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): January 28, 2008

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 January 28, 2008, the Company issued a press release announcing its earnings for the year ended December 31, 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 Fourth Quarter 2007 Supplemental Financial Report.

99.2 Press Release dated January 28, 2008.

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: January 28, 2008
	By:	/s/ Heidi R. Roth
		Heidi R. Roth
		Senior Vice President and Controller

EXHIBIT INDEX

Exhibit Number		Description
99.1	*	Fourth Quarter 2007 Supplemental Financial Report.
99.2	*	Press Release dated January 28, 2008.

* Filed herewith.

EX-99.1

Exhibit 99.1

Fourth Quarter 2007 Supplemental Financial Report

Some of the enclosed information presented in this supplemental and on the Company’s January 29, 2008 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 January 29, 2008 conference call might not occur.

Kilroy Realty Corporation

Fourth 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
Stabilized Development Projects	20
In-Process and Committed Development and Redevelopment Projects	21
Future Development Pipeline	22
Debt and Capitalization Data
Capital Structure	23
Debt Analysis	24-25
Non-GAAP Supplemental Measures	26-30

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Company Background

Kilroy Realty Corporation (NYSE: KRC) owns, develops, and operates office and industrial real estate in Southern California. The Company operates as a self-administered real estate investment trust. As of December 31, 2007, the Company's stabilized portfolio consisted of 86 office buildings and 43 industrial buildings, which encompassed an aggregate of 8.1 million and 3.9 million square feet, respectively, and was 94.0% 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
Bank of America Securities		Green Street Advisors
Mitch Germain	(212) 847-5794	Michael Knott	(949) 640-8780
Citigroup Investment Research		Merrill Lynch & Co., Inc.
Michael Bilerman	(212) 816-1383	Steve Sakwa	(212) 449-0335
Credit Suisse Group		RBC Capital Markets
Steven Benyik	(212) 538-0239	Dave Rodgers	(216) 378-7626
Deutsche Bank Securities, Inc.		Robert W. Baird & Company
Lou Taylor	(212) 250-4912	David Loeb	(414) 765-7063
Friedman, Billings, Ramsey & Co., Inc.		Stifel, Nicolaus & Company
Wilkes Graham	(703) 312-9737	John W. Guinee III	(410) 454-5520

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

Fourth Quarter 2007 Supplemental Financial Report

Financial Highlights

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

	Three Months Ended
	12/31/2007			9/30/2007			6/30/2007			3/31/2007			12/31/2006
INCOME ITEMS (Including Discontinued Operations):
Revenues	$	72,155		$	67,921		$	64,630		$	64,077		$	64,340
Lease Termination Fees		245			265			1,908			831			658
Net Operating Income(1)		53,476			49,645			47,853			48,117			48,047
Capitalized Interest and Loan Costs		3,635			4,581			5,094			4,757			3,866
Net Income Available for Common Stockholders		65,612			9,028			13,090			16,478			9,184
EBITDA(1)(2)		44,434			41,231			38,764			39,687			41,387
Funds From Operations(1)(3)(4)		29,672			28,212			26,674			26,021			27,311
Funds Available for Distribution(1)(3)(4)		23,310			18,309			29,563			23,461			21,575
Net Income per common share – diluted	$	2.01		$	0.28		$	0.40		$	0.51		$	0.28
Funds From Operations per common share – diluted	$	0.85		$	0.81		$	0.77		$	0.75		$	0.79
Dividends per share	$	0.555		$	0.555		$	0.555		$	0.555		$	0.530
RATIOS (Including Discontinued Operations):
Operating Margins		74.1	%		73.1	%		74.0	%		75.1	%		74.7	%
Interest Coverage Ratio(5)		4.1x			4.6x			4.8x			4.1x			4.1x
Fixed Charge Coverage Ratio(6)		3.1x			3.2x			3.3x			2.9x			3.0x
FFO Payout Ratio(7)		65.4	%		68.8	%		72.7	%		74.5	%		67.4	%
FAD Payout Ratio(8)		83.2	%		106.0	%		65.6	%		82.7	%		85.3	%
	12/31/2007			9/30/2007			6/30/2007			3/31/2007			12/31/2006
ASSETS:
Real Estate Held for Investment before Depreciation	$	2,368,556		$	2,292,918		$	2,247,047		$	2,165,355		$	2,040,761
Total Assets		2,068,720			1,963,750			1,927,685			1,854,715			1,799,352
CAPITALIZATION:
Total Debt(9)	$	1,110,912		$	1,054,283		$	1,022,617		$	930,230		$	879,198
Total Preferred Equity(9)		201,500			201,500			201,500			201,500			201,500
Total Common Equity(9)		1,921,138			2,119,335			2,476,227			2,577,291			2,707,958
Total Market Capitalization(9)		3,233,550			3,375,118			3,700,344			3,709,021			3,788,656
Total Debt / Total Market Capitalization		34.4	%		31.2	%		27.6	%		25.1	%		23.2	%
Total Debt and Preferred / Total Market Capitalization		40.6	%		37.2	%		33.1	%		30.5	%		28.5	%

(1) Please refer to pages 26 and 27 for Management Statements on Net Operating Income, EBITDA before minority interests, Funds From Operations and Funds Available for Distribution.

(2) EBITDA is reported before minority interests and net gain (loss) on dispositions. Please refer to page 29 for a reconciliation of GAAP Net Income Available for Common Stockholders to EBITDA before minority interests.

(3) 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.

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

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

(6) 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.

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

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

(9) See "Capital Structure" on page 23.

2

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Common Stock Data (NYSE: KRC)

	Three Months Ended
	12/31/2007		9/30/2007		6/30/2007		3/31/2007		12/31/2006
High Price	$	68.29	$	73.20	$	76.92	$	89.80	$	83.42
Low Price	$	52.66	$	56.79	$	69.48	$	72.70	$	71.53
Closing Price	$	54.96	$	60.63	$	70.84	$	73.75	$	78.00
Dividends per share -annualized	$	2.22	$	2.22	$	2.22	$	2.22	$	2.12
Closing common shares (in 000’s)(1)		32,766		32,707		32,707		32,698		32,399
Closing partnership units (in 000’s)(1)		2,189		2,248		2,248		2,248		2,319
		34,955		34,955		34,955		34,946		34,718

(1) As of the end of the period.

