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 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 July 28, 2008, Kilroy Realty Corporation issued a press release announcing its earnings for the quarter ended June 30, 2008 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 2008 Supplemental Financial Report.

99.2 Press Release dated July 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: July 28, 2008
	By:	/s/ Heidi R. Roth
		Heidi R. Roth
		Senior Vice President and Controller

EXHIBIT INDEX

Exhibit Number		Description
99.1	*	Second Quarter 2008 Supplemental Financial Report.
99.2	*	Press Release dated July 28, 2008.

* Filed herewith.

EX-99.1

Exhibit 99.1

Second Quarter 2008 Supplemental Financial Report

Some of the enclosed information presented in this supplemental and on the Company’s July 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, 2007. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplemental information and on the Company’s July 29, 2008 conference call might not occur.

Kilroy Realty Corporation

Second Quarter 2008 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 Fifteen Tenants	18
Development
In-Process and Committed Development and Redevelopment Projects	19
Future Development Pipeline	20
Debt and Capitalization Data
Capital Structure	21
Debt Analysis	22-23
Non-GAAP Supplemental Measures	24-28

Kilroy Realty Corporation

Second Quarter 2008 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 June 30, 2008, 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 92.8% 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
Scott S. Ingraham		John T. Fucci	Sr. VP Asset Management	Web: www.kilroyrealty.com
John B. Kilroy, Jr.		Tyler H. Rose	Sr. VP and Treasurer	E-mail: investorrelations@kilroyrealty.com
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	(646) 855-1794	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	(440) 715-2647
Deutsche Bank Securities, Inc.		Robert W. Baird & Company
Lou Taylor	(212) 250-4912	David Aubuchon	(314) 863-4235
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

Second Quarter 2008 Supplemental Financial Report

Financial Highlights

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

	Three Months Ended
	6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007
INCOME ITEMS (Including Discontinued Operations):
Revenues	$	69,828		$	70,802		$	72,155		$	67,921		$	64,630
Lease Termination Fees		92			202			245			265			1,908
Net Operating Income (1)		49,508			52,985			53,476			49,645			47,853
Capitalized Interest and Loan Costs		4,582			4,498			3,635			4,581			5,094
Net Income Available for Common Stockholders		5,581			9,864			65,612			9,028			13,090
EBITDA (1)(2)		40,505			43,906			44,434			41,231			38,764
Funds From Operations (1)(3)(4)		27,061			30,199			29,672			28,212			26,674
Funds Available for Distribution (1)(3)(4)		24,906			25,747			23,310			18,309			29,563
Net Income per common share – diluted	$	0.17		$	0.30		$	2.01		$	0.28		$	0.40
Funds From Operations per common share – diluted	$	0.78		$	0.87		$	0.85		$	0.81		$	0.77
Dividends per share	$	0.580		$	0.580		$	0.555		$	0.555		$	0.555
RATIOS (Including Discontinued Operations):
Operating Margins		70.9	%		74.8	%		74.1	%		73.1	%		74.0	%
Interest Coverage Ratio (5)		4.3x			4.5x			4.1x			4.6x			4.8x
Fixed Charge Coverage Ratio (6)		3.1x			3.2x			3.1x			3.2x			3.3x
FFO Payout Ratio (7)		74.7	%		67.1	%		65.4	%		68.8	%		72.7	%
FAD Payout Ratio (8)		81.2	%		78.7	%		83.2	%		106.0	%		65.6	%
	6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007
ASSETS:
Real Estate Held for Investment before Depreciation		2,429,759		$	2,406,272		$	2,368,556		$	2,292,918		$	2,247,047
Total Assets		2,087,725			2,085,909			2,068,720			1,963,750			1,927,685
CAPITALIZATION:
Total Debt (9)	$	1,155,511		$	1,135,983		$	1,110,912		$	1,054,283		$	1,022,617
Total Preferred Equity (9)		201,500			201,500			201,500			201,500			201,500
Total Common Equity (9)		1,638,558			1,714,978			1,921,138			2,119,335			2,476,227
Total Market Capitalization (9)		2,995,569			3,052,461			3,233,550			3,375,118			3,700,344
Total Debt / Total Market Capitalization		38.6	%		37.2	%		34.4	%		31.2	%		27.6	%
Total Debt and Preferred / Total Market Capitalization		45.3	%		43.8	%		40.6	%		37.2	%		33.1	%

(1) Please refer to pages 24 and 25 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 27 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 21.

2

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Common Stock Data (NYSE: KRC)

	Three Months Ended
	6/30/2008		3/31/2008		12/31/2007		9/30/2007		6/30/2007
High Price	$	55.54	$	53.64	$	68.29	$	73.20	$	76.92
Low Price	$	46.52	$	44.81	$	52.66	$	56.79	$	69.48
Closing Price	$	47.03	$	49.11	$	54.96	$	60.63	$	70.84
Dividends per share – annualized	$	2.32	$	2.32	$	2.22	$	2.22	$	2.22
Closing common shares (in 000’s) (1) (2)		32,652		32,732		32,766		32,707		32,707
Closing partnership units (in 000’s) (1)		2,188		2,189		2,189		2,248		2,248
		34,840		34,921		34,955		34,955		34,955

(1) As of the end of the period.

(2) During the three months ended June 30, 2008, the Company repurchased 79,818 shares of its common stock in open market transactions for an aggregate price of approximately $4.0 million, or $49.61 per share. During the three months ended March 31, 2008, the Company repurchased 159,657 shares of its common stock in open market transactions for an aggregate price of approximately $7.6 million, or $47.54 per share.

3

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Consolidated Balance Sheets

(unaudited, $ in thousands)

	6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007
ASSETS:
Land and improvements	$	324,779		$	324,779		$	324,779		$	312,057		$	293,059
Buildings and improvements		1,739,874			1,733,794			1,719,700			1,730,833			1,500,777
Undeveloped land and construction in progress		365,106			347,699			324,077			250,028			453,211
Total real estate held for investment		2,429,759			2,406,272			2,368,556			2,292,918			2,247,047
Accumulated depreciation and amortization		(497,697	)		(480,642	)		(463,932	)		(488,050	)		(472,302	)
Total real estate assets, net		1,932,062			1,925,630			1,904,624			1,804,868			1,774,745
Cash and cash equivalents		4,367			4,881			11,732			3,655			11,134
Restricted cash		756			11			546			1,362			619
Marketable securities		2,406			2,238			707			455
Current receivables, net		3,843			4,724			4,891			4,231			4,715
Deferred rent receivables, net		66,554			68,423			67,283			66,073			62,515
Notes receivable		10,904			10,938			10,970			11,002			11,034
Deferred leasing costs and acquisition-related intangibles, net		52,282			53,335			54,418			56,629			46,381
Deferred financing costs, net		7,341			7,946			8,492			9,144			9,702
Prepaid expenses and other assets, net		7,210			7,783			5,057			6,331			6,840
TOTAL ASSETS	$	2,087,725		$	2,085,909		$	2,068,720		$	1,963,750		$	1,927,685
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Liabilities:
Secured debt	$	392,511		$	394,983		$	395,912		$	398,283		$	400,617
Exchangeable senior notes, net		456,550			456,320			456,090			455,860			455,630
Unsecured senior notes		144,000			144,000			144,000			144,000			144,000
Unsecured line of credit		159,000			137,000			111,000			52,000			18,000
Accounts payable, accrued expenses and other liabilities		44,893			49,295			58,249			67,356			61,497
Accrued distributions		21,422			21,464			20,610			20,610			20,610
Deferred revenue and acquisition-related liabilities		75,421			72,573			59,187			56,638			52,026
Rents received in advance and tenant security deposits		20,386			20,699			18,433			17,862			17,521
Total liabilities		1,314,183			1,296,334			1,263,481			1,212,609			1,169,901
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		36,608			37,563			38,309			35,968			36,398
Total minority interests		110,246			111,201			111,947			109,606			110,036
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			328			327			327
Additional paid-in capital		651,386			653,101			658,894			654,569			651,659
Distributions in excess of earnings		(109,999	)		(96,636	)		(87,512	)		(134,943	)		(125,820	)
Total stockholders’ equity		663,296			678,374			693,292			641,535			647,748
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,087,725		$	2,085,909		$	2,068,720		$	1,963,750		$	1,927,685

