Completed the acquisition of a fully entitled, 3.3 acre development site located at 100 Hooper Street in San Francisco, CA for approximately $78.0 million in cash • Completed the sale of six office properties in San Diego, CA for gross proceeds of approximately $163.0 million • Delivered the 100% leased office component of the historic buildings at the Columbia Square mixed-use development project in Hollywood, CA • In October, completed and delivered the first of two buildings encompassing 226,000 rentable square feet at the Company’s Crossing/900 project in Redwood City, CA. Both buildings are fully leased to Box, Inc.

________________________

Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 30 through 31 “Definitions Included in Supplemental.”

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Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Financial Highlights

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

		Three Months Ended
		9/30/2015 (1)			6/30/2015 (1)			3/31/2015 (1)			12/31/2014 (1)			9/30/2014 (1)
INCOME ITEMS (Including Discontinued Operations):
	Revenues	$	141,553		$	146,227		$	146,082		$	142,628		$	131,082
	Lease Termination Fees, net (2)	—			179			9			459			1,737
	Net Operating Income	101,920			106,071			107,635			104,041			92,543
	Acquisition-related Expenses	4			265			128			211			431
	Capitalized Interest and Debt Costs	14,567			12,323			10,871			11,229			13,328
	Net Income Available to Common Stockholders	101,446			54,188			39,874			27,540			15,669
	EBITDA (3)	90,423			93,684			112,367			91,458			80,965
	Funds From Operations (3)(4)(5)	73,588			74,819			91,532			69,817			60,399
	Funds Available for Distribution (4)(5)	48,325			44,987			61,277			26,187			37,667
	Net Income Available to Common Stockholders per common share – diluted (5)	$	1.09		$	0.61		$	0.45		$	0.32		$	0.18
	Funds From Operations per common share – diluted (5)	$	0.77		$	0.82		$	1.01		$	0.78		$	0.69
	Dividends per common share (5)	$	0.35		$	0.35		$	0.35		$	0.35		$	0.35
RATIOS (Including Discontinued Operations):
	Operating Margins	72.0		%	72.5		%	73.7		%	72.9		%	70.6		%
	Interest Coverage Ratio	3.4x			3.5x			4.1x			3.3x			3.0x
	Fixed Charge Coverage Ratio	3.0x			3.1x			3.6x			2.9x			2.6x
	FFO Payout Ratio	44.7		%	42.2		%	34.3		%	44.1		%	49.4		%
	FAD Payout Ratio	68.1		%	70.2		%	51.3		%	117.7		%	79.2		%
ASSETS:
	Real Estate Held for Investment before Depreciation	$	6,354,042		$	6,109,184		$	5,985,469		$	6,057,932		$	5,751,097
	Total Assets (6)	6,353,392			5,686,925			5,725,480			5,633,736			5,487,464
CAPITALIZATION:
	Total Debt	$	2,657,688		$	2,360,252		$	2,426,550		$	2,465,022		$	2,424,033
	Total Preferred Equity and Noncontrolling Interests	200,000			200,000			200,000			200,000			200,000
	Total Common Equity and Noncontrolling Interests	6,125,596			6,056,849			6,841,936			6,082,572			5,063,838
	Total Market Capitalization	8,983,284			8,617,101			9,468,486			8,747,594			7,687,871
	Total Debt / Total Market Capitalization	29.6		%	27.4		%	25.6		%	28.2		%	31.5		%
	Total Debt and Preferred / Total Market Capitalization	31.8		%	29.8		%	27.8		%	30.4		%	34.1		%

________________________

Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 30 through 31 “Definitions Included in Supplemental.”

(1) Net Income Available to Common Stockholders includes $78.5 million and $31.4 million gains on sales of depreciable operating properties for the three months ended September 30, 2015 and June 30, 2015, respectively, a $17.3 million gain on sale of land for the three months ended March 31, 2015, and gains on dispositions of discontinued operations of $11.5 million and $5.6 million for the three months ended December 31, 2014 and September 30, 2014, respectively.

(2) Lease termination fees are presented net of accelerated amortization of deferred rent receivables.

(3) EBITDA and Funds From Operations for the three months ended March 31, 2015 include a $17.3 milliongain on sale of land.

(4) Please refer to page 7 for a reconciliation of GAAP Net Income Available to Common Stockholders to Funds From Operations and Funds Available for Distribution.

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

(6) Total assets as of June 30, 2015, March 31, 2015, December 31, 2014, and September 30, 2014 include “Real estate assets and other assets held for sale, net.”

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Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Common Stock Data (NYSE: KRC)

	Three Months Ended
	9/30/2015		6/30/2015		3/31/2015		12/31/2014		9/30/2014
High Price	$	73.45	$	77.92	$	78.86	$	71.47	$	63.96
Low Price	$	63.41	$	67.15	$	70.48	$	58.73	$	58.03
Closing Price	$	65.16	$	67.15	$	76.17	$	69.07	$	59.44
Dividends per share – annualized	$	1.40	$	1.40	$	1.40	$	1.40	$	1.40
Closing common shares (in 000’s) (1)(2)	92,220		88,406		88,031		86,260		83,388
Closing common partnership units (in 000’s) (1)	1,788		1,793		1,793		1,804		1,804
	94,008		90,199		89,824		88,064		85,192

________________________

(1) As of the end of the period.

(2) In July 2015, the Company completed the sale of 3,773,766 shares through a registered direct equity placement.

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Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Consolidated Balance Sheets

(unaudited, $ in thousands)

	9/30/2015			6/30/2015			3/31/2015			12/31/2014			9/30/2014
ASSETS:
Land and improvements	$	850,280		$	839,072		$	838,927		$	877,633		$	757,036
Buildings and improvements	4,028,044			3,906,860			3,880,883			4,059,639			3,882,015
Undeveloped land and construction in progress	1,475,718			1,363,252			1,265,659			1,120,660			1,112,046
Total real estate assets held for investment	6,354,042			6,109,184			5,985,469			6,057,932			5,751,097
Accumulated depreciation and amortization	(999,557		)	(960,816		)	(921,279		)	(947,664		)	(912,623		)
Total real estate assets held for investment, net	5,354,485			5,148,368			5,064,190			5,110,268			4,838,474
Real estate assets and other assets held for sale, net	—			81,699			190,751			8,211			49,815
Cash and cash equivalents	567,940			28,142			50,181			23,781			200,431
Restricted cash	8,130			7,462			8,287			75,185			17,487
Marketable securities	12,638			13,803			13,337			11,971			12,076
Current receivables, net	11,533			8,956			8,122			7,229			6,443
Deferred rent receivables, net	183,352			176,493			168,581			156,416			139,910
Deferred leasing costs and acquisition-related intangible assets, net	173,457			174,387			182,251			201,926			183,057
Deferred financing costs, net	18,709			16,324			17,346			18,374			19,373
Prepaid expenses and other assets, net	23,148			31,291			22,434			20,375			20,398
TOTAL ASSETS	$	6,353,392		$	5,686,925		$	5,725,480		$	5,633,736		$	5,487,464
LIABILITIES AND EQUITY:
Liabilities:
Secured debt	$	475,923		$	479,368		$	516,725		$	546,292		$	549,896
Exchangeable senior notes, net	—			—			—			—			135,049
Unsecured debt, net	2,181,382			1,783,438			1,783,280			1,783,121			1,743,962
Unsecured line of credit	—			100,000			130,000			140,000			—
Accounts payable, accrued expenses and other liabilities	249,980			199,005			217,352			225,830			243,602
Accrued distributions	34,993			33,670			33,532			32,899			31,897
Deferred revenue and acquisition-related intangible liabilities, net	127,473			123,819			128,730			132,239			114,504
Rents received in advance and tenant security deposits	46,579			47,434			46,887			49,363			45,086
Liabilities of real estate assets held for sale	—			7,086			9,768			56			3,099
Total liabilities	3,116,330			2,773,820			2,866,274			2,909,800			2,867,095
Equity:
Stockholders’ Equity
6.875% Series G Cumulative Redeemable Preferred stock	96,155			96,155			96,155			96,155			96,155
6.375% Series H Cumulative Redeemable Preferred stock	96,256			96,256			96,256			96,256			96,256
Common stock	922			884			880			863			834
Additional paid-in capital	3,042,330			2,791,226			2,761,176			2,635,900			2,530,282
Distributions in excess of earnings	(62,850		)	(131,569		)	(154,355		)	(162,964		)	(159,799		)
Total stockholders’ equity	3,172,813			2,852,952			2,800,112			2,666,210			2,563,728
Noncontrolling Interests
Common units of the Operating Partnership	57,913			54,088			53,232			51,864			51,419
Noncontrolling interest in consolidated subsidiary	6,336			6,065			5,862			5,862			5,222
Total noncontrolling interests	64,249			60,153			59,094			57,726			56,641
Total equity	3,237,062			2,913,105			2,859,206			2,723,936			2,620,369
TOTAL LIABILITIES AND EQUITY	$	6,353,392		$	5,686,925		$	5,725,480		$	5,633,736		$	5,487,464

