Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

11.   Commitments and Contingencies

Ground Leases

We have noncancellable ground lease obligations at one building in Bellevue, Washington which expires in November 2093 and at Kilroy Airport Center Phases I, II, and III in Long Beach, California which expires in July 2084.

The minimum commitment under our ground leases as of June 30, 2011 for five years and thereafter was as follows:

Year Ending	(in thousands)
Remaining 2011	$	1,041
2012		1,926
2013		1,926
2014		1,870
2015		1,830
Thereafter(1)(2)		133,212
Total	$	141,805

(1)

One of our ground lease obligations is subject to a fair market value adjustment every five years; however, the lease includes ground rent subprotection and infrastructure rent credits which currently limit our annual rental obligations to $1.0 million. The contractual obligations for that ground lease included above assumes the lesser of $1.0 million or annual lease rental obligation in effect as of June 30, 2011.

(2)

One of our ground lease obligations includes a component which is based on the percentage of gross income that exceeds the minimum ground rent. The minimum rent is subject to increases every five years based on 50% of the average annual percentage rent for the previous five years. Currently gross income does not exceed the threshold requiring us to pay percentage rent. The contractual obligations for that ground lease included above assumes the annual lease rental obligation in effect as of June 30, 2011.

Non-refundable Escrow Deposits

As of June 30, 2011, we had $16.0 million in non-refundable escrow deposits related to potential future acquisitions. These potential future acquisitions are currently anticipated to close in 2011 and are subject to customary closing conditions.