4

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Consolidated Statements of Operations

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

	Three Months Ended June 30,								Six Months Ended June 30,
	2008			2007			% Change		2008			2007			% Change
REVENUES:
Rental income	$	61,486		$	54,518		12.8	%	$	123,791		$	108,951		13.6	%
Tenant reimbursements		7,686			5,712		34.6	%		15,879			11,610		36.8	%
Other property income		457			1,950		(76.6	%)		761			3,053		(75.1	%)
Total revenues		69,629			62,180		12.0	%		140,431			123,614		13.6	%
EXPENSES:
Property expenses		11,873			10,604		12.0	%		23,361			20,570		13.6	%
Real estate taxes		4,843			4,668		3.7	%		10,322			9,220		12.0	%
Provision for bad debts		3,204			(26	)	12,423.1	%		3,659			(199	)	1,938.7	%
Ground leases		400			389		2.8	%		795			792		0.4	%
General and administrative expenses		9,187			9,460		(2.9	%)		18,423			18,508		(0.5	%)
Interest expense		9,448			8,072		17.0	%		19,161			17,728		8.1	%
Depreciation and amortization		21,536			17,378		23.9	%		41,402			34,223		21.0	%
Total expenses		60,491			50,545		19.7	%		117,123			100,842		16.1	%
OTHER INCOME:
Interest and other investment income		184			371		(50.4	%)		341			990		(65.6	%)
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS		9,322			12,006		(22.4	%)		23,649			23,762		(0.5	%)
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		(348	)		(531	)	(34.5	%)		(1,012	)		(1,044	)	(3.1	%)
Total minority interests		(1,745	)		(1,928	)	(9.5	%)		(3,806	)		(3,838	)	(0.8	%)
INCOME FROM CONTINUING OPERATIONS		7,577			10,078		(24.8	%)		19,843			19,924		(0.4	%)
DISCONTINUED OPERATIONS:
Revenues from discontinued operations		199			2,450		(91.9	%)		199			5,095		(96.1	%)
Expenses from discontinued operations					(1,509	)	(100.0	%)					(3,112	)	(100.0	%)
Net gain on dispositions of discontinued operations		234			4,848		(95.2	%)		234			13,474		(98.3	%)
Minority interest in earnings of Operating Partnership attributable to discontinued operations		(27	)		(375	)	(92.8	%)		(27	)		(1,005	)	(97.3	%)
Total income from discontinued operations		406			5,414		(92.5	%)		406			14,452		(97.2	%)
NET INCOME		7,983			15,492		(48.5	%)		20,249			34,376		(41.1	%)
PREFERRED DIVIDENDS		(2,402	)		(2,402	)	0.0	%		(4,804	)		(4,804	)	0.0	%
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS	$	5,581		$	13,090		(57.4	%)	$	15,445		$	29,572		(47.8	%)
Weighted average shares outstanding - basic		32,351			32,371		0.1	%		32,404			32,360		0.1	%
Weighted average shares outstanding - diluted		32,510			32,486		0.1	%		32,532			32,486		0.1	%
NET INCOME PER COMMON SHARE:
Net income per common share - basic	$	0.17		$	0.40		(57.5	%)	$	0.48		$	0.91		(47.3	%)
Net income per common share - diluted	$	0.17		$	0.40		(57.5	%)	$	0.48		$	0.91		(47.3	%)

5

Kilroy Realty Corporation

Second Quarter 2008 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,
	2008			2007			% Change		2008			2007			% Change
FUNDS FROM OPERATIONS: (1)
Net income available for common stockholders	$	5,581		$	13,090		(57.4	%)	$	15,445		$	29,572		(47.8	%)
Adjustments:
Minority interest in earnings of Operating Partnership		375			906		(58.6	%)		1,039			2,049		(49.3	%)
Depreciation and amortization of real estate assets		21,339			17,526		21.8	%		41,010			34,551		18.7	%
Net gain on dispositions of discontinued operations (7)		(234	)		(4,848	)	(95.2	%)		(234	)		(13,474	)	(98.3	%)
Funds From Operations (2)	$	27,061		$	26,674		1.5	%	$	57,260		$	52,698		8.7	%
Weighted average common shares/units outstanding - basic		34,540			34,619		(0.2	%)		34,593			34,609		0.0	%
Weighted average common shares/units outstanding - diluted		34,699			34,734		(0.1	%)		34,721			34,735		0.0	%
FFO per common share/unit - basic	$	0.78		$	0.77		1.7	%	$	1.66		$	1.52		8.7	%
FFO per common share/unit - diluted	$	0.78		$	0.77		1.6	%	$	1.65		$	1.52		8.7	%
FUNDS AVAILABLE FOR DISTRIBUTION: (1)
Funds From Operations	$	27,061		$	26,674		1.5	%	$	57,260		$	52,698		8.7	%
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		(6,294	)		(4,912	)	28.1	%		(11,647	)		(9,176	)	26.9	%
Amortization of deferred revenue related to tenant improvements (3)		(1,950	)		(812	)	140.1	%		(3,782	)		(1,453	)	160.3	%
Net effect of straight-line rents (4)		1,845			(331	)	657.4	%		681			(1,402	)	148.6	%
Amortization of above/below market rents (5)		(163	)		(375	)	(56.5	%)		(335	)		(691	)	(51.5	%)
Contractual cash rents received in advance of revenue recognition (6)		100			27		270.4	%		108			43		151.2	%
Net gain on termination of profit participation agreements (7)					4,848		(100.0	%)					4,848		(100.0	%)
Amortization of deferred financing costs and debt discount		568			531		7.0	%		1,139			773		47.3	%
Non-cash amortization of share-based compensation awards		3,739			3,913		(4.4	%)		7,229			7,387		(2.1	%)
Funds Available for Distribution (2)	$	24,906		$	29,563		(15.8	%)	$	50,653		$	53,027		(4.5	%)

(1) See page 25 for Management Statements on Funds From Operations and Funds Available for Distribution.

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

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

(4) 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 and the provision for bad debts recorded for deferred rent receivable balances.

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

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

(7) 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.

