8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15 (d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 25, 2010

KILROY REALTY CORPORATION

(Exact name of registrant as specified in its charter)

Maryland	1-12675	95-4598246
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
12200 W. Olympic Boulevard, Suite 200, Los Angeles, California		90064
(Address of principal executive offices)		(Zip Code)

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

N/A

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

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

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

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

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

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

Item 2.02 Results of Operations and Financial Condition.

On January 25, 2010, Kilroy Realty Corporation issued a press release announcing its earnings for the year ended December 31, 2009 and distributed certain supplemental information. The supplemental information is attached to this report as Exhibit 99.1, and the press release is attached to this report as Exhibit 99.2.

Item 9.01 Financial Statements and Exhibits.

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

(d) Exhibits.

99.1	Fourth Quarter 2009 Supplemental Financial Report
99.2	Press Release dated January 25, 2010

SIGNATURES

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

	KILROY REALTY CORPORATION
Date: January 25, 2010
	By:	/S/    HEIDI R. ROTH
		Heidi R. Roth
		Senior Vice President and Controller

EXHIBIT INDEX

Exhibit Number		Description
99.1	*	Fourth Quarter 2009 Supplemental Financial Report
99.2	*	Press Release dated January 25, 2010

* Filed herewith.

EX-99.1

Exhibit 99.1

Fourth Quarter 2009 Supplemental Financial Report

Some of the enclosed information presented in this supplemental and on the Company’s January 26, 2010 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, 2008. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplemental information and on the Company’s January 26, 2010 conference call might not occur.

Kilroy Realty Corporation

Fourth Quarter 2009 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	8-12
Lease Commencement Information by Segment	13
Stabilized Portfolio Capital Expenditures	14
Lease Expiration Summary and Lease Expirations by Region	15-18
Top Fifteen Tenants	19
Dispositions	20
Development
Stabilized Development Projects	21
Future Development Pipeline	22
Debt and Capitalization Data
Capital Structure	23
Debt Analysis	24-25
Non-GAAP Supplemental Measures	26-30

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Company Background

Kilroy Realty Corporation (NYSE: KRC) owns, develops, and operates office and industrial real estate in Southern California. The Company operates as a self-administered real estate investment trust. As of December 31, 2009, the Company’s stabilized portfolio consisted of 93 office buildings and 41 industrial buildings, which encompassed an aggregate of 8.7 million and 3.7 million rentable square feet, respectively, and was 82.8% 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 Los Angeles, CA 90064 (310) 481-8400 Web: www.kilroyrealty.com E-mail: investorrelations@kilroyrealty.com
Edward F. Brennan, Ph.D.		Chris Corpuz	Executive VP, Acquisitions and Strategic Initiatives
William P. Dickey		Jeffrey C. Hawken	Executive VP and COO
Scott S. Ingraham		Tyler H. Rose	Executive VP and CFO
John B. Kilroy, Jr.		John T. Fucci	Sr. VP, Asset Management
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 Merrill Lynch		JMP Securities
James Feldman	(646) 855-5808	Mitch Germain	(212) 906-3546
Citigroup Investment Research		J.P. Morgan
Michael Bilerman	(212) 816-1383	Anthony Paolone	(212) 622-6682
Credit Suisse Group		RBC Capital Markets
Steven Benyik	(212) 538-0239	Dave Rodgers	(440) 715-2647
Friedman, Billings, Ramsey & Co., Inc.		Robert W. Baird & Company
Wilkes Graham	(703) 312-9737	David Aubuchon	(314) 863-4235
Green Street Advisors		Stifel, Nicolaus & Company
Michael Knott	(949) 640-8780	John W. Guinee III	(443) 224-1307
ISI Group		UBS Investment Research
Steve Sakwa	(212) 446-9462	Ross T. Nussbaum	(212) 713-2484

Kilroy Realty Corporation is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Kilroy Realty Corporation’s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Kilroy Realty Corporation or its management. Kilroy Realty Corporation does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.

