Kilroy Realty (KRC) 8-K Fourth Quarter 2007 Supplemental Financial Report

Exhibit 99.2

Contact: Richard E. Moran Jr. Executive Vice President FOR RELEASE: January 28, 2008

and Chief Financial Officer

(310) 481-8483

or

Tyler H. Rose

Senior Vice President

and Treasurer

(310) 481-8484

KILROY REALTY CORPORATION REPORTS

FOURTH QUARTER FINANCIAL RESULTS

LOS ANGELES, January 28, 2008 – Kilroy Realty Corporation(NYSE: KRC) today reported financial results for its fourth quarter ended December 31, 2007 with net income available for common stockholders of $65.6 million, or $2.01 per share, compared to $9.2 million, or $0.28 per share, in the fourth quarter of 2006. Revenues from continuing operations in the fourth quarter totaled $69.7 million, up from $61.5 million in the prior year’s fourth quarter. Funds from operations (FFO) for the period totaled $29.7 million, or $0.85 per share, compared to $27.3 million, or $0.79 per share, in the year-earlier period.

For its fiscal year ended December 31, 2007, KRC reported net income available for common stockholders of $104.2 million, or $3.20 per share, compared to $72.3 million, or $2.30 per share, in fiscal year 2006. Revenues from continuing operations in 2007 totaled $258.5 million, up from $241.5 million in 2006. FFO for the year totaled $110.6 million, or $3.18 per share, compared to $118.2 million, or $3.48 per share, in 2006.

All per-share amounts in this report are presented on a diluted basis.

“KRC is well positioned in a changing environment,” said John B. Kilroy, Jr., the company’s president and chief executive officer. “We achieved solid 2007 results, ended the year 94% occupied, and continue to maintain a very strong balance sheet.”

During the fourth quarter, KRC completed the sale of its 532,000 square-foot office campus located immediately adjacent to the Seattle-Tacoma International Airport for approximately $79.3 million, generating a book gain of approximately $61.0 million. The company also acquired a 23-acre development site currently entitled for approximately 500,000 square feet of office space for a purchase price of $88 million. The property, one of the last available development sites in the highly attractive Del Mar submarket of San Diego County, increased the company’s future development pipeline to just over 116 acres representing future development potential of over two million square feet of space.

In its current development program, KRC delivered more than 780,000 square feet of new office space in two projects during 2007. Both projects are 100% leased and occupied. The company also commenced construction during the year on two additional development and redevelopment projects totaling approximately 155,000 square feet of space.

With these new projects, KRC’s current development now encompasses four new office buildings totaling approximately 395,000 square feet. In the aggregate, the buildings represent a total estimated investment of approximately $161 million, of which $108 million has been spent to date. They are 37% preleased.

The company also has two redevelopment projects underway totaling just under 211,000 square feet of space and representing a total estimated incremental investment of approximately $26 million. They are 49% preleased.

Earnings guidance for 2008 will be discussed by KRC management during the company’s January 29, 2008 conference call. The call will begin at 11:00 a.m. Pacific time and last approximately one hour. Those interested in listening via the Internet can access the conference call at www.kilroyrealty.com. Please go to the website 15 minutes before the call and register. It may be necessary to download audio software to hear the conference call. Those interested in listening via telephone can access the conference call at (888) 680-0869, reservation #10068170. A replay of the conference call will be available via phone through February 12, 2008 at (888) 286-8010, reservation #33589186, or via the Internet at the company’s website.

Some of the information presented in this release is forward looking in nature within the meaning of the Private Securities Litigation Reform Act of 1995. Although

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Kilroy Realty Corporation believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that its expectations will be achieved. Certain factors that could cause actual results to differ materially from Kilroy Realty’s expectations are set forth as risk factors in the company’s Securities and Exchange Commission reports and filings. Included among these factors are changes in general economic conditions, including changes in the economic conditions affecting industries in which its principal tenants compete; Kilroy Realty’s ability to timely lease or re-lease space at current or anticipated rents; changes in interest rates; changes in operating costs, including utility costs; future demand for its debt and equity securities; its ability to refinance its debt on reasonable terms at maturity; its ability to complete current and future development projects on schedule and on budget; the demand for office space in markets in which Kilroy Realty has a presence; and risks detailed from time to time in the company’s SEC reports, including quarterly reports on Form 10-Q, current reports on Form 8-K and annual reports on Form 10-K. Many of these factors are beyond Kilroy Realty’s ability to control or predict. Forward-looking statements are not guarantees of performance. For forward-looking statements herein, Kilroy Realty claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Kilroy Realty Corporation, a member of the S&P Small Cap 600 Index, is a Southern California-based real estate investment trust active in the office and industrial property sectors. For 60 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of Los Angeles, Orange and San Diego counties. Kilroy Realty currently has an in-process development and redevelopment pipeline of approximately 600,000 square feet. At December 31, 2007, the company owned 8.1 million rentable square feet of commercial office space and 3.9 million rentable square feet of industrial space. More information is available at www.kilroyrealty.com.