6

Kilroy Realty Corporation

Second Quarter 2008 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,
	2008			2007			% Change		2008			2007			% Change
Total Same Store Portfolio
Number of properties		124			124					124			124
Square Feet		11,180,987			11,180,987					11,180,987			11,180,987
Percent of Stabilized Portfolio		93.4	%		95.5	%				93.4	%		95.5	%
Average Occupancy		92.4	%		93.1	%				93.3	%		93.8	%
Operating Revenues:
Rental income	$	54,755		$	54,397		0.7	%	$	110,434		$	108,720		1.6	%
Tenant reimbursements		6,547			5,740		14.1	%		13,245			11,595		14.2	%
Other property income		453			1,950		(76.8	%)		756			3,053		(75.2	%)
Total operating revenues	$	61,755			62,087		(0.5	%)		124,435			123,368		0.9	%
Operating Expenses:
Property expenses		11,488			10,525		9.1	%		22,582			20,505		10.1	%
Real estate taxes		4,391			4,661		(5.8	%)		9,068			9,205		(1.5	%)
Provision for bad debts		3,204			(26	)	12,423.1	%		3,659			(199	)	1,938.7	%
Ground leases		399			388		2.8	%		792			790		0.3	%
Total operating expenses		19,482			15,548		25.3	%		36,101			30,301		19.1	%
GAAP Net Operating Income	$	42,273		$	46,539		(9.2	%)	$	88,334		$	93,067		(5.1	%)
Same Store Analysis (Cash Basis) (2)
	Three Months Ended June 30,								Six Months Ended June 30,
	2008			2007			% Change		2008			2007			% Change
Total operating revenues		59,651			60,653		(1.7	%)		120,172			119,458		0.6	%
Total operating expenses		16,277			15,572		4.5	%		32,442			30,500		6.4	%
Cash Net Operating Income	$	43,374		$	45,081		(3.8	%)	$	87,730		$	88,958		(1.4	%)

(1) Same store defined as all stabilized properties owned at January 1, 2007 and still owned and in the stabilized portfolio at June 30, 2008.

(2) Please refer to page 26 for a reconciliation of Same Store Cash and GAAP Net Operating Income to Net Income Available to Common Stockholders.

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Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	# of Buildings	Portfolio Breakdown				Total Square Feet	Occupancy at: (1)
		NOI (2)		Sq. Ft.			6/30/2008		3/31/2008		12/31/2007
STABILIZED PORTFOLIO:
OCCUPANCY BY PRODUCT TYPE:
Office:
Los Angeles	24	26.6	%	24.2	%	2,899,075	96.0	%	96.3	%	96.1	%
Orange County	5	1.8	%	2.3	%	277,340	72.0	%	92.4	%	99.1	%
San Diego	52	55.5	%	38.2	%	4,565,824	93.8	%	93.7	%	91.4	%
Other	5	2.3	%	2.9	%	346,439	93.8	%	99.6	%	99.6	%
Subtotal	86	86.2	%	67.6	%	8,088,678	93.8	%	94.8	%	93.7	%
Industrial:
Los Angeles	1	1.4	%	1.6	%	192,053	100.0	%	100.0	%	100.0	%
Orange County	42	12.4	%	30.8	%	3,684,068	90.3	%	94.6	%	94.4	%
Subtotal	43	13.8	%	32.4	%	3,876,121	90.7	%	94.8	%	94.7	%
OCCUPANCY BY REGION:
Los Angeles	25	28.0	%	25.8	%	3,091,128	96.2	%	96.5	%	96.4	%
Orange County	47	14.2	%	33.1	%	3,961,408	89.0	%	94.4	%	94.8	%
San Diego	52	55.5	%	38.2	%	4,565,824	93.8	%	93.7	%	91.4	%
Other	5	2.3	%	2.9	%	346,439	93.8	%	99.6	%	99.6	%
TOTAL STABILIZED PORTFOLIO	129	100.0	%	100.0	%	11,964,799	92.8	%	94.8	%	94.0	%

AVERAGE OCCUPANCY - STABILIZED PORTFOLIO
	Office		Industrial		Total
Quarter-to-Date	94.0	%	90.8	%	92.9	%
Year-to-Date	94.2	%	92.7	%	93.7	%

(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 2008 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	85.4	%
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	98.3	%
909 Sepulveda Blvd.	El Segundo	1	241,607	90.0	%
999 Sepulveda Blvd.	El Segundo	1	127,901	97.2	%
Kilroy Airport Center, Long Beach	Long Beach	7	949,065	94.6	%
12200 W. Olympic Blvd.	Los Angeles	1	150,302	95.7	%
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	98.2	%
501 Santa Monica Blvd.	Santa Monica	1	73,115	94.7	%
Total Los Angeles Office		24	2,899,075	96.0	%
Orange County, California
4175 E. La Palma Avenue	Anaheim	1	43,263	90.7	%
8101 Kaiser Blvd.	Anaheim	1	59,790	100.0	%
Kilroy Center-Brea	Brea	2	106,791	49.1	%
111 Pacifica	Irvine Spectrum	1	67,496	71.3	%
Total Orange County Office		5	277,340	72.0	%

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Kilroy Realty Corporation

Second Quarter 2008 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	%
6200 / 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	%
15435 / 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	86.4	%
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 (1)	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	100.0	%
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	93.8	%
Other
5151/5155 Camino Ruiz	Carmarillo, CA	4	265,372	92.5	%
2829 Townsgate Road	Thousand Oaks, CA	1	81,067	98.2	%
Total Other Office		5	346,439	93.8	%
Total Office		86	8,088,678	93.8	%

(1) In March 2008, Newgen Results Corporation (“Newgen”) attempted to surrender this property to the Company and ceased paying rent. Newgen signed the original lease for the property in 2000 and was subsequently acquired by Teletech Holdings, Inc. (“Teletech”). The Company refused to accept a surrender of the premises and has initiated legal action against Teletech and Newgen for past due rent and future rent as it becomes due and owing. The lease has not been legally terminated.

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Kilroy Realty Corporation

Second Quarter 2008 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	0.0	%
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	97.8	%
Brea Industrial-Lambert Road	Brea	2	178,811	79.3	%
1675 MacArthur	Costa Mesa	1	50,842	100.0	%
25202 Towne Center Drive	Foothill Ranch	1	309,685	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	98.2	%
17150 Von Karman	Irvine	1	157,458	0.0	%
2055 S.E. Main Street	Irvine	1	47,583	100.0	%
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	3,684,068	90.3	%
Total Industrial		43	3,876,121	90.7	%

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Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Leasing Activity

Quarter-to-Date

	1st & 2nd Generation				2nd Generation
							Maintenance Capex Per Sq.Ft. (3)								Weighted Average Lease Term (Mo.)
	# of Leases (1)		Square Feet (1)		TI/LC Per Sq.Ft. (2)				Changes in Rents (4)		Changes in Cash Rents (5)		Retention Rates (6)
	New	Renewal	New	Renewal
Office	7	4	32,643	43,431	$	15.12	$	0.16	21.3	%	4.2	%	29.1	%	53
Industrial	0	4	0	362,777		5.79		0.18	16.5	%	(8.8	%)	98.6	%	57
Total	7	8	32,643	406,208	$	7.32	$	0.17	17.8	%	(4.5	%)	78.8	%	56

Year-to-Date

	1st & 2nd Generation				2nd Generation
							Maintenance Capex Per Sq.Ft. (3)
	# of Leases (1)		Square Feet (1)		TI/LC Per Sq.Ft. (2)						Changes in Cash Rents (5)		Retention Rates (6)		Weighted Average Lease Term (Mo.)
	New	Renewal	New	Renewal					Changes in Rents (4)
Office	14	14	139,485	85,321	$	24.03	$	0.29	48.7	%	29.9	%	41.4	%	62
Industrial	3	7	164,727	425,187		5.14		0.19	20.7	%	(3.3	%)	72.0	%	57
Total	17	21	304,212	510,508	$	10.10	$	0.26	33.7	%	11.5	%	64.1	%	58

(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 or subtenants at lease expiration.

