8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15 (d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 24, 2007

KILROY REALTY CORPORATION

(Exact name of registrant as specified in its charter)

Maryland	1-12675 (Commission File Number)	95-4598246
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

12200 W. Olympic Boulevard, Suite 200, Los Angeles, California	90064
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:   (310) 481-8400

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On July 24, 2007, the Company issued a press release announcing its earnings for the quarter ended June 30, 2007 and distributed certain supplemental information. The supplemental information is attached to this report as Exhibit 99.1, and the press release is attached to this report as Exhibit 99.2.

Item 9.01 Financial Statements and Exhibits.

List below the financial statements, pro forma financial information and exhibits, if any, filed as a part of this report.

(d) Exhibits.

99.1 Second Quarter 2007 Supplemental Financial Report.

99.2 Press Release dated July 24, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	KILROY REALTY CORPORATION
Date: July 24, 2007
	By:	/s/ Heidi R. Roth
		Heidi R. Roth
		Senior Vice President and Controller

EXHIBIT INDEX

Exhibit Number		Description
99.1	*	Second Quarter 2007 Supplemental Financial Report.
99.2	*	Press Release dated July 24, 2007.

* Filed herewith.

EX-99.1

Exhibit 99.1

Second Quarter 2007 Supplemental Financial Report

Some of the enclosed information presented in this supplemental and on the Company’s July 25, 2007 conference call is forward-looking in nature, including information concerning project development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise, except to the extent it is required to do so in connection with its ongoing requirements under Federal securities laws to disclose material information. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Risk Factors” in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2006. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplemental information and on the Company’s July 25, 2007 conference call might not occur.

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Table of Contents

	Page
Corporate Data and Financial Highlights
Company Background	1
Financial Highlights	2
Common Stock Data	3
Consolidated Balance Sheets	4
Consolidated Statements of Operations	5
Funds From Operations and Funds Available for Distribution	6
Portfolio Data
Same Store Analysis	7
Stabilized Portfolio Occupancy Overview	8-11
Leasing Activity	12
Stabilized Portfolio Capital Expenditures	13
Lease Expiration Summary and Lease Expirations by Region	14-17
Top Ten Office and Top Ten Industrial Tenants	18
Acquisitions and Dispositions	19
Development
In-Process and Committed Development and Redevelopment Projects	20
Future Development Pipeline	21
Debt and Capitalization Data
Capital Structure	22
Debt Analysis	23-24
Non-GAAP Supplemental Measures	25-29

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Company Background

Kilroy Realty Corporation (NYSE: KRC) owns, develops, and operates office and industrial real estate, primarily in Southern California. The Company operates as a self-administered real estate investment trust. As of June 30, 2007, the Company’s stabilized portfolio consisted of 84 office buildings and 43 industrial buildings, which encompassed an aggregate of 7.8 million and 3.9 million square feet, respectively, and was 92.7% occupied.

Board of Directors	Senior Management		Investor Relations
John B. Kilroy, Sr. Chairman	John B. Kilroy, Jr.	President and CEO	12200 W. Olympic Blvd., Suite 200
Edward F. Brennan, Ph.D.	Jeffrey C. Hawken	Executive VP and COO	Los Angeles, CA 90064
William P. Dickey	Richard E. Moran Jr.	Executive VP and CFO	(310) 481-8400
Matthew J. Hart	Conan Cotrell	Sr. VP Marketing and Leasing	Web: www.kilroyrealty.com
Scott S. Ingraham	John T. Fucci	Sr. VP Asset Management	E-mail: investorrelations@kilroyrealty.com
John B. Kilroy, Jr.	Tyler H. Rose	Sr. VP and Treasurer
Dale F. Kinsella	Heidi R. Roth	Sr. VP and Controller
	Steve Scott	Sr. VP San Diego
	Justin W. Smart	Sr. VP Development

Equity Research Coverage
A.G. Edwards & Sons, Inc.		Green Street Advisors
David AuBuchon	(314) 955-5452	Michael Knott	(949) 640-8780
Bank of America Securities		Merrill Lynch & Co., Inc.
Mitch Germain	(212) 847-5794	Steve Sakwa	(212) 449-0335
Citigroup Investment Research		Robert W. Baird & Company
Michael Bilerman	(212) 816-1383	David Loeb	(414) 765-7063
Deutsche Bank Securities, Inc.		Stifel, Nicolaus & Company
Lou Taylor	(212) 250-4912	John W. Guinee III	(410) 454-5520
Friedman, Billings, Ramsey & Co., Inc.
Wilkes Graham	(703) 312-9737

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.

1

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Financial Highlights

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

	Three Months Ended
	6/30/2007			3/31/2007			12/31/2006			9/30/2006			6/30/2006
INCOME ITEMS (Including Discontinued Operations):
Revenues	$	64,630		$	64,077		$	64,340		$	63,058		$	73,450
Lease Termination Fees(1)		1,908			831			658			475			9,938
Net Operating Income(2)		47,853			48,117			48,047			46,156			57,241
Capitalized Interest and Loan Costs		5,094			4,757			3,866			2,984			2,398
Net Income Available for Common Stockholders		13,090			16,478			9,184			31,574			17,975
EBITDA(2)(3)		38,764			39,687			41,387			40,817			52,833
Funds From Operations(2)(4)(5)		26,674			26,021			27,311			26,462			37,630
Funds Available for Distribution(2)(4)(5)		29,563			23,461			21,575			21,002			29,765
Net Income per common share – diluted	$	0.40		$	0.51		$	0.28		$	0.98		$	0.58
Funds From Operations per common share – diluted	$	0.77		$	0.75		$	0.79		$	0.76		$	1.11
Dividends per share	$	0.555		$	0.555		$	0.530		$	0.530		$	0.530
RATIOS (Including Discontinued Operations):
Operating Margins		74.0	%		75.1	%		74.7	%		73.2	%		77.9	%
Interest Coverage Ratio(6)		4.8x			4.1x			4.1x			4.0x			4.7x
Fixed Charge Coverage Ratio(7)		3.3x			2.9x			3.0x			2.9x			3.5x
FFO Payout Ratio(8)		72.7	%		74.5	%		67.4	%		69.5	%		48.9	%
FAD Payout Ratio(9)		65.6	%		82.7	%		85.3	%		87.6	%		61.8	%
	6/30/2007			3/31/2007			12/31/2006			9/30/2006			6/30/2006
ASSETS:
Real Estate Held for Investment before Depreciation	$	2,247,047		$	2,165,355		$	2,040,761		$	2,005,713		$	1,991,551
Total Assets		1,927,685			1,854,715			1,799,352			1,759,799			1,713,762
CAPITALIZATION:
Total Debt(10)	$	1,022,617		$	930,230		$	879,198		$	837,005		$	811,562
Total Preferred Equity(10)		201,500			201,500			201,500			201,500			201,500
Total Common Equity(10)		2,476,227			2,577,291			2,707,958			2,615,609			2,508,333
Total Market Capitalization(10)		3,700,344			3,709,021			3,788,656			3,654,114			3,521,395
Total Debt / Total Market Capitalization		27.6	%		25.1	%		23.2	%		22.9	%		23.0	%
Total Debt and Preferred / Total Market Capitalization		33.1	%		30.5	%		28.5	%		28.4	%		28.7	%

(1) For the three months ended June 30, 2006, lease terminations fees include approximately $9.8 million from an early lease termination with Qwest Communications, Inc.

(2) Please refer to pages 25 and 26 for Management Statements on Net Operating Income, EBITDA before minority interests, Funds From Operations and Funds Available for Distribution.

(3) EBITDA is reported before minority interests and net gain (loss) on dispositions. Please refer to page 28 for a reconciliation of GAAP Net Income Available for Common Stockholders to EBITDA before minority interests.

(4) Please refer to page 6 for a reconciliation of GAAP Net Income Available for Common Stockholders to Funds From Operations and Funds Available for Distribution.

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

(6) Calculated as EBITDA before minority interests divided by total interest expense, including discontinued operations.

(7) Calculated as EBITDA before minority interests divided by total interest expense, including discontinued operations, current year accrued preferred dividends and distributions on Cumulative Redeemable Preferred units.

(8) Calculated as current-quarter dividends accrued to common stockholders and common unitholders divided by Funds From Operations.

(9) Calculated as current-quarter dividends accrued to common stockholders and common unitholders divided by Funds Available for Distribution.

(10) See “Capital Structure” on page 22.

2

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Common Stock Data (NYSE: KRC)

	Three Months Ended
	6/30/2007		3/31/2007		12/31/2006		9/30/2006		6/30/2006
High Price	$	76.92	$	89.80	$	83.42	$	79.44	$	76.00
Low Price	$	69.48	$	72.70	$	71.53	$	70.72	$	65.33
Closing Price	$	70.84	$	73.75	$	78.00	$	75.34	$	72.25
Dividends per share - annualized	$	2.22	$	2.22	$	2.12	$	2.12	$	2.12
Closing common shares (in 000’s)(1)		32,707		32,698		32,399		32,389		32,092
Closing partnership units (in 000’s)(1)		2,248		2,248		2,319		2,329		2,626
		34,955		34,946		34,718		34,718		34,718

(1) As of the end of the period.