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Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Consolidated Statements of Operations

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
REVENUES
Rental income	$	129,510		$	115,221		$	391,892		$	338,911
Tenant reimbursements	11,681			11,346			40,280			33,399
Other property income	362			2,457			1,690			7,650
Total revenues	141,553			129,024			433,862			379,960
EXPENSES
Property expenses	26,684			25,801			78,264			75,448
Real estate taxes	12,087			11,008			37,232			32,728
Provision for bad debts	—			58			289			58
Ground leases	862			771			2,451			2,306
General and administrative expenses	10,799			11,138			36,200			33,806
Acquisition-related expenses	4			431			397			1,268
Depreciation and amortization	49,422			50,032			152,567			148,647
Total expenses	99,858			99,239			307,400			294,261
OTHER (EXPENSES) INCOME
Interest income and other net investment (loss) gain	(694		)	(9		)	177			587
Interest expense	(12,819		)	(16,608		)	(44,561		)	(49,880		)
Total other (expenses) income	(13,513		)	(16,617		)	(44,384		)	(49,293		)
INCOME FROM CONTINUING OPERATIONS BEFORE GAINS ON SALES OF REAL ESTATE	28,182			13,168			82,078			36,406
Gain on sale of land	—			—			17,268			3,490
Gains on sales of depreciable operating properties	78,522			—			109,950			—
INCOME FROM CONTINUING OPERATIONS	106,704			13,168			209,296			39,896
DISCONTINUED OPERATIONS: (1)
Income from discontinued operations	—			548			—			2,091
Gains on dispositions of discontinued operations	—			5,587			—			110,391
Total income from discontinued operations	—			6,135			—			112,482
NET INCOME	106,704			19,303			209,296			152,378
Net income attributable to noncontrolling common units of the Operating Partnership	(1,945		)	(321		)	(3,850		)	(3,011		)
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION	104,759			18,982			205,446			149,367
Preferred dividends	(3,313		)	(3,313		)	(9,938		)	(9,938		)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	101,446		$	15,669		$	195,508		$	139,429
Weighted average common shares outstanding – basic	92,150			83,161			89,077			82,525
Weighted average common shares outstanding – diluted	92,639			85,110			89,593			84,623
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE
Net income available to common stockholders per share – basic	$	1.10		$	0.18		$	2.18		$	1.67
Net income available to common stockholders per share – diluted	$	1.09		$	0.18		$	2.17		$	1.63

________________________

(1) Effective January 1, 2015, the Company adopted Financial Accounting Standards Board Accounting Standards Update No. 2014-08, which changed the criteria for reporting discontinued operations. As a result operating properties held for sale and dispositions of depreciable operating properties will no longer be reported as discontinued operations.

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Kilroy Realty Corporation

Third Quarter 2015 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,
	2015			2014			2015			2014
FUNDS FROM OPERATIONS: (1)
Net income available to common stockholders	$	101,446		$	15,669		$	195,508		$	139,429
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership	1,945			321			3,850			3,011
Depreciation and amortization of real estate assets	48,719			49,996			150,531			148,878
Gains on sales of depreciable real estate	(78,522		)	(5,587		)	(109,950		)	(110,391		)
Funds From Operations (2)(3)	$	73,588		$	60,399		$	239,939		$	180,927
Weighted average common shares/units outstanding – basic (4)	95,097			86,189			92,048			85,555
Weighted average common shares/units outstanding – diluted (4)	95,586			88,138			92,564			87,653
FFO per common share/unit – basic (2)	$	0.77		$	0.70		$	2.61		$	2.11
FFO per common share/unit – diluted (2)	$	0.77		$	0.69		$	2.59		$	2.06
FUNDS AVAILABLE FOR DISTRIBUTION: (1)
Funds From Operations (2)	$	73,588		$	60,399		$	239,939		$	180,927
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures	(17,014		)	(20,074		)	(45,332		)	(52,247		)
Amortization of deferred revenue related to tenant-funded tenant improvements (3)(5)	(3,653		)	(2,678		)	(9,957		)	(7,695		)
Net effect of straight-line rents	(6,956		)	(7,452		)	(35,288		)	(15,245		)
Amortization of net below market rents (6)	(1,740		)	(1,766		)	(6,769		)	(6,216		)
Amortization of deferred financing costs and net debt discount/premium (7)	163			1,276			276			2,897
Noncash amortization of share-based compensation awards	3,622			3,372			11,272			8,817
Other lease related adjustments, net (8)	315			4,590			448			2,169
Funds Available for Distribution (1)	$	48,325		$	37,667		$	154,589		$	113,407

________________________

(1) See pages 28 and 29 for Management Statements on Funds From Operation and Funds Available for Distribution.

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

(3) FFO includes amortization of deferred revenue related to tenant-funded tenant improvements of $3.7 million and $2.7 million for the three months ended September 30, 2015 and 2014, respectively, and $10.0 million and $7.7 million for the nine months ended September 30, 2015 and 2014, respectively. These amounts are adjusted out of FFO in our calculation of FAD.

(4) Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units), dilutive impact of stock options and contingently issuable shares and assuming the exchange of all common limited partnership units outstanding.

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

(6) Represents the non-cash adjustment related to the acquisition of buildings with above and/or below market rents.

(7) Includes the non-cash amortization of the debt discount on the Company's exchangeable senior notes, which were repaid in November 2014, for the three and nine months ended September 30, 2014.

(8) Includes other non-cash adjustments attributable to lease-related GAAP revenue recognition timing differences.