1

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Financial Highlights

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

	Three Months Ended
	12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008 (1)
INCOME ITEMS (Including Discontinued Operations):
Revenues	$	67,379		$	68,494		$	71,050		$	72,512		$	72,437
Lease Termination Fees		177			94			983			612			242
Net Operating Income (2)		48,667			49,166			53,040			52,159			53,149
Capitalized Interest and Debt Costs		2,733			2,614			2,273			2,063			3,117
Net (Loss) Income Available to Common Stockholders (11)		(3,009	)		8,111			9,117			7,577			4,522
EBITDA (2)(3)(11)		30,978			42,005			46,235			45,176			42,654
Funds From Operations (2)(4)(5)(11)		17,679			30,190			30,331			28,961			25,737
Funds Available for Distribution (2)(4)(5)(11)		12,921			23,920			25,068			23,979			20,076
Net (Loss) Income Available to Common Stockholders per common share – diluted (11)	$	(0.08	)	$	0.17		$	0.25		$	0.23		$	0.14
Funds From Operations per common share – diluted (11)	$	0.39		$	0.66		$	0.79		$	0.82		$	0.73
Dividends per share	$	0.35		$	0.35		$	0.35		$	0.58		$	0.58
RATIOS (Including Discontinued Operations):
Operating Margins		72.2	%		71.8	%		74.7	%		71.9	%		73.4	%
Interest Coverage Ratio (6)(11)		2.9x			4.0x			4.2x			4.0x			3.2x
Fixed Charge Coverage Ratio (7)(11)		2.2x			3.0x			3.1x			3.0x			2.5x
FFO Payout Ratio (8)(11)		88.8	%		52.0	%		51.8	%		69.7	%		78.5	%
FAD Payout Ratio (9)(11)		121.5	%		65.7	%		62.7	%		84.2	%		100.7	%
	12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008 (1)
ASSETS:
Real Estate Held for Investment before Depreciation	$	2,520,083		$	2,504,916		$	2,492,814		$	2,485,427		$	2,475,596
Total Assets		2,084,281			2,079,002			2,087,582			2,103,498			2,102,918
CAPITALIZATION:
Total Debt (10)	$	1,006,074		$	986,788		$	998,944		$	1,191,886		$	1,172,456
Total Preferred Equity and Noncontrolling Interests (10)		201,500			201,500			201,500			201,500			201,500
Total Common Equity and Noncontrolling Interests (10)		1,376,221			1,244,747			921,669			598,289			1,165,743
Total Market Capitalization (10)		2,583,795			2,433,035			2,122,113			1,991,675			2,539,699
Total Debt / Total Market Capitalization		39.0	%		40.6	%		47.1	%		59.9	%		46.1	%
Total Debt and Preferred / Total Market Capitalization		46.8	%		48.9	%		56.6	%		70.0	%		54.1	%

(1) Results for December 31, 2008 have been adjusted for the retroactive application of the new accounting pronouncements adopted by the Company on January 1, 2009.

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

(3) Please refer to page 29 for a reconciliation of GAAP Net Income Available to Common Stockholders to EBITDA.

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

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

(6) Calculated as EBITDA divided by interest expense, excluding the noncash amortization of convertible debt discount.

(7) Calculated as EBITDA divided by interest expense, excluding the noncash amortization of convertible debt discount, current year accrued preferred dividends and distributions on Cumulative Redeemable Preferred units.

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

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

(10) See “Capital Structure” on page 23.

(11) Amounts reported for the three months ended December 31, 2009 include a previously announced one-time $7.0 million charge for separation payments related to the resignation for personal reasons of the Company’s former Chief Financial Officer in December 2009.

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Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Common Stock Data (NYSE: KRC)

	Three Months Ended
	12/31/2009		9/30/2009		6/30/2009		3/31/2009		12/31/2008
High Price	$	31.99	$	30.75	$	23.35	$	32.83	$	45.97
Low Price	$	26.00	$	18.67	$	16.16	$	15.40	$	21.71
Closing Price	$	30.67	$	27.74	$	20.54	$	17.19	$	33.46
Dividends per share - annualized	$	1.40	$	1.40	$	1.40	$	2.32	$	2.32
Closing common shares (in 000’s) (1) (2)		43,149		43,149		43,149		33,050		33,086
Closing common partnership units (in 000’s) (1)		1,723		1,723		1,723		1,754		1,754
		44,872		44,872		44,872		34,804		34,840

(1) As of the end of the period.

(2) In June 2009, the Company completed a public offering of 10,062,500 shares of its common stock.

3

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Consolidated Balance Sheets

(unaudited, $ in thousands)

	12/31/2009			9/30/2009			6/30/2009			3/31/2009			12/31/2008 (1)
ASSETS:
Land and improvements	$	335,932		$	335,932		$	335,932		$	336,874		$	336,874
Buildings and improvements		1,920,543			1,909,876			1,901,647			1,896,972			1,889,833
Undeveloped land and construction in progress		263,608			259,108			255,235			251,581			248,889
Total real estate held for investment		2,520,083			2,504,916			2,492,814			2,485,427			2,475,596
Accumulated depreciation and amortization		(605,976	)		(587,968	)		(568,877	)		(550,868	)		(532,769	)
Total real estate assets, net		1,914,107			1,916,948			1,923,937			1,934,559			1,942,827
Cash and cash equivalents		9,883			9,265			13,348			16,256			9,553
Restricted cash		2,059			2,936			591			728			672
Marketable securities		3,452			3,229			2,801			2,392			1,888
Current receivables, net		3,236			3,139			2,945			3,915			5,753
Deferred rent receivables, net		74,392			72,623			71,355			68,693			67,144
Notes receivable		10,679			10,716			10,753			10,789			10,824
Deferred leasing costs and acquisition-related intangibles, net		51,832			49,627			49,803			52,151			53,539
Deferred financing costs, net		8,334			4,393			5,250			5,281			5,883
Prepaid expenses and other assets, net		6,307			6,126			6,799			8,734			4,835
TOTAL ASSETS	$	2,084,281		$	2,079,002		$	2,087,582		$	2,103,498		$	2,102,918
LIABILITIES, NONCONTROLLING INTERESTS AND EQUITY:
Liabilities:
Secured debt	$	294,574		$	296,788		$	300,944		$	312,886		$	316,456
Exchangeable senior notes, net		436,442			398,347			434,132			431,988			429,892
Unsecured senior notes		144,000			144,000			144,000			144,000			144,000
Unsecured line of credit		97,000			126,000			94,000			275,000			252,000
Accounts payable, accrued expenses and other liabilities		52,533			42,565			32,365			41,506			55,066
Accrued distributions		17,136			17,133			17,129			21,732			21,421
Deferred revenue and acquisition-related liabilities		66,890			69,252			71,333			74,088			76,219
Rents received in advance and tenant security deposits		18,230			18,381			22,038			19,146			19,340
Total liabilities		1,126,805			1,112,466			1,115,941			1,320,346			1,314,394
Noncontrolling Interest:
7.45% Series A cumulative redeemable preferred units of the Operating Partnership		73,638			73,638			73,638			73,638			73,638
Equity:
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		431			431			431			331			331
Additional paid-in capital		913,657			904,043			901,747			707,421			700,122
Distributions in excess of earnings		(180,722	)		(162,391	)		(155,183	)		(148,982	)		(137,052	)
Total stockholders’ equity		854,948			863,665			868,577			680,352			684,983
Noncontrolling Interest
Common units of the Operating Partnership		28,890			29,233			29,426			29,162			29,903
Total equity		883,838			892,898			898,003			709,514			714,886
TOTAL LIABILITIES, NONCONTROLLING INTERESTS AND EQUITY	$	2,084,281		$	2,079,002		$	2,087,582		$	2,103,498		$	2,102,918