3

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Consolidated Balance Sheets

(unaudited, $ in thousands)

	6/30/2007			3/31/2007			12/31/2006			9/30/2006			6/30/2006
ASSETS:
Land and improvements	$	293,059		$	293,059		$	293,059		$	315,113		$	320,778
Buildings and improvements		1,500,777			1,494,184			1,484,051			1,472,438			1,481,215
Undeveloped land and construction in progress		453,211			378,112			263,651			218,162			189,558
Total real estate held for investment		2,247,047			2,165,355			2,040,761			2,005,713			1,991,551
Accumulated depreciation and amortization		(472,302	)		(457,982	)		(443,807	)		(436,940	)		(425,708	)
Total real estate held for investment, net		1,774,745			1,707,373			1,596,954			1,568,773			1,565,843
Properties held for sale, net		—			—			4,512			—			—
Total real estate assets, net		1,774,745			1,707,373			1,601,466			1,568,773			1,565,843
Cash and cash equivalents		11,134			5,167			11,948			7,750			8,583
Restricted cash		619			—			494			1,302			614
Funds held at qualified intermediary for Section 1031 exchange		—			—			43,794			43,794			—
Current receivables, net		4,715			7,096			5,890			3,168			3,951
Deferred rent receivables, net		62,515			62,201			61,929			60,535			58,579
Notes receivable		11,034			11,065			11,096			11,126			11,155
Deferred leasing costs and acquisition related intangibles, net		46,381			48,598			49,019			48,790			49,108
Deferred financing costs, net		9,702			5,545			5,100			5,754			6,396
Prepaid expenses and other assets, net		6,840			7,670			8,616			8,807			9,533
TOTAL ASSETS	$	1,927,685		$	1,854,715		$	1,799,352		$	1,759,799		$	1,713,762
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Liabilities:
Secured debt	$	400,617		$	455,230		$	459,198		$	463,005		$	465,562
Exchangeable senior notes, net		455,630			—			—			—			—
Unsecured senior notes		144,000			144,000			144,000			144,000			144,000
Unsecured line of credit		18,000			331,000			276,000			230,000			202,000
Accounts payable, accrued expenses and other liabilities		61,497			90,525			67,729			61,894			55,403
Accrued distributions		20,610			20,605			19,610			19,610			19,610
Deferred revenue and acquisition related liabilities		52,026			29,923			25,353			25,162			24,938
Rents received in advance and tenant security deposits		17,521			19,256			19,900			20,636			23,159
Total liabilities		1,169,901			1,090,539			1,011,790			964,307			934,672
Minority Interests:
7.45% Series A Cumulative Redeemable Preferred units of the Operating Partnership		73,638			73,638			73,638			73,638			73,638
Common units of the Operating Partnership		36,398			36,812			39,628			40,338			44,199
Total minority interests		110,036			110,450			113,266			113,976			117,837
Stockholders’ Equity:
7.80% Series E Cumulative Redeemable Preferred stock		38,425			38,425			38,425			38,425			38,425
7.50% Series F Cumulative Redeemable Preferred stock		83,157			83,157			83,157			83,157			83,157
Common stock		327			327			324			324			321
Additional paid-in capital		651,659			652,580			671,484			670,715			664,860
Distributions in excess of earnings		(125,820	)		(120,763	)		(119,094	)		(111,105	)		(125,510	)
Total stockholders’ equity		647,748			653,726			674,296			681,516			661,253
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,927,685		$	1,854,715		$	1,799,352		$	1,759,799		$	1,713,762

4

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Consolidated Statements of Operations

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

	Three Months Ended June 30,								Six Months Ended June 30,
	2007			2006			% Change		2007			2006			% Change
REVENUES:
Rental income	$	56,454		$	56,171		0.5	%	$	112,769		$	111,769		0.9	%
Tenant reimbursements		6,225			6,241		(0.3	%)		12,784			11,726		9.0	%
Other property income		1,951			195		900.5	%		3,058			1,132		170.1	%
Total revenues		64,630			62,607		3.2	%		128,611			124,627		3.2	%
EXPENSES:
Property expenses		11,440			10,764		6.3	%		22,298			20,768		7.4	%
Real estate taxes		4,861			4,696		3.5	%		9,599			9,430		1.8	%
Provision for bad debts		(26	)		56		(146.4	%)		(199	)		567		(135.1	%)
Ground leases		502			474		5.9	%		1,018			993		2.5	%
General and administrative expenses		9,460			4,714		100.7	%		18,508			9,649		91.8	%
Interest expense		8,072			11,208		(28.0	%)		17,728			23,179		(23.5	%)
Depreciation and amortization		17,745			17,666		0.4	%		34,982			35,046		(0.2	%)
Total expenses		52,054			49,578		5.0	%		103,934			99,632		4.3	%
OTHER INCOME AND EXPENSE:
Interest income		371			231		60.6	%		990			483		105.0	%
Net settlement receipts on interest rate swaps		—			254		(100.0	%)		—			448		(100.0	%)
Loss on derivative instruments		—			(179	)	(100.0	%)		—			(255	)	(100.0	%)
Total other income and expense		371			306		21.2	%		990			676		46.4	%
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS		12,947			13,335		(2.9	%)		25,667			25,671		(0.0	%)
MINORITY INTERESTS:
Distributions on Cumulative Redeemable Preferred units		(1,397	)		(1,397	)	0.0	%		(2,794	)		(2,794	)	0.0	%
Minority interest in earnings of Operating Partnership attributable to continuing operations		(609	)		(750	)	(18.8	%)		(1,187	)		(1,554	)	(23.6	%)
Total minority interests		(2,006	)		(2,147	)	(6.6	%)		(3,981	)		(4,348	)	(8.4	%)
INCOME FROM CONTINUING OPERATIONS		10,941			11,188		(2.2	%)		21,686			21,323		1.7	%
DISCONTINUED OPERATIONS:
Revenues from discontinued operations		—			10,843		(100.0	%)		98			12,303		(99.2	%)
Expenses from discontinued operations		—			(847	)	(100.0	%)		(20	)		(1,567	)	(98.7	%)
Net gain on dispositions of discontinued operations(1)		4,848			—		100.0	%		13,474			5,655		138.3	%
Minority interest in earnings of Operating Partnership attributable to discontinued operations		(297	)		(807	)	(63.2	%)		(862	)		(1,408	)	(38.8	%)
Total income from discontinued operations		4,551			9,189		(50.5	%)		12,690			14,983		(15.3	%)
NET INCOME		15,492			20,377		(24.0	%)		34,376			36,306		(5.3	%)
PREFERRED DIVIDENDS		(2,402	)		(2,402	)	0.0	%		(4,804	)		(4,804	)	0.0	%
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS	$	13,090		$	17,975		(27.2	%)	$	29,572		$	31,502		(6.1	%)
Weighted average shares outstanding - basic		32,371			31,049		4.3	%		32,360			30,249		7.0	%
Weighted average shares outstanding - diluted		32,486			31,172		4.2	%		32,486			30,394		6.9	%
NET INCOME PER COMMON SHARE:
Net income per common share - basic	$	0.40		$	0.58		(31.0	%)	$	0.91		$	1.04		(12.5	%)
Net income per common share - diluted	$	0.40		$	0.58		(31.0	%)	$	0.91		$	1.04		(12.5	%)

(1) In June 2007, the Company received a $4.8 million payment to terminate a profit participation agreement that was entered into in connection with a property disposition in 2005. When the property disposition occurred in 2005, the Company entered into an agreement with the buyer under which the Company had the right to participate in certain future operating and sale profits of the property above specified thresholds without any risk of loss or continuing involvement to the Company.

5

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Funds From Operations and Funds Available for Distribution

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

	Three Months Ended June 30,								Six Months Ended June 30,
	2007			2006			% Change		2007			2006			% Change
FUNDS FROM OPERATIONS:(1)
Net income available for common stockholders	$	13,090		$	17,975		(27.2	%)	$	29,572		$	31,502		(6.1	%)
Adjustments:
Minority interest in earnings of Operating Partnership		906			1,557		(41.8	%)		2,049			2,962		(30.8	%)
Depreciation and amortization of real estate assets		17,526			18,098		(3.2	%)		34,551			35,607		(3.0	%)
Net gain on dispositions of discontinued operations(2)		(4,848	)		—		(100.0	%)		(13,474	)		(5,655	)	138.3	%
Funds From Operations(3)	$	26,674		$	37,630		(29.1	%)	$	52,698		$	64,416		(18.2	%)
Weighted average common shares/units outstanding - basic		34,619			33,689		2.8	%		34,609			33,102		4.6	%
Weighted average common shares/units outstanding - diluted		34,734			33,812		2.7	%		34,735			33,247		4.5	%
FFO per common share/unit - basic	$	0.77		$	1.12		(31.0	%)	$	1.52		$	1.95		(21.8	%)
FFO per common share/unit - diluted	$	0.77		$	1.11		(31.0	%)	$	1.52		$	1.94		(21.7	%)
FUNDS AVAILABLE FOR DISTRIBUTION:(1)
Funds From Operations	$	26,674		$	37,630		(29.1	%)	$	52,698		$	64,416		(18.2	%)
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		(4,912	)		(4,949	)	(0.7	%)		(9,176	)		(7,644	)	20.0	%
Amortization of deferred revenue related to tenant improvements(4)		(812	)		(566	)	43.5	%		(1,453	)		(1,132	)	28.4	%
Net effect of straight-line rents(5)		(331	)		(899	)	(63.2	%)		(1,402	)		(3,649	)	(61.6	%)
Amortization of above/below market rents(6)		(375	)		(348	)	7.8	%		(691	)		(655	)	5.5	%
Contractual cash rents received in advance of revenue recognition(7)		27			—		100.0	%		43			327		(86.9	%)
Net gain on termination of profit participation agreement(2)		4,848			—		100.0	%		4,848			—		100.0	%
Non-cash gain on lease termination(8)		—			(2,334	)	(100.0	%)		—			(2,334	)	(100.0	%)
Amortization of deferred financing costs		531			278		91.0	%		773			604		28.0	%
Non-cash amortization of share-based compensation awards		3,913			774		405.6	%		7,387			1,588		365.2	%
Loss on derivative instruments(9)		—			179		(100.0	%)		—			255		(100.0	%)
Funds Available for Distribution(3)	$	29,563		$	29,765		(0.7	%)	$	53,027		$	51,776		2.4	%

(1) See page 26 for Management Statements on Funds From Operations and Funds Available for Distribution.

