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

12 Months Ended

Dec. 31, 2012

For the years ended December 31, 2012 and December 31, 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:



	Year Ended December 31,
	2012	2011
Per share average trading price of the Company's common stock	$45.72	$37.27

Approximate fair value of shares upon conversion

Using the per share average trading price presented in the table above, the approximate fair value of the shares upon conversion of the 4.25% Exchangeable Notes as of December 31, 2012 and December 31, 2011 would have been as follows:



	December 31, 2012 ⁽¹⁾		December 31, 2011 ⁽²⁾
	(in thousands)
Approximate fair value of shares upon conversion	$	221,200	$	179,100
Principal amount of 4.25% Exchangeable Notes	172,500		172,500
Approximate fair value in excess amount of principal amount	$	48,700	$	6,600

_______________


(1)	Although the 4.25% Exchangeable Notes were exchangeable during the three months ended December 31, 2012, no 4.25% Exchangeable Notes were exchanged during the period. The 4.25% Exchangeable Notes were not exchangeable during the remainder of the year.


(2)	The 4.25% Exchangeable Notes were not exchangeable during the year ended December 31, 2011.

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 years ended December 31, 2012, 2011, and 2010:



	Year Ended December 31,
	2012		2011		2010
	(in thousands)
Contractual interest payments	$	8,721	$	12,141	$	14,565
Amortization of discount	5,052		6,928		7,965
Interest expense attributable to Exchangeable Notes	$	13,773	$	19,069	$	22,530

Capped call Transactions

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

Terms of the Credit Facility

The following table summarizes the terms of our revolving credit facility as of December 31, 2012 and December 31, 2011:



	December 31, 2012			December 31, 2011
	(in thousands)
Outstanding borrowings	$	185,000		$	182,000
Remaining borrowing capacity	315,000			318,000
Total borrowing capacity ⁽¹⁾	$	500,000		$	500,000
Interest rate ⁽²⁾	1.66		%	2.05		%
Facility fee-annual rate ⁽³⁾	0.300		%	0.350		%
Maturity date ⁽⁴⁾	April 2017			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 revolving credit facility.


(2)	The revolving credit facility interest rate was calculated based on an annual rate of LIBOR plus 1.450% and 1.750% as of December 31, 2012 and December 31, 2011, respectively.

(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 debt origination and legal costs of approximately $5.0 million when we entered into the revolving credit facility in 2010, an additional $3.3 million when we amended the terms of the revolving credit facility in June 2011 and an additional $1.9 million when we amended the terms of the revolving credit facility in November 2012. The unamortized balance of these costs are amortized through the extended maturity date of the revolving credit facility.


(4)	Under the original and all amended terms of the revolving 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 December 31, 2012:



Year Ending	(in thousands)
2013	$	90,881
2014	263,913
2015	393,711
2016	247,822
2017	255,036
Thereafter	793,056
Total	$	2,044,419	⁽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 our gross interest expense reported in continuing operations, including debt discount/premium and loan cost amortization, net of capitalized interest, for the years ended December 31, 2012, 2011 and 2010. 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 17 for interest expense reported in discontinued operations).



	Year Ended December 31,
	2012			2011			2010 ⁽¹⁾
	(in thousands)
Gross interest expense	$	98,906		$	94,915		$	69,661
Capitalized interest	(19,792		)	(9,130		)	(10,015		)
Interest expense	$	79,114		$	85,785		$	59,646

Secured Debt [Member]

Debt Instrument [Line Items]