(1) Results for December 31, 2008 have been adjusted for the retroactive application of the new accounting pronouncements adopted by the Company on January 1, 2009.

4

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Consolidated Statements of Operations ⁽¹⁾

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

	Three Months Ended December 31,								Year Ended December 31,
	2009			2008			% Change		2009			2008			% Change
REVENUES:
Rental income	$	60,690		$	63,606		(4.6	%)	$	247,649		$	251,520		(1.5	%)
Tenant reimbursements		6,177			7,875		(21.6	%)		28,075			30,986		(9.4	%)
Other property income		512			803		(36.2	%)		3,710			6,849		(45.8	%)
Total revenues		67,379			72,284		(6.8	%)		279,434			289,355		(3.4	%)
EXPENSES:
Property expenses		12,099			12,682		(4.6	%)		49,709			48,861		1.7	%
Real estate taxes		6,069			5,948		2.0	%		24,330			22,063		10.3	%
Provision for bad debts		174			383		(54.6	%)		569			4,051		(86.0	%)
Ground leases		370			391		(5.4	%)		1,597			1,617		(1.2	%)
General and administrative expenses		17,915			10,210		75.5	%		39,938			38,260		4.4	%
Interest expense		11,078			12,923		(14.3	%)		46,119			45,346		1.7	%
Depreciation and amortization		21,019			21,197		(0.8	%)		87,627			83,215		5.3	%
Total expenses		68,724			63,734		7.8	%		249,889			243,413		2.7	%
OTHER INCOME (LOSS):
Interest income and other net investment gains (losses)		226			(285	)	179.3	%		1,300			(93	)	1497.8	%
Gain on early extinguishment of debt		1,790			—		100.0	%		4,909			—		100.0	%
Total other income (loss)		2,016			(285	)	807.4	%		6,209			(93	)	6776.3	%
INCOME FROM CONTINUING OPERATIONS		671			8,265		(91.9	%)		35,754			45,849		(22.0	%)
DISCONTINUED OPERATIONS:
Revenues from discontinued operations		—			153		(100.0	%)		—			812		(100.0	%)
Expenses from discontinued operations		—			101		(100.0	%)		(224	)		16		(1500.0	%)
Net gain on dispositions of discontinued operations		—			—		0.0	%		2,485			234		962.0	%
Total income from discontinued operations		—			254		(100.0	%)		2,261			1,062		112.9	%
NET INCOME		671			8,519		(92.1	%)		38,015			46,911		(19.0	%)
Net loss (income) attributable to noncontrolling common units of the Operating Partnership		119			(198	)	160.1	%		(1,025	)		(1,886	)	(45.7	%)
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION		790			8,321		(90.5	%)		36,990			45,025		(17.8	%)
PREFERRED DISTRIBUTIONS AND DIVIDENDS:
Distributions on noncontrolling cumulative redeemable preferred units of the Operating Partnership		(1,397	)		(1,397	)	0.0	%		(5,588	)		(5,588	)	0.0	%
Preferred dividends		(2,402	)		(2,402	)	0.0	%		(9,608	)		(9,608	)	0.0	%
Total preferred distributions and dividends		(3,799	)		(3,799	)	0.0	%		(15,196	)		(15,196	)	0.0	%
NET (LOSS) INCOME AVAILABLE TO COMMON STOCKHOLDERS (2)	$	(3,009	)	$	4,522		(166.5	%)	$	21,794		$	29,829		(26.9	%)
Weighted average common shares outstanding - basic		42,936			32,719		31.2	%		38,705			32,467		19.2	%
Weighted average common shares outstanding - diluted		42,936			32,929		30.4	%		38,732			32,541		19.0	%
NET (LOSS) INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE (2)
Net (loss) income available to common stockholders per share - basic	$	(0.08	)	$	0.14		(157.1	%)	$	0.53		$	0.91		(41.8	%)
Net (loss) income available to common stockholders per share - diluted	$	(0.08	)	$	0.14		(157.1	%)	$	0.53		$	0.91		(41.8	%)

(1) Results for the three months and year ended December 31, 2008 have been adjusted for the retroactive application of the new accounting pronouncements adopted by the Company on January 1, 2009.

