Secured and Unsecured Debt of the Operating Partnership (Tables) (Kilroy Realty, L.P. [Member])

9 Months Ended

Sep. 30, 2012

The table below summarizes our capped call option positions for the 4.25% Exchangeable Notes as of both September 30, 2012 and December 31, 2011.



	4.25% Exchangeable Notes⁽¹⁾
Referenced shares of common stock	4,800,796
Exchange price including effect of capped calls	$	42.81

________________________


(1)	The capped calls mitigate the dilutive impact to us of the potential exchange of all of the 4.25% Exchangeable Notes into shares of common stock.

Per Share Average Trading Price Of Companys Common Stock On Stock Exchange [Tables Text Block]

For the three and nine months ended September 30, 2012 and the nine months ended September 30, 2011, the per share average trading price of the Company's common stock on the NYSE was higher than the $35.93 exchange price for the 4.25% Exchangeable Notes, as presented below:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2012	2011	2012	2011
Per share average trading price of the Company's common stock	$47.56	$35.93	$45.74	$37.92

Interest expense for the exchangeable notes

The following table summarizes the total interest expense attributable to the Exchangeable Notes based on the effective interest rates set forth above, before the effect of capitalized interest, for the three and nine months ended September 30, 2012 and 2011:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
	(in thousands)
Contractual interest payments	$	1,833	$	3,035	$	6,888	$	9,106
Amortization of discount	1,041		1,742		3,993		5,151
Interest expense attributable to the Exchangeable Notes	$	2,874	$	4,777	$	10,881	$	14,257

Terms of the Credit Facility

The following table summarizes the balance and terms of our unsecured line of credit (the "Credit Facility") as of September 30, 2012 and December 31, 2011, respectively:



	September 30, 2012			December 31, 2011
	(in thousands)
Outstanding borrowings	$	27,000		$	182,000
Remaining borrowing capacity	473,000			318,000
Total borrowing capacity⁽¹⁾	$	500,000		$	500,000
Interest rate⁽²⁾	1.97		%	2.05		%
Facility fee-annual rate⁽³⁾	0.350%
Maturity date⁽⁴⁾	August 2015

________________________


(1)	We may elect to borrow, subject to bank approval, up to an additional $200.0 million under an accordion feature under the terms of the Credit Facility.


(2)	The Credit Facility interest rate was calculated based on an annual rate of LIBOR plus 1.750% as of both September 30, 2012 and December 31, 2011.


(3)	The facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we also incurred origination and legal costs of approximately $8.3 million that are currently being amortized through the maturity date of the Credit Facility.


(4)	Under the terms of the Credit Facility, we may exercise an option to extend the maturity date by one year.

Stated debt maturities and scheduled amortization payments, excluding debt discounts

The following table summarizes the stated debt maturities and scheduled amortization payments, excluding debt discounts and premiums, as of September 30, 2012:



Year	(in thousands)
Remaining 2012	$	1,646
2013	90,203
2014	263,304
2015	419,936
2016	209,120
Thereafter	863,230
Total	$	1,847,439	⁽¹⁾

________________________


(1)	Includes gross principal balance of outstanding debt before impact of all debt discounts and premiums.

Capitalized interest and loan fees

The following table sets forth gross interest expense reported in continuing operations, including debt discount/premium and loan cost amortization, net of capitalized interest, for the three and nine months ended September 30, 2012 and 2011. The interest expense capitalized was recorded as a cost of development and redevelopment, and increased the carrying value of undeveloped land and construction in progress. (See Note 13 for interest expense reported in discontinued operations).



	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(in thousands)
Gross interest expense	$	24,843		$	25,294		$	73,326		$	69,113
Capitalized interest	(4,989		)	(2,398		)	(13,154		)	(6,442		)
Interest expense	$	19,854		$	22,896		$	60,172		$	62,671

Secured Debt [Member]

Debt Instrument [Line Items]

Balance and significant terms of debt

The following table sets forth the composition of our secured debt as of September 30, 2012 and December 31, 2011:



	Annual Stated	GAAP
Type of Debt	Interest Rate ⁽¹⁾	Effective Rate ⁽¹⁾⁽²⁾	Maturity Date	September 30, 2012 ⁽¹⁰⁾		December 31, 2011 ⁽¹⁰⁾
				(in thousands)
Mortgage note payable	4.27%	4.27%	2/1/2018	$	135,000	$	135,000
Mortgage note payable ⁽³⁾⁽⁹⁾	4.48%	4.48%	7/1/2027	97,000		—
Mortgage note payable⁽⁴⁾⁽⁹⁾	6.37%	3.55%	4/1/2013	84,238		—
Mortgage note payable ⁽⁵⁾	5.57%	5.57%	8/1/2012	—		71,517
Mortgage note payable	6.51%	6.51%	2/1/2017	68,844		69,507
Mortgage note payable ⁽⁶⁾⁽⁹⁾	5.23%	3.50%	1/1/2016	56,730		—
Mortgage note payable⁽⁷⁾⁽⁹⁾	5.09%	3.50%	8/7/2015	35,512		—
Mortgage note payable ⁽⁹⁾	4.94%	4.00%	4/15/2015	29,258		30,191
Mortgage note payable ⁽⁵⁾	4.95%	4.95%	8/1/2012	—		29,754
Mortgage note payable	7.15%	7.15%	5/1/2017	11,745		13,294
Public facility bonds ⁽⁸⁾	Various	Various	Various	2,540		2,562
Total				$	520,867	$	351,825


(1)	All interest rates presented are fixed-rate interest rates.