3

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Consolidated Balance Sheets

(unaudited, $ in thousands)

	12/31/2007			9/30/2007			6/30/2007			3/31/2007			12/31/2006
ASSETS:
Land and improvements	$	324,779		$	312,057		$	293,059		$	293,059		$	293,059
Buildings and improvements		1,719,700			1,730,833			1,500,777			1,494,184			1,484,051
Undeveloped land and construction in progress		324,077			250,028			453,211			378,112			263,651
Total real estate held for investment		2,368,556			2,292,918			2,247,047			2,165,355			2,040,761
Accumulated depreciation and amortization		(463,932	)		(488,050	)		(472,302	)		(457,982	)		(443,807	)
Total real estate held for investment, net		1,904,624			1,804,868			1,774,745			1,707,373			1,596,954
Properties held for sale, net														4,512
Total real estate assets, net		1,904,624			1,804,868			1,774,745			1,707,373			1,601,466
Cash and cash equivalents		11,732			3,655			11,134			5,167			11,948
Restricted cash		546			1,362			619						494
Funds held at qualified intermediary for Section 1031 exchange														43,794
Marketable securities		707			455
Current receivables, net		4,891			4,231			4,715			7,096			5,890
Deferred rent receivables, net		67,283			66,073			62,515			62,201			61,929
Notes receivable		10,970			11,002			11,034			11,065			11,096
Deferred leasing costs and acquisition related intangibles, net		54,418			56,629			46,381			48,598			49,019
Deferred financing costs, net		8,492			9,144			9,702			5,545			5,100
Prepaid expenses and other assets, net		5,057			6,331			6,840			7,670			8,616
TOTAL ASSETS	$	2,068,720		$	1,963,750		$	1,927,685		$	1,854,715		$	1,799,352
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Secured debt	$	395,912		$	398,283		$	400,617		$	455,230		$	459,198
Exchangeable senior notes, net		456,090			455,860			455,630
Unsecured senior notes		144,000			144,000			144,000			144,000			144,000
Unsecured line of credit		111,000			52,000			18,000			331,000			276,000
Accounts payable, accrued expenses and other liabilities		58,249			67,356			61,497			90,525			67,729
Accrued distributions		20,610			20,610			20,610			20,605			19,610
Deferred revenue and acquisition related liabilities		59,187			56,638			52,026			29,923			25,353
Rents received in advance and tenant security deposits		18,433			17,862			17,521			19,256			19,900
Total liabilities		1,263,481			1,212,609			1,169,901			1,090,539			1,011,790
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		38,309			35,968			36,398			36,812			39,628
Total minority interests		111,947			109,606			110,036			110,450			113,266
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		328			327			327			327			324
Additional paid-in capital		658,894			654,569			651,659			652,580			671,484
Distributions in excess of earnings		(87,512	)		(134,943	)		(125,820	)		(120,763	)		(119,094	)
Total stockholders' equity		693,292			641,535			647,748			653,726			674,296
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,068,720		$	1,963,750		$	1,927,685		$	1,854,715		$	1,799,352

4

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Consolidated Statements of Operations

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

	Three Months Ended December 31,								Year Ended December 31,
	2007			2006			% Change		2007			2006			% Change
REVENUES:
Rental income	$	62,125		$	54,523		13.9	%	$	229,672		$	216,745		6.0	%
Tenant reimbursements		7,320			6,269		16.8	%		25,322			22,440		12.8	%
Other property income		296			727		(59.3	%)		3,478			2,356		47.6	%
Total revenues		69,741			61,519		13.4	%		258,472			241,541		7.0	%
EXPENSES:
Property expenses		11,255			10,166		10.7	%		43,306			39,700		9.1	%
Real estate taxes		5,137			4,526		13.5	%		19,539			18,149		7.7	%
Provision for bad debts		783			118		563.6	%		473			744		(36.4	%)
Ground leases		392			396		(1.0	%)		1,582			1,583		(0.1	%)
General and administrative expenses		9,353			7,478		25.1	%		36,580			22,800		60.4	%
Interest expense		10,765			10,050		7.1	%		37,502			43,541		(13.9	%)
Depreciation and amortization		20,259			17,292		17.2	%		72,815			68,830		5.8	%
Total expenses		57,944			50,026		15.8	%		211,797			195,347		8.4	%
OTHER INCOME AND EXPENSE:
Interest and other investment income		311			812		(61.7	%)		1,606			1,653		(2.8	%)
Net settlement receipts on interest rate swaps					244		(100.0	%)					991		(100.0	%)
Loss on derivative instruments					(238	)	(100.0	%)					(818	)	(100.0	%)
Total other income and expense		311			818		(62.0	%)		1,606			1,826		(12.0	%)
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS		12,108			12,311		(1.6	%)		48,281			48,020		0.5	%
MINORITY INTERESTS:
Distributions on Cumulative Redeemable Preferred units		(1,397	)		(1,397	)	0.0	%		(5,588	)		(5,588	)	0.0	%
Minority interest in earnings of Operating Partnership attributable to continuing operations		(524	)		(571	)	(8.2	%)		(2,129	)		(2,514	)	(15.3	%)
Total minority interests		(1,921	)		(1,968	)	(2.4	%)		(7,717	)		(8,102	)	(4.8	%)
INCOME FROM CONTINUING OPERATIONS		10,187			10,343		(1.5	%)		40,564			39,918		1.6	%
DISCONTINUED OPERATIONS:
Revenues from discontinued operations		2,414			2,820		(14.4	%)		10,312			22,788		(54.7	%)
Expenses from discontinued operations		(1,648	)		(1,633	)	0.9	%		(6,521	)		(8,625	)	(24.4	%)
Net gain on dispositions of discontinued operations		61,031					100.0	%		74,505			31,259		138.3	%
Minority interest in earnings of Operating Partnership attributable to discontinued operations		(3,970	)		56		(7189.3	%)		(5,038	)		(3,476	)	44.9	%
Total income from discontinued operations		57,827			1,243		4552.2	%		73,258			41,946		74.6	%
NET INCOME		68,014			11,586		487.0	%		113,822			81,864		39.0	%
PREFERRED DIVIDENDS		(2,402	)		(2,402	)	0.0	%		(9,608	)		(9,608	)	0.0	%
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS	$	65,612		$	9,184		614.4	%	$	104,214		$	72,256		44.2	%
Weighted average shares outstanding - basic		32,426			32,246		0.6	%		32,380			31,244		3.6	%
Weighted average shares outstanding - diluted		32,633			32,416		0.7	%		32,527			31,390		3.6	%
NET INCOME PER COMMON SHARE:
Net income per common share - basic	$	2.02		$	0.28		621.4	%	$	3.22		$	2.31		39.4	%
Net income per common share - diluted	$	2.01		$	0.28		617.9	%	$	3.20		$	2.30		39.1	%