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Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Same Store Analysis ⁽¹⁾ 

(unaudited, $ in thousands)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015			2014			% Change		2015			2014			% Change
	Total Same Store Portfolio
	Number of properties	90			90					90			90
	Square Feet	11,285,022			11,285,022					11,285,022			11,285,022
	Percent of Stabilized Portfolio	86.5		%	83.7		%			86.5		%	83.7		%
	Average Occupancy	95.2		%	94.8		%			95.5		%	94.8		%
	Operating Revenues:
	Rental income	$	107,438		$	101,893		5.4	%	$	320,015		$	304,158		5.2	%
	Tenant reimbursements	8,346			10,101			(17.4	)%	30,222			30,356			(0.4	)%
	Other property income	358			2,456			(85.4	)%	1,683			7,475			(77.5	)%
	Total operating revenues (2)	116,142			114,450			1.5	%	351,920			341,989			2.9	%
	Operating Expenses:
	Property expenses (3)	24,733			24,000			3.1	%	71,375			70,270			1.6	%
	Real estate taxes	9,093			9,530			(4.6	)%	28,331			28,563			(0.8	)%
	Provision for bad debts	—			(43		)	100.0	%	440			(46		)	1,056.5	%
	Ground leases	862			771			11.8	%	2,451			2,306			6.3	%
	Total operating expenses	34,688			34,258			1.3	%	102,597			101,093			1.5	%
	GAAP Net Operating Income	$	81,454		$	80,192		1.6	%	$	249,323		$	240,896		3.5	%
Same Store Analysis (Cash Basis) (4)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2015			2014			% Change		2015			2014			% Change
	Total operating revenues	$	108,080		$	109,565		(1.4	)%	$	323,805		$	319,841		1.2	%
	Total operating expenses	34,709			34,323			1.1		102,220			101,203			1.0	%
	Cash Net Operating Income	$	73,371		$	75,242		(2.5	)%	$	221,585		$	218,638		1.3	%

________________________

(1) Same Store is defined as all properties owned and included in our stabilized portfolio as of January 1, 2014 and still owned and included in the stabilized portfolio as of September 30, 2015.

(2) Total operating revenues for the three and nine months ended September 30, 2014 includes $1.6 million and $4.4 million, respectively, related to a net lease termination fee.

(3) Property expenses for the nine months ended September 30, 2015 and 2014 include $0.7 million and $1.7 million related to cash paid for nonrecurring legal fees, respectively.

(4) 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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Stabilized Portfolio Occupancy Overview by Region

		Portfolio Breakdown					Occupied at				Leased at
	Buildings	YTD NOI %		SF %		Total SF	9/30/2015		6/30/2015		9/30/2015
Los Angeles and Ventura Counties
101 Corridor	4	1.4	%	2.3	%	306,324	84.3	%	97.4	%	89.7	%
El Segundo	5	6.4	%	8.4	%	1,090,525	99.2	%	98.9	%	99.2	%
Hollywood	1	2.0	%	2.5	%	324,617	96.7	%	96.4	%	97.3	%
Long Beach	7	3.6	%	7.3	%	946,857	89.5	%	91.2	%	92.2	%
West Los Angeles	10	5.6	%	6.4	%	837,191	95.3	%	94.4	%	95.6	%
Total Los Angeles and Ventura Counties	27	19.0	%	26.9	%	3,505,514	94.1	%	95.4	%	95.4	%
Total Orange County	1	1.9	%	2.1	%	271,556	95.7	%	98.1	%	95.7	%
San Diego County
Del Mar	17	14.0	%	13.4	%	1,743,613	97.1	%	96.9	%	97.3	%
I-15 Corridor	5	4.3	%	4.1	%	540,854	95.3	%	98.1	%	95.3	%
Mission Valley	4	1.3	%	2.2	%	290,586	95.7	%	82.3	%	95.7	%
Point Loma	1	0.3	%	0.8	%	103,900	67.4	%	67.4	%	100.0	%
Sorrento Mesa	9	3.6	%	4.5	%	591,186	100.0	%	100.0	%	100.0	%
University Towne Center	1	0.2	%	0.4	%	47,846	100.0	%	100.0	%	100.0	%
Total San Diego County	37	23.7	%	25.4	%	3,317,985	96.3	%	95.5	%	97.4	%
San Francisco Bay Area
Menlo Park	7	3.5	%	2.9	%	378,358	100.0	%	100.0	%	100.0	%
Mountain View	3	5.0	%	3.3	%	428,060	100.0	%	100.0	%	100.0	%
San Francisco	6	20.4	%	16.5	%	2,153,114	94.3	%	97.3	%	97.4	%
Sunnyvale	8	8.9	%	7.1	%	930,221	100.0	%	100.0	%	100.0	%
Total San Francisco Bay Area	24	37.8	%	29.8	%	3,889,753	96.8	%	98.5	%	98.6	%
Greater Seattle
Bellevue	2	7.8	%	6.9	%	905,225	92.0	%	97.5	%	98.3	%
Kirkland	4	1.7	%	2.1	%	279,924	86.3	%	86.3	%	86.3	%
Lake Union	6	8.1	%	6.8	%	880,990	100.0	%	100.0	%	100.0	%
Total Greater Seattle	12	17.6	%	15.8	%	2,066,139	94.7	%	97.0	%	97.4	%
TOTAL STABILIZED PORTFOLIO	101	100.0	%	100.0	%	13,050,947	95.6	%	96.7	%	97.2	%

Average Occupancy
Quarter-to-Date	Year-to-Date
95.8%	95.9%

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Stabilized Portfolio Occupancy Overview by Region, continued

		Submarket	Square Feet	Occupied
Los Angeles and Ventura, California
	23925 Park Sorrento	101 Corridor	11,789	100.0	%
	23975 Park Sorrento	101 Corridor	104,797	95.7	%
	24025 Park Sorrento	101 Corridor	108,671	59.9	%
	2829 Townsgate Road	101 Corridor	81,067	100.0	%
	2240 E. Imperial Highway	El Segundo	122,870	100.0	%
	2250 E. Imperial Highway	El Segundo	298,728	100.0	%
	2260 E. Imperial Highway	El Segundo	298,728	100.0	%
	909 N. Sepulveda Boulevard	El Segundo	241,607	98.7	%
	999 N. Sepulveda Boulevard	El Segundo	128,592	95.8	%
	6255 W. Sunset Boulevard	Hollywood	324,617	96.7	%
	3750 Kilroy Airport Way	Long Beach	10,457	86.1	%
	3760 Kilroy Airport Way	Long Beach	165,278	78.9	%
	3780 Kilroy Airport Way	Long Beach	219,745	89.2	%
	3800 Kilroy Airport Way	Long Beach	192,476	85.8	%
	3840 Kilroy Airport Way	Long Beach	136,026	100.0	%
	3880 Kilroy Airport Way	Long Beach	96,035	100.0	%
	3900 Kilroy Airport Way	Long Beach	126,840	90.8	%
	12100 W. Olympic Boulevard	West Los Angeles	150,167	100.0	%
	12200 W. Olympic Boulevard	West Los Angeles	150,117	100.0	%
	12233 W. Olympic Boulevard	West Los Angeles	151,029	94.8	%
	12312 W. Olympic Boulevard	West Los Angeles	76,644	100.0	%
	1633 26th Street	West Los Angeles	44,915	100.0	%
	2100/2110 Colorado Avenue	West Los Angeles	102,864	100.0	%
	3130 Wilshire Boulevard	West Los Angeles	88,340	95.7	%
	501 Santa Monica Boulevard	West Los Angeles	73,115	61.6	%
	Total Los Angeles and Ventura Counties		3,505,514	94.1	%
Orange County, California
	2211 Michelson Drive	Irvine	271,556	95.7	%
	Total Orange County		271,556	95.7	%