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KILROY REALTY CORPORATION

SUMMARY QUARTERLY RESULTS

(unaudited, in thousands, except per share data)

	Three Months Ended December 31, 2007		Three Months Ended December 31, 2006		Year Ended December 31, 2007		Year Ended December 31, 2006
Revenues from continuing operations	$	69,741	$	61,519	$	258,472	$	241,541
Revenues including discontinued operations	$	72,155	$	64,339	$	268,784	$	264,329
Net income available for common stockholders(1)	$	65,612	$	9,184	$	104,214	$	72,256
Weighted average common shares outstanding - basic		32,426		32,246		32,380		31,244
Weighted average common shares outstanding - diluted		32,633		32,416		32,527		31,390
Net income per share of common stock - basic	$	2.02	$	0.28	$	3.22	$	2.31
Net income per share of common stock - diluted	$	2.01	$	0.28	$	3.20	$	2.30
Funds From Operations(2), (3)	$	29,672	$	27,311	$	110,584	$	118,184
Weighted average common shares/units outstanding - basic(4)		34,622		34,570		34,616		33,842
Weighted average common shares/units outstanding - diluted(4)		34,829		34,740		34,762		33,988
Funds From Operations per common share/unit - basic(4)	$	0.86	$	0.79	$	3.19	$	3.49
Funds From Operations per common share/unit - diluted(4)	$	0.85	$	0.79	$	3.18	$	3.48
Common shares outstanding at end of period						32,766		32,399
Common partnership units outstanding at end of period						2,189		2,319
Total common shares and units outstanding at end of period						34,955		34,718

	December 31, 2007		December 31, 2006
Stabilized portfolio occupancy rates:
Office	93.7	%	95.8	%
Industrial	94.7	%	95.8	%
Weighted average total	94.0	%	95.8	%
Los Angeles	96.4	%	93.2	%
Orange County	94.8	%	95.7	%
San Diego	91.4	%	98.6	%
Other	99.6	%	92.8	%
Weighted average total	94.0	%	95.8	%
Total square feet of stabilized properties owned at end of period:
Office	8,089		7,835
Industrial	3,870		3,870
Total	11,959		11,705

(1) Net income after minority interests.

(2) Reconciliation of Net Income to Funds From Operations and management statement on Funds From Operations are included after the Consolidated Statements of Operations.

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

(4) Calculated based on weighted average shares outstanding assuming conversion of all common limited partnership units outstanding.

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KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	December 31, 2007			December 31, 2006
ASSETS
REAL ESTATE ASSETS:
Land and improvements	$	324,779		$	293,059
Buildings and improvements		1,719,700			1,484,051
Undeveloped land and construction in progress		324,077			263,651
Total real estate held for investment		2,368,556			2,040,761
Accumulated depreciation and amortization		(463,932	)		(443,807	)
Total real estate held for investment, net		1,904,624			1,596,954
Properties held for sale, net		—			4,512
Total real estate assets, net		1,904,624			1,601,466
Cash and cash equivalents	$	11,732		$	11,948
Restricted cash		546			494
Funds held at qualified intermediary for Section 1031 exchange		—			43,794
Marketable securities		707			—
Current receivables, net		4,891			5,890
Deferred rent receivables, net		67,283			61,929
Notes receivable		10,970			11,096
Deferred leasing costs and acquisition related intangibles, net		54,418			49,019
Deferred financing costs, net		8,492			5,100
Prepaid expenses and other assets, net		5,057			8,616
TOTAL ASSETS	$	2,068,720		$	1,799,352
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES:
Secured debt	$	395,912		$	459,198
Exchangeable senior notes, net		456,090			—
Unsecured senior notes		144,000			144,000
Unsecured line of credit		111,000			276,000
Accounts payable, accrued expenses and other liabilities		58,249			67,729
Accrued distributions		20,610			19,610
Deferred revenue and acquisition related liabilities		59,187			25,353
Rents received in advance and tenant security deposits		18,433			19,900
Total liabilities		1,263,481			1,011,790
MINORITY INTERESTS:
7.45% Series A Cumulative Redeemable Preferred units of the Operating Partnership		73,638			73,638
Common units of the Operating Partnership		38,309			39,628
Total minority interests		111,947			113,266
STOCKHOLDERS’ EQUITY:
7.80% Series E Cumulative Redeemable Preferred stock		38,425			38,425
7.50% Series F Cumulative Redeemable Preferred stock		83,157			83,157
Common stock		328			324
Additional paid-in capital		658,894			671,484
Distributions in excess of earnings		(87,512	)		(119,094	)
Total stockholders’ equity		693,292			674,296
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	2,068,720		$	1,799,352