5

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Funds From Operations and Funds Available for Distribution

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

	Three Months Ended December 31,								Year Ended December 31,
	2007			2006			% Change		2007			2006			% Change
FUNDS FROM OPERATIONS:(1)
Net income available for common stockholders	$	65,612		$	9,184		614.4	%	$	104,214		$	72,256		44.2	%
Adjustments:
Minority interest in earnings of Operating Partnership		4,494			515		772.6	%		7,167			5,990		19.6	%
Depreciation and amortization of real estate assets		20,597			17,612		16.9	%		73,708			71,197		3.5	%
Net gain on dispositions of discontinued operations(2)		(61,031	)				(100.0	%)		(74,505	)		(31,259	)	138.3	%
Funds From Operations(3)	$	29,672		$	27,311		8.6	%	$	110,584		$	118,184		(6.4	%)
Weighted average common shares/units outstanding - basic		34,622			34,570		0.2	%		34,616			33,842		2.3	%
Weighted average common shares/units outstanding - diluted		34,829			34,740		0.3	%		34,762			33,988		2.3	%
FFO per common share/unit - basic	$	0.86		$	0.79		8.5	%	$	3.19		$	3.49		(8.5	%)
FFO per common share/unit - diluted	$	0.85		$	0.79		8.4	%	$	3.18		$	3.48		(8.5	%)
FUNDS AVAILABLE FOR DISTRIBUTION:(1)
Funds From Operations	$	29,672		$	27,311		8.6	%	$	110,584		$	118,184		(6.4	%)
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		(6,805	)		(6,985	)	(2.6	%)		(25,350	)		(18,829	)	34.6	%
Amortization of deferred revenue related to tenant improvements(4)		(1,576	)		(596	)	164.4	%		(4,328	)		(2,313	)	87.1	%
Net effect of straight-line rents(5)		(1,966	)		(1,409	)	39.5	%		(6,944	)		(7,025	)	(1.2	%)
Amortization of above/below market rents(6)		(911	)		(457	)	99.3	%		(1,831	)		(1,570	)	16.6	%
Contractual cash rents received in advance of revenue recognition(7)		254			107		137.4	%		564			485		16.3	%
Net gain on termination of profit participation agreement(2)							0.0	%		4,848					100.0	%
Non-cash gain on lease termination(8)							0.0	%					(2,334	)	(100.0	%)
Amortization of deferred financing costs		622			306		103.3	%		1,968			1,215		62.0	%
Non-cash amortization of share-based compensation awards		4,020			3,060		31.4	%		15,137			5,717		164.8	%
Loss on derivative instruments(9)					238		(100.0	%)					818		(100.0	%)
Funds Available for Distribution(3)	$	23,310		$	21,575		8.0	%	$	94,648		$	94,348		0.3	%

(1) See page 27 for Management Statements on Funds From Operations and Funds Available for Distribution.

(2) Included in net gain on termination of profit participation agreement for the year ended December 31, 2007 is a $4.8 million payment the Company received 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

Fourth Quarter 2007 Supplemental Financial Report

Same Store Analysis⁽¹⁾

(unaudited, $ in thousands)

Same Store Analysis (GAAP Basis)

	Three Months Ended December 31,								Year Ended December 31,
	2007			2006			% Change		2007			2006			% Change
Total Same Store Portfolio
Number of properties		123			123					123			123
Square Feet		11,096,046			11,096,046					11,096,046			11,096,046
Percent of Stabilized Portfolio		92.8	%		94.8	%				92.8	%		94.8	%
Average Occupancy		93.3	%		96.1	%				93.2	%		95.7	%
Operating Revenues:
Rental income	$	54,710		$	54,235		0.9	%	$	215,511		$	214,404		0.5	%
Tenant reimbursements		6,014			6,254		(3.8	)%		23,241			21,697		7.1	%
Other property income		295			726		(59.4	)%		3,477			2,353		47.8	%
Total operating revenues		61,019			61,215		(0.3	)%		242,229			238,454		1.6	%
Operating Expenses:
Property expenses		10,854			10,026		8.3	%		42,580			38,820		9.7	%
Real estate taxes		4,349			4,593		(5.3	)%		18,070			17,866		1.1	%
Provision for bad debts		783			118		563.6	%		473			744		(36.4	)%
Ground leases		390			395		(1.3	)%		1,576			1,578		(0.1	)%
Total operating expenses		16,376			15,132		8.2	%		62,699			59,008		6.3	%
GAAP Net Operating Income	$	44,643		$	46,083		(3.1	)%	$	179,530		$	179,446		0.0	%
Same Store Analysis (Cash Basis)
	Three Months Ended December 31,								Year Ended December 31,
	2007			2006			% Change		2007			2006			% Change
Total operating revenues		57,485			59,162		(2.8	)%		233,459			227,933		2.4	%
Total operating expenses		16,376			15,132		8.2	%		62,699			59,008		6.3	%
Cash Net Operating Income	$	41,109		$	44,030		(6.6	)%	$	170,760		$	168,925		1.1	%

(1) Same store defined as all stabilized properties owned at January 1, 2006 and still owned and in the stabilized portfolio at December 31, 2007.