(2) In June 2007, the Company received a $4.8 million payment to terminate a profit participation agreement that was entered into in connection with a property disposition in 2005. When the property disposition occurred in 2005, the Company entered into an agreement with the buyer under which the Company had the right to participate in certain future operating and sale profits of the property above specified thresholds without any risk of loss or continuing involvement to the Company.

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

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

(5) 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.

(6) Represents the SFAS 141 adjustment related to the acquisition of buildings with above/below market rents.

(7) Represents cash rents received for leases that have contractually commenced but for which tenant improvements are not substantially complete.

(8) Represents the amount funded by a tenant for a new roof on one of the Company’s industrial properties in connection with the tenant’s early lease termination. The roof was recorded as a building improvement on the Company’s balance sheet with an offsetting gain recorded in other income.

(9) Represents the non-cash loss on derivatives as a result of marking such instruments to market at the end of the period.

6

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Same Store Analysis⁽¹⁾

(unaudited, $ in thousands)

Same Store Analysis (GAAP Basis)

	Three Months Ended June 30,								Six Months Ended June 30,
	2007			2006			% Change		2007			2006			% Change
Total Same Store Portfolio
Number of properties		126			126					126			126
Square Feet		11,627,994			11,627,994					11,627,994			11,627,994
Percent of Stabilized Portfolio		99.3	%		94.8	%				99.3	%		94.8	%
Average Occupancy		92.8	%		95.9	%				93.5	%		95.4	%
Operating Revenues:
Rental income	$	55,790		$	55,534		0.5	%	$	111,454		$	110,186		1.2	%
Tenant reimbursements		6,155			6,030		2.1	%		12,594			11,071		13.8	%
Other property income		1,951			195		900.5	%		3,058			1,132		170.1	%
Total operating revenues		63,896			61,759		3.5	%		127,106			122,389		3.9	%
Operating Expenses:
Property expenses		11,328			10,391		9.0	%		22,177			20,139		10.1	%
Real estate taxes		4,804			4,563		5.3	%		9,492			9,162		3.6	%
Provision for bad debts		(26	)		56		(146.4	)%		(199	)		567		(135.1	)%
Ground leases		502			474		5.9	%		1,018			993		2.5	%
Total operating expenses		16,608			15,484		7.3	%		32,488			30,861		5.3	%
GAAP Net Operating Income	$	47,288		$	46,275		2.2	%	$	94,618		$	91,528		3.4	%
Same Store Analysis (Cash Basis)(2)
	Three Months Ended June 30,								Six Months Ended June 30,
	2007			2006			% Change		2007			2006			% Change
Total operating revenues		63,219			59,105		7.0	%		123,783			116,829		6.0	%
Total operating expenses		16,608			15,484		7.3	%		32,488			30,861		5.3	%
Cash Net Operating Income	$	46,611		$	43,621		6.9	%	$	91,295		$	85,968		6.2	%

(1) Same store defined as all stabilized properties owned at January 1, 2006 and still owned and in the stabilized portfolio at June 30, 2007.

(2) Please refer to page 27 for a reconciliation of Same Store Cash and GAAP Net Operating Income to Net Income Available to Common Stockholders.

7

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	# of Buildings	Portfolio Breakdown				Total Square Feet	Occupancy at:(1)
		NOI(2)		Sq. Ft.			6/30/2007		3/31/2007		12/31/2006
STABILIZED PORTFOLIO:
OCCUPANCY BY PRODUCT TYPE:
Office:
Los Angeles	24	28.7	%	24.8	%	2,898,396	93.8	%	93.4	%	92.8	%
Orange County	5	2.3	%	2.4	%	277,340	97.4	%	100.0	%	98.3	%
San Diego	47	50.4	%	32.3	%	3,780,344	93.9	%	98.2	%	98.6	%
Other	8	5.3	%	7.5	%	878,960	90.5	%	89.7	%	92.8	%
Subtotal	84	86.7	%	67.0	%	7,835,040	93.6	%	95.5	%	95.8	%
Industrial:
Los Angeles	1	1.5	%	1.6	%	192,053	100.0	%	100.0	%	100.0	%
Orange County	42	11.8	%	31.4	%	3,677,916	90.5	%	90.5	%	95.6	%
Subtotal	43	13.3	%	33.0	%	3,869,969	91.0	%	91.0	%	95.8	%
OCCUPANCY BY REGION:
Los Angeles	25	30.2	%	26.4	%	3,090,449	94.2	%	93.8	%	93.2	%
Orange County	47	14.1	%	33.8	%	3,955,256	91.0	%	91.2	%	95.7	%
San Diego	47	50.4	%	32.3	%	3,780,344	93.9	%	98.2	%	98.6	%
Other	8	5.3	%	7.5	%	878,960	90.5	%	89.7	%	92.8	%
TOTAL STABILIZED PORTFOLIO	127	100.0	%	100.0	%	11,705,009	92.7	%	94.0	%	95.8	%

AVERAGE OCCUPANCY - STABILIZED PORTFOLIO

	Office		Industrial		Total
Quarter-to-Date	93.7	%	91.0	%	92.8	%
Year-to-Date	94.5	%	91.4	%	93.5	%

(1) Occupancy percentages reported are based on the Company’s stabilized portfolio for the period presented.

(2) Percentage of year-to-date Net Operating Income excluding Other Property Income.

8

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	City/ Submarket	# of Buildings	Square Feet	Occupancy
Office:
Los Angeles, California
23925 Park Sorrento	Calabasas	1	11,789	100.0	%
23975 Park Sorrento	Calabasas	1	100,592	84.5	%
24025 Park Sorrento	Calabasas	1	102,264	100.0	%
26541 Agoura Road	Calabasas	1	90,366	100.0	%
Kilroy Airport Center, El Segundo	El Segundo	2	595,131	100.0	%
909 Sepulveda Blvd.	El Segundo	1	241,607	70.0	%
999 Sepulveda Blvd.	El Segundo	1	127,901	98.1	%
Kilroy Airport Center, Long Beach	Long Beach	7	949,065	92.3	%
12200 W. Olympic Blvd.	Los Angeles	1	150,302	99.7	%
12100 W. Olympic Blvd.	Los Angeles	1	150,167	100.0	%
12312 W. Olympic Blvd.	Los Angeles	1	78,000	100.0	%
1633 26th Street	Santa Monica	1	44,915	100.0	%
2100 Colorado Avenue	Santa Monica	3	94,844	100.0	%
3130 Wilshire Blvd.	Santa Monica	1	88,338	93.0	%
501 Santa Monica Blvd.	Santa Monica	1	73,115	86.3	%
Total Los Angeles Office		24	2,898,396	93.8	%
Orange County, California
4175 E. La Palma Avenue	Anaheim	1	43,263	94.1	%
8101 Kaiser Blvd.	Anaheim	1	59,790	92.2	%
Kilroy Center-Brea	Brea	2	106,791	100.0	%
111 Pacifica	Irvine Spectrum	1	67,496	100.0	%
Total Orange County Office		5	277,340	97.4	%

9

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	City/ Submarket	# of Buildings	Square Feet	Occupancy
Office:
San Diego, California
12340 El Camino Real	Del Mar	1	87,405	100.0	%
12348 High Bluff Drive	Del Mar	1	38,710	78.4	%
12390 El Camino Real	Del Mar	1	72,332	100.0	%
3579 Valley Center Drive	Del Mar	1	52,375	100.0	%
3611 Valley Center Drive	Del Mar	1	130,178	100.0	%
3661 Valley Center Drive	Del Mar	1	129,752	100.0	%
3721 Valley Center Drive	Del Mar	1	114,780	100.0	%
3811 Valley Center Drive	Del Mar	1	112,067	100.0	%
12225 / 12235 El Camino Real	Del Mar	2	115,513	93.4	%
12400 High Bluff Drive	Del Mar	1	208,464	100.0	%
6215 / 6220 Greenwich Drive	Governor Park	2	212,214	100.0	%
15051 Ave of Science	I-15 Corridor	1	70,617	100.0	%
15073 Ave of Science	I-15 Corridor	1	46,759	100.0	%
15378 Ave of Science	I-15 Corridor	1	68,910	100.0	%
15434 / 15445 Innovation Drive	I-15 Corridor	2	103,000	76.4	%
15231 Ave of Science	I-15 Corridor	1	65,867	100.0	%
15253 Ave of Science	I-15 Corridor	1	37,405	100.0	%
15215 Ave of Science	I-15 Corridor	1	77,015	100.0	%
13500/13520 Evening Creek Drive North	I-15 Corridor	2	281,830	79.1	%
4939 / 4955 Directors Place	Sorrento Mesa	2	136,908	100.0	%
5005 / 5010 Wateridge Vista Drive	Sorrento Mesa	2	172,778	100.0	%
10421 Pacific Center Court	Sorrento Mesa	1	79,871	100.0	%
10243 Genetic Center	Sorrento Mesa	1	102,875	100.0	%
10390 Pacific Center Court	Sorrento Mesa	1	68,400	100.0	%
6055 Lusk Avenue	Sorrento Mesa	1	93,000	0.0	%
6260 Sequence Drive	Sorrento Mesa	1	130,536	100.0	%
6290 / 6310 Sequence Drive	Sorrento Mesa	2	152,415	100.0	%
6340 / 6350 Sequence Drive	Sorrento Mesa	2	199,000	100.0	%
Pacific Corporate Center	Sorrento Mesa	6	332,542	88.6	%
5717 Pacific Center	Sorrento Mesa	1	67,995	100.0	%
4690 Executive Drive	University Towne Center	1	47,636	100.0	%
9455 Towne Center Drive	University Towne Center	1	45,195	100.0	%
9785 / 9791 Towne Center Drive	University Towne Center	2	126,000	100.0	%
Total San Diego Office		47	3,780,344	93.9	%
Other
Kilroy Airport Center, Sea-Tac	Seattle, WA	3	532,430	85.9	%
5151/5155 Camino Ruiz	Carmarillo, CA	4	265,372	100.0	%
2829 Townsgate Road	Thousand Oaks, CA	1	81,158	89.8	%
Total Other Office		8	878,960	90.5	%
Total Office		84	7,835,040	93.6	%

