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): October 27, 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 October 27, 2008, Kilroy Realty Corporation issued a press release announcing its earnings for the quarter ended September 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 Third Quarter 2008 Supplemental Financial Report.

99.2 Press Release dated October 27, 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: October 27, 2008
	By:	/s/ Heidi R. Roth
		Heidi R. Roth
		Senior Vice President and Controller

EXHIBIT INDEX

Exhibit Number		Description
99.1	*	Third Quarter 2008 Supplemental Financial Report.
99.2	*	Press Release dated October 27, 2008.

* Filed herewith.

EX-99.1

Exhibit 99.1

Third Quarter 2008 Supplemental Financial Report

Some of the enclosed information presented in this supplemental and on the Company’s October 28, 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 October 28, 2008 conference call might not occur.

Kilroy Realty Corporation

Third 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
Stabilized Development	19
In-Process and Committed Development and Redevelopment Projects	20
Future Development Pipeline	21
Debt and Capitalization Data
Capital Structure	22
Debt Analysis	23-24
Non-GAAP Supplemental Measures	25-29

Kilroy Realty Corporation

Third 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 September 30, 2008, the Company’s stabilized portfolio consisted of 88 office buildings and 43 industrial buildings, which encompassed an aggregate of 8.3 million and 3.9 million rentable square feet, respectively, and was 90.7% occupied.

Board of Directors		Senior Management		Investor Relations
John B. Kilroy, Sr.	Chairman	John B. Kilroy, Jr.	President and CEO	12200 W. Olympic Blvd., Suite 200
Edward F. Brennan, Ph.D.		Jeffrey C. Hawken	Executive VP and COO	Los Angeles, CA 90064
William P. Dickey		Richard E. Moran Jr.	Executive VP and CFO	(310) 481-8400
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	(443) 224-1307

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

Third Quarter 2008 Supplemental Financial Report

Financial Highlights

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

	Three Months Ended
	9/30/2008			6/30/2008			3/31/2008			12/31/2007			9/30/2007
INCOME ITEMS (Including Discontinued Operations):
Revenues	$	77,100		$	69,828		$	70,802		$	72,155		$	67,921
Lease Termination Fees		5,033			92			202			245			265
Net Operating Income (1)		58,009			49,508			52,985			53,476			49,645
Capitalized Interest and Loan Costs		4,185			4,582			4,498			3,635			4,581
Net Income Available for Common Stockholders		13,176			5,581			9,864			65,612			9,028
EBITDA (1)(2)		48,233			40,505			43,906			44,434			41,231
Funds From Operations (1)(3)(4)		34,510			27,061			30,199			29,672			28,212
Funds Available for Distribution (1)(3)(4)		28,527			24,906			25,747			23,310			18,309
Net Income per common share – diluted	$	0.40		$	0.17		$	0.30		$	2.01		$	0.28
Funds From Operations per common share – diluted	$	1.00		$	0.78		$	0.87		$	0.85		$	0.81
Dividends per share	$	0.580		$	0.580		$	0.580		$	0.555		$	0.555
RATIOS (Including Discontinued Operations):
Operating Margins		75.2	%		70.9	%		74.8	%		74.1	%		73.1	%
Interest Coverage Ratio (5)		5.0x			4.3x			4.5x			4.1x			4.6x
Fixed Charge Coverage Ratio (6)		3.6x			3.1x			3.2x			3.1x			3.2x
FFO Payout Ratio (7)		58.6	%		74.7	%		67.1	%		65.4	%		68.8	%
FAD Payout Ratio (8)		70.8	%		81.2	%		78.7	%		83.2	%		106.0	%
	9/30/2008			6/30/2008			3/31/2008			12/31/2007			9/30/2007
ASSETS:
Real Estate Held for Investment before Depreciation	$	2,453,538		$	2,429,759		$	2,406,272		$	2,368,556		$	2,292,918
Total Assets		2,099,498			2,087,725			2,085,909			2,068,720			1,963,750
CAPITALIZATION:
Total Debt (9)	$	1,158,878		$	1,155,511		$	1,135,983		$	1,110,912		$	1,054,283
Total Preferred Equity (9)		201,500			201,500			201,500			201,500			201,500
Total Common Equity (9)		1,665,037			1,638,558			1,714,978			1,921,138			2,119,335
Total Market Capitalization (9)		3,025,415			2,995,569			3,052,461			3,233,550			3,375,118
Total Debt / Total Market Capitalization		38.2	%		38.6	%		37.2	%		34.4	%		31.2	%
Total Debt and Preferred / Total Market Capitalization		44.9	%		45.3	%		43.8	%		40.6	%		37.2	%

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

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

(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 22.

2

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Common Stock Data (NYSE: KRC)

	Three Months Ended
	9/30/2008		6/30/2008		3/31/2008		12/31/2007		9/30/2007
High Price	$	52.30	$	55.54	$	53.64	$	68.29	$	73.20
Low Price	$	42.37	$	46.52	$	44.81	$	52.66	$	56.79
Closing Price	$	47.79	$	47.03	$	49.11	$	54.96	$	60.63
Dividends per share - annualized	$	2.32	$	2.32	$	2.32	$	2.22	$	2.22
Closing common shares (in 000’s) (1) (2)		33,087		32,652		32,732		32,766		32,707
Closing partnership units (in 000’s) (1)		1,754		2,188		2,189		2,189		2,248
		34,841		34,840		34,921		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

Third Quarter 2008 Supplemental Financial Report

Consolidated Balance Sheets

(unaudited, $ in thousands)

	9/30/2008			6/30/2008			3/31/2008			12/31/2007			9/30/2007
ASSETS:
Land and improvements	$	334,634		$	324,779		$	324,779		$	324,779		$	312,057
Buildings and improvements		1,861,769			1,739,874			1,733,794			1,719,700			1,730,833
Undeveloped land and construction in progress		257,135			365,106			347,699			324,077			250,028
Total real estate held for investment		2,453,538			2,429,759			2,406,272			2,368,556			2,292,918
Accumulated depreciation and amortization		(514,712	)		(497,697	)		(480,642	)		(463,932	)		(488,050	)
Total real estate assets, net		1,938,826			1,932,062			1,925,630			1,904,624			1,804,868
Cash and cash equivalents		10,055			4,367			4,881			11,732			3,655
Restricted cash		1,503			756			11			546			1,362
Marketable securities		2,243			2,406			2,238			707			455
Current receivables, net		4,658			3,843			4,724			4,891			4,231
Deferred rent receivables, net		64,444			66,554			68,423			67,283			66,073
Notes receivable		10,870			10,904			10,938			10,970			11,002
Deferred leasing costs and acquisition-related intangibles, net		54,044			52,282			53,335			54,418			56,629
Deferred financing costs, net		6,731			7,341			7,946			8,492			9,144
Prepaid expenses and other assets, net		6,124			7,210			7,783			5,057			6,331
TOTAL ASSETS	$	2,099,498		$	2,087,725		$	2,085,909		$	2,068,720		$	1,963,750
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Liabilities:
Secured debt	$	317,878		$	392,511		$	394,983		$	395,912		$	398,283
Exchangeable senior notes, net		456,780			456,550			456,320			456,090			455,860
Unsecured senior notes		144,000			144,000			144,000			144,000			144,000
Unsecured line of credit		237,000			159,000			137,000			111,000			52,000
Accounts payable, accrued expenses and other liabilities		58,938			44,893			49,295			58,249			67,356
Accrued distributions		21,422			21,422			21,464			20,610			20,610
Deferred revenue and acquisition-related liabilities		75,012			75,421			72,573			59,187			56,638
Rents received in advance and tenant security deposits		18,785			20,386			20,699			18,433			17,862
Total liabilities		1,329,815			1,314,183			1,296,334			1,263,481			1,212,609
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		29,125			36,608			37,563			38,309			35,968
Total minority interests		102,763			110,246			111,201			111,947			109,606
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		331			327			327			328			327
Additional paid-in capital		661,019			651,386			653,101			658,894			654,569
Distributions in excess of earnings		(116,012	)		(109,999	)		(96,636	)		(87,512	)		(134,943	)
Total stockholders’ equity		666,920			663,296			678,374			693,292			641,535
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,099,498		$	2,087,725		$	2,085,909		$	2,068,720		$	1,963,750