12

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures

($ in thousands)

Recurring Capital Expenditures:
	Q1 2008		Q2 2008		YTD 2008
Capital Improvements
Office	$	1,063	$	1,321	$	2,384
Industrial		48		705		753
		1,111		2,026		3,137
Tenant Improvements & Leasing Commissions (1)
Office		3,812		3,322		7,134
Industrial		430		946		1,376
		4,242		4,268		8,510
Total
Office		4,875		4,643		9,518
Industrial		478		1,651		2,129
	$	5,353	$	6,294	$	11,647

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

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Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Lease Expiration Summary Schedule ⁽¹⁾

($ in thousands)

Year of Expiration	# of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annual Base Rent (2)		Annual Rent per Sq. Ft.(2)
OFFICE:
Remaining 2008	28	462,597	6.2	%	$	13,537	$	29.26
2009	66	693,545	9.2	%		17,756		25.60
2010	73	1,317,642	17.6	%		32,129		24.38
2011	49	507,180	6.8	%		10,431		20.57
2012	39	529,481	7.1	%		14,738		27.83
2013	33	526,575	7.0	%		12,965		24.62
2014	21	765,423	10.2	%		19,794		25.86
2015	14	442,323	5.9	%		13,015		29.42
2016	10	436,822	5.8	%		12,032		27.54
2017	12	1,086,215	14.5	%		29,678		27.32
2018 and beyond	20	739,866	9.7	%		31,954		43.19
Subtotal	365	7,507,669	100.0	%	$	208,029	$	27.71
INDUSTRIAL:
Remaining 2008	2	63,424	1.8	%	$	725	$	11.43
2009	14	786,203	22.8	%		5,268		6.70
2010	15	413,485	12.0	%		3,250		7.86
2011	12	345,634	10.0	%		3,217		9.31
2012	10	591,672	17.1	%		4,112		6.95
2013	3	295,369	8.6	%		2,181		7.38
2014	2	94,477	2.7	%		861		9.11
2015	5	547,028	15.8	%		3,586		6.56
2016	2	233,278	6.8	%		3,274		14.03
2017	—	—	—			—		—
2018 and beyond	1	82,602	2.4	%		643		7.78
Subtotal	66	3,453,172	100.0	%	$	27,117	$	7.85
TOTAL PORTFOLIO:
Remaining 2008	30	526,021	4.8	%	$	14,262	$	27.11
2009	80	1,479,748	13.5	%		23,024		15.56
2010	88	1,731,127	15.8	%		35,379		20.44
2011	61	852,814	7.8	%		13,648		16.00
2012	49	1,121,153	10.2	%		18,850		16.81
2013	36	821,944	7.5	%		15,146		18.43
2014	23	859,900	7.8	%		20,655		24.02
2015	19	989,351	9.0	%		16,601		16.78
2016	12	670,100	6.1	%		15,306		22.84
2017	12	1,086,215	9.9	%		29,678		27.32
2018 and beyond	21	822,468	7.6	%		32,597		39.63
Total	431	10,960,841	100.0	%	$	235,146	$	21.45

(1) The information presented reflects leasing activity through the date of this filing. For leases that have been renewed early or space that has been released to a new tenant, the expiration date and annual base rent information presented takes into consideration the renewed or released lease terms. Excludes space leased under month-to-month leases and vacant space at June 30, 2008.

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

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Second Quarter 2008 Supplemental Financial Report

Lease Expiration Schedule Detail by Region ⁽¹⁾

($ in thousands)

	Los Angeles County								Orange County
Year of Expiration	# of Expiring Leases	Total Square Feet	% of Total Regional Sq. Ft.		Annual Base Rent (2)		Annual Rent per Sq. Ft. (2)		# of Expiring Leases	Total Square Feet	% of Total Regional Sq. Ft.		Annual Base Rent (2)		Annual Rent per Sq. Ft. (2)
OFFICE:
Remaining 2008	14	124,337	4.6	%	$	3,436	$	27.63	4	11,946	6.1	%	$	221	$	18.50
2009	38	346,865	12.8	%		9,799		28.25	16	114,289	58.5	%		2,829		24.75
2010	49	849,874	31.3	%		20,034		23.57	6	14,699	7.5	%		362		24.63
2011	36	218,580	8.0	%		6,314		28.89	4	14,767	7.6	%		351		23.77
2012	24	171,929	6.3	%		4,648		27.03	6	38,572	19.7	%		971		25.17
2013	27	261,482	9.6	%		6,783		25.94	—	—	—			—		—
2014	12	325,824	12.0	%		9,735		29.88	1	1,115	0.6	%		24		21.52
2015	7	153,899	5.7	%		4,553		29.58	—	—	—			—		—
2016	5	61,992	2.3	%		2,238		36.10	—	—	—			—		—
2017	3	27,801	1.0	%		928		33.38	—	—	—			—		—
2018 and beyond	3	173,075	6.4	%		6,417		37.08	—	—	—			—		—
Subtotal	218	2,715,658	100.0	%	$	74,885	$	27.58	37	195,388	100.0	%	$	4,758	$	24.35
INDUSTRIAL:
Remaining 2008	—	—	—			—		—	2	63,424	1.9	%	$	725	$	11.43
2009	—	—	—			—		—	14	786,203	24.1	%		5,268		6.70
2010	—	—	—			—		—	15	413,485	12.7	%		3,250		7.86
2011	—	—	—			—		—	12	345,634	10.6	%		3,217		9.31
2012	—	—	—			—		—	10	591,672	18.1	%		4,112		6.95
2013	—	—	—			—		—	3	295,369	9.1	%		2,181		7.38
2014	—	—	—			—		—	2	94,477	2.9	%		861		9.11
2015	—	—	—			—		—	5	547,028	16.8	%		3,586		6.56
2016	1	192,053	100.0	%		2,960		15.41	1	41,225	1.3	%		314		7.62
2017	—	—	—			—		—	—	—	—			—		—
2018 and beyond	—	—	—			—		—	1	82,602	2.5	%		643		7.78
Subtotal	1	192,053	100.0	%	$	2,960	$	15.41	65	3,261,119	100.0	%	$	24,157	$	7.41
TOTAL PORTFOLIO:
Remaining 2008	14	124,337	4.3	%	$	3,436	$	27.63	6	75,370	2.2	%	$	946	$	12.55
2009	38	346,865	11.9	%		9,799		28.25	30	900,492	26.1	%		8,097		8.99
2010	49	849,874	29.2	%		20,034		23.57	21	428,184	12.4	%		3,612		8.44
2011	36	218,580	7.5	%		6,314		28.89	16	360,401	10.4	%		3,568		9.90
2012	24	171,929	5.9	%		4,648		27.03	16	630,244	18.2	%		5,083		8.07
2013	27	261,482	9.0	%		6,783		25.94	3	295,369	8.5	%		2,181		7.38
2014	12	325,824	11.2	%		9,735		29.88	3	95,592	2.8	%		885		9.26
2015	7	153,899	5.3	%		4,553		29.58	5	547,028	15.8	%		3,586		6.56
2016	6	254,045	8.7	%		5,198		20.46	1	41,225	1.2	%		314		7.62
2017	3	27,801	1.0	%		928		33.38	—	—	—			—		—
2018 and beyond	3	173,075	6.0	%		6,417		37.08	1	82,602	2.4	%		643		7.78
Total	219	2,907,711	100.0	%	$	77,845	$	26.77	102	3,456,507	100.0	%	$	28,915	$	8.37

(1) The information presented reflects leasing activity through the date of this filing. For leases that have been renewed early or space that has been released to a new tenant, the expiration date and annual base rent information presented takes into consideration the renewed or released lease terms. Excludes space leased under month-to-month leases and vacant space at June 30, 2008.