7

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	# of Buildings	Portfolio Breakdown				Total Square Feet	Occupancy at:(1)
		NOI(2)		Sq. Ft.			12/31/2007		9/30/2007		12/31/2006
STABILIZED PORTFOLIO:
OCCUPANCY BY PRODUCT TYPE:
Office:
Los Angeles	24	29.7	%	24.2	%	2,899,075	96.1	%	96.0	%	92.8	%
Orange County	5	2.4	%	2.3	%	277,340	99.1	%	99.1	%	98.3	%
San Diego	52	51.5	%	38.2	%	4,565,824	91.4	%	91.4	%	98.6	%
Other	5	2.5	%	2.9	%	346,530	99.6	%	93.2	%	92.8	%
Subtotal	86	86.1	%	67.6	%	8,088,769	93.7	%	93.4	%	95.8	%
Industrial:
Los Angeles	1	1.5	%	1.6	%	192,053	100.0	%	100.0	%	100.0	%
Orange County	42	12.4	%	30.8	%	3,677,916	94.4	%	90.5	%	95.6	%
Subtotal	43	13.9	%	32.4	%	3,869,969	94.7	%	91.0	%	95.8	%
OCCUPANCY BY REGION:
Los Angeles	25	31.2	%	25.8	%	3,091,128	96.4	%	96.3	%	93.2	%
Orange County	47	14.8	%	33.1	%	3,955,256	94.8	%	91.1	%	95.7	%
San Diego	52	51.5	%	38.2	%	4,565,824	91.4	%	91.4	%	98.6	%
Other	5	2.5	%	2.9	%	346,530	99.6	%	93.2	%	92.8	%
TOTAL STABILIZED PORTFOLIO	129	100.0	%	100.0	%	11,958,738	94.0	%	92.6	%	95.8	%

AVERAGE OCCUPANCY - STABILIZED PORTFOLIO

	Office		Industrial		Total
Quarter-to-Date	93.3	%	94.7	%	93.8	%
Year-to-Date	94.1	%	92.1	%	93.4	%

(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

Fourth 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	86.7	%
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	85.2	%
999 Sepulveda Blvd.	El Segundo	1	127,901	98.5	%
Kilroy Airport Center, Long Beach	Long Beach	7	949,065	93.9	%
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	89,017	98.9	%
501 Santa Monica Blvd.	Santa Monica	1	73,115	98.3	%
Total Los Angeles Office		24	2,899,075	96.1	%
Orange County, California
4175 E. La Palma Avenue	Anaheim	1	43,263	94.1	%
8101 Kaiser Blvd.	Anaheim	1	59,790	100.0	%
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	99.1	%

9

Kilroy Realty Corporation

Fourth 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	93.5	%
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	100.0	%
12400 High Bluff Drive	Del Mar	1	208,464	100.0	%
6215 / 6220 Greenwich Drive	Governor Park	2	212,214	33.5	%
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	0.0	%
15231 Ave of Science	I-15 Corridor	1	65,638	100.0	%
15253 Ave of Science	I-15 Corridor	1	37,437	100.0	%
15333 Ave of Science	I-15 Corridor	1	78,880	100.0	%
13500/13520 Evening Creek Drive North	I-15 Corridor	2	281,830	79.8	%
Santa Fe Summit - Phase I	56 Corridor	4	465,812	100.0	%
10020 Pacific Mesa	Sorrento Mesa	1	318,000	100.0	%
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	100.0	%
6260 Sequence Drive	Sorrento Mesa	1	130,536	100.0	%
6290 / 6310 Sequence Drive	Sorrento Mesa	2	152,415	41.0	%
6340 / 6350 Sequence Drive	Sorrento Mesa	2	199,000	100.0	%
Pacific Corporate Center	Sorrento Mesa	6	332,542	100.0	%
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		52	4,565,824	91.4	%
Other
5151/5155 Camino Ruiz	Carmarillo, CA	4	265,372	100.0	%
2829 Townsgate Road	Thousand Oaks, CA	1	81,158	98.1	%
Total Other Office		5	346,530	99.6	%
Total Office		86	8,088,769	93.7	%

10

Kilroy Realty Corporation

Fourth 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	100.0	%
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	94.4	%
Total Industrial		43	3,869,969	94.7	%

11

Kilroy Realty Corporation

Fourth 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	10	7	32,735	33,141	$	20.14	$	0.39	24.6	%	13.3	%	54.1	%	54
Industrial	2	3	202,303	32,133		3.95	$	0.03	10.3	%	(5.0	%)	35.5	%	56
Total	12	10	235,038	65,274	$	7.09	$	0.27	16.1	%	2.1	%	43.0	%	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	50	42	455,246	738,147	$	18.22	$	0.82	15.1	%	3.8	%	54.3	%	76
Industrial	6	11	283,879	243,823		3.77		0.23	15.6	%	1.3	%	47.5	%	55
Total	56	53	739,125	981,970	$	13.43	$	0.62	15.2	%	3.4	%	52.4	%	69

(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

Fourth Quarter 2007 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures

($ in thousands)

Non-Recurring Capital Expenditures:
	Q1 2007		Q2 2007		Q3 2007		Q4 2007		Annual 2007
Capital Improvements	$	195	$	49	$	9	$	5	$	258
Tenant Improvements & Leasing Commissions(1)		—		249		1		—		250
Total	$	195	$	298	$	10	$	5	$	508
Recurring Capital Expenditures:
	Q1 2007		Q2 2007		Q3 2007		Q4 2007		Annual 2007
Capital Improvements
Office	$	524	$	1,970	$	889	$	3,027	$	6,410
Industrial		279		395		84		123		881
		803		2,365		973		3,150		7,291
Tenant Improvements & Leasing Commissions(1)
Office		3,431		2,098		8,396		2,377		16,302
Industrial		30		449		—		1,278		1,757
		3,461		2,547		8,396		3,655		18,059
Total
Office		3,955		4,068		9,285		5,404		22,712
Industrial		309		844		84		1,401		2,638
	$	4,264	$	4,912	$	9,369	$	6,805	$	25,350

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

13

Kilroy Realty Corporation

Fourth 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:
2008	59	509,022	6.8	%	$	10,928	$	21.47
2009	76	1,239,568	16.5	%		29,414		23.73
2010	71	1,193,026	15.9	%		30,584		25.64
2011	50	448,306	6.0	%		9,775		21.80
2012	41	552,591	7.4	%		15,321		27.73
2013	15	415,517	5.5	%		8,939		21.51
2014	21	704,545	9.4	%		18,694		26.53
2015	11	343,972	4.6	%		10,641		30.94
2016	9	421,006	5.6	%		11,360		26.98
2017	13	1,088,694	14.5	%		30,169		27.71
2018 and beyond	11	590,427	7.8	%		26,633		45.11
Subtotal	377	7,506,674	100.0	%	$	202,458	$	26.97
INDUSTRIAL:
2008	12	877,303	24.4	%	$	6,334	$	7.22
2009	14	731,502	20.3	%		4,609		6.30
2010	15	413,485	11.5	%		3,250		7.86
2011	10	408,402	11.3	%		3,156		7.73
2012	10	591,672	16.4	%		4,112		6.95
2013	—	—	—			—		—
2014	1	49,178	1.4	%		420		8.54
2015	3	213,306	5.9	%		1,629		7.64
2016	2	233,278	6.5	%		3,274		14.03
2017	—	—	—			—		—
2018 and beyond	1	82,602	2.3	%		643		7.78
Subtotal	68	3,600,728	100.0	%	$	27,427	$	7.62
TOTAL PORTFOLIO:
2008	71	1,386,325	12.5	%	$	17,262	$	12.45
2009	90	1,971,070	17.7	%		34,023		17.26
2010	86	1,606,511	14.5	%		33,834		21.06
2011	60	856,708	7.7	%		12,931		15.09
2012	51	1,144,263	10.3	%		19,433		16.98
2013	15	415,517	3.7	%		8,939		21.51
2014	22	753,723	6.8	%		19,114		25.36
2015	14	557,278	5.0	%		12,270		22.02
2016	11	654,284	5.9	%		14,634		22.37
2017	13	1,088,694	9.8	%		30,169		27.71
2018 and beyond	12	673,029	6.1	%		27,276		40.53
Total	445	11,107,402	100.0	%	$	229,885	$	20.70