(2) Net (loss) income available to common stockholders for the three months and year ended December 31, 2009 includes a previously announced one-time $7.0 million charge for separation payments related to the resignation for personal reasons of the Company’s former Chief Financial Officer in December 2009.

5

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Funds From Operations and Funds Available for Distribution ⁽¹⁾

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

	Three Months Ended December 31,								Year Ended December 31,
	2009			2008			% Change		2009			2008			% Change
FUNDS FROM OPERATIONS: (2)
Net (loss) income available to common stockholders	$	(3,009	)	$	4,522		(166.5	%)	$	21,794		$	29,829		(26.9	%)
Adjustments:
Net (loss) income attributable to noncontrolling common units of the Operating Partnership		(119	)		198		(160.1	%)		1,025			1,886		(45.7	%)
Depreciation and amortization of real estate assets		20,807			21,017		(1.0	%)		86,825			82,491		5.3	%
Net gain on dispositions of discontinued operations		—			—		0.0	%		(2,485	)		(234	)	962.0	%
Funds From Operations (3)	$	17,679		$	25,737		(31.3	%)	$	107,159		$	113,972		(6.0	%)
Weighted average common shares/units outstanding - basic (4)		45,502			34,848		30.6	%		41,222			34,904		18.1	%
Weighted average common shares/units outstanding - diluted (4)		45,557			35,058		29.9	%		41,249			34,979		17.9	%
FFO per common share/unit - basic (3)	$	0.39		$	0.74		(47.4	%)	$	2.60		$	3.27		(20.4	%)
FFO per common share/unit - diluted (3)	$	0.39		$	0.73		(47.1	%)	$	2.60		$	3.26		(20.3	%)
FUNDS AVAILABLE FOR DISTRIBUTION: (2)
Funds From Operations (3)	$	17,679		$	25,737		(31.3	%)	$	107,159		$	113,972		(6.0	%)
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		(12,434	)		(7,228	)	72.0	%		(31,131	)		(26,620	)	16.9	%
Amortization of deferred revenue related to tenant improvements (5)		(2,326	)		(2,403	)	(3.2	%)		(9,757	)		(11,310	)	(13.7	%)
Net effect of straight-line rents (6)		(1,769	)		(2,700	)	(34.5	%)		(7,248	)		202		(3688.1	%)
Amortization of other deferred revenue, net (7)		(50	)		875		(105.7	%)		(1,001	)		1,058		(194.6	%)
Amortization of above/below market rents (8)		(10	)		(149	)	(93.3	%)		(359	)		(633	)	(43.3	%)
Noncash amortization of exchangeable debt discount, net (9)		1,537			1,473		4.3	%		6,166			5,098		20.9	%
Additional cash gain on early extinguishment of debt (10)		5,129			—		100.0	%		6,678			—		100.0	%
Amortization of deferred financing costs and debt discount		826			658		25.5	%		3,126			2,304		35.7	%
Noncash amortization of share-based compensation awards		4,339			3,813		13.8	%		12,253			15,185		(19.3	%)
Funds Available for Distribution (3)	$	12,921		$	20,076		(35.6	%)	$	85,886		$	99,256		(13.5	%)

(1) Results for the three months and year ended December 31, 2008 have been adjusted for the retroactive application of new accounting pronouncements which were adopted by the Company on January 1, 2009.

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

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

(4) Calculated based on weighted average shares outstanding including participating share-based awards and assuming the exchange of all common limited partnership units outstanding.

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

(6) 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.

(7) Represents amortization of deferred revenue related to cash received prior to revenue recognition in connection with tenants’ contractual lease obligations, net of such amounts received.

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

(9) Represents the amortization of the noncash debt discount on the Company’s exchangeable senior notes due to the adoption of the new convertible debt accounting pronouncement on January 1, 2009, net of amounts capitalized.

(10) Represents the difference for the three months and year ended December 31, 2009 between the cash gain of approximately $6.9 million and $11.6 million, respectively, and the GAAP gain on early extinguishment of debt of approximately $1.8 million $4.9 million, respectively, related to the Company’s repurchase of its exchangeable senior notes.