4

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Consolidated Statements of Operations

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

	Three Months Ended September 30,								Nine Months Ended September 30,
	2008			2007			% Change		2008			2007			% Change
REVENUES:
Rental income	$	64,546		$	58,596		10.2	%	$	188,337		$	167,547		12.4	%
Tenant reimbursements		7,269			6,392		13.7	%		23,148			18,002		28.6	%
Other property income		5,285			129		3996.9	%		6,046			3,182		90.0	%
Total revenues		77,100			65,117		18.4	%		217,531			188,731		15.3	%
EXPENSES:
Property expenses		12,824			11,481		11.7	%		36,185			32,051		12.9	%
Real estate taxes		5,827			5,182		12.4	%		16,149			14,402		12.1	%
Provision for bad debts		9			(111	)	108.1	%		3,668			(310	)	1,283.2	%
Ground leases		431			398		8.3	%		1,226			1,190		3.0	%
General and administrative expenses		9,627			8,719		10.4	%		28,050			27,227		3.0	%
Interest expense		9,727			9,009		8.0	%		28,888			26,737		8.0	%
Depreciation and amortization		20,661			18,334		12.7	%		62,063			52,556		18.1	%
Total expenses		59,106			53,012		11.5	%		176,229			153,853		14.5	%
OTHER INCOME (LOSS):
Interest and other investment income (loss)		(149	)		305		(148.9	%)		192			1,295		(85.2	%)
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS		17,845			12,410		43.8	%		41,494			36,173		14.7	%
MINORITY INTERESTS:
Distributions on Cumulative Redeemable Preferred units		(1,397	)		(1,397	)	0.0	%		(4,191	)		(4,191	)	0.0	%
Minority interest in earnings of Operating Partnership attributable to continuing operations		(870	)		(557	)	56.2	%		(1,882	)		(1,601	)	17.6	%
Total minority interests		(2,267	)		(1,954	)	16.0	%		(6,073	)		(5,792	)	4.9	%
INCOME FROM CONTINUING OPERATIONS		15,578			10,456		49.0	%		35,421			30,381		16.6	%
DISCONTINUED OPERATIONS:
Revenues from discontinued operations		—			2,804		(100.0	%)		199			7,897		(97.5	%)
Expenses from discontinued operations		—			(1,763	)	(100.0	%)		—			(4,873	)	(100.0	%)
Net gain on dispositions of discontinued operations		—			—		0.0	%		234			13,474		(98.3	%)
Minority interest in earnings of Operating Partnership attributable to discontinued operations		—			(67	)	(100.0	%)		(27	)		(1,072	)	(97.5	%)
Total income from discontinued operations		—			974		(100.0	%)		406			15,426		(97.4	%)
NET INCOME		15,578			11,430		36.3	%		35,827			45,807		(21.8	%)
PREFERRED DIVIDENDS		(2,402	)		(2,402	)	0.0	%		(7,206	)		(7,206	)	0.0	%
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS	$	13,176		$	9,028		45.9	%	$	28,621		$	38,601		(25.9	%)
Weighted average shares outstanding - basic		32,339			32,373		(0.1	%)		32,382			32,364		0.1	%
Weighted average shares outstanding - diluted		32,535			32,502		0.1	%		32,533			32,491		0.1	%
NET INCOME PER COMMON SHARE:
Net income per common share - basic	$	0.41		$	0.28		46.4	%	$	0.88		$	1.19		(26.1	%)
Net income per common share - diluted	$	0.40		$	0.28		42.9	%	$	0.88		$	1.19		(26.1	%)

5

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Funds From Operations and Funds Available for Distribution

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

	Three Months Ended September 30,								Nine Months Ended September 30,
	2008			2007			% Change		2008			2007			% Change
FUNDS FROM OPERATIONS: (1)
Net income available for common stockholders	$	13,176		$	9,028		45.9	%	$	28,621		$	38,601		(25.9	%)
Adjustments:
Minority interest in earnings of Operating Partnership		870			624		39.4	%		1,909			2,673		(28.6	%)
Depreciation and amortization of real estate assets		20,464			18,560		10.3	%		61,474			53,111		15.7	%
Net gain on dispositions of discontinued operations (2)		—			—		0.0	%		(234	)		(13,474	)	(98.3	%)
Funds From Operations (3)	$	34,510		$	28,212		22.3	%	$	91,770		$	80,911		13.4	%
Weighted average common shares/units outstanding - basic		34,470			34,621		(0.4	%)		34,552			34,614		(0.2	%)
Weighted average common shares/units outstanding - diluted		34,666			34,749		(0.2	%)		34,703			34,740		(0.1	%)
FFO per common share/unit - basic	$	1.00		$	0.81		22.9	%	$	2.66		$	2.34		13.6	%
FFO per common share/unit - diluted	$	1.00		$	0.81		22.6	%	$	2.64		$	2.33		13.5	%
FUNDS AVAILABLE FOR DISTRIBUTION: (1)
Funds From Operations	$	34,510		$	28,212		22.3	%	$	91,770		$	80,911		13.4	%
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		(7,745	)		(9,369	)	(17.3	%)		(19,392	)		(18,545	)	4.6	%
Amortization of deferred revenue related to tenant improvements (4)		(5,125	)		(1,299	)	294.5	%		(8,907	)		(2,752	)	223.7	%
Net effect of straight-line rents (5)		1,899			(3,576	)	153.1	%		2,405			(4,978	)	148.3	%
Amortization of above/below market rents (6)		(149	)		(229	)	(34.9	%)		(484	)		(920	)	(47.4	%)
Contractual cash rents received in advance of revenue recognition (7)		397			267		48.7	%		680			310		119.4	%
Net gain on termination of profit participation agreements (2)		—			—		0.0	%		—			4,848		(100.0	%)
Amortization of deferred financing costs and debt discount		597			573		4.2	%		1,736			1,346		29.0	%
Non-cash amortization of share-based compensation awards		4,143			3,730		11.1	%		11,372			11,117		2.3	%
Funds Available for Distribution (3)	$	28,527		$	18,309		55.8	%	$	79,180		$	71,337		11.0	%

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

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

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

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

(5) Represents the straight-line rent income recognized during the period offset by cash received during the period that was applied to deferred rents receivable balances for terminated leases and the provision for bad debts recorded for deferred rent receivable balances.