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

15

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Lease Expiration Schedule Detail by Region ⁽¹⁾

($ in thousands)

	San Diego County								Other
Year of Expiration	# of Expiring Leases	Total Square Feet	% of Total Regional Sq. Ft.		Annual Base Rent (2)		Annual Rent per Sq. Ft. (2)		# of Expiring Leases	Total Square Feet	% of Total Regional Sq. Ft.		Annual Base Rent (2)		Annual Rent per Sq. Ft. (2)
OFFICE:
Remaining 2008	10	326,314	7.6	%	$	9,880	$	30.28	—	—	—			—		—
2009	6	217,872	5.1	%		4,676		21.46	6	14,519	4.5	%		452		31.13
2010	13	381,154	8.9	%		10,066		26.41	5	71,915	22.1	%		1,667		23.18
2011	3	65,759	1.5	%		1,359		20.67	6	208,074	64.0	%		2,407		11.57
2012	8	313,430	7.3	%		8,925		28.48	1	5,550	1.7	%		194		34.95
2013	6	265,093	6.2	%		6,182		23.32	—	—	—			—		—
2014	7	431,725	10.1	%		9,798		22.70	1	6,759	2.1	%		237		35.06
2015	5	270,213	6.3	%		7,906		29.26	2	18,211	5.6	%		556		30.53
2016	5	374,830	8.8	%		9,794		26.13	—	—	—			—		—
2017	9	1,058,414	24.8	%		28,750		27.16	—	—	—			—		—
2018 and beyond	17	566,791	13.4	%		25,537		45.06	—	—	—			—		—
Subtotal	89	4,271,595	100.0	%	$	122,873	$	28.77	21	325,028	100.0	%	$	5,513	$	16.96
INDUSTRIAL:
Remaining 2008	—	—	—			—		—	—	—	—			—		—
2009	—	—	—			—		—	—	—	—			—		—
2010	—	—	—			—		—	—	—	—			—		—
2011	—	—	—			—		—	—	—	—			—		—
2012	—	—	—			—		—	—	—	—			—		—
2013	—	—	—			—		—	—	—	—			—		—
2014	—	—	—			—		—	—	—	—			—		—
2015	—	—	—			—		—	—	—	—			—		—
2016	—	—	—			—		—	—	—	—			—		—
2017	—	—	—			—		—	—	—	—			—		—
2018 and beyond	—	—	—			—		—	—	—	—			—		—
Subtotal	—	—	—			—		—	—	—	—			—		—
TOTAL PORTFOLIO:
Remaining 2008	10	326,314	7.6	%	$	9,880	$	30.28	—	—	—			—		—
2009	6	217,872	5.1	%		4,676		21.46	6	14,519	4.5	%		452		31.13
2010	13	381,154	8.9	%		10,066		26.41	5	71,915	22.1	%		1,667		23.18
2011	3	65,759	1.5	%		1,359		20.67	6	208,074	64.0	%		2,407		11.57
2012	8	313,430	7.3	%		8,925		28.48	1	5,550	1.7	%		194		34.95
2013	6	265,093	6.2	%		6,182		23.32	—	—	—			—		—
2014	7	431,725	10.1	%		9,798		22.70	1	6,759	2.1	%		237		35.06
2015	5	270,213	6.3	%		7,906		29.26	2	18,211	5.6	%		556		30.53
2016	5	374,830	8.8	%		9,794		26.13	—	—	—			—		—
2017	9	1,058,414	24.8	%		28,750		27.16	—	—	—			—		—
2018 and beyond	17	566,791	13.4	%		25,537		45.06	—	—	—			—		—
Total	89	4,271,595	100.0	%	$	122,873	$	28.77	21	325,028	100.0	%	$	5,513	$	16.96

(1) The information presented reflects leasing activity through the date of this filing. For leases that have been renewed early or space that has been released to a new tenant, the expiration date and annual base rent information presented takes into consideration the renewed or released lease terms. Excludes space leased under month-to-month leases and vacant space at June 30, 2008.

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

16

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Quarterly Lease Expirations for 2008 ⁽¹⁾

($ in thousands)

	# of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annual Base Rent (2)		Annual Rent per Sq. Ft. (2)
OFFICE:
Q3 2008	19	441,076	5.9	%	$	12,890	$	29.22
Q4 2008	9	21,521	0.3	%		647		30.06
Subtotal 2008	28	462,597	6.2	%	$	13,537	$	29.26
INDUSTRIAL:
Q3 2008	—	—	—			—		—
Q4 2008	2	63,424	1.8	%	$	725	$	11.43
Subtotal 2008	2	63,424	1.8	%	$	725	$	11.43
TOTAL PORTFOLIO:
Q3 2008	19	441,076	4.0	%	$	12,890	$	29.22
Q4 2008	11	84,945	0.8	%		1,372		16.15
Total 2008	30	526,021	4.8	%	$	14,262	$	27.11

(1) The information presented reflects leasing activity through the date of this filing. For leases that have been renewed early or space that has been released to a new tenant, the expiration date and annual base rent information presented takes into consideration the renewed or released lease terms. Excludes space leased under month-to-month leases and vacant space at June 30, 2008.

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

17

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Top Fifteen Tenants

($ in thousands)

Tenant Name	Product Type	Annualized Base Rental Revenues (1)		Rentable Square Feet	Percentage of Total Annualized Base Rental Revenues (1)		Percentage of Total Rentable Square Feet
Intuit Inc. (2)	Office	$	17,374	627,050	7.1	%	5.2	%
Cardinal Health, Inc.	Office		9,256	411,000	3.8	%	3.4	%
AMN Healthcare	Office		8,341	175,672	3.4	%	1.5	%
DIRECTV Group, Inc. (3)	Office		8,037	289,752	3.3	%	2.4	%
The Boeing Company	Office		6,593	464,840	2.7	%	3.9	%
Fish & Richardson	Office		6,071	139,538	2.5	%	1.2	%
Favrille, Inc. (4)	Office		5,588	128,580	2.3	%	1.1	%
Epson America, Inc.	Office		5,538	162,852	2.3	%	1.4	%
Scripps Health (5)	Office		5,199	112,067	2.1	%	0.9	%
Accredited Home Lenders, Inc.	Office		5,164	181,955	2.1	%	1.5	%
Verenium Corporation	Office		5,158	136,908	2.1	%	1.1	%
Hewlett-Packard Company	Office		4,348	117,948	1.8	%	1.0	%
Fair Isaac Corporation	Office		4,006	129,752	1.6	%	1.1	%
Avnet, Inc.	Office		3,768	114,780	1.5	%	1.0	%
Epicor Software Corporation	Office		3,509	172,778	1.4	%	1.4	%
Total Top Fifteen Tenants		$	97,950	3,365,472	40.0	%	28.1	%

(1) Based upon annualized contractual base rental revenue, which is calculated on a straight-line basis in accordance with GAAP, for leases for which rental revenue is being recognized by the Company as of June 30, 2008.

(2) In July 2008, the Company executed agreements with Intuit, Inc. to early terminate one of its leases and extend another lease by one year. The Company estimates that annualized base rental revenues from Intuit, Inc. will decrease by approximately $2.2 million as a result of these agreements.

(3) In July 2008, the Company executed a lease amendment with DIRECTV Group, Inc. for an additional 24,500 rentable square feet at 2240 E. Imperial Highway in El Segundo, CA. This lease will increase the Company’s annualized base rental revenue from DIRECTV Group, Inc. by approximately $0.5 million and is expected to commence in the fourth quarter of 2008.