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Stabilized Portfolio Occupancy Overview by Region, continued

		Submarket	Square Feet	Occupied
San Diego, California
	12225 El Camino Real	Del Mar	58,401	100.0	%
	12235 El Camino Real	Del Mar	54,673	96.4	%
	12340 El Camino Real	Del Mar	87,774	88.1	%
	12390 El Camino Real	Del Mar	72,332	100.0	%
	12348 High Bluff Drive	Del Mar	38,806	100.0	%
	12400 High Bluff Drive	Del Mar	209,220	100.0	%
	3579 Valley Center Drive	Del Mar	50,677	100.0	%
	3611 Valley Center Drive	Del Mar	130,349	100.0	%
	3661 Valley Center Drive	Del Mar	129,782	89.7	%
	3721 Valley Center Drive	Del Mar	114,780	79.9	%
	3811 Valley Center Drive	Del Mar	112,067	100.0	%
	7525 Torrey Santa Fe	Del Mar	103,979	100.0	%
	7535 Torrey Santa Fe	Del Mar	130,243	100.0	%
	7545 Torrey Santa Fe	Del Mar	130,354	100.0	%
	7555 Torrey Santa Fe	Del Mar	101,236	100.0	%
	12780 El Camino Real	Del Mar	140,591	100.0	%
	12790 El Camino Real	Del Mar	78,349	97.5	%
	13280 Evening Creek Drive South	I-15 Corridor	41,196	100.0	%
	13290 Evening Creek Drive South	I-15 Corridor	61,180	100.0	%
	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	141,128	82.0	%
	2355 Northside Drive	Mission Valley	53,610	100.0	%
	2365 Northside Drive	Mission Valley	96,437	87.1	%
	2375 Northside Drive	Mission Valley	51,516	100.0	%
	2385 Northside Drive	Mission Valley	89,023	100.0	%
	2305 Historic Decatur Road	Point Loma	103,900	67.4	%
	4939 Directors Place	Sorrento Mesa	60,662	100.0	%
	4955 Directors Place	Sorrento Mesa	76,246	100.0	%

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Stabilized Portfolio Occupancy Overview by Region, continued

		Submarket	Square Feet	Occupied
San Diego, California (Continued)
	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	75,899	100.0	%
	10445 Pacific Center Court	Sorrento Mesa	48,709	100.0	%
	10455 Pacific Center Court	Sorrento Mesa	90,000	100.0	%
	5717 Pacific Center Boulevard	Sorrento Mesa	67,995	100.0	%
	4690 Executive Drive	University Towne Center	47,846	100.0	%
	Total San Diego County		3,317,985	96.3	%

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Stabilized Portfolio Occupancy Overview by Region, continued

		Submarket	Square Feet	Occupied
San Francisco Bay Area, California
	4100 Bohannon Drive	Menlo Park	47,379	100.0	%
	4200 Bohannon Drive	Menlo Park	45,451	100.0	%
	4300 Bohannon Drive	Menlo Park	63,079	100.0	%
	4400 Bohannon Drive	Menlo Park	48,146	100.0	%
	4500 Bohannon Drive	Menlo Park	63,078	100.0	%
	4600 Bohannon Drive	Menlo Park	48,147	100.0	%
	4700 Bohannon Drive	Menlo Park	63,078	100.0	%
	331 Fairchild Drive	Mountain View	87,147	100.0	%
	680 E. Middlefield Road	Mountain View	170,090	100.0	%
	690 E. Middlefield Road	Mountain View	170,823	100.0	%
	303 Second Street	San Francisco	740,047	94.9	%
	100 First Street	San Francisco	467,095	91.3	%
	250 Brannan Street	San Francisco	95,008	100.0	%
	201 Third Street	San Francisco	346,538	87.1	%
	301 Brannan Street	San Francisco	74,430	100.0	%
	360 Third Street	San Francisco	429,996	100.0	%
	1310 Chesapeake Terrace	Sunnyvale	76,244	100.0	%
	1315 Chesapeake Terrace	Sunnyvale	55,635	100.0	%
	1320-1324 Chesapeake Terrace	Sunnyvale	79,720	100.0	%
	1325-1327 Chesapeake Terrace	Sunnyvale	55,383	100.0	%
	505 Mathilda Avenue	Sunnyvale	212,322	100.0	%
	555 Mathilda Avenue	Sunnyvale	212,322	100.0	%
	605 Mathilda Avenue	Sunnyvale	162,785	100.0	%
	599 Mathilda Avenue	Sunnyvale	75,810	100.0	%
	Total San Francisco Bay Area		3,889,753	96.8	%

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Stabilized Portfolio Occupancy Overview by Region, continued

		Submarket	Square Feet	Occupied
Greater Seattle, Washington
	601 108th Avenue NE	Bellevue	488,470	89.8	%
	10900 NE 4th Street	Bellevue	416,755	94.7	%
	10210 NE Points Drive	Kirkland	84,641	94.4	%
	10220 NE Points Drive	Kirkland	49,851	100.0	%
	10230 NE Points Drive	Kirkland	98,982	82.2	%
	3933 Lake Washington Blvd NE	Kirkland	46,450	65.5	%
	837 N. 34th Street	Lake Union	111,580	100.0	%
	701 N. 34th Street	Lake Union	138,995	100.0	%
	801 N. 34th Street	Lake Union	169,412	100.0	%
	320 Westlake Avenue North	Lake Union	184,643	100.0	%
	321 Terry Avenue North	Lake Union	135,755	100.0	%
	401 Terry Avenue North	Lake Union	140,605	100.0	%
	Total Greater Seattle		2,066,139	94.7	%
	TOTAL		13,050,947	95.6	%

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Information on Leases Commenced

	1st & 2nd Generation				2nd Generation
	# of Leases  (1)		Square Feet (1)		TI/LC Per Sq.Ft.		Changes in GAAP Rents		Changes in Cash Rents		Retention Rates		Weighted Average Lease Term (Mo.)
	New	Renewal	New	Renewal
Quarter to Date	25	14	252,216	134,126	$	41.66	40.1	%	26.9	%	26.7	%	73
Year to Date	64	50	697,212	390,114	43.33		32.4	%	21.0	%	40.4	%	71

Information on Leases Executed

	1st & 2nd Generation				2nd Generation
	# of Leases (2)		Square Feet (2)		TI/LC Per Sq.Ft.		Changes in GAAP Rents		Changes in Cash Rents		Weighted Average Lease Term (Mo.)
	New	Renewal	New	Renewal
Quarter to Date (3)	21	14	250,900	134,126	$	43.29	53.0	%	39.2	%	74
Year to Date (4)	61	50	640,248	394,763	42.12		36.3	%	25.4	%	68

________________________

(1) Represents leasing activity for leases that commenced at properties in the stabilized portfolio during the three and nine months ended September 30, 2015, including first and second generation space, net of month-to-month leases.