(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.

6

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Same Store Analysis (1)
(unaudited, $ in thousands)
Same Store Analysis (GAAP Basis)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2008			2007			% Change		2008			2007			% Change
Total Same Store Portfolio
Number of properties		124			124					124			124
Square Feet		11,181,948			11,181,948					11,181,948			11,181,948
Percent of Stabilized Portfolio		91.5	%		89.5	%				91.5	%		89.5	%
Average Occupancy		91.4	%		92.3	%				92.6	%		93.3	%
Operating Revenues:
Rental income	$	56,391		$	53,708		5.0	%	$	166,825		$	162,428		2.7	%
Tenant reimbursements		6,237			5,869		6.3	%		19,482			17,465		11.5	%
Other property income		5,285			127		4,061.4	%		6,041			3,181		89.9	%
Total operating revenues		67,913			59,704		13.7	%		192,348			183,074		5.1	%
Operating Expenses:
Property expenses		12,287			11,276		9.0	%		34,868			31,780		9.7	%
Real estate taxes		4,727			4,666		1.3	%		13,795			13,871		(0.5	%)
Provision for bad debts		9			(111	)	108.1	%		3,668			(310	)	1,283.2	%
Ground leases		430			396		8.6	%		1,222			1,186		3.0	%
Total operating expenses		17,453			16,227		7.6	%		53,553			46,527		15.1	%
GAAP Net Operating Income	$	50,460		$	43,477		16.1	%	$	138,795		$	136,547		1.6	%
Same Store Analysis (Cash Basis) (2)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2008			2007			% Change		2008			2007			% Change
Total operating revenues	$	67,207		$	57,579		16.7	%	$	187,731		$	177,037		6.0	%
Total operating expenses		17,444			16,338		6.8	%		49,885			46,837		6.5	%
Cash Net Operating Income	$	49,763		$	41,241		20.7	%	$	137,846		$	130,200		5.9	%

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

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

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Third Quarter 2008 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	# of Buildings	Portfolio Breakdown				Total Square Feet	Occupancy at: (1)
		NOI (2)		Sq. Ft.			9/30/2008		6/30/2008		12/31/2007
STABILIZED PORTFOLIO:
OCCUPANCY BY PRODUCT TYPE:
Office:
Los Angeles	25	25.3	%	24.6	%	3,007,187	91.2	%	96.0	%	96.1	%
Orange County	5	1.6	%	2.3	%	277,340	72.6	%	72.0	%	99.1	%
San Diego	53	57.6	%	38.6	%	4,711,980	89.0	%	93.8	%	91.4	%
Other	5	2.2	%	2.8	%	346,439	94.2	%	93.8	%	99.6	%
Subtotal	88	86.7	%	68.3	%	8,342,946	89.5	%	93.8	%	93.7	%
Industrial:
Los Angeles	1	1.4	%	1.6	%	192,053	100.0	%	100.0	%	100.0	%
Orange County	42	11.9	%	30.1	%	3,684,068	93.1	%	90.3	%	94.4	%
Subtotal	43	13.3	%	31.7	%	3,876,121	93.4	%	90.7	%	94.7	%
OCCUPANCY BY REGION:
Los Angeles	26	26.7	%	26.2	%	3,199,240	91.7	%	96.2	%	96.4	%
Orange County	47	13.5	%	32.4	%	3,961,408	91.7	%	89.0	%	94.8	%
San Diego	53	57.6	%	38.6	%	4,711,980	89.0	%	93.8	%	91.4	%
Other	5	2.2	%	2.8	%	346,439	94.2	%	93.8	%	99.6	%
TOTAL STABILIZED PORTFOLIO	131	100.0	%	100.0	%	12,219,067	90.7	%	92.8	%	94.0	%

AVERAGE OCCUPANCY - STABILIZED PORTFOLIO

	Office		Industrial		Total
Quarter-to-Date	91.7	%	92.2	%	91.9	%
Year-to-Date	93.4	%	92.6	%	93.1	%

(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.

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Kilroy Realty Corporation

Third 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	73.5	%
24025 Park Sorrento	Calabasas	1	102,264	100.0	%
26541 Agoura Road	Calabasas	1	91,327	5.0	%
Kilroy Airport Center, El Segundo	El Segundo	3	702,282	94.8	%
909 Sepulveda Blvd.	El Segundo	1	241,607	91.6	%
999 Sepulveda Blvd.	El Segundo	1	127,901	98.6	%
Kilroy Airport Center, Long Beach	Long Beach	7	949,065	93.4	%
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	81.2	%
501 Santa Monica Blvd.	Santa Monica	1	73,115	90.8	%
Total Los Angeles Office		25	3,007,187	91.2	%
Orange County, California
4175 E. La Palma Avenue	Anaheim	1	43,263	100.0	%
8101 Kaiser Blvd.	Anaheim	1	59,790	96.1	%
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	72.6	%

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Third 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	47.3	%
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	%
15004 Innovation Dr	I-15 Corridor	1	146,156	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	0.0	%
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	85.4	%
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	0.0	%
9785 / 9791 Towne Center Drive	University Towne Center	2	126,000	100.0	%
Total San Diego Office		53	4,711,980	89.0	%
Other
5151/5155 Camino Ruiz	Carmarillo, CA	4	265,372	92.5	%
2829 Townsgate Road	Thousand Oaks, CA	1	81,067	100.0	%
Total Other Office		5	346,439	94.2	%
Total Office		88	8,342,946	89.5	%

(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

Third 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	40.8	%
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	100.0	%
1675 MacArthur	Costa Mesa	1	50,842	100.0	%
25902 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	100.0	%
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	93.1	%
Total Industrial		43	3,876,121	93.4	%

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Third Quarter 2008 Supplemental Financial Report

Leasing Activity

Quarter-to-Date

	1st & 2nd Generation				2nd Generation
					TI/LC Per Sq.Ft. (2)		Maintenance Capex Per Sq.Ft. (3)		Changes in Rents (4)		Changes in Cash Rents (5)		Retention Rates (6)		Weighted Average Lease Term (Mo.)
	# of Leases (1)		Square Feet (1)
	New	Renewal	New	Renewal
Office	6	12	12,882	231,781	$	7.89	$	0.19	33.1	%	12.2	%	60.2	%	41
Industrial	2	1	41,971	286,139		2.17		0.08	38.0	%	11.2	%	100.0	%	76
Total	8	13	54,853	517,920	$	4.58	$	0.15	34.4	%	12.0	%	77.2	%	61
Year-to-Date
	1st & 2nd Generation				2nd Generation
					TI/LC Per Sq.Ft. (2)		Maintenance Capex Per Sq.Ft. (3)		Changes in Rents (4)		Changes in Cash Rents (5)		Retention Rates (6)		Weighted Average Lease Term (Mo.)
	# of Leases (1)		Square Feet (1)
	New	Renewal	New	Renewal
Office	20	26	152,367	317,102	$	15.44	$	0.48	39.8	%	19.7	%	53.1	%	51
Industrial	5	8	206,698	711,326		4.08		0.27	25.9	%	1.0	%	81.7	%	63
Total	25	34	359,065	1,028,428	$	7.81	$	0.41	33.9	%	11.7	%	70.1	%	59

(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.