10

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	City/ Submarket	# of Buildings	Square Feet	Occupancy
Industrial:
Los Angeles, California
2031 E. Mariposa Avenue	El Segundo	1	192,053	100.0	%
Total Los Angeles Industrial		1	192,053	100.0	%
Orange County, California
1000 E. Ball Road	Anaheim	1	100,000	100.0	%
1230 S. Lewis Road	Anaheim	1	57,730	100.0	%
1250 N. Tustin Avenue	Anaheim	1	84,185	100.0	%
3125 E. Coronado Street	Anaheim	1	144,000	0.0	%
3130 - 3150 Miraloma	Anaheim	1	144,000	100.0	%
3250 E. Carpenter	Anaheim	1	41,225	100.0	%
3340 E. La Palma Avenue	Anaheim	1	153,320	100.0	%
5115 E. La Palma Avenue	Anaheim	1	286,139	100.0	%
5325 E. Hunter Avenue	Anaheim	1	110,487	100.0	%
Anaheim Tech Center	Anaheim	5	597,147	100.0	%
La Palma Business Center	Anaheim	2	145,481	100.0	%
Brea Industrial Complex	Brea	7	277,456	100.0	%
Brea Industrial-Lambert Road	Brea	2	178,811	100.0	%
1675 MacArthur	Costa Mesa	1	50,842	100.0	%
25202 Towne Center Drive	Foothill Ranch	1	303,533	100.0	%
12400 Industry Street	Garden Grove	1	64,200	100.0	%
12681 / 12691 Pala Drive	Garden Grove	1	84,700	100.0	%
7421 Orangewood Avenue	Garden Grove	1	82,602	100.0	%
Garden Grove Industrial Complex	Garden Grove	6	275,971	100.0	%
17150 Von Karman	Irvine	1	157,458	0.0	%
2055 S.E. Main Street	Irvine	1	47,583	0.0	%
1951 E. Carnegie Avenue	Santa Ana	1	100,000	100.0	%
2525 Pullman	Santa Ana	1	103,380	100.0	%
14831 Franklin Avenue	Tustin	1	36,256	100.0	%
2911 Dow Avenue	Tustin	1	51,410	100.0	%
Total Orange County Industrial		42	3,677,916	90.5	%
Total Industrial		43	3,869,969	91.0	%

11

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Leasing Activity

Quarter-to-Date

	1st & 2nd Generation				2nd Generation										Weighted Average Lease Term (Mo.)
	# of Leases(1)		Square Feet(1)		TI/LC		Maintenance Capex		Changes in		Changes in		Retention
	New	Renewal	New	Renewal	Per Sq.Ft.(2)		Per Sq.Ft.(3)		Rents(4)		Cash Rents(5)		Rates(6)
Office	11	10	72,164	131,256	$	14.57	$	0.25	17.0	%	3.6	%	43.8	%	57
Industrial	3	4	75,576	156,980		4.36		0.10	17.8	%	4.8	%	88.7	%	55
Total	14	14	147,740	288,236	$	8.96	$	0.20	17.2	%	3.9	%	60.5	%	56

Year-to-Date

	1st & 2nd Generation				2nd Generation										Weighted Average Lease Term (Mo.)
	# of Leases(1)		Square Feet(1)		TI/LC		Maintenance Capex		Changes in		Changes in		Retention
	New	Renewal	New	Renewal	Per Sq.Ft.(2)		Per Sq.Ft.(3)		Rents(4)		Cash Rents(5)		Rates(6)
Office	18	18	166,198	287,675	$	19.17	$	0.32	26.7	%	9.1	%	45.4	%	104
Industrial	4	8	81,576	211,690		3.63		0.17	19.8	%	6.5	%	50.0	%	53
Total	22	26	247,774	499,365	$	12.21	$	0.27	25.2	%	8.6	%	47.3	%	84

(1) Represents leasing activity for leases commencing during the period shown, net of month-to-month leases. Excludes leasing on new construction.

(2) Amounts exclude tenant-funded tenant improvements.

(3) Calculated over entire stabilized portfolio.

(4) Calculated as the change between GAAP rents for new/renewed leases and the expired GAAP rents for the same space. Excludes leases for which the space was vacant longer than one year.

(5) Calculated as the change between stated rents for new/renewed leases and the expired stated rents for the same space. Excludes leases for which the space was vacant longer than one year.

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

12

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures

($ in thousands)

Non-Recurring Capital Expenditures:
	Q1 2007		Q2 2007		YTD 2007
Capital Improvements	$	195	$	49	$	244
Tenant Improvements & Leasing Commissions(1)		—		249		249
Total	$	195	$	298	$	493
Recurring Capital Expenditures:
	Q1 2007		Q2 2007		YTD 2007
Capital Improvements
Office	$	524	$	1,970	$	2,494
Industrial		279		395		674
		803		2,365		3,168
Tenant Improvements & Leasing Commissions(1)
Office		3,431		2,098		5,529
Industrial		30		449		479
		3,461		2,547		6,008
Total
Office		3,955		4,068		8,023
Industrial		309		844		1,153
	$	4,264	$	4,912	$	9,176

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

13

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Lease Expiration Summary Schedule

($ in thousands)

Year of Expiration	# of Expiring Leases	Total Square Feet (1)	% of Total Leased Sq. Ft.		Annual Base Rent(2)		Annual Rent per Sq. Ft.(2)
OFFICE:
Remaining 2007	24	380,311	5.3	%	$	6,586	$	17.32
2008	62	512,274	7.1	%		11,436		22.32
2009	79	1,278,819	17.7	%		29,617		23.16
2010	72	1,199,171	16.6	%		30,700		25.60
2011	60	776,904	10.7	%		14,254		18.35
2012	30	428,676	5.9	%		12,627		29.46
2013	14	426,753	5.9	%		9,161		21.47
2014	17	669,329	9.2	%		17,381		25.97
2015	11	355,140	4.9	%		10,399		29.28
2016	8	416,760	5.8	%		11,286		27.08
2017 and beyond	16	792,174	10.9	%		33,250		41.97
Subtotal	393	7,236,311	100.0	%	$	186,697	$	25.80
INDUSTRIAL:
Remaining 2007	2	64,303	1.9	%	$	549	$	8.54
2008	13	928,713	26.9	%		6,612		7.12
2009	14	731,502	21.2	%		4,609		6.30
2010	13	356,075	10.3	%		2,795		7.85
2011	10	408,402	11.8	%		3,156		7.73
2012	8	389,369	11.3	%		2,479		6.37
2013	—	—	—			—		—
2014	1	49,178	1.4	%		420		8.54
2015	3	213,306	6.2	%		1,629		7.64
2016	2	233,278	6.7	%		3,274		14.03
2017 and beyond	1	82,602	2.4	%		643		7.78
Subtotal	67	3,456,728	100.0	%	$	26,166	$	7.57
TOTAL PORTFOLIO:
Remaining 2007	26	444,614	4.2	%	$	7,135	$	16.05
2008	75	1,440,987	13.5	%		18,048		12.52
2009	93	2,010,321	18.8	%		34,226		17.03
2010	85	1,555,246	14.5	%		33,495		21.54
2011	70	1,185,306	11.1	%		17,410		14.69
2012	38	818,045	7.7	%		15,106		18.47
2013	14	426,753	4.0	%		9,161		21.47
2014	18	718,507	6.7	%		17,801		24.77
2015	14	568,446	5.3	%		12,028		21.16
2016	10	650,038	6.1	%		14,560		22.40
2017 and beyond	17	874,776	8.1	%		33,893		38.74
Total	460	10,693,039	100.0	%	$	212,863	$	19.91

(1) Excludes space leased under month-to-month leases and vacant space at June 30, 2007.

(2) Reflects annualized contractual base rent calculated on a straight-line basis.