(1) Excludes space leased under month-to-month leases and vacant space at December 31, 2007.

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

14

Kilroy Realty Corporation

Fourth 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:
2008	31	133,854	4.9	%	$	3,752	$	28.03	12	79,945	29.5	%	$	1,238	$	15.49
2009	40	594,600	21.8	%		15,118		25.43	17	123,750	45.7	%		3,101		25.06
2010	49	754,244	27.7	%		18,781		24.90	4	10,712	4.0	%		251		23.43
2011	35	219,253	8.0	%		6,298		28.72	5	17,564	6.5	%		455		25.91
2012	26	194,455	7.1	%		5,248		26.99	6	38,572	14.3	%		971		25.17
2013	12	170,201	6.2	%		3,455		20.30	—	—	—			—		—
2014	14	403,910	14.8	%		11,908		29.48	—	—	—			—		—
2015	5	145,548	5.3	%		4,277		29.39	—	—	—			—		—
2016	4	46,176	1.7	%		1,669		36.14	—	—	—			—		—
2017	4	30,280	1.1	%		1,000		33.03	—	—	—			—		—
2018 and beyond	1	34,570	1.4	%		1,433		41.45	—	—	—			—		—
Subtotal	221	2,727,091	100.0	%	$	72,939	$	26.75	44	270,543	100.0	%	$	6,016	$	22.24
INDUSTRIAL:
2008	—	—	—			—		—	12	877,303	25.7	%	$	6,334	$	7.22
2009	—	—	—			—		—	14	731,502	21.5	%		4,609		6.30
2010	—	—	—			—		—	15	413,485	12.1	%		3,250		7.86
2011	—	—	—			—		—	10	408,402	12.0	%		3,156		7.73
2012	—	—	—			—		—	10	591,672	17.4	%		4,112		6.95
2013	—	—	—			—		—	—	—	—			—		—
2014	—	—	—			—		—	1	49,178	1.4	%		420		8.54
2015	—	—	—			—		—	3	213,306	6.3	%		1,629		7.64
2016	1	192,053	100.0	%		2,960		15.41	1	41,225	1.2	%		314		7.62
2017	—	—	—			—		—	—	—	—			—		—
2018 and beyond	—	—	—			—		—	1	82,602	2.4	%		643		7.78
Subtotal	1	192,053	100.0	%	$	2,960	$	15.41	67	3,408,675	100.0	%	$	24,467	$	7.18
TOTAL PORTFOLIO:
2008	31	133,854	4.6	%	$	3,752	$	28.03	24	957,248	26.0	%	$	7,572	$	7.91
2009	40	594,600	20.4	%		15,118		25.43	31	855,252	23.2	%		7,710		9.01
2010	49	754,244	25.8	%		18,781		24.90	19	424,197	11.5	%		3,501		8.25
2011	35	219,253	7.5	%		6,298		28.72	15	425,966	11.6	%		3,611		8.48
2012	26	194,455	6.7	%		5,248		26.99	16	630,244	17.1	%		5,083		8.07
2013	12	170,201	5.8	%		3,455		20.30	—	—	—			—		—
2014	14	403,910	13.8	%		11,908		29.48	1	49,178	1.3	%		420		8.54
2015	5	145,548	5.0	%		4,277		29.39	3	213,306	5.8	%		1,629		7.64
2016	5	238,229	8.2	%		4,629		19.43	1	41,225	1.1	%		314		7.62
2017	4	30,280	1.0	%		1,000		33.03	—	—	—			—		—
2018 and beyond	1	34,570	1.2	%		1,433		41.45	1	82,602	2.4	%		643		7.78
Total	222	2,919,144	100.0	%	$	75,899	$	26.00	111	3,679,218	100.0	%	$	30,483	$	8.29

(1) Excludes space leased under month-to-month leases and vacant space at December 31, 2007.

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

15

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Lease Expiration Schedule Detail by Region

($ in thousands)