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Third Quarter 2008 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures

($ in thousands)

Recurring Capital Expenditures:
	Q1 2008		Q2 2008		Q3 2008		YTD 2008
Capital Improvements
Office	$	1,063	$	1,321	$	1,508	$	3,892
Industrial		48		705		313		1,066
		1,111		2,026		1,821		4,958
Tenant Improvements & Leasing Commissions (1)
Office		3,812		3,322		4,445		11,579
Industrial		430		946		1,479		2,855
		4,242		4,268		5,924		14,434
Total
Office		4,875		4,643		5,953		15,471
Industrial		478		1,651		1,792		3,921
	$	5,353	$	6,294	$	7,745	$	19,392

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

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Third 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	14	96,347	1.3	%	$	3,711	$	38.52
2009	69	690,934	9.3	%		16,796		24.31
2010	72	1,276,606	17.3	%		31,110		24.37
2011	51	518,501	7.0	%		10,759		20.75
2012	40	530,437	7.2	%		14,805		27.91
2013	35	530,685	7.2	%		13,140		24.76
2014	22	854,955	11.6	%		21,806		25.51
2015	16	484,815	6.6	%		14,656		30.23
2016	10	436,822	5.9	%		12,032		27.54
2017	11	1,084,438	14.7	%		29,624		27.32
2018 and beyond	22	887,799	11.9	%		38,067		42.88
Subtotal	362	7,392,339	100.0	%	$	206,506	$	27.94
INDUSTRIAL:
Remaining 2008	2	46,387	1.3	%	$	442	$	9.53
2009	13	688,003	19.7	%		4,627		6.73
2010	17	467,493	13.4	%		3,659		7.83
2011	12	345,634	9.9	%		3,217		9.31
2012	11	596,672	17.1	%		4,158		6.97
2013	4	581,508	16.6	%		4,259		7.32
2014	2	94,477	2.7	%		861		9.11
2015	4	260,889	7.5	%		2,102		8.06
2016	2	233,278	6.7	%		3,274		14.03
2017	—	—	—			—		—
2018 and beyond	2	180,802	5.2	%		1,566		8.66
Subtotal	69	3,495,143	100.0	%	$	28,165	$	8.06
TOTAL PORTFOLIO:
Remaining 2008	16	142,734	1.3	%	$	4,153	$	29.10
2009	82	1,378,937	12.7	%		21,423		15.54
2010	89	1,744,099	16.0	%		34,769		19.94
2011	63	864,135	7.9	%		13,976		16.17
2012	51	1,127,109	10.4	%		18,963		16.82
2013	39	1,112,193	10.2	%		17,399		15.64
2014	24	949,432	8.7	%		22,667		23.87
2015	20	745,704	6.8	%		16,758		22.47
2016	12	670,100	6.2	%		15,306		22.84
2017	11	1,084,438	10.0	%		29,624		27.32
2018 and beyond	24	1,068,601	9.8	%		39,633		37.09
Total	431	10,887,482	100.0	%	$	234,671	$	21.55

(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 September 30, 2008.

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

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Third 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	5	16,933	0.6	%	$	522	$	30.83	3	9,634	4.9	%	$	212	$	22.01
2009	41	322,335	12.0	%		8,839		27.42	16	114,289	58.0	%		2,829		24.75
2010	48	808,838	30.1	%		18,841		23.29	6	14,699	7.5	%		362		24.63
2011	37	228,454	8.5	%		6,612		28.94	5	16,214	8.2	%		381		23.50
2012	25	172,885	6.4	%		4,715		27.27	6	38,572	19.6	%		971		25.17
2013	28	263,036	9.8	%		6,898		26.22	1	2,556	1.3	%		60		23.47
2014	13	415,356	15.5	%		11,747		28.28	1	1,115	0.5	%		24		21.52
2015	8	194,935	7.3	%		6,142		31.51	—	—	—			—		—
2016	5	61,992	2.3	%		2,238		36.10	—	—	—			—		—
2017	2	26,024	1.0	%		874		33.58	—	—	—			—		—
2018 and beyond	4	174,852	6.5	%		6,471		37.01	—	—	—			—		—
Subtotal	216	2,685,640	100.0	%	$	73,899	$	27.52	38	197,079	100.0	%	$	4,839	$	24.55
INDUSTRIAL:
Remaining 2008	—	—	—			—		—	2	46,387	1.4	%	$	442	$	9.53
2009	—	—	—			—		—	13	688,003	20.8	%		4,627		6.73
2010	—	—	—			—		—	17	467,493	14.2	%		3,659		7.83
2011	—	—	—			—		—	12	345,634	10.5	%		3,217		9.31
2012	—	—	—			—		—	11	596,672	18.1	%		4,158		6.97
2013	—	—	—			—		—	4	581,508	17.6	%		4,259		7.32
2014	—	—	—			—		—	2	94,477	2.9	%		861		9.11
2015	—	—	—			—		—	4	260,889	7.9	%		2,102		8.06
2016	1	192,053	100.0	%		2,960		15.41	1	41,225	1.2	%		314		7.62
2017	—	—	—			—		—	—	—	—			—		—
2018 and beyond	—	—	—			—		—	2	180,802	5.4	%		1,566		8.66
Subtotal	1	192,053	100.0	%	$	2,960	$	15.41	68	3,303,090	100.0	%	$	25,205	$	7.63
TOTAL PORTFOLIO:
Remaining 2008	5	16,933	0.6	%	$	522	$	30.83	5	56,021	1.6	%	$	654	$	11.67
2009	41	322,335	11.2	%		8,839		27.42	29	802,292	22.9	%		7,456		9.29
2010	48	808,838	28.1	%		18,841		23.29	23	482,192	13.8	%		4,021		8.34
2011	37	228,454	7.9	%		6,612		28.94	17	361,848	10.3	%		3,598		9.94
2012	25	172,885	6.0	%		4,715		27.27	17	635,244	18.1	%		5,129		8.07
2013	28	263,036	9.1	%		6,898		26.22	5	584,064	16.7	%		4,319		7.39
2014	13	415,356	14.4	%		11,747		28.28	3	95,592	2.7	%		885		9.26
2015	8	194,935	6.8	%		6,142		31.51	4	260,889	7.5	%		2,102		8.06
2016	6	254,045	8.8	%		5,198		20.46	1	41,225	1.2	%		314		7.62
2017	2	26,024	0.9	%		874		33.58	—	—	—			—		—
2018 and beyond	4	174,852	6.2	%		6,471		37.01	2	180,802	5.2	%		1,566		8.66
Total	217	2,877,693	100.0	%	$	76,859	$	26.71	106	3,500,169	100.0	%	$	30,044	$	8.58

(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 September 30, 2008.