14

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Lease Expiration Schedule Detail by Region

($ in thousands)

	Los Angeles County								Orange County
Year of Expiration	# of Expiring Leases	Total Square Feet(1)	% of Total Regional Sq. Ft.		Annual Base Rent (2)		Annual Rent per Sq. Ft.(2)		# of Expiring Leases	Total Square Feet(1)	% of Total Regional Sq. Ft.		Annual Base Rent(2)		Annual Rent per Sq. Ft.(2)
OFFICE:
Remaining 2007	12	27,240	1.0	%	$	791	$	29.04	2	3,934	1.5	%	$	84	$	21.35
2008	31	140,506	5.3	%		3,820		27.19	12	79,945	30.1	%		1,238		15.49
2009	38	586,691	22.2	%		14,618		24.92	15	121,777	45.8	%		3,023		24.82
2010	46	750,690	28.5	%		18,720		24.94	5	11,563	4.3	%		281		24.30
2011	36	233,944	8.9	%		6,603		28.22	5	17,564	6.6	%		449		25.56
2012	17	143,195	5.4	%		3,782		26.41	4	31,092	11.7	%		731		23.51
2013	8	157,887	6.0	%		3,176		20.12	—	—	—			—		—
2014	10	367,107	13.9	%		10,801		29.42	—	—	—			—		—
2015	4	132,560	5.0	%		3,982		30.04	—	—	—			—		—
2016	3	43,598	1.7	%		1,595		36.58	—	—	—			—		—
2017 and beyond	3	54,715	2.1	%		2,026		37.03	—	—	—			—		—
Subtotal	208	2,638,133	100.0	%	$	69,914	$	26.50	43	265,875	100.0	%	$	5,806	$	21.84
INDUSTRIAL:
Remaining 2007	—	—	—			—		—	2	64,303	2.0	%	$	549	$	8.54
2008	—	—	—			—		—	13	928,713	28.4	%		6,612		7.12
2009	—	—	—			—		—	14	731,502	22.4	%		4,609		6.30
2010	—	—	—			—		—	13	356,075	10.9	%		2,795		7.85
2011	—	—	—			—		—	10	408,402	12.5	%		3,156		7.73
2012	—	—	—			—		—	8	389,369	11.9	%		2,479		6.37
2013	—	—	—			—		—	—	—	—			—		—
2014	—	—	—			—		—	1	49,178	1.5	%		420		8.54
2015	—	—	—			—		—	3	213,306	6.5	%		1,629		7.64
2016	1	192,053	100.0	%		2,960		15.41	1	41,225	1.3	%		314		7.62
2017 and beyond	—	—	—			—		—	1	82,602	2.6	%		643		7.78
Subtotal	1	192,053	100.0	%	$	2,960	$	15.41	66	3,264,675	100.0	%		23,206	$	7.11
TOTAL PORTFOLIO:
Remaining 2007	12	27,240	1.0	%	$	791	$	29.04	4	68,237	1.9	%	$	633	$	9.28
2008	31	140,506	5.0	%		3,820		27.19	25	1,008,658	28.6	%		7,850		7.78
2009	38	586,691	20.7	%		14,618		24.92	29	853,279	24.2	%		7,632		8.94
2010	46	750,690	26.5	%		18,720		24.94	18	367,638	10.4	%		3,076		8.37
2011	36	233,944	8.3	%		6,603		28.22	15	425,966	12.1	%		3,605		8.46
2012	17	143,195	5.1	%		3,782		26.41	12	420,461	11.9	%		3,210		7.63
2013	8	157,887	5.6	%		3,176		20.12	—	—	—			—		—
2014	10	367,107	13.0	%		10,801		29.42	1	49,178	1.4	%		420		8.54
2015	4	132,560	4.7	%		3,982		30.04	3	213,306	6.0	%		1,629		7.64
2016	4	235,651	8.3	%		4,555		19.33	1	41,225	1.2	%		314		7.62
2017 and beyond	3	54,715	1.8	%		2,026		37.03	1	82,602	2.3	%		643		7.78
Total	209	2,830,186	100.0	%	$	72,874	$	25.75	109	3,530,550	100.0	%	$	29,012	$	8.22

(1) Excludes space leased under month-to-month leases and vacant space at June 30, 2007.

(2) Reflects annualized contractual base rent calculated on a straight-line basis.

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Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Lease Expiration Schedule Detail by Region

($ in thousands)

	San Diego County								Other
	# of Expiring Leases	Total Square Feet(1)	% of Total Regional Sq. Ft.		Annual Base Rent(2)		Annual Rent per Sq. Ft.(2)		# of Expiring Leases	Total Square Feet(1)	% of Total Regional Sq. Ft.		Annual Base Rent(2)		Annual Rent per Sq. Ft.(2)
Year of Expiration
OFFICE:
Remaining 2007	7	314,095	8.9	%	$	5,059	$	16.11	3	35,042	4.4	%	$	652	$	18.61
2008	11	261,850	7.4	%		5,972		22.81	8	29,973	3.8	%		406		13.55
2009	13	501,718	14.2	%		10,468		20.86	13	68,633	8.7	%		1,508		21.97
2010	12	354,132	10.0	%		9,769		27.59	9	82,786	10.5	%		1,930		23.31
2011	7	88,963	2.5	%		1,699		19.10	12	436,433	55.2	%		5,503		12.61
2012	8	245,104	6.9	%		7,931		32.36	1	9,285	1.2	%		183		19.71
2013	3	245,316	6.9	%		5,484		22.35	3	23,550	3.0	%		501		21.27
2014	4	247,481	7.0	%		5,336		21.56	3	54,741	6.9	%		1,244		22.73
2015	3	172,572	4.9	%		5,471		31.70	4	50,008	6.3	%		946		18.92
2016	5	373,162	10.5	%		9,691		25.97	—	—	—			—		—
2017 and beyond	13	737,459	20.8	%		31,224		42.34	—	—	—			—		—
Subtotal	86	3,541,852	100.0	%	$	98,104	$	27.70	56	790,451	100.0	%	$	12,873	$	16.29
INDUSTRIAL:
Remaining 2007	—	—	—			—		—	—	—	—			—		—
2008	—	—	—			—		—	—	—	—			—		—
2009	—	—	—			—		—	—	—	—			—		—
2010	—	—	—			—		—	—	—	—			—		—
2011	—	—	—			—		—	—	—	—			—		—
2012	—	—	—			—		—	—	—	—			—		—
2013	—	—	—			—		—	—	—	—			—		—
2014	—	—	—			—		—	—	—	—			—		—
2015	—	—	—			—		—	—	—	—			—		—
2016	—	—	—			—		—	—	—	—			—		—
2017 and beyond	—	—	—			—		—	—	—	—			—		—
Subtotal	—	—	—			—		—	—	—	—			—		—
TOTAL PORTFOLIO:
Remaining 2007	7	314,095	8.9	%	$	5,059	$	16.11	3	35,042	4.4	%	$	652	$	18.61
2008	11	261,850	7.4	%		5,972		22.81	8	29,973	3.8	%		406		13.55
2009	13	501,718	14.2	%		10,468		20.86	13	68,633	8.7	%		1,508		21.97
2010	12	354,132	10.0	%		9,769		27.59	9	82,786	10.5	%		1,930		23.31
2011	7	88,963	2.5	%		1,699		19.10	12	436,433	55.2	%		5,503		12.61
2012	8	245,104	6.9	%		7,931		32.36	1	9,285	1.2	%		183		19.71
2013	3	245,316	6.9	%		5,484		22.35	3	23,550	3.0	%		501		21.27
2014	4	247,481	7.0	%		5,336		21.56	3	54,741	6.9	%		1,244		22.73
2015	3	172,572	4.9	%		5,471		31.70	4	50,008	6.3	%		946		18.92
2016	5	373,162	10.5	%		9,691		25.97	—	—	—			—		—
2017 and beyond	13	737,459	20.8	%		31,224		42.34	—	—	—			—		—
Total	86	3,541,852	100.0	%	$	98,104	$	27.70	56	790,451	100.0	%	$	12,873	$	16.29

(1) Excludes space leased under month-to-month leases and vacant space at June 30, 2007.

(2) Reflects annualized contractual base rent calculated on a straight-line basis.

16

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Quarterly Lease Expirations for 2007

($ in thousands)

	# of Expiring Leases(1)	Total Square Feet(1)(2)	% of Total Leased Sq. Ft.		Annual Base Rent(3)		Annual Rent per Sq. Ft.(3)
OFFICE:
Q3 2007	13	325,441	4.5	%	$	5,399	$	16.59
Q4 2007	11	54,870	0.8	%		1,187		21.63
Subtotal 2007	24	380,311	5.3	%	$	6,586	$	17.32
INDUSTRIAL:
Q3 2007	—	—	—			—		—
Q4 2007	2	64,303	1.9	%		549		8.54
Subtotal 2007	2	64,303	1.9	%	$	549	$	8.54
TOTAL PORTFOLIO:
Q3 2007	13	325,441	3.1	%	$	5,399	$	16.59
Q4 2007	13	119,173	1.1	%		1,736		14.57
Total 2007	26	444,614	4.2	%	$	7,135	$	16.05

(1) Represents leases expiring in 2007 for which renewals have not been executed.

(2) Excludes space leased under month-to-month leases and vacant space at June 30, 2007.

(3) Reflects annualized contractual base rent calculated on a straight-line basis.