(2) Represents leasing activity for leases signed at properties in the stabilized portfolio during the three and nine months ended September 30, 2015, including first and second generation space, net of month-to-month leases.

(3) During the three months ended September 30, 2015, 11new leases totaling 188,268 square feet were signed but not commenced as of September 30, 2015.

(4) During the nine months ended September 30, 2015, 15 new leases totaling236,987 square feet were signed but not commenced as of September 30, 2015.

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Stabilized Portfolio Capital Expenditures

($ in thousands)

	Total 2015		Q3 2015		Q2 2015		Q1 2015
1st Generation (Nonrecurring) Capital Expenditures:
Capital Improvements	$	7,641	$	2,832	$	2,821	$	1,988
Tenant Improvements & Leasing Commissions (1)	2,959		218		77		2,664
Total	$	10,600	$	3,050	$	2,898	$	4,652
	Total 2015		Q3 2015		Q2 2015		Q1 2015
2nd Generation (Recurring) Capital Expenditures:
Capital Improvements	$	9,968	$	4,580	$	3,318	$	2,070
Tenant Improvements & Leasing Commissions (1)	35,364		12,434		15,398		7,532
Total	$	45,332	$	17,014	$	18,716	$	9,602

________________________

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

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Stabilized Portfolio Lease Expiration Summary Schedule

($ in thousands, except for annualized rent per sq. ft.)

Year of Expiration	# of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annualized Base Rent		% of Total Annualized Base Rent		Annualized Rent per Sq. Ft.
2015	19	276,227	2.3	%	$	8,016	1.8	%	$	29.02
2016	92	786,793	6.5	%	24,647		5.3	%	31.33
2017	108	1,786,634	14.6	%	62,059		13.4	%	34.74
2018	75	1,355,837	11.1	%	54,481		11.8	%	40.18
2019	84	1,502,427	12.3	%	54,718		11.8	%	36.42
2020	87	1,867,302	15.3	%	68,886		14.9	%	36.89
2021	42	825,254	6.8	%	35,901		7.7	%	43.50
2022	16	382,065	3.1	%	16,257		3.5	%	42.55
2023	16	505,496	4.1	%	23,790		5.1	%	47.06
2024	17	513,689	4.2	%	18,624		4.0	%	36.26
2025 and beyond	26	2,407,458	19.7	%	96,068		20.7	%	39.90
Total (1)	582	12,209,182	100.0	%	$	463,447	100.0	%	$	37.96

________________________

(1) For leases that have been renewed early or space that has been re-leased to a new tenant, the expiration date and annualized base rent information presented takes into consideration the renewed or re-leased lease terms. Excludes space leased under month-to-month leases, vacant space and lease renewal options not executed as of September 30, 2015.

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Stabilized Portfolio Lease Expiration Schedule by Region

($ in thousands, except for annualized rent per sq. ft.)

Year	Region	# of Expirations	Total Square Feet	% of Total Leased Sq. Ft.		Annualized Base Rent		% of Total Annualized Base Rent		Annualized Rent per Sq. Ft.
2015	Los Angeles	11	47,881	0.4	%	$	1,768	0.4	%	$	36.92
	Orange County	—	—	—	%	—		—	%	—
	San Diego	4	168,072	1.4	%	4,886		1.1	%	29.07
	San Francisco Bay Area	1	10,283	0.1	%	386		0.1	%	37.54
	Greater Seattle	3	49,991	0.4	%	976		0.2	%	19.52
	Total	19	276,227	2.3	%	$	8,016	1.8	%	$	29.02
2016	Los Angeles	55	316,968	2.6	%	$	10,832	2.3	%	$	34.17
	Orange County	3	19,995	0.2	%	756		0.2	%	37.81
	San Diego	16	265,307	2.2	%	5,595		1.2	%	21.09
	San Francisco Bay Area	9	118,232	1.0	%	5,708		1.2	%	48.28
	Greater Seattle	9	66,291	0.5	%	1,756		0.4	%	26.49
	Total	92	786,793	6.5	%	$	24,647	5.3	%	$	31.33
2017	Los Angeles	54	463,073	3.8	%	$	15,675	3.4	%	$	33.85
	Orange County	8	61,840	0.5	%	2,526		0.5	%	40.85
	San Diego	16	715,894	5.8	%	22,664		4.9	%	31.66
	San Francisco Bay Area	18	277,849	2.3	%	12,771		2.8	%	45.96
	Greater Seattle	12	267,978	2.2	%	8,423		1.8	%	31.43
	Total	108	1,786,634	14.6	%	$	62,059	13.4	%	$	34.74
2018	Los Angeles	35	177,094	1.5	%	$	5,709	1.2	%	$	32.24
	Orange County	3	18,263	0.1	%	639		0.2	%	34.99
	San Diego	11	509,828	4.2	%	21,794		4.7	%	42.75
	San Francisco Bay Area	13	298,712	2.4	%	15,165		3.3	%	50.77
	Greater Seattle	13	351,940	2.9	%	11,174		2.4	%	31.75
	Total	75	1,355,837	11.1	%	$	54,481	11.8	%	$	40.18
2019	Los Angeles	28	434,615	3.5	%	$	14,061	3.0	%	$	32.35
	Orange County	6	77,922	0.6	%	3,234		0.7	%	41.50
	San Diego	14	216,946	1.8	%	7,622		1.7	%	35.13
	San Francisco Bay Area	19	582,035	4.8	%	23,826		5.1	%	40.94
	Greater Seattle	17	190,909	1.6	%	5,975		1.3	%	31.30
	Total	84	1,502,427	12.3	%	$	54,718	11.8	%	$	36.42
2020 and Beyond	Los Angeles	74	1,708,555	14.0	%	$	58,885	12.7	%	$	34.46
	Orange County	8	78,596	0.6	%	2,559		0.5	%	32.56
	San Diego	38	1,282,619	10.5	%	49,720		10.7	%	38.76
	San Francisco Bay Area	48	2,415,474	19.8	%	112,523		24.3	%	46.58
	Greater Seattle	36	1,016,020	8.3	%	35,839		7.7	%	35.27
	Total	204	6,501,264	53.2	%	$	259,526	55.9	%	$	39.92

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Stabilized Portfolio Quarterly Lease Expirations for 2015 and 2016

($ in thousands, except for annualized rent per sq. ft.)