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

15

Kilroy Realty Corporation

Third 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	6	69,780	1.7	%	$	2,977	$	42.66	—	—	—			—		—
2009	6	239,791	5.7	%		4,676		19.50	6	14,519	4.4	%		452		31.13
2010	13	381,154	9.1	%		10,240		26.87	5	71,915	22.0	%		1,667		23.18
2011	3	65,759	1.6	%		1,359		20.67	6	208,074	63.7	%		2,407		11.57
2012	8	313,430	7.5	%		8,925		28.48	1	5,550	1.7	%		194		34.95
2013	6	265,093	6.3	%		6,182		23.32	—	—	—			—		—
2014	7	431,725	10.3	%		9,798		22.70	1	6,759	2.1	%		237		35.06
2015	5	270,213	6.5	%		7,906		29.26	3	19,667	6.1	%		608		30.91
2016	5	374,830	9.0	%		9,794		26.13	—	—	—			—		—
2017	9	1,058,414	25.3	%		28,750		27.16	—	—	—			—		—
2018 and beyond	18	712,947	17.0	%		31,596		44.32	—	—	—			—		—
Subtotal	86	4,183,136	100.0	%	$	122,203	$	29.21	22	326,484	100.0	%	$	5,565	$	17.05
INDUSTRIAL:
Remaining 2008	—	—	—			—		—	—	—	—			—		—
2009	—	—	—			—		—	—	—	—			—		—
2010	—	—	—			—		—	—	—	—			—		—
2011	—	—	—			—		—	—	—	—			—		—
2012	—	—	—			—		—	—	—	—			—		—
2013	—	—	—			—		—	—	—	—			—		—
2014	—	—	—			—		—	—	—	—			—		—
2015	—	—	—			—		—	—	—	—			—		—
2016	—	—	—			—		—	—	—	—			—		—
2017	—	—	—			—		—	—	—	—			—		—
2018 and beyond	—	—	—			—		—	—	—	—			—		—
Subtotal	—	—	—			—		—	—	—	—			—		—
TOTAL PORTFOLIO:
Remaining 2008	6	69,780	1.7	%	$	2,977	$	42.66	—	—	—			—		—
2009	6	239,791	5.7	%		4,676		19.50	6	14,519	4.4	%		452		31.13
2010	13	381,154	9.1	%		10,240		26.87	5	71,915	22.0	%		1,667		23.18
2011	3	65,759	1.6	%		1,359		20.67	6	208,074	63.7	%		2,407		11.57
2012	8	313,430	7.5	%		8,925		28.48	1	5,550	1.7	%		194		34.95
2013	6	265,093	6.3	%		6,182		23.32	—	—	—			—		—
2014	7	431,725	10.3	%		9,798		22.70	1	6,759	2.1	%		237		35.06
2015	5	270,213	6.5	%		7,906		29.26	3	19,667	6.0	%		608		30.91
2016	5	374,830	9.0	%		9,794		26.13	—	—	—			—		—
2017	9	1,058,414	25.3	%		28,750		27.16	—	—	—			—		—
2018 and beyond	18	712,947	17.0	%		31,596		44.32	—	—	—			—		—
Total	86	4,183,136	100.0	%	$	122,203	$	29.21	22	326,484	100.0	%	$	5,565	$	17.05

(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 September 30, 2008.

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

16

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Quarterly Lease Expirations for 2008 and 2009 ⁽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:
Q4 2008	14	96,347	1.3	%	$	3,711	$	38.52
Q1 2009	15	156,919	2.1	%	$	3,846	$	24.51
Q2 2009	16	100,080	1.3	%		2,940		29.38
Q3 2009	17	286,554	3.9	%		6,295		21.97
Q4 2009	21	147,381	2.0	%		3,715		25.21
Subtotal 2009	69	690,934	9.3	%	$	16,796	$	24.31
INDUSTRIAL:
Q4 2008	2	46,387	1.3	%	$	442	$	9.53
Q1 2009	2	203,380	5.8	%	$	1,599	$	7.86
Q2 2009	6	403,422	11.6	%		2,303		5.71
Q3 2009	1	4,000	0.1	%		42		10.50
Q4 2009	4	77,201	2.2	%		683		8.85
Subtotal 2009	13	688,003	19.7	%	$	4,627	$	6.73
TOTAL PORTFOLIO:
Q4 2008	16	142,734	1.3	%	$	4,153	$	29.10
Q1 2009	17	360,299	3.3	%	$	5,445	$	15.11
Q2 2009	22	503,502	4.6	%		5,243		10.41
Q3 2009	18	290,554	2.7	%		6,337		21.81
Q4 2009	25	224,582	2.1	%		4,398		19.58
Total 2009	82	1,378,937	12.7	%	$	21,423	$	15.54

(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 September 30, 2008.

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

17

Kilroy Realty Corporation

Third 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.	Office	$	15,021	541,610	6.2	%	4.4	%
Scripps Health	Office		12,336	258,223	5.1	%	2.1	%
Cardinal Health, Inc.	Office		9,256	411,000	3.8	%	3.4	%
AMN Healthcare	Office		8,341	175,672	3.4	%	1.4	%
DIRECTV Group, Inc. (2)	Office		8,037	289,752	3.3	%	2.4	%
The Boeing Company	Office / Industrial		6,593	464,840	2.7	%	3.8	%
Fish & Richardson	Office		6,071	139,538	2.5	%	1.1	%
Bridgepoint Education, Inc. (3)	Office		5,786	120,693	2.4	%	1.0	%
Epson America, Inc.	Office		5,538	162,852	2.3	%	1.3	%
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	1.6	%	0.9	%
Epicor Software Corporation	Office		3,509	172,778	1.4	%	1.4	%
Total Top Fifteen Tenants		$	102,932	3,418,301	42.3	%	27.9	%

(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 September 30, 2008.

(2) 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.

(3) Bridgepoint Education, Inc. (“Bridgepoint”) is projected to increase its current occupancy of 120,693 rentable square feet to 289,750 rentable square feet in phases through the third quarter of 2010. This expansion will increase the Company’s annualized base rental revenue from Bridgepoint to approximately $13.9 million in the third quarter of 2010. Bridgepoint is currently projected to become the Company’s third largest tenant during the fourth quarter of 2008 and our second largest tenant during the fourth quarter of 2009.