	San Diego County								Other
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:
2008	11	253,738	6.1	%	$	5,629	$	22.18	5	41,485	12.0	%	$	309	$	7.45
2009	14	511,591	12.3	%		10,910		21.33	5	9,627	2.8	%		285		29.60
2010	13	356,155	8.6	%		9,885		27.75	5	71,915	20.8	%		1,667		23.18
2011	6	20,053	0.5	%		770		38.40	4	191,436	55.5	%		2,252		11.76
2012	8	314,014	7.5	%		8,908		28.37	1	5,550	1.6	%		194		34.95
2013	3	245,316	5.9	%		5,484		22.35	—	—	—			—		—
2014	6	293,876	7.1	%		6,549		22.28	1	6,759	2.0	%		237		35.06
2015	4	180,213	4.3	%		5,808		32.23	2	18,211	5.3	%		556		30.53
2016	5	374,830	9.0	%		9,691		25.85	—	—	—			—		—
2017	9	1,058,414	25.4	%		29,169		27.56	—	—	—			—		—
2018 and beyond	10	555,857	13.3	%		25,200		45.34	—	—	—			—		—
Subtotal	89	4,164,057	100.0	%	$	118,003	$	28.34	23	344,983	100.0	%	$	5,500	$	15.94
INDUSTRIAL:
Remaining 2007	—	—	—			—		—	—	—	—			—		—
2008	—	—	—			—		—	—	—	—			—		—
2009	—	—	—			—		—	—	—	—			—		—
2010	—	—	—			—		—	—	—	—			—		—
2011	—	—	—			—		—	—	—	—			—		—
2012	—	—	—			—		—	—	—	—			—		—
2013	—	—	—			—		—	—	—	—			—		—
2014	—	—	—			—		—	—	—	—			—		—
2015	—	—	—			—		—	—	—	—			—		—
2016	—	—	—			—		—	—	—	—			—		—
2017	—	—	—			—		—	—	—	—			—		—
2018 and beyond	—	—	—			—		—	—	—	—			—		—
Subtotal	—	—	—			—		—	—	—	—			—		—
TOTAL PORTFOLIO:
2008	11	253,738	6.1	%	$	5,629	$	22.18	5	41,485	12.0	%	$	309	$	7.45
2009	14	511,591	12.3	%		10,910		21.33	5	9,627	2.8	%		285		29.60
2010	13	356,155	8.6	%		9,885		27.75	5	71,915	20.8	%		1,667		23.18
2011	6	20,053	0.5	%		770		38.40	4	191,436	55.5	%		2,252		11.76
2012	8	314,014	7.5	%		8,908		28.37	1	5,550	1.6	%		194		34.95
2013	3	245,316	5.9	%		5,484		22.35	—	—	—			—		—
2014	6	293,876	7.1	%		6,549		22.28	1	6,759	2.0	%		237		35.06
2015	4	180,213	4.3	%		5,808		32.23	2	18,211	5.3	%		556		30.53
2016	5	374,830	9.0	%		9,691		25.85	—	—	—			—		—
2017	9	1,058,414	25.4	%		29,169		27.56	—	—	—			—		—
2018 and beyond	10	555,857	13.3	%		25,200		45.34	—	—	—			—		—
Total	89	4,164,057	100.0	%	$	118,003	$	28.34	23	344,983	100.0	%	$	5,500	$	15.94

(1) Excludes space leased under month-to-month leases and vacant space at December 31, 2007.

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

16

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Quarterly Lease Expirations for 2008

($ 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:
Q1 2008	13	32,578	0.4	%	$	890	$	27.32
Q2 2008	11	121,132	1.6	%		2,118		17.49
Q3 2008	23	316,215	4.2	%		6,765		21.39
Q4 2008	12	39,097	0.6	%		1,155		29.54
Subtotal 2008	59	509,022	6.8	%	$	10,928	$	21.47
INDUSTRIAL:
Q1 2008	4	148,971	4.1	%	$	1,145	$	7.69
Q2 2008	5	378,769	10.5	%		2,980		7.87
Q3 2008	1	286,139	7.9	%		1,484		5.19
Q4 2008	2	63,424	1.9	%		725		11.43
Subtotal 2008	12	877,303	24.4	%	$	6,334	$	7.22
TOTAL PORTFOLIO:
Q1 2008	17	181,549	1.6	%	$	2,035	$	11.21
Q2 2008	16	499,901	4.5	%		5,098		10.20
Q3 2008	24	602,354	5.4	%		8,249		13.69
Q4 2008	14	102,521	1.0	%		1,880		18.34
Total 2008	71	1,386,325	12.5	%	$	17,262	$	12.45

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

(2) Excludes space leased under month-to-month leases and vacant space at December 31, 2007.

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

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Kilroy Realty Corporation

Fourth 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:
Intuit Inc.	$	17,793	627,050	7.2	%	5.2	%
Cardinal Health, Inc.		9,256	411,000	3.8	%	3.4	%
AMN Healthcare		8,341	175,672	3.4	%	1.5	%
DIRECTV Group, Inc.		8,037	289,752	3.3	%	2.4	%
The Boeing Company		6,593	464,840	2.7	%	3.9	%
Fish & Richardson		6,071	139,538	2.5	%	1.2	%
Favrille, Inc.		5,588	128,580	2.3	%	1.1	%
Scripps Health (2)		5,199	112,067	2.1	%	0.9	%
Verenium Corporation		5,158	136,908	2.1	%	1.1	%
Accredited Home Lenders, Inc.		5,164	181,955	2.1	%	1.5	%
Total Office Properties	$	77,200	2,667,362	31.5	%	22.2	%
Industrial Properties:
Mattel, Inc.	$	2,960	192,053	1.2	%	1.6	%
Celestica California, Inc.		2,501	303,533	1.0	%	2.5	%
NBTY Manufacturing, LLC		1,484	286,139	0.6	%	2.4	%
Extron Electronics		1,145	157,730	0.5	%	1.3	%
Eagle Ridge Manufacturing		1,087	144,000	0.4	%	1.2	%
Targus, Inc.		1,053	200,646	0.4	%	1.7	%
Progressive Marketing		838	144,000	0.3	%	1.2	%
Ricoh Electronics, Inc.		810	100,000	0.3	%	0.8	%
Arrow Industries		798	153,320	0.3	%	1.3	%
Printrak International Inc.		753	84,185	0.3	%	0.7	%
Total Industrial Properties	$	13,429	1,765,606	5.3	%	14.7	%

(1) Reflects annualized contractual base rent calculated on a straight-line basis as of December 31, 2007.

(2) 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

Fourth 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
Subtotal				48.1		68.5
2nd QUARTER:
NONE
3rd QUARTER:
NONE
4th QUARTER:
San Diego Corporate Center	Del Mar	Land for Office Development	November	23.0		88.0
TOTAL YEAR-TO-DATE ACQUISITIONS				71.1	$	156.5
DISPOSITIONS:
Property	Location	Type	Month of Disposition	Rentable Square Feet	Sales Price
1st QUARTER:
181 & 185 S. Douglas Street (3) (4)	El Segundo	Office	January	61,545
2270 E. El Segundo Blvd. (3) (4)	El Segundo	Industrial	January	6,362
				67,907	$	14.8
2nd QUARTER:
NONE
3rd QUARTER:
NONE
4th QUARTER:
Kilroy Airport Center Sea-Tac	Seattle, WA	Office	December	532,430		79.3
TOTAL YEAR-TO-DATE DISPOSITIONS				600,337	$	94.1

(1) Two existing buildings total approximately 103,900 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 21.