	# of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annualized Base Rent		% of Total Annualized Base Rent		Annualized Rent per Sq. Ft.
2015:
Q4 2015	19	276,227	2.3	%	$	8,016	1.8	%	$	29.02
Total 2015	19	276,227	2.3	%	$	8,016	1.8	%	$	29.02
2016:
Q1 2016	23	173,398	1.4	%	$	5,575	1.2	%	$	32.15
Q2 2016	18	188,160	1.5	%	3,932		0.8	%	20.90
Q3 2016	26	211,295	1.7	%	6,973		1.5	%	33.00
Q4 2016	25	213,940	1.9	%	8,167		1.8	%	38.17
Total 2016	92	786,793	6.5	%	$	24,647	5.3	%	$	31.33

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Top Fifteen Tenants⁽¹⁾ 

($ in thousands)

Tenant Name	Annualized Base Rental Revenue		Rentable Square Feet	Percentage of Total Annualized Base Rental Revenue		Percentage of Total Rentable Square Feet
LinkedIn Corporation (2)	$	28,344	663,239	6.1	%	5.1	%
DIRECTV, LLC	22,467		667,852	4.9	%	5.1	%
Synopsys, Inc.	15,492		340,913	3.3	%	2.6	%
Bridgepoint Education, Inc.	15,066		322,342	3.3	%	2.5	%
Intuit, Inc.	13,489		465,812	2.9	%	3.6	%
Delta Dental of California	10,313		188,143	2.2	%	1.4	%
AMN Healthcare, Inc.	9,001		176,075	1.9	%	1.3	%
Concur Technologies	6,562		183,279	1.4	%	1.4	%
Scan Group (3)	6,487		201,782	1.4	%	1.5	%
Group Health Cooperative	6,372		183,422	1.4	%	1.4	%
Neurocrine Biosciences, Inc.	6,366		140,591	1.4	%	1.1	%
Institute for Systems Biology	6,207		140,605	1.3	%	1.1	%
Fish & Richardson, P.C.	6,071		139,547	1.3	%	1.1	%
Pac-12 Enterprises, LLC	5,603		131,749	1.2	%	1.0	%
AppDynamics, Inc.	5,435		83,549	1.2	%	0.6	%
Total Top Fifteen Tenants	$	163,275	4,028,900	35.2	%	30.8	%

________________________

(1) The information presented is as of September 30, 2015.

(2) In January 2015, Apple subleased 431,000 square feet of office space from LinkedIn for the remaining term of the lease (approximately twelve years).

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

20

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

2015 Dispositions

($ in millions)

COMPLETED OFFICE PROPERTY DISPOSITIONS
Property	Submarket	Month of Disposition	No. of Buildings	Rentable Square Feet	Sales Price (1)
1st Quarter
None
2nd Quarter
15050 NE 36th Street, Redmond, WA	Redmond	April	1	122,103	$	51.2
San Diego Properties - Tranche 1 (2)	Sorrento Mesa/UTC	April	3	384,468	95.0
3rd Quarter
San Diego Properties - Tranche 2 (3)	Sorrento Mesa	July	6	539,823	163.0
TOTAL DISPOSITIONS			10	1,046,394	$	309.2

COMPLETED LAND DISPOSITIONS
Property	Submarket	Month of Disposition	Gross Site Acreage	Sales Price (1)
1st Quarter
17150 Von Karman, Irvine, CA	Irvine	January	8.5	$	26.0
2nd Quarter
None
3rd Quarter
None

_____________________

(1) Represents gross sales price before the impact of commissions, closing costs and for the San Diego Properties, approximately $9.0 million of purchase price credits.

(2) The San Diego Properties - Tranche 1 includes the following properties: 10770 Wateridge Circle, 6200 Greenwich Drive, and 6220 Greenwich Drive.

(3) The San Diego Properties - Tranche 2 includes the following properties: 6260 Sequence Drive, 6290 Sequence Drive, 6310 Sequence Drive, 6340 Sequence Drive, 6350 Sequence Drive and 4921 Directors Place.

21

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Development Projects in Lease-up

($ in millions)

LEASE-UP PROJECTS	Location	Start Date	Completion Date	Estimated Stabilization Date	Rentable Square Feet	Total Estimated Investment		Office % Occupied (1)
1st Quarter
None
2nd Quarter
None
3rd Quarter
Columbia Square Phase 1 - Historic	Hollywood	2Q 2013	3Q 2015	4Q 2015	108,539	$	80.0	100%
TOTAL:					108,539	$	80.0	100%

________________________

(1) Phase 1 is comprised of 95,677 rentable square feet of office space and 12,862 rentable square feet of retail space. The office component was 100% occupied at September 30, 2015 and we expect the retail component will be 100% occupied at the end of the fourth quarter of 2015.

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Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

In-Process, Near-Term and Future Development Pipeline

($ in millions)

	Location	Estimated Construction Period		Estimated Stabilization Date	Estimated Rentable Square Feet		Total Estimated Investment		Total Costs as of 9/30/2015 (1)		Office % Leased
		Start Date	Compl. Date
UNDER CONSTRUCTION:
San Francisco Bay Area
350 Mission Street	San Francisco	4Q 2012	3Q 2015	2Q 2016	450,000		$	285	$	243.2	100%
333 Brannan Street	San Francisco	4Q 2013	3Q 2015	2Q 2016	185,000		105		81.3		100%
Crossing/900 (2)	Redwood City	4Q 2013	4Q 2015	4Q 2015	339,000		190		168.0		100%
The Exchange on 16th (3)	San Francisco	2Q 2015	3Q 2017	3Q 2018	700,000		485		123.7		—%
Los Angeles
Columbia Square Phase 2 - Office	Hollywood	3Q 2013	1Q 2016	1Q 2017	370,000		220		154.8		58%
Columbia Square Residential	Hollywood	3Q 2013	1Q 2016	1Q 2017	205,000		140		99.3		—%
San Diego
The Heights at Del Mar	Del Mar	4Q 2014	4Q 2015	4Q 2016	73,000		45		30.7		—%
TOTAL:					2,322,000		$	1,470	$	901.0	56%
NEAR-TERM DEVELOPMENT PIPELINE(4):	Location	Potential Start Date (5)	Approx. Developable Square Feet		Total Estimated Investment		Total Costs as of 9/30/2015 (1)
100 Hooper (6)	San Francisco	2016	400,000		$	250	$	84.0
Academy Project	Hollywood	2016	500,000		300		58.3
333 Dexter (7)	South Lake Union	2016	700,000		375		56.0
One Paseo	Del Mar	2016	TBD		TBD		177.9
TOTAL:							$	376.2
FUTURE DEVELOPMENT PIPELINE:
Flower Mart	San Francisco		TBD		TBD		$	89.7
9455 Towne Centre Drive (8)	San Diego		150,000		TBD		5.2
Carlsbad Oaks – Lots 4, 5, 7 & 8	Carlsbad		288,000		TBD		18.6
Pacific Corporate Center – Lot 8	Sorrento Mesa		170,000		TBD		13.8
Santa Fe Summit – Phase II and III	56 Corridor		600,000		TBD		78.3
Sorrento Gateway – Lot 2	Sorrento Mesa		80,000		TBD		12.2
TOTAL:							$	217.8

________________________

(1) Represents cash paid and costs incurred as of September 30, 2015.

(2) In October 2015, the Company completed and delivered the first of the two buildings at the project encompassing 226,000 square feet.

(3) In the second quarter of 2015, the Company commenced development of the four building complex comprised of 2 six-story buildings and 2 twelve-story buildings for approximately 700,000 gross rentable square feet located in the Mission Bay district of San Francisco.

(4) Project timing, costs, developable square feet and scope could change materially from estimated data provided due to one of more of the following:  any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new office supply, regulatory and entitlement processes, and project design.

(5) Potential start dates assume successfully obtaining all entitlements and approvals necessary to commence construction. Actual commencement is subject to extensive consideration of market conditions and economic factors. 100 Hooper is fully-entitled with Proposition M allocation.