6

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Same Store Analysis ⁽¹⁾

(unaudited, $ in thousands)

Same Store Analysis (GAAP Basis)

	Three Months Ended December 31,								Year Ended December 31,
	2009			2008			% Change		2009			2008			% Change
Total Same Store Portfolio
Number of properties		127			127					127			127
Square Feet		11,744,588			11,744,588					11,744,588			11,744,588
Percent of Stabilized Portfolio		95.0	%		94.9	%				95.0	%		94.9	%
Average Occupancy		83.6	%		90.4	%				85.8	%		93.3	%
Operating Revenues:
Rental income	$	55,513		$	58,942		(5.8	%)	$	226,862		$	243,157		(6.7	%)
Tenant reimbursements		5,798			7,579		(23.5	%)		26,011			29,864		(12.9	%)
Other property income		509			802		(36.5	%)		3,668			6,795		(46.0	%)
Total operating revenues		61,820			67,323		(8.2	%)		256,541			279,816		(8.3	%)
Operating Expenses:
Property expenses		11,269			12,090		(6.8	%)		46,790			48,028		(2.6	%)
Real estate taxes		5,214			5,323		(2.0	%)		21,273			20,940		1.6	%
Provision for bad debts		174			383		(54.6	%)		569			4,051		(86.0	%)
Ground leases		368			390		(5.6	%)		1,591			1,612		(1.3	%)
Total operating expenses		17,025			18,186		(6.4	%)		70,223			74,631		(5.9	%)
GAAP Net Operating Income	$	44,795		$	49,137		(8.8	%)	$	186,318		$	205,185		(9.2	%)
Same Store Analysis (Cash Basis) (2)
	Three Months Ended December 31,								Year Ended December 31,
	2009			2008			% Change		2009			2008			% Change
Total operating revenues	$	58,633		$	64,769		(9.5	%)	$	243,766		$	268,592		(9.2	%)
Total operating expenses		16,851			17,803		(5.3	%)		69,654			70,580		(1.3	%)
Cash Net Operating Income	$	41,782		$	46,966		(11.0	%)	$	174,112		$	198,012		(12.1	%)

(1) Same store defined as all stabilized properties owned as of January 1, 2008 and still owned and in the stabilized portfolio as of December 31, 2009.

(2) Please refer to page 28 for a reconciliation of the Same Store measures on this page to Net income Available to Common Stockholders.

7

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	# of Buildings	Portfolio Breakdown				Total Square Feet	Occupancy at: (1)
		NOI (2)		Sq. Ft.			12/31/2009		9/30/2009		12/31/2008
STABILIZED PORTFOLIO:
OCCUPANCY BY PRODUCT TYPE:
Office:
Los Angeles	25	28.4	%	24.3	%	3,006,509	88.2	%	88.7	%	92.1	%
San Diego	58	56.3	%	41.1	%	5,078,178	76.8	%	78.2	%	83.1	%
Orange County	5	0.8	%	2.2	%	277,340	49.8	%	52.5	%	67.9	%
Other	5	2.5	%	2.8	%	346,439	93.9	%	93.8	%	94.2	%
Subtotal	93	88.0	%	70.4	%	8,708,466	80.6	%	81.6	%	86.2	%
Industrial:
Los Angeles	1	1.3	%	1.6	%	192,053	100.0	%	100.0	%	100.0	%
Orange County	40	10.7	%	28.0	%	3,462,410	87.6	%	83.7	%	96.1	%
Subtotal	41	12.0	%	29.6	%	3,654,463	88.2	%	84.6	%	96.3	%
OCCUPANCY BY REGION:
Los Angeles	26	29.7	%	25.9	%	3,198,562	88.9	%	89.4	%	92.6	%
San Diego	58	56.3	%	41.1	%	5,078,178	76.8	%	78.2	%	83.1	%
Orange County	45	11.5	%	30.2	%	3,739,750	84.8	%	81.4	%	94.1	%
Other	5	2.5	%	2.8	%	346,439	93.9	%	93.8	%	94.2	%
TOTAL STABILIZED PORTFOLIO	134	100.0	%	100.0	%	12,362,929	82.8	%	82.5	%	89.2	%
REENTITLEMENT PROPERTY:
Industrial:
Orange County (17150 Von Karman)	1					157,458
TOTAL PORTFOLIO	135					12,520,387

AVERAGE OCCUPANCY - STABILIZED PORTFOLIO

	Office		Industrial		Total
Quarter-to-Date	81.0	%	88.2	%	83.1	%
Year-to-Date	83.3	%	89.8	%	85.3	%

AVERAGE OCCUPANCY - SAME STORE PORTFOLIO

	Office		Industrial		Total
Quarter-to-Date	81.6	%	88.2	%	83.6	%
Year-to-Date	84.0	%	89.8	%	85.8	%

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

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

8

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	City/ Submarket	Square Feet	Occupancy
Office:
Los Angeles, California
23925 Park Sorrento	Calabasas	11,789	100.0	%
23975 Park Sorrento	Calabasas	100,592	72.9	%
24025 Park Sorrento	Calabasas	102,264	100.0	%
26541 Agoura Road	Calabasas	91,327	0.0	%
2240 E. Imperial Highway	El Segundo	122,870	100.0	%
2250 E. Imperial Highway	El Segundo	293,261	88.3	%
2260 E. Imperial Highway	El Segundo	286,151	100.0	%
909 Sepulveda Boulevard	El Segundo	241,607	97.2	%
999 Sepulveda Boulevard	El Segundo	127,901	100.0	%
3750 Kilroy Airport Way	Long Beach	10,457	100.0	%
3760 Kilroy Airport Way	Long Beach	165,278	100.0	%
3780 Kilroy Airport Way	Long Beach	219,745	89.8	%
3800 Kilroy Airport Way	Long Beach	192,476	100.0	%
3840 Kilroy Airport Way	Long Beach	136,026	100.0	%
3880 Kilroy Airport Way	Long Beach	98,243	100.0	%
3900 Kilroy Airport Way	Long Beach	126,840	66.2	%
12100 W. Olympic Boulevard	Los Angeles	150,167	100.0	%
12200 W. Olympic Boulevard	Los Angeles	150,302	94.7	%
12312 W. Olympic Boulevard	Los Angeles	78,000	100.0	%
1633 26th Street	Santa Monica	44,915	100.0	%
2100 Colorado Avenue	Santa Monica	94,844	0.0	%
3130 Wilshire Boulevard	Santa Monica	88,339	80.3	%
501 Santa Monica Boulevard	Santa Monica	73,115	86.3	%
Total Los Angeles Office		3,006,509	88.2	%