18

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Stabilized Development and Redevelopment Projects

($ in millions)

DEVELOPMENT PROJECTS:					Rentable Square	Total Estimated		%
Project	Location	Type	Start Date	Compl. Date	Feet	Investment (1)		Leased
1st QUARTER:
NONE
2nd QUARTER:
NONE
3rd QUARTER:
ICC - 15004 Innovation Drive	I-15 Corridor	Office	Q3 2006	3Q 2008	146,156	$	49.3	100	%
TOTAL STABILIZED DEVELOPMENT PROJECTS:					146,156	$	49.3	100	%

REDEVELOPMENT PROJECTS:					Rentable Square	Existing		Estimated Redevelopment		Total Estimated		%
Project	Location	Type	Start Date	Compl. Date	Feet	Investment (2)		Costs		Investment (1)		Leased
1st QUARTER:
NONE
2nd QUARTER:
NONE
3rd QUARTER:
KAC - 2240 E. Imperial Highway	El Segundo	Office	2Q 2006	3Q 2007	107,041	$	5.0	$	16.5	$	21.5	100	% (3)
TOTAL STABILIZED REDEVELOPMENT PROJECTS:					107,041	$	5.0	$	16.5	$	21.5	100	%

(1) Amounts exclude tenant-funded tenant improvements.

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

(3) This building is primarily leased to DIRECTV Group, Inc., which occupied 77% of the building as of September 30, 2008. The lease with DIRECTV Group, Inc. for the remainder of the building is expected to commence during the fourth quarter of 2008.

19

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

In-Process and Committed Development and Redevelopment Projects

($ in millions)

DEVELOPMENT PROJECTS:	Location	Type	Estimated Construction Period		Est. Stabilization Date (1)	Rentable Square Feet	Total Estimated Investment (2)		Total Costs as of 9/30/2008 (2)(3)		% Leased
Project			Start Date	Compl. Date
PROJECTS IN LEASE-UP
Sorrento Gateway - Lot 3	Sorrento Mesa	Office	4Q 2006	4Q 2007	4Q 2008	55,500	$	22.1	$	16.1	0	%
Kilroy Sabre Springs - Phase III	I-15 Corridor	Office	3Q 2006	3Q 2008	4Q 2008	147,533		65.9		59.5	100	% (5)
Subtotal						203,033		88.0		75.6
PROJECT UNDER CONSTRUCTION:
Sorrento Gateway - Lot 1	Sorrento Mesa	Medical Office	4Q 2007	4Q 2008	4Q 2009	50,925		22.6		14.4	0	%
TOTAL IN-PROCESS AND COMMITTED PROJECTS						253,958	$	110.6	$	90.0	58	%

REDEVELOPMENT PROJECT:

Location

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 9/30/2008 (2)(3)

% Leased

Project

Start Date

Compl. Date

PROJECT IN LEASE-UP:

Sabre Springs Corporate Center

I-15 Corridor

Office

1Q 2007

4Q 2007

4Q 2008

103,900

$

24.7

$

10.3

$

35.0

$

31.2

19

%

(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 September 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.

(5) This building is 100% leased to Bridgepoint Education, Inc. (“Bridgepoint”). Bridgepoint occupied 50% of the building as of September 30, 2008. It is expected that Bridgepoint will begin occupying the remainder of the building in the fourth quarter of 2008.

20

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Future Development Pipeline

($ in millions)

Project	Location	Type	Gross Site Acreage	Estimated Rentable Square Feet	Total Costs as of 9/30/2008 (1)
SAN DIEGO, CALIFORNIA
Carlsbad Oaks - Lots 4, 5, 7 & 8	Carlsbad	Office	32.0	288,000	$	18.1
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		27.1
San Diego Corporate Center	Del Mar	Office	23.0	500,000		92.9
Santa Fe Summit - Phase II and III	56 Corridor	Office	21.8	600,000		67.8
Sorrento Gateway - Lot 2	Sorrento Mesa	Office	6.3	80,000		11.1
Sorrento Gateway - Lot 7	Sorrento Mesa	Office	7.6	57,000		10.0
TOTAL FUTURE DEVELOPMENT PIPELINE			116.7	2,015,000 - 2,695,000	$	238.3

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

21

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Capital Structure

At September 30, 2008

($ in thousands)

	Shares/Units At September 30, 2008	Aggregate Principal Amount or $ Value Equivalent		% of Total Market Capitalization
DEBT:
Secured Debt		$	317,878	10.5	%
Exchangeable Senior Notes (1)			460,000	15.2	%
Unsecured Senior Notes			144,000	4.8	%
Unsecured Line of Credit			237,000	7.7	%
Total Debt		$	1,158,878	38.2	%
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)	1,753,729		83,811	2.8	%
Common Shares Outstanding (4)	33,086,957		1,581,226	52.3	%
Total Equity		$	1,866,537	61.8	%
TOTAL MARKET CAPITALIZATION		$	3,025,415	100.0	%

(1) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $3.2 million at September 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 $47.79 on September 30, 2008.

22

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Debt Analysis

At September 30, 2008

($ in millions)

TOTAL DEBT COMPOSITION

	% of Total Debt		Weighted Average
			Interest Rate		Maturity
Secured vs. Unsecured Debt:
Secured Debt	27.4	%	6.0	%	3.1
Unsecured Debt	72.6	%	3.9	%	3.1
Floating vs. Fixed Rate Debt:
Fixed Rate Debt	76.5	%	4.7	%	3.6
Floating Rate Debt	23.5	%	3.8	%	1.6
Total Debt			4.5	%	3.1
Total Debt Including Loan Fees			4.9	%

UNSECURED LINE OF CREDIT

Total Line	Outstanding Balance	Expiration Date
$550.0	$237.0	April 2010 (1)

CAPITALIZED INTEREST & LOAN FEES

Quarter-to-Date	Year-to-Date
$4.2	$13.3

(1) The maturity date does not reflect the Company’s option to extend the maturity by one year.

23

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Debt Analysis

At September 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	3.89	%	4/26/2010	(1)						237,000							$	237,000
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
										298,000				460,000		83,000		841,000
Secured Debt:
Floating	3.29	%	4/26/2010							35,500								35,500
Fixed	7.20	%	4/1/2009			669		75,475										76,144
Fixed	6.70	%	12/27/2011			325		1,359		1,453		69,980						73,117
Fixed	5.57	%	8/1/2012			331		1,370		1,449		1,532		71,517				76,199
Fixed	4.95	%	8/1/2012			150		622		653		687		29,754				31,866
Fixed	8.13	%	11/1/2014			239		1,004		1,088		812						3,143
Fixed	7.15	%	5/1/2017			403		1,683		1,807		1,941		2,084		11,210		19,128
Fixed	Various	(3)	Various	(3)				39		41		43		45		2,613		2,781
						2,117		81,552		41,991		74,995		103,400		13,823		317,878
Total	4.50	%			$	2,117	$	81,552	$	339,991	$	74,995	$	563,400	$	96,823	$	1,158,878

(1) The maturity date does not reflect the Company’s option to extend the maturity by one year.

(2) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $3.2 million at September 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.

24

Kilroy Realty Corporation

Third 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 October 27, 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.

25

Kilroy Realty Corporation

Third 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.