(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

Fourth Quarter 2007 Supplemental Financial Report

Stabilized Development Projects

($ in millions)

DEVELOPMENT PROJECTS:
Project	Location	Type	Start Date	Compl. Date	Rentable Square Feet	Total Est. Investment (1)		% Leased
1st QUARTER:
NONE
2nd QUARTER:
NONE
3rd QUARTER:
Santa Fe Summit - Phase I(2)	56 Corridor	Office	4Q 2005 - 1Q 2006	3Q 2007	465,812	$	142.4	100	%
Pacific Corporate Center - Lots 3, 4 & 6	Sorrento Mesa	Office	3Q 2006	3Q 2007	318,000		69.7	100	%
4th QUARTER
NONE
TOTAL STABILIZED DEVELOPMENT PROJECTS:					783,812	$	212.1	100	%

(1) Amounts exclude tenant-funded tenant improvements.

(2) 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.

20

Kilroy Realty Corporation

Fourth 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 12/31/2007(2)(3)		% Leased
Project	Location	Type	Start Date	Compl. Date
PROJECT IN LEASE-UP
Sorrento Gateway - Lot 3	Sorrento Mesa	Office	4Q 2006	4Q 2007	4Q 2008	55,500	$	21.5	$	15.1	0	%
PROJECTS UNDER CONSTRUCTION:
Kilroy Sabre Springs - Phase III	I-15 Corridor	Office	3Q 2006	1Q 2008	1Q 2009	142,726		65.5		43.0	0	%
ICC - 15004 Innovation Drive	I-15 Corridor	Office	3Q 2006	3Q 2008	3Q 2008	146,156		51.6		42.8	100	%
Sorrento Gateway-Lot 1	Sorrento Mesa	Office	4Q 2007	4Q 2008	4Q 2009	50,925		22.4		6.9	0	%
Subtotal						339,807		139.5		92.7	43	%
TOTAL IN-PROCESS AND COMMITTED PROJECTS						395,307	$	161.0	$	107.8	37	%

REDEVELOPMENT PROJECTS:		Pre and Post Redevelopment Type	Estimated Construction Period		Est. Stabilization Date (1)	Rentable Square Feet	Existing Investment (4)		Estimated Redevelopment Costs		Total Estimated Investment (2)		Total Costs as of 12/31/2007(2)(3)		% Leased
Project	Location		Start Date	Compl. Date
PROJECTS IN LEASE-UP:
Kilroy Airport Center - 2240 E. Imperial Highway	El Segundo	Lab to Office	2Q 2006	3Q 2007	3Q 2008	107,041	$	5.0	$	15.5	$	20.5	$	18.0	77	%
Sabre Springs Corporate Center	I-15 Corridor	Office	1Q 2007	4Q 2007	4Q 2008	103,900		24.7		10.3		35.0		29.8	19	%
TOTAL IN-PROCESS AND COMMITTED PROJECTS						210,941	$	29.7	$	25.8	$	55.5	$	47.8	49	%

(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 December 31, 2007. Includes existing investment at the commencement of redevelopment. See footnote (4) below.

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

21

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Future Development Pipeline

($ in millions)

Project	Location	Type	Gross Site Acreage	Estimated Rentable Square Feet	Total Costs as of 12/31/2007 (1)
SAN DIEGO, CALIFORNIA:
Carlsbad Oaks - Lots 4, 5, 7 & 8	Carlsbad	Office	32.0	288,000	$	17.2
Pacific Corporate Center - Lot 8	Sorrento Mesa	Office	5.0	170,000		10.8
Rancho Bernardo Corporate Center	I-15 Corridor	Office	21.0	320,000 -1,000,000		26.2
San Diego Corporate Center	Del Mar	Office	23.0	500,000		88.6
Santa Fe Summit - Phase II and III	56 Corridor	Office	21.8	600,000		64.3
Sorrento Gateway - Lot 2	Sorrento Mesa	Office	6.3	80,000		10.5
Sorrento Gateway - Lot 7	Sorrento Mesa	Office	7.6	57,000		9.4
TOTAL FUTURE DEVELOPMENT PIPELINE			116.7	2,015,000 - 2,695,000	$	227.0

(1) Represents cash paid and costs incurred as of December 31, 2007.

22

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Capital Structure

At December 31, 2007

($ in thousands)

	Shares/Units At December 31, 2007	Aggregate Principal Amount or $ Value Equivalent		% of Total Market Capitalization
DEBT:
Secured Debt		$	395,912	12.3	%
Exchangeable Senior Notes (1)			460,000	14.2	%
Unsecured Senior Notes			144,000	4.5	%
Unsecured Line of Credit			111,000	3.4	%
Total Debt		$	1,110,912	34.4	%
EQUITY:
7.450% Series A Cumulative Redeemable Preferred Units (2)	1,500,000	$	75,000	2.3	%
7.800% Series E Cumulative Redeemable Preferred Stock (3)	1,610,000		40,250	1.2	%
7.500% Series F Cumulative Redeemable Preferred Stock (3)	3,450,000		86,250	2.7	%
Common Units Outstanding (4)	2,189,325		120,325	3.7	%
Common Shares Outstanding (4)	32,765,893		1,800,813	55.7	%
Total Equity		$	2,122,638	65.6	%
TOTAL MARKET CAPITALIZATION		$	3,233,550	100.0	%

(1) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $3.9 million at December 31, 2007.

(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 $54.96 on December 31, 2007.

23

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Debt Analysis

At December 31, 2007

($ in millions)

TOTAL DEBT COMPOSITION

	% of		Weighted Average
	Total Debt		Interest Rate		Maturity
Secured vs. Unsecured Debt:
Secured Debt	35.6	%	5.9	%	3.1
Unsecured Debt	64.4	%	4.2	%	4.1
Floating vs. Fixed Rate Debt:
Fixed Rate Debt	86.8	%	4.7	%	4.0
Floating Rate Debt	13.2	%	5.9	%	2.3
Total Debt			4.8	%	3.8
Total Debt Including Loan Fees			5.2	%

UNSECURED LINE OF CREDIT

Total Line	Outstanding Balance	Expiration Date
$550.0	$111.0	April 2010

CAPITALIZED INTEREST & LOAN FEES

Quarter-to-Date	Year-to-Date
$3.6	$18.1

24

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Debt Analysis

At December 31, 2007

($ in thousands)

DEBT MATURITY SCHEDULE
Floating/ Fixed Rate	Effective Rate		Maturity Date		2008		2009		2010		2011		2012		After 2012		Total
Unsecured Debt:
Floating	5.96	%	4/26/2010	(1)						111,000							$	111,000
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
										172,000				460,000		83,000		715,000
Secured Debt:
Floating	5.93	%	4/26/2010							35,500								35,500
Fixed	3.80	%	8/1/2008			73,401												73,401
Fixed	7.20	%	4/1/2009			2,604		75,475										78,079
Fixed	6.70	%	12/27/2011			1,271		1,359		1,453		69,980						74,063
Fixed	5.57	%	8/1/2012			1,296		1,370		1,449		1,532		71,517				77,164
Fixed	4.95	%	8/1/2012			592		622		653		687		29,754				32,308
Fixed	8.13	%	11/1/2014			817		887		962		1,043		1,131		265		5,105
Fixed	7.15	%	5/1/2017			1,567		1,683		1,807		1,941		2,084		11,210		20,292
						81,548		81,396		41,824		75,183		104,486		11,475		395,912
Total	4.83	%			$	81,548	$	81,396	$	213,824	$	75,183	$	564,486	$	94,475	$	1,110,912

(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 $3.9 million at December 31, 2007.