9

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	City/ Submarket	Square Feet	Occupancy
Office:
San Diego, California
12225 El Camino Real	Del Mar	60,148	24.5	%
12235 El Camino Real	Del Mar	54,673	100.0	%
12340 El Camino Real	Del Mar	87,405	100.0	%
12390 El Camino Real	Del Mar	72,332	100.0	%
12348 High Bluff Drive	Del Mar	38,710	100.0	%
12400 High Bluff Drive	Del Mar	208,464	100.0	%
3579 Valley Centre Drive	Del Mar	52,375	0.0	%
3611 Valley Centre Drive	Del Mar	130,178	100.0	%
3661 Valley Centre Drive	Del Mar	129,752	100.0	%
3721 Valley Centre Drive	Del Mar	114,780	100.0	%
3811 Valley Centre Drive	Del Mar	112,067	100.0	%
6200 Greenwich Drive	Governor Park	71,000	100.0	%
6220 Greenwich Drive	Governor Park	141,214	0.0	%
15051 Avenue of Science	I-15 Corridor	70,617	100.0	%
15073 Avenue of Science	I-15 Corridor	46,759	100.0	%
15231 Avenue of Science	I-15 Corridor	65,638	0.0	%
15253 Avenue of Science	I-15 Corridor	37,437	0.0	%
15333 Avenue of Science	I-15 Corridor	78,880	0.0	%
15378 Avenue of Science	I-15 Corridor	68,910	100.0	%
15004 Innovation Drive	I-15 Corridor	150,801	100.0	%
15435 Innovation Drive	I-15 Corridor	51,500	0.0	%
15445 Innovation Drive	I-15 Corridor	51,500	0.0	%
13280 S. Evening Creek Drive	I-15 Corridor	42,971	46.5	%
13290 S. Evening Creek Drive	I-15 Corridor	61,176	0.0	%
13480 Evening Creek Drive North	I-15 Corridor	149,817	100.0	%
13500 Evening Creek Drive North	I-15 Corridor	142,742	97.6	%
13520 Evening Creek Drive North	I-15 Corridor	141,368	93.0	%
7525 Torrey Santa Fe	56 Corridor	103,979	100.0	%
7535 Torrey Santa Fe	56 Corridor	130,243	100.0	%
7545 Torrey Santa Fe	56 Corridor	130,354	100.0	%
7555 Torrey Santa Fe	56 Corridor	101,236	100.0	%
10020 Pacific Mesa Boulevard	Sorrento Mesa	318,000	100.0	%
4910 Directors Place	Sorrento Mesa	50,925	0.0	%
4921 Directors Place	Sorrento Mesa	55,500	0.0	%
4939 Directors Place	Sorrento Mesa	60,662	100.0	%
4955 Directors Place	Sorrento Mesa	76,246	100.0	%
5005 Wateridge Vista Drive	Sorrento Mesa	61,460	0.0	%
5010 Wateridge Vista Drive	Sorrento Mesa	111,318	0.0	%
10243 Genetic Center Drive	Sorrento Mesa	102,875	0.0	%
6055 Lusk Avenue	Sorrento Mesa	93,000	100.0	%
6260 Sequence Drive	Sorrento Mesa	130,536	100.0	%
6290 Sequence Drive	Sorrento Mesa	90,000	100.0	%
6310 Sequence Drive	Sorrento Mesa	62,415	100.0	%
6340 Sequence Drive	Sorrento Mesa	66,400	100.0	%
6350 Sequence Drive	Sorrento Mesa	132,600	100.0	%
10390 Pacific Center Court	Sorrento Mesa	68,400	100.0	%
10394 Pacific Center Court	Sorrento Mesa	59,630	100.0	%
10398 Pacific Center Court	Sorrento Mesa	43,645	0.0	%
10421 Pacific Center Court	Sorrento Mesa	79,871	0.0	%
10445 Pacific Center Court	Sorrento Mesa	48,709	100.0	%
10455 Pacific Center Court	Sorrento Mesa	90,000	100.0	%
10350 Barnes Canyon	Sorrento Mesa	38,018	100.0	%
10120 Pacific Heights	Sorrento Mesa	52,540	100.0	%
5717 Pacific Center Boulevard	Sorrento Mesa	67,995	100.0	%
4690 Executive Drive	University Towne Center	47,212	88.3	%
9455 Towne Center Drive	University Towne Center	45,195	0.0	%
9785 Towne Center Drive	University Towne Center	75,534	100.0	%
9791 Towne Center Drive	University Towne Center	50,466	100.0	%
Total San Diego Office		5,078,178	76.8	%