17

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Top Ten Office and Top Ten Industrial Tenants

($ in thousands)

Tenant Name	Annual Base Rental Revenues(1)		Rentable Square Feet	Percentage of Total Annual Base Rental Revenues(1)		Percentage of Total Rentable Square Feet
Office Properties:
The Boeing Company	$	9,222	675,979	4.2	%	5.8	%
AMN Healthcare		8,341	175,672	3.8	%	1.5	%
DIRECTV Group, Inc.(2)		6,350	207,166	2.9	%	1.8	%
Intuit Inc.(3)		6,106	302,452	2.8	%	2.6	%
Fish & Richardson		6,071	139,538	2.8	%	1.2	%
Favrille, Inc.		5,588	128,580	2.5	%	1.1	%
Scripps Health(4)		5,199	112,067	2.4	%	1.0	%
Verenium Corporation		5,158	136,908	2.3	%	1.2	%
Accredited Home Lenders		5,061	180,287	2.3	%	1.5	%
Hewlett-Packard Company		4,348	117,948	2.0	%	1.0	%
Total Office Properties	$	61,444	2,176,597	28.0	%	18.6	%
Industrial Properties:
Mattel, Inc.	$	2,960	192,053	1.3	%	1.6	%
Celestica California, Inc.		2,501	303,533	1.1	%	2.6	%
NBTY Manufacturing, LLC		1,484	286,139	0.7	%	2.4	%
Extron Electronics		1,145	157,730	0.5	%	1.3	%
Targus, Inc.		1,053	200,646	0.5	%	1.7	%
Progressive Marketing		838	144,000	0.4	%	1.2	%
Ricoh Electronics, Inc.		810	100,000	0.4	%	0.9	%
Arrow Industries		798	153,320	0.4	%	1.3	%
Printrak International Inc.		753	84,185	0.3	%	0.7	%
Southland Industries		643	82,602	0.3	%	0.7	%
Total Industrial Properties	$	12,985	1,704,208	5.9	%	14.6	%

(1) Reflects annualized contractual base rent calculated on a straight-line basis as of June 30, 2007.

(2) In addition, the Company is redeveloping 107,041 rentable square feet at 2240 E. Imperial Highway of which 77% has been leased to DIRECTV Group, Inc. The lease commenced in July 2007.

(3) In addition, the Company is developing four buildings encompassing 465,600 rentable square feet in San Diego County, which have been leased to Intuit Inc. The tenant began occupying two of the four buildings encompassing 205,200 rentable square feet in July 2007 and is expected to begin occupying the remaining two buildings encompassing 260,400 rentable square feet in August 2007, at which time Intuit Inc. is projected to become our largest tenant based on its percentage of total annual base rental revenues.

(4) In addition, Scripps Health has preleased an additional office building encompassing approximately 146,200 rentable square feet that the Company is constructing at 15004 Innovation Drive. The tenant is expected to begin occupying the building during Q3 2008.

18

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

2007 Acquisitions and Dispositions

($ in millions)

ACQUISITIONS:
Property	Location	Type	Month of Acquisition	Gross Site Acreage	Purchase Price(2)
1st QUARTER:
Sabre Springs Corporate Center	I-15 Corridor	Two Existing Office Buildings to be Redeveloped (1)	January	5.6	$	24.7
Santa Fe Summit - Phase III	56 Corridor	Land for Office Development	January	10.5		28.0
Carlsbad Oaks	Carlsbad	Land for Office Development	February	32.0		15.8
2nd QUARTER:
NONE
TOTAL YEAR-TO-DATE ACQUISITIONS				48.1		$68.5
DISPOSITIONS:
Property	Location	Type	Month of Disposition	Square Feet	Sales Price(3)
1st QUARTER:
181 & 185 S. Douglas(4)	El Segundo	Office	January	61,545
2270 El Segundo(4)	El Segundo	Industrial	January	6,362
2nd QUARTER:
NONE
TOTAL YEAR-TO-DATE DISPOSITIONS				67,907		$14.8

(1) Two existing buildings total approximately 104,500 rentable square feet on 5.6 acres of land. The Company began redevelopment of the existing buildings during the first quarter of 2007. See “Redevelopment Projects” on page 20.

(2) Excludes acquisition related costs.

(3) The Company sold these properties in a portfolio transaction in January 2007. The sales price shown represents the sales price for the entire transaction.

(4) These properties were classified as held for sale on the consolidated balance sheet as of December 31, 2006.

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Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

In-Process and Committed Development and Redevelopment Projects

($ in millions)

DEVELOPMENT PROJECTS:			Estimated Construction Period		Est. Stabilization Date(1)	Rentable Square Feet	Total Estimated Investment(2)		Total Costs as of 6/30/2007(2)(3)		% Leased
Project	Location	Type	Start Date	Compl. Date
PROJECTS UNDER CONSTRUCTION:
Santa Fe Summit - Phase I(4)	56 Corridor	Office	4Q 2005 - 1Q 2006	3Q 2007	3Q 2007	465,600	$	145.2	$	138.0	100	%
Pacific Corporate Center - Lots 3, 4 & 6 (5)	Sorrento Mesa	Office	3Q 2006	3Q 2007	3Q 2007	318,000		75.1		62.4	100	%
Kilroy Sabre Springs - Phase III	I-15 Corridor	Office	3Q 2006	4Q 2007	4Q 2008	142,726		65.4		25.9	0	%
ICC - 15004 Innovation Drive	I-15 Corridor	Office	3Q 2006	3Q 2008	3Q 2008	146,156		51.1		17.5	100	%
Sorrento Gateway-Lot 3	Sorrento Mesa	Office	4Q 2006	4Q 2007	4Q 2008	55,500		21.8		12.1	0	%
TOTAL PROJECTS UNDER CONSTRUCTION						1,127,982	$	358.6	$	255.9	82	%

REDEVELOPMENT PROJECTS:	Location	Pre and Post Redevelopment Type	Estimated Construction Period		Est. Stabilization Date(1)	Rentable Square Feet	Existing Investment(6)		Estimated Redevelopment Costs		Total Estimated Investment(2)		Total Costs as of 6/30/2007(2)(3)		% Leased
Project			Start Date	Compl. Date
PROJECTS UNDER CONSTRUCTION:
2240 E. Imperial Highway - Kilroy Airport Center(7)	El Segundo	Lab to Office	2Q 2006	3Q 2007	3Q 2008	107,041	$	5.0	$	15.5	$	20.5	$	17.1	77	%
Sabre Springs Corporate Center	I-15 Corridor	Office	1Q 2007	3Q 2007	3Q 2008	104,500		24.7		9.9		34.6		26.0	0	%
TOTAL PROJECTS UNDER CONSTRUCTION						211,541	$	29.7	$	25.4	$	55.1	$	43.1	39	%

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

(2) Amounts exclude tenant-funded tenant improvements.

(3) Represents cash paid and costs incurred as of June 30, 2007. Includes existing investment at the commencement of redevelopment. See footnote (6) below.

(4) Construction on two of the four buildings commenced in the fourth quarter of 2005. Construction on the remaining two buildings commenced in the first quarter of 2006. Intuit Inc., began occupying two of the four buildings encompassing 205,200 rentable square feet in July 2007 and is expected to begin occupying the remaining two buildings encompassing 260,400 rentable square feet in August 2007.

(5) Cardinal Health, Inc. began occupying the building in July 2007.

(6) Represents the depreciated carrying value at the commencement of redevelopment for the space being redeveloped.

(7) DIRECTV Group, Inc. has leased 77% of this space.

20

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Future Development Pipeline

($ in millions)

Project	Location	Type	Gross Site Acreage	Estimated Rentable Square Feet	Total Estimated Investment		Total Costs as of 6/30/2007(1)
SAN DIEGO, CALIFORNIA:
Carlsbad Oaks	Carlsbad	Office	32.0	288,000	$	83.3	$	16.5
Kilroy Centre Rancho Bernardo(2)	I-15 Corridor	Office	21.0	800,000 -1,500,000		250.0 - 563.0		25.3
Pacific Corporate Center - Lot 8	Sorrento Mesa	Office	5.0	95,000		32.6		10.0
Santa Fe Summit - Phase II and III	56 Corridor	Office	21.8	600,000		300.0		59.4
Sorrento Gateway - Lot 1	Sorrento Mesa	Office	4.2	54,000		18.8		5.6
Sorrento Gateway - Lot 2	Sorrento Mesa	Office	6.3	80,000		31.8		10.0
Sorrento Gateway - Lot 7	Sorrento Mesa	Office	7.6	57,000		24.5		8.8
TOTAL FUTURE DEVELOPMENT PIPELINE			97.9	1,974,000 -2,674,000	$	741.0 -1,054.0	$	135.6

(1) Represents cash paid and costs incurred as of June 30, 2007.

(2) This site includes entitlements to build approximately 1.8 million square feet of office or light industrial space. The Company currently anticipates it may develop the site in phases depending on lease activity and market conditions.

21

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Capital Structure

At June 30, 2007

($ in thousands)

	Shares/Units At June 30, 2007	Aggregate Principal Amount or $ Value Equivalent		% of Total Market Capitalization
DEBT:
Secured Debt		$	400,617	10.8	%
Exchangeable Senior Notes(1)			460,000	12.4	%
Unsecured Senior Notes			144,000	3.9	%
Unsecured Line of Credit			18,000	0.5	%
Total Debt		$	1,022,617	27.6	%
EQUITY:
7.450% Series A Cumulative Redeemable Preferred Units(2)	1,500,000	$	75,000	2.1	%
7.800% Series E Cumulative Redeemable Preferred Stock(3)	1,610,000		40,250	1.1	%
7.500% Series F Cumulative Redeemable Preferred Stock(3)	3,450,000		86,250	2.3	%
Common Units Outstanding(4)	2,247,774		159,232	4.3	%
Common Shares Outstanding(4)	32,707,444		2,316,995	62.6	%
Total Equity		$	2,677,727	72.4	%
TOTAL MARKET CAPITALIZATION		$	3,700,344	100.0	%

(1) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $4.4 million.