(4) As of June 30, 2008, Favrille, Inc. leased an aggregate of 128,580 rentable square feet in two buildings in Sorrento Mesa, CA. In July 2008, the Company entered into an early lease termination agreement with Favrille, Inc. under which the lease will terminate on August 31, 2008.

(5) Scripps Health has preleased an additional office building encompassing approximately 146,200 rentable square feet that the Company is developing at 15004 Innovation Drive in San Diego, CA. The tenant is expected to begin occupying the building in the third quarter of 2008.

18

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

In-Process and Committed Development and Redevelopment Projects

($ in millions)

					Est. Stabilization Date (1)	Rentable Square Feet	Total Estimated Investment (2)		Total Costs as of 6/30/2008 (2)(3)		% Leased
DEVELOPMENT PROJECTS:			Estimated Construction Period
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	$	22.0	$	15.7	0	%
PROJECTS UNDER CONSTRUCTION:
Kilroy Sabre Springs - Phase III	I-15 Corridor	Office	3Q 2006	3Q 2008	3Q 2008	147,533		65.5		51.6	100	%
ICC - 15004 Innovation Drive	I-15 Corridor	Office	3Q 2006	3Q 2008	3Q 2008	146,156		50.0		47.3	100	%
Sorrento Gateway - Lot 1	Sorrento Mesa	Medical Office	4Q 2007	4Q 2008	4Q 2009	50,925		22.5		12.1	0	%
Subtotal						344,614		138.0		111.0
TOTAL IN-PROCESS AND COMMITTED PROJECTS						400,114	$	160.0	$	126.7	73	%

		Pre and Post Redevelopment Type	Estimated		Est. Stabilization Date (1)	Rentable Square Feet	Existing Investment (4)		Estimated Redevelopment Costs		Total Estimated Investment (2)		Total Costs as of 6/30/2008 (2)(3)		% Leased
REDEVELOPMENT PROJECTS:			Construction Period
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	$	16.7	$	21.7	$	18.9	100	%
Sabre Springs Corporate Center	I-15 Corridor	Office	1Q 2007	4Q 2007	4Q 2008	103,900		24.7		10.4		35.1		30.7	19	%
TOTAL IN-PROCESS AND COMMITTED PROJECTS						210,941	$	29.7	$	27.1	$	56.8	$	49.6	60	%

(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, 2008. 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.

19

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Future Development Pipeline

($ in millions)

Project	Location	Type	Gross Site Acreage	Estimated Rentable Square Feet	Total Costs as of 6/30/2008 (1)
SAN DIEGO, CALIFORNIA:
Carlsbad Oaks - Lots 4, 5, 7 & 8	Carlsbad	Office	32.0	288,000	$	17.8
Pacific Corporate Center - Lot 8	Sorrento Mesa	Office	5.0	170,000		11.3
Rancho Bernardo Corporate Center	I-15 Corridor	Office	21.0	320,000 -1,000,000		27.2
San Diego Corporate Center	Del Mar	Office	23.0	500,000		91.3
Santa Fe Summit - Phase II and III	56 Corridor	Office	21.8	600,000		66.8
Sorrento Gateway - Lot 2	Sorrento Mesa	Office	6.3	80,000		10.9
Sorrento Gateway - Lot 7	Sorrento Mesa	Office	7.6	57,000		9.8
TOTAL FUTURE DEVELOPMENT PIPELINE			116.7	2,015,000 -2,695,000	$	235.1

(1) Represents cash paid and costs incurred as of June 30, 2008.

20

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Capital Structure

At June 30, 2008

($ in thousands)

	Shares/Units At June 30, 2008	Aggregate Principal Amount or $ Value Equivalent		% of Total Market Capitalization
DEBT:
Secured Debt		$	392,511	13.1	%
Exchangeable Senior Notes (1)			460,000	15.4	%
Unsecured Senior Notes			144,000	4.8	%
Unsecured Line of Credit			159,000	5.3	%
Total Debt		$	1,155,511	38.6	%
EQUITY:
7.450% Series A Cumulative Redeemable Preferred Units (2)	1,500,000	$	75,000	2.5	%
7.800% Series E Cumulative Redeemable Preferred Stock (3)	1,610,000		40,250	1.3	%
7.500% Series F Cumulative Redeemable Preferred Stock (3)	3,450,000		86,250	2.9	%
Common Units Outstanding (4)	2,188,340		102,918	3.4	%
Common Shares Outstanding (4)	32,652,346		1,535,640	51.3	%
Total Equity		$	1,840,058	61.4	%
TOTAL MARKET CAPITALIZATION		$	2,995,569	100.0	%

(1) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $3.4 million at June 30, 2008.

(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 $47.03 on June 30, 2008.

21

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Debt Analysis

At June 30, 2008

($ in millions)

TOTAL DEBT COMPOSITION

	% of		Weighted Average
	Total Debt		Interest Rate		Maturity
Secured vs. Unsecured Debt:
Secured Debt	34.0	%	5.6	%	2.7
Unsecured Debt	66.0	%	3.8	%	3.5
Floating vs. Fixed Rate Debt:
Fixed Rate Debt	83.2	%	4.6	%	3.5
Floating Rate Debt	16.8	%	3.4	%	1.8
Total Debt			4.4	%	3.2
Total Debt Including Loan Fees			4.8	%

UNSECURED LINE OF CREDIT

Total Line	Outstanding Balance	Expiration Date
$550.0	$159.0	April 2010

CAPITALIZED INTEREST & LOAN FEES

Quarter-to-Date	Year-to-Date
$4.6	$9.1

22

Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Debt Analysis

At June 30, 2008

($ in thousands)

DEBT MATURITY SCHEDULE
Floating/ Fixed Rate	Effective Rate		Maturity Date		Remaining 2008		2009		2010		2011		2012		After 2012		Total
Unsecured Debt:
Floating	3.48	%	4/26/2010	(1)						159,000							$	159,000
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
										220,000				460,000		83,000		763,000
Secured Debt:
Floating	3.26	%	4/26/2010							35,500								35,500
Fixed	3.80	%	8/1/2008			72,552												72,552
Fixed	7.20	%	4/1/2009			1,326		75,475										76,801
Fixed	6.70	%	12/27/2011			646		1,359		1,453		69,980						73,438
Fixed	5.57	%	8/1/2012			657		1,370		1,449		1,532		71,517				76,525
Fixed	4.95	%	8/1/2012			299		622		653		687		29,754				32,015
Fixed	8.13	%	11/1/2014			472		1,004		1,088		812						3,376
Fixed	7.15	%	5/1/2017			798		1,683		1,807		1,941		2,084		11,210		19,523
Fixed	Various	(3)	Various	(3)				39		41		43		45		2,613		2,781
						76,750		81,552		41,991		74,995		103,400		13,823		392,511
Total	4.45	%			$	76,750	$	81,552	$	261,991	$	74,995	$	563,400	$	96,823	$	1,155,511

(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 $3.4 million at June 30, 2008.

(3) Represents balance outstanding related to public facility bonds (the “Bonds”) issued in February 2008 by the City of Carlsbad. The Bonds have annual maturities beginning on September 1, 2009 through September 1, 2038, with interest rates ranging from 4.00% to 6.19%. This amount is reported in the Company’s secured debt balance on the balance sheet since the Company’s obligation for the Bonds is fixed and determinable.

23

Kilroy Realty Corporation

Second Quarter 2008 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 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, 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.