25

Kilroy Realty Corporation

Fourth 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 January 28, 2008, 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.

26

Kilroy Realty Corporation

Fourth 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.

27

Kilroy Realty Corporation

Fourth 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 December 31,						Year Ended December 31,
	2007			2006			2007			2006
Same Store Cash Net Operating Income	$	41,109		$	44,030		$	170,760		$	168,925
Adjustment:
GAAP Straight Line Rental Income		1,126			1,326			4,485			8,199
Other Non-Cash GAAP Adjustments, net		2,408			727			4,285			2,322
Same Store GAAP Net Operating Income		44,643			46,083			179,530			179,446
Adjustment:
Non-Same Store GAAP Net Operating Income		8,833			1,964			19,566			19,405
Net Operating Income including discontinued operations		53,476			48,047			199,096			198,851
Adjustment:
Net Operating Income, as defined, from discontinued operations		(1,302	)		(1,734	)		(5,524	)		(17,486	)
Net Operating Income, as defined (1)		52,174			46,313			193,572			181,365
Adjustments:
Other Expenses:
General and administrative expenses		(9,353	)		(7,478	)		(36,580	)		(22,800	)
Interest expense		(10,765	)		(10,050	)		(37,502	)		(43,541	)
Depreciation and amortization		(20,259	)		(17,292	)		(72,815	)		(68,830	)
Other Income and Expense:
Interest and other investment income		311			812			1,606			1,653
Net settlement receipts on interest rate swaps					244						991
Loss on derivative instruments					(238	)					(818	)
Income from Continuing Operations		12,108			12,311			48,281			48,020
Minority interests		(1,921	)		(1,968	)		(7,717	)		(8,102	)
Income from discontinued operations		57,827			1,243			73,258			41,946
Preferred dividends		(2,402	)		(2,402	)		(9,608	)		(9,608	)
Net Income Available for Common Stockholders	$	65,612		$	9,184		$	104,214		$	72,256

(1) Please refer to page 26 for Management Statements on Net Operating Income and Same Store Net Operating Income.

28

Kilroy Realty Corporation

Fourth Quarter 2007 Supplemental Financial Report

Reconciliation of EBITDA to Net Income Available to Common Stockholders

(unaudited, $ in thousands)

	Three Months Ended December 31,
	2007			2006
Net Income Available for Common Stockholders	$	65,612		$	9,184
Preferred dividends		2,402			2,402
Adjustments for Continuing Operations:
Interest expense		10,765			10,050
Depreciation and amortization		20,259			17,292
Distributions on Cumulative Redeemable Preferred units		1,397			1,397
Minority interest in earnings of Operating Partnership		524			571
Adjustments for Discontinued Operations:
Depreciation and amortization		536			547
Net gain on disposition of discontinued operations		(61,031	)		—
Minority interest in earnings of Operating Partnership		3,970			(56	)
EBITDA Before Minority Interests (1)	$	44,434		$	41,387

(1) Please refer to page 27 for a Management Statement on EBITDA before minority interests.

29

Kilroy Realty Corporation

Fourth 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 December 31,						Year Ended December 31,
	2007			2006			2007			2006
Funds Available for Distribution (1)	$	23,310		$	21,575		$	94,648		$	94,348
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		6,805			6,985			25,350			18,829
Depreciation for furniture, fixtures and equipment		197			227			839			866
Accrued preferred dividends		2,402			2,402			9,608			9,608
Distributions on Cumulative Redeemable Preferred units		1,397			1,397			5,588			5,588
Provision for uncollectible tenant receivables		483			118			173			520
Contractual cash rents received in advance of revenue recognition		(254	)		(107	)		(564	)		(485	)
Net settlement receipts on interest rate swaps					(244	)					(991	)
Net gain on termination of profit participation agreement								(4,848	)
Changes in assets and liabilities (2)(3)		(3,555	)		(2,832	)		16,214			(66,750	)
Other adjustments, net		271			13			787			37
GAAP Net Cash Provided by Operating Activities	$	31,056		$	29,534		$	147,795		$	61,570

(1) Please refer to page 27 for a Management Statement on Funds Available for Distribution.

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

(3) Amount for the nine months ended December 31, 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.

30

EX-99.2

Exhibit 99.2

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

and Chief Financial Officer

(310) 481-8483

or

Tyler H. Rose

Senior Vice President

and Treasurer

(310) 481-8484

KILROY REALTY CORPORATION REPORTS

FOURTH QUARTER FINANCIAL RESULTS

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

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

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

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

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

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

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

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

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

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

2

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

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

###

3

KILROY REALTY CORPORATION

SUMMARY QUARTERLY RESULTS

(unaudited, in thousands, except per share data)

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

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

(1) Net income after minority interests.

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

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

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

4

KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

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

5

KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

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

6

KILROY REALTY CORPORATION FUNDS FROM OPERATIONS

(unaudited, in thousands, except per share data)

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

(1) Management believes that Funds From Operations (“FFO”) is a useful supplemental measure of the Company’s operating performance. The Company computes FFO in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). The White Paper defines FFO as net income or loss computed in accordance with generally accepted accounting principles (“GAAP”), excluding extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable operating property, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships and joint ventures. Other real estate investment trusts (“REITs”) may use different methodologies for calculating FFO and, accordingly, the Company’s FFO may not be comparable to other REITs.

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

However, FFO should not be viewed as an alternative measure of the Company’s operating performance since it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties, which are significant economic costs that could materially impact the Company’s results of operations.

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

7