10

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	City/ Submarket	Square Feet	Occupancy
Office:
Orange County, California
4175 E. La Palma Avenue	Anaheim	43,263	91.7	%
8101 Kaiser Boulevard	Anaheim	59,790	88.0	%
601 Valencia Avenue	Brea	60,891	0.0	%
603 Valencia Avenue	Brea	45,900	10.1	%
111 Pacifica	Irvine Spectrum	67,496	61.2	%
Total Orange County Office		277,340	49.8	%
Other
5151 Camino Ruiz	Camarillo	187,861	89.4	%
5153 Camino Ruiz	Camarillo	38,655	100.0	%
5155 Camino Ruiz	Camarillo	38,856	100.0	%
2829 Townsgate Road	Thousand Oaks	81,067	98.4	%
Total Other Office		346,439	93.9	%
Total Office		8,708,466	80.6	%
Industrial:
Los Angeles, California
2031 E. Mariposa Avenue	El Segundo	192,053	100.0	%
Total Los Angeles Industrial		192,053	100.0	%

11

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview

	City/ Submarket	Square Feet	Occupancy
Industrial:
Orange County, California
1000 E. Ball Road	Anaheim	100,000	100.0	%
1230 S. Lewis Road	Anaheim	57,730	100.0	%
1250 N. Tustin Avenue	Anaheim	84,185	100.0	%
3125 E. Coronado Street	Anaheim	144,000	0.0	%
3130/3150 Miraloma Avenue	Anaheim	144,000	100.0	%
3250 E. Carpenter Avenue	Anaheim	41,225	100.0	%
3340 E. La Palma Avenue	Anaheim	153,320	0.0	%
3355 E. La Palma Avenue	Anaheim	98,200	100.0	%
4123 E. La Palma Avenue	Anaheim	70,863	100.0	%
4155 E. La Palma Avenue	Anaheim	74,618	88.8	%
5115 E. La Palma Avenue	Anaheim	286,139	100.0	%
5325 E. Hunter Avenue	Anaheim	110,487	100.0	%
1145 N. Ocean Boulevard	Anaheim	65,447	100.0	%
1201 N. Miller Street	Anaheim	119,612	100.0	%
1211 N. Miller Street	Anaheim	200,646	100.0	%
1231 N. Miller Street	Anaheim	113,242	0.0	%
660 N. Puente Street	Brea	51,567	100.0	%
950 W. Central Avenue	Brea	24,000	75.0	%
1050 W. Central Avenue	Brea	30,000	100.0	%
1150 W. Central Avenue	Brea	30,000	100.0	%
895 Beacon Street	Brea	54,795	100.0	%
955 Beacon Street	Brea	37,916	100.0	%
1125 Beacon Street	Brea	49,178	100.0	%
925 Lambert Road	Brea	80,000	100.0	%
1075 Lambert Road	Brea	98,811	100.0	%
1675 MacArthur Boulevard	Costa Mesa	50,842	100.0	%
25902 Towne Center Drive	Foothill Ranch	309,685	100.0	%
12681 / 12691 Pala Drive	Garden Grove	84,700	100.0	%
7421 Orangewood Avenue	Garden Grove	82,602	100.0	%
7091 Belgrave Avenue	Garden Grove	70,000	100.0	%
12271 Industry Street	Garden Grove	20,000	75.0	%
12311 Industry Street	Garden Grove	25,000	100.0	%
7261 Lampson Avenue	Garden Grove	47,092	100.0	%
12472 Edison Way	Garden Grove	55,576	100.0	%
12442 Knott Street	Garden Grove	58,303	100.0	%
2055 S.E. Main Street	Irvine	47,583	100.0	%
1951 E. Carnegie Avenue	Santa Ana	100,000	100.0	%
2525 Pullman Street	Santa Ana	103,380	100.0	%
14831 Franklin Avenue	Tustin	36,256	100.0	%
2911 Dow Avenue	Tustin	51,410	100.0	%
Total Orange County Industrial		3,462,410	87.6	%
Total Industrial		3,654,463	88.2	%

12

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Lease Commencement Information by Segment

For Leases That Commenced During the Three Months Ended December 31, 2009

	1st & 2nd Generation				2nd Generation
	# of Leases (1)		Square Feet (1)		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.)
	New	Renewal	New	Renewal
Office	12	11	65,873	207,661	$	23.90	$	0.39	21.9	%	7.3	%	75.0	%	89
Industrial	3	4	139,380	108,408		6.58		0.51	(7.9	%)	(18.6	%)	100.0	%	65
Total	15	15	205,253	316,069	$	15.67	$	0.42	15.8	%	1.7	%	82.0	%	77

For Leases That Commenced During the Year Ended December 31, 2009

	1st & 2nd Generation				2nd Generation
	# of Leases (1)		Square Feet (1)		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.)
	New	Renewal	New	Renewal
Office	37	45	221,229	680,977	$	22.97	$	0.86	15.1	%	6.5	%	59.5	%	66
Industrial	6	9	248,380	545,143		4.58		0.85	9.1	%	(5.4	%)	60.5	%	74
Total	43	54	469,609	1,226,120	$	14.36	$	0.86	13.8	%	3.8	%	60.0	%	70

(1) Represents leasing activity for leases that commenced during the period shown, including first and second generation space, 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 expiring 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 expiring 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.