(2)	This represents the rate at which interest expense is recorded for financial reporting purposes, which reflects the amortization of discounts/premiums, excluding debt issuance costs.


(3)	In June 2012, we obtained a mortgage loan that is secured by office properties located at 2211 Michelson in Irvine, California and 2100 and 2110 Colorado Avenue in Santa Monica, California and requires monthly principal and interest payments based on a 30-year amortization period with an initial three years of interest only payments.

(4)

In July 2012, in connection with the acquisition of one office building in Bellevue, Washington, we assumed the mortgage loan that is secured by the project. The assumed mortgage loan had a principal balance of $83.6 million at the acquisition date and was recorded at fair value on the date of the acquisition resulting in a premium of approximately $1.4 million. This premium will be accreted on a straight-line basis, which approximates the effective interest method, as a reduction to interest expense. The loan requires monthly principal and interest payments based on a 30-year amortization period.


(5)	In May 2012, we repaid these loans prior to the stated maturity.

(6)

In July 2012, in connection with the acquisition of one office building in Los Angeles, California, we assumed the mortgage loan that is secured by the project. The assumed mortgage had a principal balance of $53.9 million at the acquisition date and was recorded at fair value on the date of the acquisition resulting in a premium of approximately $3.1 million. This premium will be accreted on a straight-line basis, which approximates the effective interest method, as a reduction to interest expense from the acquisition date through the maturity date of the mortgage loan. The loan requires monthly principal and interest payments based on a 30-year amortization period.


(7)	In June 2012, in connection with the acquisition of two office buildings in Seattle, Washington, we assumed a mortgage loan that is secured by the project. The assumed mortgage loan had a principal balance of $34.0 million at the acquisition date and was recorded at fair value at the date of acquisition resulting in an initial premium of

approximately $1.7 million. This premium will be accreted on a straight−line basis, which approximates the effective interest method, as a reduction to interest expense from the

acquisition date through the maturity date of the mortgage loan.

(8)

The public facility bonds (the “Bonds”), the proceeds from which were used to finance infrastructure improvements on one of the Company’s undeveloped land parcels, were issued in February 2008 by the City of Carlsbad. The Bonds have annual maturities from September 1, 2013 through September 1, 2038, with interest rates ranging from 4.74% to 6.20%. Principal and interest payments for the Bonds will be charged through the assessment of special property taxes.


(9)	The secured debt and the related properties that secure the debt are held in a special purpose entity and the properties are not available to satisfy the debts and other obligations of the Company or the Operating Partnership.


(10)	Amounts reported include the amounts of unamortized debt premiums and discounts for the periods presented.

Exchangeable Notes [Member]

Debt Instrument [Line Items]

Balance and significant terms of debt

The table below summarizes the balance and significant terms of the Company's 3.25% Exchangeable Notes due April 2012 (the "3.25% Exchangeable Notes") and 4.25% Exchangeable Notes due November 2014 (the "4.25% Exchangeable Notes" and together with the 3.25% Exchangeable Notes, the "Exchangeable Notes") outstanding as of September 30, 2012 and December 31, 2011. The Company repaid the 3.25% Exchangeable Notes in April 2012 upon maturity.



	3.25% Exchangeable Notes					4.25% Exchangeable Notes
	September 30, 2012		December 31, 2011			September 30, 2012			December 31, 2011
	(in thousands)
Principal amount	$	—	$	148,000		$	172,500		$	172,500
Unamortized discount	—		(924		)	(9,615		)	(12,684		)
Net carrying amount of liability component	$	—	$	147,076		$	162,885		$	159,816
Carrying amount of equity component			$33,675			$19,835
Maturity date			April 2012			November 2014
Stated coupon rate ⁽¹⁾			3.25%			4.25%
Effective interest rate ⁽²⁾			5.45%			7.13%
Exchange rate per $1,000 principal value of the Exchangeable Notes, as adjusted ⁽³⁾						27.8307
Exchange price, as adjusted ⁽³⁾						$35.93
Number of shares on which the aggregate consideration to be delivered on conversion is determined ⁽³⁾						4,800,796

_____________________


(1)	Interest on the 4.25% Exchangeable Notes is payable semi-annually in arrears on May 15^th and November 15^th of each year.


(2)	The rate at which we record interest expense for financial reporting purposes, which reflects the amortization of the discounts on the Exchangeable Notes. This rate represents our conventional debt borrowing rate at the date of issuance.


(3)	The exchange rate, exchange price, and the number of shares to be delivered upon conversion are subject to adjustment under certain circumstances including increases in our common dividends.