(6) In July 2015, the Company closed on a fully-entitled 3.3 acre site for a total purchase price of approximately $78.0 million in cash and approximately $4.1 million in accrued liabilities and acquisition costs in the south of market area of San Francisco. The Company will develop and own two buildings totaling approximately 400,000 square feet.

(7) Consists of four adjacent parcels in the South Lake Union submarket of Seattle.

(8) The Company is planning to demolish the existing 2-story 45,195 rentable square foot office building and is currently pursuing entitlements to build a new 5-story 150,000 rentable square foot building.

23

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Capital Structure

As of September 30, 2015

($ in thousands)

	Shares/Units September 30, 2015	Aggregate Principal Amount or $ Value Equivalent		% of Total Market Capitalization
DEBT:
Unsecured Term Loan Facility (1)		$	150,000	1.7	%
Unsecured Term Loan		39,000		0.4	%
Unsecured Senior Notes due 2015 (2) (3)		325,000		3.6	%
Unsecured Senior Notes due 2018 (2)		325,000		3.6	%
Unsecured Senior Notes due 2020 (2)		250,000		2.8	%
Unsecured Senior Notes due 2023 (2)		300,000		3.3	%
Unsecured Senior Notes due 2025 (2)		400,000		4.5	%
Unsecured Senior Notes due 2029 (2)		400,000		4.5	%
Secured Debt (2) (4)		468,688		5.2	%
Total Debt		$	2,657,688	29.6	%
EQUITY AND NONCONTROLLING INTERESTS:
6.875% Series G Cumulative Redeemable Preferred stock (5)	4,000,000	$	100,000	1.1	%
6.375% Series H Cumulative Redeemable Preferred stock (5)	4,000,000	100,000		1.1	%
Common limited partnership units outstanding (6)	1,788,170	116,517		1.3	%
Shares of common stock outstanding (6)	92,220,367	6,009,079		66.9	%
Total Equity and Noncontrolling Interests		$	6,325,596	70.4	%
TOTAL MARKET CAPITALIZATION		$	8,983,284	100.0	%

________________________

(1) There was no outstanding balance on the unsecured line of credit as of September 30, 2015.

(2) Represents gross aggregate principal amount due at maturity before the effect of net unamortized discounts as of September 30, 2015. The aggregate net unamortized discounts totaled approximately $0.4 million as of September 30, 2015.

(3) These notes will be repaid at maturity on November 3, 2015.

(4) In October 2015, re-paid at par, two secured mortgages totaling approximately $90.1 million.

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

(6) Value based on closing share price of $65.16 as of September 30, 2015.

24

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Debt Analysis

As of September 30, 2015

TOTAL DEBT COMPOSITION
	Percent of Total Debt		Weighted Average
			Interest Rate		Maturity
Secured vs. Unsecured Debt
Unsecured Debt	82.4	%	4.4	%	6.6
Secured Debt	17.6	%	5.2	%	4.0
Floating vs. Fixed-Rate Debt
Floating-Rate Debt	7.1	%	1.4	%	3.8
Fixed-Rate Debt	92.9	%	4.8	%	6.4
Stated Interest Rate			4.6	%	6.2
GAAP Effective Rate			4.5	%
GAAP Effective Rate Including Debt Issuance Costs			4.7	%

KEY DEBT COVENANTS
	Covenant	Actual Performance as of September 30, 2015
Unsecured Credit Facility, Term Loan Facility, and Term Loan (as defined in the Credit Agreements):
Total debt to total asset value	less than 60%	31%
Fixed charge coverage ratio	greater than 1.5x	2.4x
Unsecured debt ratio	greater than 1.67x	2.81x
Unencumbered asset pool debt service coverage	greater than 1.75x	3.61x
Unsecured Senior Notes due 2015, 2018, 2020, 2023, 2025 and 2029 (as defined in the Indentures):
Total debt to total asset value	less than 60%	38%
Interest coverage	greater than 1.5x	6.2x
Secured debt to total asset value	less than 40%	7%
Unencumbered asset pool value to unsecured debt	greater than 150%	274%

25

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Debt Analysis

($ in thousands)

DEBT MATURITY SCHEDULE
Floating/ Fixed Rate	Stated Rate	GAAP Effective Rate	Maturity Date	2015		2016		2017		2018		2019		After 2019		Total (1) (2)
Unsecured Debt:
Floating (3)	1.35%	1.35%	7/1/2019									$	150,000			$	150,000
Floating (3)	1.35%	1.35%	7/1/2019									39,000				39,000
Fixed	5.00%	5.01%	11/3/2015	325,000												325,000
Fixed	4.80%	4.83%	7/15/2018							325,000						325,000
Fixed	6.63%	6.74%	6/1/2020											250,000		250,000
Fixed	3.80%	3.80%	1/15/2023											300,000		300,000
Fixed	4.38%	4.44%	10/1/2025											400,000		400,000
Fixed	4.25%	4.35%	8/15/2029											400,000		400,000
Total unsecured debt	4.43%	4.47%		325,000		—		—		325,000		189,000		1,350,000		2,189,000
Secured Debt:
Fixed(4) (5)	5.23%	3.50%	1/1/2016	233		50,969										51,202
Fixed(4) (5)	5.57%	3.25%	2/11/2016	166		38,694										38,860
Fixed	6.51%	6.51%	2/1/2017	278		1,157		64,406								65,841
Fixed	7.15%	7.15%	5/1/2017	662		2,772		1,215								4,649
Fixed	4.27%	4.27%	2/1/2018	622		2,559		2,671		123,085						128,937
Fixed(4)	6.05%	3.50%	6/1/2019	392		1,626		1,727		1,835		74,479				80,059
Fixed	4.48%	4.48%	7/1/2027	389		1,600		1,673		1,749		1,830		89,502		96,743
Fixed	Various	Various	Various	26		54		56		59		61		2,141		2,397
Total secured debt	5.18%	4.35%		2,768		99,431		71,748		126,728		76,370		91,643		468,688
Total	4.56%	4.45%		$	327,768	$	99,431	$	71,748	$	451,728	$	265,370	$	1,441,643	$	2,657,688

________________________

(1) Amounts presented reflect the gross principal balances before the effect of any unamortized discounts/premiums as of September 30, 2015. The aggregate net unamortized discounts totaled approximately $0.4 million as of September 30, 2015.

(2) There was no outstanding balance on the unsecured line of credit as of September 30, 2015.

(3) The interest for this loan is calculated at an annual rate of LIBOR plus 1.150% at September 30, 2015.

(4) Represents secured debt assumed in connection with an operating property acquisition.

(5) These mortgage notes payable were re-paid at par in October 2015.

26

Kilroy Realty Corporation

Third Quarter 2015 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 28, 2015 and the reasons why management believes that these measures provide useful information to investors about the Company’s financial condition and results of operations.

Net Operating Income:

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

Because NOI excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expenses, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. The Company uses NOI to evaluate its operating performance on a portfolio basis since NOI allows the Company to evaluate the impact that factors such as occupancy levels, lease structure, rental rates, and tenant base 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 all of the properties that were owned and included in our stabilized portfolio for two comparable reporting periods. Because Same Store NOI excludes the change in NOI from developed, redeveloped, acquired and disposed of and held for sale properties, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties. 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.