26

Kilroy Realty Corporation

Third 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 September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Same Store Cash Net Operating Income	$	49,763		$	41,241		$	137,846		$	130,200
Adjustment:
GAAP Operating Revenues Adjustments, net		706			2,125			4,617			6,037
GAAP Operating Expenses Adjustments, net		(9	)		111			(3,668	)		310
Same Store GAAP Net Operating Income		50,460			43,477			138,795			136,547
Adjustment:
Non-Same Store GAAP Net Operating Income		7,549			6,168			21,707			9,071
Net Operating Income including discontinued operations		58,009			49,645			160,502			145,618
Adjustment:
Net Operating Income, as defined, from discontinued operations		—			(1,478	)		(199	)		(4,220	)
Net Operating Income, as defined (1)		58,009			48,167			160,303			141,398
Adjustments:
Other Expenses:
General and administrative expenses		(9,627	)		(8,719	)		(28,050	)		(27,227	)
Interest expense		(9,727	)		(9,009	)		(28,888	)		(26,737	)
Depreciation and amortization		(20,661	)		(18,334	)		(62,063	)		(52,556	)
Other Income (Loss):
Interest and other investment income (loss)		(149	)		305			192			1,295
Income from Continuing Operations before Minority Interests		17,845			12,410			41,494			36,173
Minority interests		(2,267	)		(1,954	)		(6,073	)		(5,792	)
Income from discontinued operations		—			974			406			15,426
Preferred dividends		(2,402	)		(2,402	)		(7,206	)		(7,206	)
Net Income Available for Common Stockholders	$	13,176		$	9,028		$	28,621		$	38,601

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

27

Kilroy Realty Corporation

Third Quarter 2008 Supplemental Financial Report

Reconciliation of EBITDA to Net Income Available to Common Stockholders

(unaudited, $ in thousands)

	Three Months Ended September 30,
	2008		2007
Net Income Available for Common Stockholders	$	13,176	$	9,028
Preferred dividends		2,402		2,402
Adjustments for Continuing Operations:
Interest expense		9,727		9,009
Depreciation and amortization		20,661		18,334
Distributions on Cumulative Redeemable Preferred units		1,397		1,397
Minority interest in earnings of Operating Partnership		870		557
Adjustments for Discontinued Operations:
Depreciation and amortization		—		437
Net gain on disposition of discontinued operations		—		—
Minority interest in earnings of Operating Partnership		—		67
EBITDA Before Minority Interests (1)	$	48,233	$	41,231

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

28

Kilroy Realty Corporation

Third 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 September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Funds Available for Distribution (1)	$	28,527		$	18,309		$	79,180		$	71,337
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		7,745			9,369			19,392			18,545
Depreciation for furniture, fixtures and equipment		197			211			589			642
Accrued preferred dividends		2,402			2,402			7,206			7,206
Distributions on Cumulative Redeemable Preferred units		1,397			1,397			4,191			4,191
Provision for uncollectible tenant receivables		8			(111	)		291			(310	)
Net gain on termination of profit participation agreement		—			—			—			(4,848	)
Changes in assets and liabilities (2)		11,069			10,773			4,759			19,769
Other adjustments, net		(23	)		(228	)		(166	)		207
GAAP Net Cash Provided by Operating Activities	$	51,322		$	42,122		$	115,442		$	116,739

(1) Please refer to page 26 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.

29

EX-99.2

Exhibit 99.2

Contact:	FOR RELEASE:
Richard E. Moran Jr.	October 27, 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

THIRD QUARTER FINANCIAL RESULTS

LOS ANGELES, October 27, 2008 – Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its third quarter ended September 30, 2008 with net income available for common stockholders of $13.2 million, or $0.40 per share, compared to $9.0 million, or $0.28 per share, in the third quarter of 2007. Revenues from continuing operations in the third quarter totaled $77.1 million, up from $65.1 million in the prior year’s third quarter. Funds from operations (FFO) for the period totaled $34.5 million, or $1.00 per share, compared to $28.2 million, or $0.81 per share, in the year-earlier period.

For the first nine months of 2008, KRC reported net income available for common stockholders of $28.6 million, or $0.88 per share, compared to $38.6 million, or $1.19 per share, in the first nine months of 2007. Revenues from continuing operations in the nine-month period totaled $217.5 million, up from $188.7 million in the same period of 2007. FFO in the first nine months of 2008 totaled $91.8 million, or $2.64 per share, compared to $80.9 million, or $2.33 per share, in first nine months of 2007.

Included in the results for the nine months ended September 30, 2008 is an approximate $4.9 million net lease termination fee related to an early termination agreement the company entered into with Intuit Inc. (“Intuit”). The lease that was terminated encompassed approximately 90,000 rentable square feet of office space. Intuit had an option to early terminate this lease in 2010 and the lease was scheduled to expire in 2014. Also included in the results for the nine months ended September 30, 2008 is approximately $2.7 million of non-cash rental revenue related to the termination of the company’s lease with Favrille, Inc. (“Favrille”). In July 2008, the company and Favrille entered into an agreement to terminate this lease effective August 31, 2008. The non-cash rental revenue recognized for the quarter primarily represents the unamortized deferred revenue balance related to tenant-funded tenant improvements for this lease at the lease termination date. All per-share amounts in this report are presented on a diluted basis.

“KRC reported solid financial results for the third quarter, despite the uncertainty about the direction of the economy and the turmoil in global credit markets,” said John B. Kilroy, Jr., the company’s president and chief executive officer. “We remain focused on the fundamentals of our business, including leasing, delivering our in-process development, and maintaining a strong, flexible financial position.”

During the third quarter, KRC added two properties, which are 100% leased, to its stabilized portfolio, a newly developed 146,000 square-foot office building located along the I-15 corridor in San Diego County and a newly redeveloped 107,000 square-foot office building in El Segundo. The two properties represent a total estimated new investment of approximately $66 million.

KRC has three additional properties currently under development, all located in submarkets of San Diego County. The three properties encompass approximately 254,000 square feet of rentable space and represent a total estimated investment of approximately $111 million, of which $90 million has been spent to date. They are 58% leased.

The company also has one redevelopment project underway totaling approximately 104,000 square feet. This project has a total estimated incremental investment of approximately $10 million and is 19% leased.

2

Updated earnings guidance for 2008 will be discussed by KRC management during the company’s October 28, 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 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) 679-8035, reservation #84755372. A replay of the conference call will be available via phone through November 11, 2008 at (888) 286-8010, reservation #62289237, 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.

3

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 San Diego counties. Kilroy Realty currently has an in-process development and redevelopment pipeline of approximately 358,000 square feet. At September 30, 2008, the company owned 8.3 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.