24

Kilroy Realty Corporation

Second Quarter 2008 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:

The Company calculates FFO in accordance with the White Paper on FFO approved by the Board of Governors of NAREIT. The White Paper defines FFO as net income or loss calculated 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.

Management believes that FFO is a useful supplemental measure of the Company’s operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, the Company’s FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting to be insufficient by themselves. Because FFO excludes depreciation and amortization of real estate assets, Management believes that FFO along with the required GAAP presentations provides a more complete measurement of the Company’s performance relative to its competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide.

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 and could materially impact the Company’s results from 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 compensation awards, contractual cash rents received in advance of revenue recognition, and net gains on terminations of profit participation agreements, then subtracting tenant improvements, leasing commissions and recurring capital expenditures, significant non-cash gains, 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.

25

Kilroy Realty Corporation

Second Quarter 2008 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,
	2008			2007			2008			2007
Same Store Cash Net Operating Income	$	43,374		$	45,081		$	87,730		$	88,958
Adjustment:
GAAP Operating Revenues Adjustments, net		2,104			1,434			4,263			3,910
GAAP Operating Expenses Adjustments, net		(3,205	)		24			(3,659	)		199
Same Store GAAP Net Operating Income		42,273			46,539			88,334			93,067
Adjustment:
Non-Same Store GAAP Net Operating Income		7,235			1,314			14,159			2,906
Net Operating Income including discontinued operations		49,508			47,853			102,493			95,973
Adjustment:
Net Operating Income, as defined, from discontinued operations		(199	)		(1,308	)		(199	)		(2,742	)
Net Operating Income, as defined (1)		49,309			46,545			102,294			93,231
Adjustments:
Other Expenses:
General and administrative expenses		(9,187	)		(9,460	)		(18,423	)		(18,508	)
Interest expense		(9,448	)		(8,072	)		(19,161	)		(17,728	)
Depreciation and amortization		(21,536	)		(17,378	)		(41,402	)		(34,223	)
Other Income:
Interest and other investment income		184			371			341			990
Income from Continuing Operations before Minority Interests		9,322			12,006			23,649			23,762
Minority interests		(1,745	)		(1,928	)		(3,806	)		(3,838	)
Income from discontinued operations		406			5,414			406			14,452
Preferred dividends		(2,402	)		(2,402	)		(4,804	)		(4,804	)
Net Income Available for Common Stockholders	$	5,581		$	13,090		$	15,445		$	29,572

(1) Please refer to page 24 for Management Statements on Net Operating Income and Same Store Net Operating Income.

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Kilroy Realty Corporation

Second Quarter 2008 Supplemental Financial Report

Reconciliation of EBITDA to Net Income Available to Common Stockholders

(unaudited, $ in thousands)

	Three Months Ended June 30,
	2008			2007
Net Income Available for Common Stockholders	$	5,581		$	13,090
Preferred dividends		2,402			2,402
Adjustments for Continuing Operations:
Interest expense		9,448			8,072
Depreciation and amortization		21,536			17,378
Distributions on Cumulative Redeemable Preferred units		1,397			1,397
Minority interest in earnings of Operating Partnership		348			531
Adjustments for Discontinued Operations:
Depreciation and amortization		—			367
Net gain on disposition of discontinued operations		(234	)		(4,848	)
Minority interest in earnings of Operating Partnership		27			375
EBITDA Before Minority Interests (1)	$	40,505		$	38,764

(1) Please refer to page 25 for a Management Statement on EBITDA before minority interests.

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Kilroy Realty Corporation

Second Quarter 2008 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, 2008						Six Months Ended June 30, 2008
	2008			2007			2008			2007
Funds Available for Distribution (1)	$	24,906		$	29,563		$	50,653		$	53,027
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		6,294			4,912			11,647			9,176
Depreciation for furniture, fixtures and equipment		197			220			392			431
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		3			(27	)		283			(199	)
Net gain on termination of profit participation agreement		—			(4,848	)		—			(4,848	)
Changes in assets and liabilities (2)		(2,198	)		6,037			(6,310	)		8,996
Other adjustments, net		(391	)		299			(143	)		436
GAAP Net Cash Provided by Operating Activities	$	32,610		$	39,955		$	64,120		$	74,617

(1) Please refer to page 25 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; prepaid expenses and other assets; accounts payable, accrued expenses and other liabilities; rents received in advance and tenant security deposits; and deferred revenue.

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EX-99.2

Exhibit 99.2

Contact:	FOR RELEASE:
Richard E. Moran Jr.	July 28, 2008
Executive Vice President 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 28, 2008 – Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its second quarter ended June 30, 2008 with net income available for common stockholders of $5.6 million, or $0.17 per share, compared to $13.1 million, or $0.40 per share, in the second quarter of 2007. Net income for the second quarter of 2007 included $4.8 million related to gains from property dispositions. Revenues from continuing operations in the second quarter of 2008 totaled $69.6 million, up from $62.2 million in the prior year’s second quarter. Funds from operations (FFO) for the period totaled $27.1 million, or $0.78 per share, compared to $26.7 million, or $0.77 per share, in the year-earlier period.

For the first six months of 2008, KRC reported net income available to common stockholders of $15.4 million, or $0.48 per share, compared to $29.6 million, or $0.91 per share, in the first half of 2007. Net income for the six months ended June 30, 2007 included $13.5 million related to gains from property dispositions. Revenues from continuing operations in the six-month period totaled $140.4 million, up from $123.6 million in the same period of 2007. FFO in the first half of 2008 totaled $57.3 million, or $1.65 per share, compared to $52.7 million, or $1.52 per share, in first half of 2007.

Included in the results for the six months ended June 30, 2008 is an increase in the company’s provision for bad debts of approximately $3.1 million, or $0.09 per share, related to the company’s lease with Favrille, Inc. (“Favrille”). In the second quarter, Favrille notified the company that it will cease its business operations and of its intent to not pay any future rental payments under its lease beyond June 2008. In July 2008, the company and Favrille entered into an agreement to terminate the lease effective August 31, 2008 and the company drew $3.6 million under a letter of credit that was held as credit support under the terms of the lease. The company also held a $0.3 million cash security deposit related to the lease.

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

“KRC made solid leasing progress during the quarter although the commercial real estate markets continue to be impacted by persistent economic uncertainty,” said John B. Kilroy, Jr., the company’s president and chief executive officer. “With the remainder of 2008 likely to bring more of the same, we remain diligently focused on leasing, delivering our under-construction properties, and preserving our strong financial position.”

KRC is currently developing four new office buildings located in high-growth submarkets of San Diego County. The four properties encompass approximately 400,000 square feet of rentable space and represent a total estimated investment of approximately $160 million, of which $127 million has been spent to date. They are 73% leased.

The company also has two redevelopment projects underway totaling just under 211,000 square feet of space. These two projects represent a total estimated incremental investment of approximately $27 million, of which $20 million has been spent to date. They are 60% leased or committed.

Updated earnings guidance for 2008 will be discussed by KRC management during the company’s July 29, 2008 earnings 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

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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 888-713-4209, reservation #81042415. A replay of the conference call will be available via phone through August 12, 2008 at 888-286-8010, reservation #85680246, 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 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 over 60 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of Los Angeles, Orange and

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San Diego counties. Kilroy Realty currently has an in-process development and redevelopment pipeline of approximately 600,000 square feet. At June 30, 2008, 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.