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KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended December 31, 2007			Three Months Ended December 31, 2006			Year Ended December 31, 2007			Year Ended December 31, 2006
REVENUES:
Rental income	$	62,125		$	54,523		$	229,672		$	216,745
Tenant reimbursements		7,320			6,269			25,322			22,440
Other property income		296			727			3,478			2,356
Total revenues		69,741			61,519			258,472			241,541
EXPENSES:
Property expenses		11,255			10,166			43,306			39,700
Real estate taxes		5,137			4,526			19,539			18,149
Provision for bad debts		783			118			473			744
Ground leases		392			396			1,582			1,583
General and administrative expenses		9,353			7,478			36,580			22,800
Interest expense		10,765			10,050			37,502			43,541
Depreciation and amortization		20,259			17,292			72,815			68,830
Total expenses		57,944			50,026			211,797			195,347
OTHER INCOME AND EXPENSE:
Interest and other investment income		311			812			1,606			1,653
Net settlement receipts on interest rate swaps		—			244			—			991
Loss on derivative instruments		—			(238	)		—			(818	)
Total other income		311			818			1,606			1,826
Income from continuing operations before minority interests		12,108			12,311			48,281			48,020
Minority interests:
Distributions on Cumulative Redeemable
Preferred units		(1,397	)		(1,397	)		(5,588	)		(5,588	)
Minority interest in earnings of Operating Partnership attributable to continuing operations		(524	)		(571	)		(2,129	)		(2,514	)
Total minority interests		(1,921	)		(1,968	)		(7,717	)		(8,102	)
Income from continuing operations		10,187			10,343			40,564			39,918
Discontinued operations:
Revenues from discontinued operations		2,414			2,820			10,312			22,788
Expenses from discontinued operations		(1,648	)		(1,633	)		(6,521	)		(8,625	)
Net gain on dispositions of discontinued operations		61,031			—			74,505			31,259
Minority interest in earnings of Operating Partnership attributable to discontinued operations		(3,970	)		56			(5,038	)		(3,476	)
Total income from discontinued operations		57,827			1,243			73,258			41,946
Net income		68,014			11,586			113,822			81,864
Preferred dividends		(2,402	)		(2,402	)		(9,608	)		(9,608	)
Net income available for common stockholders	$	65,612		$	9,184		$	104,214		$	72,256
Weighted average shares outstanding - basic		32,426			32,246			32,380			31,244
Weighted average shares outstanding - diluted		32,633			32,416			32,527			31,390
Net income per common share - basic	$	2.02		$	0.28		$	3.22		$	2.31
Net income per common share - diluted	$	2.01		$	0.28		$	3.20		$	2.30

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KILROY REALTY CORPORATION FUNDS FROM OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended December 31, 2007			Three Months Ended December 31, 2006		Year Ended December 31, 2007			Year Ended December 31, 2006
Net income available for common stockholders	$	65,612		$	9,184	$	104,214		$	72,256
Adjustments:
Minority interest in earnings of Operating Partnership		4,494			515		7,167			5,990
Depreciation and amortization of real estate assets		20,597			17,612		73,708			71,197
Net gain on dispositions of discontinued operations		(61,031	)		—		(74,505	)		(31,259	)
Funds From Operations(1), (2)	$	29,672		$	27,311	$	110,584		$	118,184
Weighted average common shares/units outstanding - basic		34,622			34,570		34,616			33,842
Weighted average common shares/units outstanding - diluted		34,829			34,740		34,762			33,988
Funds From Operations per common share/unit - basic	$	0.86		$	0.79	$	3.19		$	3.49
Funds From Operations per common share/unit - diluted	$	0.85		$	0.79	$	3.18		$	3.48

(1) Management believes that Funds From Operations (“FFO”) is a useful supplemental measure of the Company’s operating performance. The Company computes FFO in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). The White Paper defines FFO as net income or loss computed in accordance with generally accepted accounting principles (“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. Other real estate investment trusts (“REITs”) may use different methodologies for calculating FFO and, accordingly, the Company’s FFO may not be comparable to other REITs.

Because FFO excludes depreciation and amortization, gains and losses from property dispositions, and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective on operating performance not immediately apparent from net income. In addition, management believes that FFO provides useful information to the investment community about the Company’s operating performance when compared to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs.

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 that could materially impact the Company’s results of operations.

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

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