###

4

KILROY REALTY CORPORATION

SUMMARY QUARTERLY RESULTS

(unaudited, in thousands, except per share data)

	Three Months Ended September 30, 2008		Three Months Ended September 30, 2007		Nine Months Ended September 30, 2008			Nine Months Ended September 30, 2007
Revenues from continuing operations	$	77,100	$	65,117	$	217,531		$	188,731
Revenues including discontinued operations	$	77,100	$	67,921	$	217,730		$	196,628
Net income available for common stockholders (1)	$	13,176	$	9,028	$	28,621		$	38,601
Weighted average common shares outstanding - basic		32,339		32,373		32,382			32,364
Weighted average common shares outstanding - diluted		32,535		32,502		32,533			32,491
Net income per share of common stock - basic	$	0.41	$	0.28	$	0.88		$	1.19
Net income per share of common stock - diluted	$	0.40	$	0.28	$	0.88		$	1.19
Funds From Operations (2), (3)	$	34,510	$	28,212	$	91,770		$	80,911
Weighted average common shares/units outstanding - basic (4)		34,470		34,621		34,552			34,614
Weighted average common shares/units outstanding - diluted (4)		34,666		34,749		34,703			34,740
Funds From Operations per common share/unit - basic (4)	$	1.00	$	0.81	$	2.66		$	2.34
Funds From Operations per common share/unit - diluted (4)	$	1.00	$	0.81	$	2.64		$	2.33
Common shares outstanding at end of period						33,087			32,707
Common partnership units outstanding at end of period						1,754			2,248
Total common shares and units outstanding at end of period						34,841			34,955
					September 30, 2008			September 30, 2007
Stabilized portfolio occupancy rates:
Office						89.5	%		93.4	%
Industrial						93.4	%		91.0	%
Weighted average total						90.7	%		92.6	%
Los Angeles						91.7	%		96.3	%
Orange County						91.7	%		91.1	%
San Diego						89.0	%		91.4	%
Other						94.2	%		93.2	%
Weighted average total						90.7	%		92.6	%
Total square feet of stabilized properties owned at end of period:
Office						8,343			8,620
Industrial						3,876			3,870
Total						12,219			12,490

(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.

KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30, 2008			December 31, 2007
	(unaudited)
ASSETS
REAL ESTATE ASSETS:
Land and improvements	$	334,634		$	324,779
Buildings and improvements		1,861,769			1,719,700
Undeveloped land and construction in progress		257,135			324,077
Total real estate held for investment		2,453,538			2,368,556
Accumulated depreciation and amortization		(514,712	)		(463,932	)
Total real estate assets, net		1,938,826			1,904,624
Cash and cash equivalents		10,055			11,732
Restricted cash		1,503			546
Marketable securities		2,243			707
Current receivables, net		4,658			4,891
Deferred rent receivables, net		64,444			67,283
Notes receivable		10,870			10,970
Deferred leasing costs and acquisition related intangibles, net		54,044			54,418
Deferred financing costs, net		6,731			8,492
Prepaid expenses and other assets, net		6,124			5,057
TOTAL ASSETS	$	2,099,498		$	2,068,720
LIABILITIES & STOCKHOLDERS’ EQUITY
LIABILITIES:
Secured debt	$	317,878		$	395,912
Exchangeable senior notes, net		456,780			456,090
Unsecured senior notes		144,000			144,000
Unsecured line of credit		237,000			111,000
Accounts payable, accrued expenses and other liabilities		58,938			58,249
Accrued distributions		21,422			20,610
Deferred revenue and acquisition-related liabilities		75,012			59,187
Rents received in advance and tenant security deposits		18,785			18,433
Total liabilities		1,329,815			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		29,125			38,309
Total minority interests		102,763			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		331			328
Additional paid-in capital		661,019			658,894
Distributions in excess of earnings		(116,012	)		(87,512	)
Total stockholders’ equity		666,920			693,292
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	2,099,498		$	2,068,720

KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended September 30, 2008			Three Months Ended September 30, 2007			Nine Months Ended September 30, 2008			Nine Months Ended September 30, 2007
REVENUES:
Rental income	$	64,546		$	58,596		$	188,337		$	167,547
Tenant reimbursements		7,269			6,392			23,148			18,002
Other property income		5,285			129			6,046			3,182
Total revenues		77,100			65,117			217,531			188,731
EXPENSES:
Property expenses		12,824			11,481			36,185			32,051
Real estate taxes		5,827			5,182			16,149			14,402
Provision for bad debts		9			(111	)		3,668			(310	)
Ground leases		431			398			1,226			1,190
General and administrative expenses		9,627			8,719			28,050			27,227
Interest expense		9,727			9,009			28,888			26,737
Depreciation and amortization		20,661			18,334			62,063			52,556
Total expenses		59,106			53,012			176,229			153,853
OTHER INCOME (LOSS):
Interest and other investment income (loss)		(149	)		305			192			1,295
Income from continuing operations before minority interests		17,845			12,410			41,494			36,173
Minority interests:
Distributions on Cumulative Redeemable Preferred units		(1,397	)		(1,397	)		(4,191	)		(4,191	)
Minority interest in earnings of Operating Partnership attributable to continuing operations		(870	)		(557	)		(1,882	)		(1,601	)
Total minority interests		(2,267	)		(1,954	)		(6,073	)		(5,792	)
Income from continuing operations		15,578			10,456			35,421			30,381
Discontinued operations:
Revenues from discontinued operations		—			2,804			199			7,897
Expenses from discontinued operations		—			(1,763	)		—			(4,873	)
Net gain on dispositions of discontinued operations		—			—			234			13,474
Minority interest in earnings of Operating Partnership attributable to discontinued operations		—			(67	)		(27	)		(1,072	)
Total income from discontinued operations		—			974			406			15,426
Net income		15,578			11,430			35,827			45,807
Preferred dividends		(2,402	)		(2,402	)		(7,206	)		(7,206	)
Net income available for common stockholders	$	13,176		$	9,028		$	28,621		$	38,601
Weighted average shares outstanding - basic		32,339			32,373			32,382			32,364
Weighted average shares outstanding - diluted		32,535			32,502			32,533			32,491
Net income per common share - basic	$	0.41		$	0.28		$	0.88		$	1.19
Net income per common share - diluted	$	0.40		$	0.28		$	0.88		$	1.19

KILROY REALTY CORPORATION FUNDS FROM OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended September 30, 2008		Three Months Ended September 30, 2007		Nine Months Ended September 30, 2008			Nine Months Ended September 30, 2007
Net income available for common stockholders	$	13,176	$	9,028	$	28,621		$	38,601
Adjustments:
Minority interest in earnings of Operating Partnership		870		624		1,909			2,673
Depreciation and amortization of real estate assets		20,464		18,560		61,474			53,111
Net gain on dispositions of discontinued operations		—		—		(234	)		(13,474	)
Funds From Operations (1), (2)	$	34,510	$	28,212	$	91,770		$	80,911
Weighted average common shares/units outstanding - basic		34,470		34,621		34,552			34,614
Weighted average common shares/units outstanding - diluted		34,666		34,749		34,703			34,740
Funds From Operations per common share/unit - basic	$	1.00	$	0.81	$	2.66		$	2.34
Funds From Operations per common share/unit - diluted	$	1.00	$	0.81	$	2.64		$	2.33

(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.

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.

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