(2) Value based on $50.00 per share liquidation preference.

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

(4) Value based on closing share price of $70.84 on June 29, 2007.

22

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Debt Analysis

At June 30, 2007

($ in thousands)

TOTAL DEBT COMPOSITION

	% of		Weighted Average
	Total Debt		Interest Rate		Maturity
Secured vs. Unsecured Debt:
Secured Debt	39.2	%	5.9	%	3.7
Unsecured Debt	60.8	%	4.0	%	5.1
Floating vs. Fixed Rate Debt:
Fixed Rate Debt	94.8	%	4.7	%	4.5
Floating Rate Debt	5.2	%	6.1	%	2.8
Total Debt			4.7	%	4.4
Total Debt Including Loan Fees			5.1	%

UNSECURED LINE OF CREDIT

Total Line	Outstanding Balance	Expiration Date
$550,000	$18,000	April 2010

CAPITALIZED INTEREST & LOAN FEES

Quarter-to-Date	Year-to-Date
$5.1	$9.9

23

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Debt Analysis

At June 30, 2007

($ in thousands)

DEBT MATURITY SCHEDULE
Floating/ Fixed Rate	Effective Rate		Maturity Date		Remaining 2007		2008		2009		2010		2011		After 2011		Total
Unsecured Debt:
Floating	6.17	%	4/26/2010	(1)							$	18,000					$	18,000
Fixed	3.25	%	4/15/2012													460,000		460,000	(2)
Fixed	5.72	%	8/4/2010									61,000						61,000
Fixed	6.45	%	8/4/2014													83,000		83,000
												79,000				543,000		622,000
Secured Debt:
Floating	6.07	%	4/26/2010									35,500						35,500
Fixed	3.80	%	8/1/2008			834		73,400										74,234
Fixed	7.20	%	4/1/2009			1,234		2,604		75,475								79,313
Fixed	6.70	%	12/27/2011			604		1,271		1,359		1,453		69,980				74,667
Fixed	5.57	%	8/1/2012			621		1,296		1,370		1,449		1,532		71,517		77,785
Fixed	4.95	%	8/1/2012			285		592		622		653		687		29,754		32,593
Fixed	8.13	%	11/1/2014			287		701		760		824		894		2,023		5,489
Fixed	7.15	%	5/1/2017			743		1,567		1,683		1,807		1,941		13,295		21,036
						4,608		81,431		81,269		41,686		75,034		116,589		400,617
Total	4.74	%			$	4,608	$	81,431	$	81,269	$	120,686	$	75,034	$	659,589	$	1,022,617

(1) The maturity date does not reflect the one-year extension option.

(2) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $4.4 million.

24

Kilroy Realty Corporation

Second Quarter 2007 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 July 25, 2007, 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, other non-property income and expenses, gains and losses from property dispositions, discontinued operations, and extraordinary items, 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 segment basis since NOI allows the Company to evaluate the impact that factors such as occupancy levels, lease structure, rental rates, and tenant base, which vary by segment type, 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, interest expense, depreciation and amortization costs, 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 the stabilized properties that were operational for two comparable reporting periods. Because Same Store NOI excludes the change in NOI from properties developed, redeveloped, acquired and disposed of, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties that were operational for two comparable periods. 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, interest expense, depreciation and amortization costs, other non-property income and expenses, 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.

25

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures

EBITDA:

Management believes that earnings before interest expense, depreciation and amortization, preferred dividends and distributions, minority interests and impairment loss (“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 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:

Management believes that 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 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 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.

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 and share-based awards, contractual cash rents received in advance of revenue recognition, the loss on derivative instruments, the original issuance costs of redeemed preferred units, the impairment losses on properties held for sale, and net gains on terminations of profit participation agreements, then subtracting tenant improvements, leasing commissions and recurring capital expenditures, significant non-cash gains, and gains associated with insurance proceeds, and eliminating the net effect of straight-line rents, amortization of deferred revenue related to tenant improvements, and above (below) market rents for acquisition properties. 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.

26

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

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

(unaudited, $ in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Same Store Cash Net Operating Income	$	46,611		$	43,621		$	91,295		$	85,968
Adjustment:
GAAP Straight Line Rental Income		1,423			2,235			2,429			5,009
Other Non-Cash GAAP Adjustments, net		(746	)		419			894			551
Same Store GAAP Net Operating Income		47,288			46,275			94,618			91,528
Adjustment:
Non-Same Store GAAP Net Operating Income		565			10,966			1,352			13,123
Net Operating Income including discontinued operations		47,853			57,241			95,970			104,651
Adjustment:
Net Operating Income, as defined, from discontinued operations		—			(10,624	)		(75	)		(11,782	)
Net Operating Income, as defined(1)		47,853			46,617			95,895			92,869
Adjustments:
Other Expenses:
General and administrative expenses		(9,460	)		(4,714	)		(18,508	)		(9,649	)
Interest expense		(8,072	)		(11,208	)		(17,728	)		(23,179	)
Depreciation and amortization		(17,745	)		(17,666	)		(34,982	)		(35,046	)
Other Income and Expense:
Interest and other income		371			231			990			483
Net settlement receipts on interest rate swaps		—			254			—			448
Loss on derivative instruments		—			(179	)		—			(255	)
Income from Continuing Operations		12,947			13,335			25,667			25,671
Minority interests		(2,006	)		(2,147	)		(3,981	)		(4,348	)
Income from discontinued operations		4,551			9,189			12,690			14,983
Preferred dividends		(2,402	)		(2,402	)		(4,804	)		(4,804	)
Net Income Available for Common Stockholders	$	13,090		$	17,975		$	29,572		$	31,502

(1) Please refer to page 25 for Management Statements on Net Operating Income and Same Store Net Operating Income.

27

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

Reconciliation of EBITDA to Net Income Available to Common Stockholders

(unaudited, $ in thousands)

	Three Months Ended June 30,
	2007			2006
Net Income Available for Common Stockholders	$	13,090		$	17,975
Preferred dividends		2,402			2,402
Adjustments for Continuing Operations:
Interest expense		8,072			11,208
Depreciation and amortization		17,745			17,666
Distributions on Cumulative Redeemable Preferred units		1,397			1,397
Minority interest in earnings of Operating Partnership		609			750
Adjustments for Discontinued Operations:
Interest expense		—			—
Depreciation and amortization		—			628
Net gain on disposition of discontinued operations		(4,848	)		—
Minority interest in loss of Operating Partnership		297			807
EBITDA Before Minority Interests(1)	$	38,764		$	52,833

(1) Please refer to page 26 for a Management Statement on EBITDA before minority interests.

28

Kilroy Realty Corporation

Second Quarter 2007 Supplemental Financial Report

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

(unaudited, $ in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Funds Available for Distribution(1)	$	29,563		$	29,765		$	53,027		$	51,776
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		4,912			4,949			9,176			7,644
Depreciation for furniture, fixtures and equipment		220			195			431			394
Accrued preferred dividends		2,402			2,402			4,804			4,804
Distributions on Cumulative Redeemable Preferred units		1,397			1,397			2,794			2,794
Provision for uncollectible tenant receivables		(27	)		72			(199	)		343
Net settlement receipts on interest rate swaps		—			(254	)		—			(448	)
Net gain on termination of profit participation agreement		(4,848	)		—			(4,848	)		—
Changes in assets and liabilities(2)(3)		7,552			4,337			10,498			(68,683	)
Other adjustments, net		286			12			436			(315	)
GAAP Net Cash Provided by (Used in) Operating Activities	$	41,457		$	42,875		$	76,119		($	1,691	)

(1) Please refer to page 26 for a Management Statement on Funds Available for Distribution.

(2) Includes changes in the following assets and liabilities and miscellaneous other adjustments: current receivables; deferred leasing costs; prepaid expenses and other assets; accounts payable, accrued expenses and other liabilities; rents received in advance and security deposits; and deferred revenue.

(3) Amount for the six months ended June 30, 2006 includes a $71.7 million cash award approved by the Executive Compensation Committee and paid to the Company’s executive officers in January 2006. The payment represents the amount earned by the Company’s executive officers under a special long-term compensation program for the approximate three-year period ended December 31, 2005. Amounts were previously reflected in FAD as compensation was expensed for financial reporting purposes.

29

EX-99.2

Exhibit 99.2

Contact: Richard E. Moran Jr. Executive Vice President FOR RELEASE: July 24, 2007

and Chief Financial Officer

(310) 481-8483

or

Tyler H. Rose

Senior Vice President

and Treasurer

(310) 481-8484

KILROY REALTY CORPORATION REPORTS

SECOND QUARTER FINANCIAL RESULTS

LOS ANGELES, July 24, 2007 – Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its second quarter ended June 30, 2007 with net income available for common stockholders of $13.1 million, or $0.40 per share, compared to $18.0 million, or $0.58 per share, in the second quarter of 2006. Revenues from continuing operations in the second quarter totaled $64.6 million, up from $62.6 million in the prior year’s second quarter. Funds from operations (FFO) for the period totaled $26.7 million, or $0.77 per share, compared to $37.6 million, or $1.11 per share, in the year-earlier period. Last year’s second-quarter results included proceeds from an early lease termination totaling $9.8 million, or $0.29 per share.