27

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures, continued

EBITDA:

Management believes that earnings before interest expense, depreciation and amortization, gain/loss on early extinguishment of debt, gains and losses on depreciable real estate, net income attributable to noncontrolling interests, preferred dividends and distributions, original issuance costs of redeemed preferred stock and preferred units, 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, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, 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. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets.

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.

28

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures, continued

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 non-cash amortization of deferred financing costs, debt discounts and premiums and share-based compensation awards and amortization of above (below) market rents for acquisition properties, then subtracting recurring tenant improvements, leasing commissions and capital expenditures and eliminating the net effect of straight-line rents, amortization of deferred revenue related to tenant improvements and adjusting for other lease related items. 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 non-cash 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.

29

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Definitions Included in Supplemental

Annualized Base Rent:

Includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net. Amounts represent percentage of total portfolio annualized contractual base rental revenue.

Change in GAAP/ Cash Rents (Leases Commenced):

Calculated as the change between GAAP/cash rents for new/renewed leases and the expiring GAAP/cash 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.

Change in GAAP/Cash Rents (Leases Executed):

Calculated as the change between GAAP/cash rents for signed leases and the expiring GAAP/cash 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.

Estimated Stabilization Date (Development):

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

FAD Payout Ratio:

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.

First Generation Capital Expenditures:

Capital expenditures for newly acquired space, newly developed or redeveloped space, or change in use. These costs are not subtracted in our calculation of Funds Available for Distribution.

Fixed Charge Coverage Ratio:

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

FFO Payout Ratio:

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.

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Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Definitions Included in Supplemental, continued

GAAP Effective Rate:

The rate at which interest expense is recorded for financial reporting purposes, which reflects the amortization of any discounts/premiums, excluding debt issuance costs.

Interest Coverage Ratio:

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

Lease-up Properties:

Properties recently redeveloped that have not yet reached 95% occupancy and are within one year following cessation of major construction activities.

Net Effect of Straight-Line Rents:

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.

Operating Margins:

Calculated as Net Operating Income divided by total revenues, including discontinued operations.

Retention Rates (Leases Commenced):

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

Same Store Portfolio:

Our Same Store portfolio includes all of our properties owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1, 2014 and still owned and included in the stabilized portfolio as of September 30, 2015. It does not include undeveloped land, development and redevelopment properties currently under construction or committed for construction, “lease-up” properties and properties held-for-sale. We define lease-up properties as properties recently developed or redeveloped that have not yet reached 95% occupancy and are within one year following cessation of major construction activities. We define redevelopment properties as those projects for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property.

Stated Interest Rate:

The rate at which interest expense is recorded per the respective loan documents, excluding the impact of the amortization of any debt discounts/premiums.

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Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Reconciliation of Same Store Net Operating Income to Net Income Available to Common Stockholders

(unaudited, $ in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Adjusted Same Store Cash Net Operating Income	$	73,371		$	69,587		$	221,607		$	214,653
Adjustments to 2015 and 2014:
Rental revenues related to a lease termination fee	—			5,655			—			5,655
Nonrecurring property damage legal fees	—			—			(671		)	(1,670		)
Property expenses related to insurance proceeds	—			—			649			—
Same Store Cash Net Operating Income	$	73,371		$	75,242		$	221,585		$	218,638
Cash to GAAP Adjustments:
GAAP Operating Revenues Adjustments, net	8,062			4,885			28,115			22,148
GAAP Operating Expenses Adjustments, net	21			65			(377		)	110
Same Store GAAP Net Operating Income	81,454			80,192			249,323			240,896
Non-Same Store GAAP Net Operating Income	20,466			11,194			66,303			28,524
Net Operating Income excluding discontinued operations	101,920			91,386			315,626			269,420
Net Operating Income from discontinued operations	—			1,157			—			4,054
Net Operating Income, as defined (1)	101,920			92,543			315,626			273,474
Adjustments:
General and administrative expenses	(10,799		)	(11,138		)	(36,200		)	(33,806		)
Acquisition-related expenses	(4		)	(431		)	(397		)	(1,268		)
Depreciation and amortization (including discontinued operations)	(49,422		)	(50,641		)	(152,567		)	(150,610		)
Interest income and other net investment (loss) gain	(694		)	(9		)	177			587
Interest expense	(12,819		)	(16,608		)	(44,561		)	(49,880		)
Gain on sale of land	—			—			17,268			3,490
Gains on sales of depreciable operating properties	78,522			—			109,950			—
Gains on dispositions of discontinued operations	—			5,587			—			110,391
Net Income	106,704			19,303			209,296			152,378
Net income attributable to noncontrolling common units of the Operating Partnership	(1,945		)	(321		)	(3,850		)	(3,011		)
Preferred dividends	(3,313		)	(3,313		)	(9,938		)	(9,938		)
Net Income Available to Common Stockholders	$	101,446		$	15,669		$	195,508		$	139,429

________________________

(1) Please refer to page 27 for Management Statements on Net Operating Income and Same Store Net Operating Income.

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Third Quarter 2015 Supplemental Financial Report

Guidance/Outlook

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

	Full Year 2015 Range at September 30, 2015						Full Year 2015 Range at June 30, 2015
	Low End			High End			Low End			High End
Net Income Available to Common Stockholders	$	219,774		$	222,294		$	138,693		$	146,404
Adjustments:
Noncontrolling interests in earnings of the Operating Partnership	4,257			4,305			2,816			2,973
Depreciation and amortization	199,424			200,588			197,855			199,319
Gains on sales of depreciable real estate	(109,950		)	(109,950		)	(31,428		)	(31,428		)
Funds From Operations	$	313,505		$	317,237		$	307,936		$	317,268
Weighted average common shares/units outstanding - diluted	93,305			93,305			93,314			93,314
FFO per common share/unit - diluted	$	3.36		$	3.40		$	3.30		$	3.40

33

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Reconciliation of Net Income Available to Common Stockholders to EBITDA

(unaudited, $ in thousands)

	Three Months Ended September 30,
	2015			2014
Net Income Available to Common Stockholders	$	101,446		$	15,669
Interest expense	12,819			16,608
Depreciation and amortization (including discontinued operations)	49,422			50,641
Net income attributable to noncontrolling common units of the Operating Partnership	1,945			321
Gains on sales of depreciable real estate	(78,522		)	(5,587		)
Preferred dividends	3,313			3,313
EBITDA(1)	$	90,423		$	80,965

________________________

(1) Please refer to page 28 for a Management Statement on EBITDA.

34

Kilroy Realty Corporation

Third Quarter 2015 Supplemental Financial Report

Reconciliation of Funds Available for Distribution to GAAP Net Cash Provided by Operating Activities

(unaudited, $ in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
Funds Available for Distribution(1)	$	48,325	$	37,667	$	154,589		$	113,407
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures	17,014		20,074		45,332			52,247
Depreciation for furniture, fixtures and equipment	703		644		2,036			1,731
Preferred dividends	3,313		3,313		9,938			9,938
Provision for uncollectible tenant receivables	—		58		47			58
Net changes in operating assets and liabilities and other adjustments (2)	16,429		28,646		(9,330		)	19,883
GAAP Net Cash Provided by Operating Activities	$	85,784	$	90,402	$	202,612		$	197,264

________________________

(1) Please refer to page 29 for a Management Statement on Funds Available for Distribution.

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

35