Debt balance and significant terms

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



	Annual Stated	GAAP		December 31,
Type of Debt	Interest Rate ⁽¹⁾	Effective Rate ⁽¹⁾⁽²⁾	Maturity Date	2012 ⁽¹¹⁾		2011 ⁽¹¹⁾
				(in thousands)
Mortgage note payable	4.27%	4.27%	February 2018	$	135,000	$	135,000
Mortgage note payable ⁽³⁾⁽⁹⁾	4.48%	4.48%	July 2027	97,000		—
Mortgage note payable⁽⁴⁾⁽⁹⁾	6.37%	3.55%	April 2013	83,116		—
Mortgage note payable ⁽⁵⁾	5.57%	5.57%	August 2012	—		71,517
Mortgage note payable	6.51%	6.51%	February 2017	68,615		69,507
Mortgage note payable ⁽⁶⁾⁽⁹⁾	5.23%	3.50%	January 2016	56,302		—
Mortgage note payable ⁽⁷⁾⁽⁹⁾	5.57%	3.25%	February 2016	43,016		—
Mortgage note payable⁽⁸⁾⁽⁹⁾	5.09%	3.50%	August 2015	35,379		—
Mortgage note payable ⁽⁹⁾	4.94%	4.00%	April 2015	28,941		30,191
Mortgage note payable ⁽⁵⁾	4.95%	4.95%	August 2012	—		29,754
Mortgage note payable	7.15%	7.15%	May 2017	11,210		13,294
Public facility bonds ⁽¹⁰⁾	Various	Various	Various	2,517		2,562
Total				$	561,096	$	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 one office property located in Irvine, California and two office properties located in Los Angeles, California and requires monthly principal and interest payments based on a 30 year amortization period with an initial 3 years of interest only payments.

(4)

In July 2012, in connection with the acquisition of one office building in Bellevue, Washington, we assumed a 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. The loan requires monthly principal and interest payments based on a 30 year amortization period. In January 2013, we repaid this loan prior to the stated maturity.


(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 a 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. The loan requires monthly principal and interest payments based on a 30 year amortization period.


(7)	In October 2012, in connection with the acquisition of one office building in Los Angeles, California, we assumed a mortgage loan that is secured by the project. The assumed mortgage loan had a principal balance of $40.7 million at the acquisition date and was recorded at fair value at the date of acquisition resulting in an initial premium of

approximately $2.7 million.


(8)	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.


(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)

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.


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

Exchangeable Notes [Member]

Debt Instrument [Line Items]

Debt balance and significant terms

The following table 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 December 31, 2012 and 2011. The Company repaid the 3.25% Exchangeable Notes in April 2012 upon maturity.



	3.25% Exchangeable Notes					4.25% Exchangeable Notes
	December 31, 2012		December 31, 2011			December 31, 2012			December 31, 2011
	(in thousands)
Principal amount	$	—	$	148,000		$	172,500		$	172,500
Unamortized discount	—		(924		)	(8,556		)	(12,684		)
Net carrying amount of liability component	$	—	$	147,076		$	163,944		$	159,816
Carrying amount of equity component			$33,675			$19,835
Issuance date			April 2007			November 2009
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 15th and November 15th 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 (see Note 2). 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.

Unsecured Senior Notes [Member]

Debt Instrument [Line Items]

Debt balance and significant terms

The following table summarizes the balance and significant terms of the registered unsecured senior notes issued by the Operating Partnership as of December 31, 2012 and 2011:



	4.800% Unsecured Senior Notes						6.625% Unsecured Senior Notes						5.000% Unsecured Senior Notes
	December 31, 2012			December 31, 2011			December 31, 2012			December 31, 2011			December 31, 2012			December 31, 2011
	(in thousands)
Principal amount	$	325,000		$	325,000		$	250,000		$	250,000		$	325,000		$	325,000
Unamortized discount	(413		)	(486		)	(1,580		)	(1,793		)	(112		)	(152		)
Net carrying amount	$	324,587		$	324,514		$	248,420		$	248,207		$	324,888		$	324,848
Issuance date	July 2011						May 2010						November 2010
Maturity date	July 2018						June 2020						November 2015
Stated coupon rate ^(1)(2)(3)	4.800%						6.625%						5.000%
Effective interest rate⁽⁴⁾	4.827%						6.743%						5.014%

________________________


(1)	Interest on the 4.800% unsecured senior notes is payable semi-annually in arrears on January 15th and July 15th of each year.


(2)	Interest on the 6.625% unsecured senior notes is payable semi-annually in arrears on June 1st and December 1st of each year.


(3)	Interest on the 5.000% unsecured senior notes is payable semi-annually in arrears on May 3rd and November 3rd of each year.


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