###

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KILROY REALTY CORPORATION

SUMMARY QUARTERLY RESULTS

(unaudited, in thousands, except per share data)

	Three Months Ended June 30, 2008		Three Months Ended June 30, 2007		Six Months Ended June 30, 2008			Six Months Ended June 30, 2007
Revenues from continuing operations	$	69,629	$	62,180	$	140,431		$	123,614
Revenues including discontinued operations	$	69,828	$	64,630	$	140,630		$	128,709
Net income available for common stockholders (1)	$	5,581	$	13,090	$	15,445		$	29,572
Weighted average common shares outstanding - basic		32,351		32,371		32,404			32,360
Weighted average common shares outstanding - diluted		32,510		32,486		32,532			32,486
Net income per share of common stock - basic	$	0.17	$	0.40	$	0.48		$	0.91
Net income per share of common stock - diluted	$	0.17	$	0.40	$	0.48		$	0.91
Funds From Operations (2), (3)	$	27,061	$	26,674	$	57,260		$	52,698
Weighted average common shares/units outstanding - basic (4)		34,540		34,619		34,593			34,609
Weighted average common shares/units outstanding - diluted (4)		34,699		34,734		34,721			34,735
Funds From Operations per common share/unit - basic (4)	$	0.78	$	0.77	$	1.66		$	1.52
Funds From Operations per common share/unit - diluted (4)	$	0.78	$	0.77	$	1.65		$	1.52
Common shares outstanding at end of period						32,652			32,707
Common partnership units outstanding at end of period						2,188			2,248
Total common shares and units outstanding at end of period						34,840			34,955
					June 30, 2008			June 30, 2007
Stabilized portfolio occupancy rates:
Office						93.8	%		93.6	%
Industrial						90.7	%		91.0	%
Weighted average total						92.8	%		92.7	%
Los Angeles						96.2	%		94.2	%
Orange County						89.0	%		91.0	%
San Diego						93.8	%		93.9	%
Other						93.8	%		90.5	%
Weighted average total						92.8	%		92.7	%
Total square feet of stabilized properties owned at end of period:
Office						8,089			7,835
Industrial						3,876			3,870
Total						11,965			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.

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KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30, 2008			December 31, 2007
	(unaudited)
ASSETS
REAL ESTATE ASSETS:
Land and improvements	$	324,779		$	324,779
Buildings and improvements		1,739,874			1,719,700
Undeveloped land and construction in progress		365,106			324,077
Total real estate held for investment		2,429,759			2,368,556
Accumulated depreciation and amortization		(497,697	)		(463,932	)
Total real estate assets, net		1,932,062			1,904,624
Cash and cash equivalents		4,367			11,732
Restricted cash		756			546
Marketable securities		2,406			707
Current receivables, net		3,843			4,891
Deferred rent receivables, net		66,554			67,283
Notes receivable		10,904			10,970
Deferred leasing costs and acquisition-related intangibles, net		52,282			54,418
Deferred financing costs, net		7,341			8,492
Prepaid expenses and other assets, net		7,210			5,057
TOTAL ASSETS	$	2,087,725		$	2,068,720
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES:
Secured debt	$	392,511		$	395,912
Exchangeable senior notes, net		456,550			456,090
Unsecured senior notes		144,000			144,000
Unsecured line of credit		159,000			111,000
Accounts payable, accrued expenses and other liabilities		44,893			58,249
Accrued distributions		21,422			20,610
Deferred revenue and acquisition-related liabilities		75,421			59,187
Rents received in advance and tenant security deposits		20,386			18,433
Total liabilities		1,314,183			1,263,481
MINORITY INTERESTS:
7.45% Series A Cumulative Redeemable Preferred units of the Operating Partnership		73,638			73,638
Common units of the Operating Partnership		36,608			38,309
Total minority interests		110,246			111,947
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			328
Additional paid-in capital		651,386			658,894
Distributions in excess of earnings		(109,999	)		(87,512	)
Total stockholders’ equity		663,296			693,292
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	2,087,725		$	2,068,720

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KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended June 30, 2008			Three Months Ended June 30, 2007			Six Months Ended June 30, 2008			Six Months Ended June 30, 2007
REVENUES:
Rental income	$	61,486		$	54,518		$	123,791		$	108,951
Tenant reimbursements		7,686			5,712			15,879			11,610
Other property income		457			1,950			761			3,053
Total revenues		69,629			62,180			140,431			123,614
EXPENSES:
Property expenses		11,873			10,604			23,361			20,570
Real estate taxes		4,843			4,668			10,322			9,220
Provision for bad debts		3,204			(26	)		3,659			(199	)
Ground leases		400			389			795			792
General and administrative expenses		9,187			9,460			18,423			18,508
Interest expense		9,448			8,072			19,161			17,728
Depreciation and amortization		21,536			17,378			41,402			34,223
Total expenses		60,491			50,545			117,123			100,842
OTHER INCOME:
Interest and other investment income		184			371			341			990
Income from continuing operations before minority interests		9,322			12,006			23,649			23,762
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		(348	)		(531	)		(1,012	)		(1,044	)
Total minority interests		(1,745	)		(1,928	)		(3,806	)		(3,838	)
Income from continuing operations		7,577			10,078			19,843			19,924
Discontinued operations:
Revenues from discontinued operations		199			2,450			199			5,095
Expenses from discontinued operations					(1,509	)					(3,112	)
Net gain on dispositions of discontinued operations		234			4,848			234			13,474
Minority interest in earnings of Operating Partnership attributable to discontinued operations		(27	)		(375	)		(27	)		(1,005	)
Total income from discontinued operations		406			5,414			406			14,452
Net income		7,983			15,492			20,249			34,376
Preferred dividends		(2,402	)		(2,402	)		(4,804	)		(4,804	)
Net income available for common stockholders	$	5,581		$	13,090		$	15,445		$	29,572
Weighted average shares outstanding - basic		32,351			32,371			32,404			32,360
Weighted average shares outstanding - diluted		32,510			32,486			32,532			32,486
Net income per common share - basic	$	0.17		$	0.40		$	0.48		$	0.91
Net income per common share - diluted	$	0.17		$	0.40		$	0.48		$	0.91

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KILROY REALTY CORPORATION FUNDS FROM OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended June 30, 2008			Three Months Ended June 30, 2007			Six Months Ended June 30, 2008			Six Months Ended June 30, 2007
Net income available for common stockholders	$	5,581		$	13,090		$	15,445		$	29,572
Adjustments:
Minority interest in earnings of Operating Partnership		375			906			1,039			2,049
Depreciation and amortization of real estate assets		21,339			17,526			41,010			34,551
Net gain on dispositions of discontinued operations		(234	)		(4,848	)		(234	)		(13,474	)
Funds From Operations (1), (2)	$	27,061		$	26,674		$	57,260		$	52,698
Weighted average common shares/units outstanding - basic		34,540			34,619			34,593			34,609
Weighted average common shares/units outstanding - diluted		34,699			34,734			34,721			34,735
Funds From Operations per common share/unit - basic	$	0.78		$	0.77		$	1.66		$	1.52
Funds From Operations per common share/unit - diluted	$	0.78		$	0.77		$	1.65		$	1.52

(1) The Company calculates FFO in accordance with the White Paper on FFO approved by the Board of Governors of NAREIT. The White Paper defines FFO as net income or loss calculated 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.

Management believes that FFO is a useful supplemental measure of the Company's operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, the Company's FFO may not be comparable to all other REITs.

Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting to be insufficient by themselves. Because FFO excludes depreciation and amortization of real estate assets, Management believes that FFO along with the required GAAP presentations provides a more complete measurement of the Company's performance relative to its competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide.

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 and could materially impact the Company's results from operations.

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

8