For the first six months of 2007, KRC reported net income available to common stockholders of $29.6 million, or $0.91 per share, compared to $31.5 million, or $1.04 per share, in the first half of 2006. Revenues from continuing operations in the six-month period totaled $128.6 million, up from $124.6 million in the same period of 2006. FFO in the first half of 2007 totaled $52.7 million, or $1.52 per share, compared to $64.4 million, or $1.94 per share, in first half of 2006.

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

KRC currently has five projects under construction, all located in coastal submarkets of central San Diego County. These five projects encompass eight buildings totaling approximately 1.1 million rentable square feet and are 82% pre-leased. In the aggregate, they represent a total estimated investment of approximately $359 million, of which $256 million has been spent to date.

The company also has two redevelopment projects underway, a 107,000 square-foot property in Los Angeles County and a two-building, 104,500 square-foot property located along the I-15 corridor in central San Diego County. The two projects represent a total estimated incremental investment of approximately $25 million, of which $13 million has been spent to date. They are 39% pre-leased.

“Market conditions for commercial real estate in Southern California remain sound, with solid demand and limited supply supporting rent increases across much of our portfolio,” said John B. Kilroy, Jr., president and chief executive officer of KRC. “Our development program remains on track, with approximately 1.3 million square feet of development and re-development projects underway, 76% of which is pre-leased,” he said.

Updated earnings guidance for 2007 will be discussed by KRC management during the company’s July 25, 2007 earnings conference call. The call will begin at 10:00 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 the telephone can access the conference call at (800) 259-0251, reservation #79084582. A replay of the conference call will be available via phone through August 5, 2007 at (888) 286-8010, reservation #34147086, 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 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

2

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 California and Washington. Kilroy Realty currently has an in-process development and redevelopment pipeline of approximately 1.3 million square feet in Los Angeles and San Diego counties. At June 30, 2007, the company owned 7.8 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.

###

3

KILROY REALTY CORPORATION

SUMMARY QUARTERLY RESULTS

(unaudited, in thousands, except per share data)

	Three Months Ended June 30, 2007		Three Months Ended June 30, 2006		Six Months Ended June 30, 2007		Six Months Ended June 30, 2006
Revenues from continuing operations	$	64,630	$	62,607	$	128,611	$	124,627
Revenues including discontinued operations	$	64,630	$	73,450	$	128,709	$	136,930
Net income available for common stockholders (1)	$	13,090	$	17,975	$	29,572	$	31,502
Weighted average common shares outstanding - basic		32,371		31,049		32,360		30,249
Weighted average common shares outstanding - diluted		32,486		31,172		32,486		30,394
Net income per share of common stock - basic	$	0.40	$	0.58	$	0.91	$	1.04
Net income per share of common stock - diluted	$	0.40	$	0.58	$	0.91	$	1.04
Funds From Operations (2), (3)	$	26,674	$	37,630	$	52,698	$	64,416
Weighted average common shares/units outstanding - basic (4)		34,619		33,689		34,609		33,102
Weighted average common shares/units outstanding - diluted (4)		34,734		33,812		34,735		33,247
Funds From Operations per common share/unit - basic (4)	$	0.77	$	1.12	$	1.52	$	1.95
Funds From Operations per common share/unit - diluted (4)	$	0.77	$	1.11	$	1.52	$	1.94
Common shares outstanding at end of period						32,707		32,092
Common partnership units outstanding at end of period						2,248		2,626
Total common shares and units outstanding at end of period						34,955		34,718

	June 30, 2007		June 30, 2006
Stabilized portfolio occupancy rates:
Office	93.6	%	95.9	%
Industrial	91.0	%	99.9	%
Weighted average total	92.7	%	97.4	%
Los Angeles	94.2	%	93.7	%
Orange County	91.0	%	99.0	%
San Diego	93.9	%	99.5	%
Other	90.5	%	92.7	%
Weighted average total	92.7	%	97.4	%
Total square feet of stabilized properties owned at end of period:
Office	7,835		7,847
Industrial	3,870		4,423
Total	11,705		12,270

(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.

4

KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	June 30, 2007			December 31, 2006
ASSETS
REAL ESTATE ASSETS:
Land and improvements	$	293,059		$	293,059
Buildings and improvements		1,500,777			1,484,051
Undeveloped land and construction in progress		453,211			263,651
Total real estate held for investment		2,247,047			2,040,761
Accumulated depreciation and amortization		(472,302	)		(443,807	)
Total real estate held for investment, net		1,774,745			1,596,954
Properties held for sale, net					4,512
Total real estate assets, net		1,774,745			1,601,466
Cash and cash equivalents		11,134			11,948
Restricted cash		619			494
Funds held at qualified intermediary for Section 1031 exchange					43,794
Current receivables, net		4,715			5,890
Deferred rent receivables, net		62,515			61,929
Notes receivable		11,034			11,096
Deferred leasing costs and acquisition related intangibles, net		46,381			49,019
Deferred financing costs, net		9,702			5,100
Prepaid expenses and other assets, net		6,840			8,616
TOTAL ASSETS	$	1,927,685		$	1,799,352
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES:
Secured debt	$	400,617		$	459,198
Exchangeable senior notes, net		455,630
Unsecured senior notes		144,000			144,000
Unsecured line of credit		18,000			276,000
Accounts payable, accrued expenses and other liabilities		61,497			67,729
Accrued distributions		20,610			19,610
Deferred revenue and acquisition related liabilities		52,026			25,353
Rents received in advance and tenant security deposits		17,521			19,900
Total liabilities		1,169,901			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		36,398			39,628
Total minority interests		110,036			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		327			324
Additional paid-in capital		651,659			671,484
Distributions in excess of earnings		(125,820	)		(119,094	)
Total stockholders’ equity		647,748			674,296
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	1,927,685		$	1,799,352

5

KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended June 30, 2007			Three Months Ended June 30, 2006			Six Months Ended June 30, 2007			Six Months Ended June 30, 2006
REVENUES:
Rental income	$	56,454		$	56,171		$	112,769		$	111,769
Tenant reimbursements		6,225			6,241			12,784			11,726
Other property income		1,951			195			3,058			1,132
Total revenues		64,630			62,607			128,611			124,627
EXPENSES:
Property expenses		11,440			10,764			22,298			20,768
Real estate taxes		4,861			4,696			9,599			9,430
Provision for bad debts		(26	)		56			(199	)		567
Ground leases		502			474			1,018			993
General and administrative expenses		9,460			4,714			18,508			9,649
Interest expense		8,072			11,208			17,728			23,179
Depreciation and amortization		17,745			17,666			34,982			35,046
Total expenses		52,054			49,578			103,934			99,632
OTHER INCOME AND EXPENSE:
Interest income		371			231			990			483
Net settlement receipts on interest rate swaps					254						448
Loss on derivative instruments					(179	)					(255	)
Total other income		371			306			990			676
Income from continuing operations before minority interests		12,947			13,335			25,667			25,671
Minority interests:
Distributions on Cumulative Redeemable Preferred units		(1,397	)		(1,397	)		(2,794	)		(2,794	)
Minority interest in earnings of Operating Partnership attributable to continuing operations		(609	)		(750	)		(1,187	)		(1,554	)
Total minority interests		(2,006	)		(2,147	)		(3,981	)		(4,348	)
Income from continuing operations		10,941			11,188			21,686			21,323
Discontinued operations:
Revenues from discontinued operations					10,843			98			12,303
Expenses from discontinued operations					(847	)		(20	)		(1,567	)
Net gain on dispositions of discontinued operations		4,848						13,474			5,655
Minority interest in earnings of Operating Partnership attributable to discontinued operations		(297	)		(807	)		(862	)		(1,408	)
Total income from discontinued operations		4,551			9,189			12,690			14,983
Net income		15,492			20,377			34,376			36,306
Preferred dividends		(2,402	)		(2,402	)		(4,804	)		(4,804	)
Net income available for common stockholders	$	13,090		$	17,975		$	29,572		$	31,502
Weighted average shares outstanding - basic		32,371			31,049			32,360			30,249
Weighted average shares outstanding - diluted		32,486			31,172			32,486			30,394
Net income per common share - basic	$	0.40		$	0.58		$	0.91		$	1.04
Net income per common share - diluted	$	0.40		$	0.58		$	0.91		$	1.04

6

KILROY REALTY CORPORATION FUNDS FROM OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended June 30, 2007			Three Months Ended June 30, 2006		Six Months Ended June 30, 2007			Six Months Ended June 30, 2006
Net income available for common stockholders	$	13,090		$	17,975	$	29,572		$	31,502
Adjustments:
Minority interest in earnings of Operating Partnership		906			1,557		2,049			2,962
Depreciation and amortization of real estate assets		17,526			18,098		34,551			35,607
Net gain on dispositions of discontinued operations		(4,848	)				(13,474	)		(5,655	)
Funds From Operations (1), (2)	$	26,674		$	37,630	$	52,698		$	64,416
Weighted average common shares/units outstanding - basic		34,619			33,689		34,609			33,102
Weighted average common shares/units outstanding - diluted		34,734			33,812		34,735			33,247
Funds From Operations per common share/unit - basic	$	0.77		$	1.12	$	1.52		$	1.95
Funds From Operations per common share/unit - diluted	$	0.77		$	1.11	$	1.52		$	1.94

(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 shareholders and common unitholders.

7