13

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures

($ in thousands)

Nonrecurring Capital Expenditures:
	Q1 2009		Q2 2009		Q3 2009		Q4 2009		Total 2009
Capital Improvements	$	1,404	$	2,968	$	881	$	1,409	$	6,662
Tenant Improvements & Leasing Commissions		—		—		—		801		801
Total	$	1,404	$	2,968	$	881	$	2,210	$	7,463
Recurring Capital Expenditures:
	Q1 2009		Q2 2009		Q3 2009		Q4 2009		Total 2009
Capital Improvements
Office	$	1,522	$	1,416	$	1,127	$	3,391	$	7,456
Industrial		425		12		854		1,857		3,148
		1,947		1,428		1,981		5,248		10,604
Tenant Improvements & Leasing Commissions (1)
Office		1,764		3,161		7,021		6,239		18,185
Industrial		1,148		232		15		947		2,342
		2,912		3,393		7,036		7,186		20,527
Total
Office		3,286		4,577		8,148		9,630		25,641
Industrial		1,573		244		869		2,804		5,490
	$	4,859	$	4,821	$	9,017	$	12,434	$	31,131

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

14

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Lease Expiration Summary Schedule ⁽¹⁾

($ in thousands)

Year of Expiration	# of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annualized Base Rent (2)		% of Total Annualized Base Rent (2)		Annualized Rent per Sq. Ft.(2)
OFFICE:
2010	70	843,916	12.2	%	$	20,301	10.2	%	$	24.06
2011	58	537,893	7.8	%		11,485	5.7	%		21.35
2012	58	758,736	11.0	%		19,973	10.0	%		26.32
2013	45	579,059	8.4	%		14,426	7.2	%		24.91
2014	41	1,019,348	14.8	%		25,918	13.0	%		25.43
2015	30	616,477	8.9	%		18,308	9.2	%		29.70
2016	7	159,552	2.3	%		3,709	1.9	%		23.25
2017	17	1,186,858	17.2	%		33,527	16.8	%		28.25
2018	13	639,502	9.3	%		28,982	14.5	%		45.32
2019	4	215,375	3.1	%		7,987	4.0	%		37.08
2020 and beyond	4	342,868	5.0	%		15,352	7.5	%		44.78
Subtotal	347	6,899,584	100.0	%	$	199,968	100.0	%	$	28.98
INDUSTRIAL:
2010	10	243,060	7.5	%	$	1,941	7.5	%	$	7.99
2011	12	376,658	11.7	%		3,345	13.0	%		8.88
2012	12	511,805	15.9	%		3,224	12.5	%		6.30
2013	7	602,455	18.7	%		4,410	17.1	%		7.32
2014	9	466,578	14.5	%		3,743	14.5	%		8.02
2015	9	539,864	16.7	%		3,777	14.6	%		7.00
2016	1	41,225	1.3	%		314	1.2	%		7.62
2017	1	192,053	6.0	%		2,960	11.5	%		15.41
2018	1	82,602	2.6	%		643	2.5	%		7.78
2019	2	168,200	5.1	%		1,467	5.6	%		8.72
2020 and beyond	—	—	—			—	—			—
Subtotal	64	3,224,500	100.0	%	$	25,824	100.0	%	$	8.01
TOTAL PORTFOLIO:
2010	80	1,086,976	10.7	%	$	22,242	9.9	%	$	20.46
2011	70	914,551	9.0	%		14,830	6.6	%		16.22
2012	70	1,270,541	12.5	%		23,197	10.3	%		18.26
2013	52	1,181,514	11.7	%		18,836	8.3	%		15.94
2014	50	1,485,926	14.7	%		29,661	13.1	%		19.96
2015	39	1,156,341	11.4	%		22,085	9.8	%		19.10
2016	8	200,777	2.0	%		4,023	1.8	%		20.04
2017	18	1,378,911	13.6	%		36,487	16.2	%		26.46
2018	14	722,104	7.1	%		29,625	13.1	%		41.03
2019	6	383,575	3.8	%		9,454	4.2	%		24.65
2020 and beyond	4	342,868	3.5	%		15,352	6.7	%		44.78
Total	411	10,124,084	100.0	%	$	225,792	100.0	%	$	22.30

(1) The information presented reflects leasing activity through December 31, 2009. 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 as of December 31, 2009.

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

15

Kilroy Realty Corporation

Fourth Quarter 2009 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.		Annualized Base Rent (2)		% of Total Annualized Base Rent (2)		Annualized Rent per Sq. Ft. (2)		# of Expiring Leases	Total Square Feet	% of Total Regional Sq. Ft.		Annualized Base Rent (2)		% of Total Annualized Base Rent (2)		Annualized Rent per Sq. Ft. (2)
OFFICE:
2010	44	602,474	23.4	%	$	13,370	18.5	%	$	22.19	7	16,669	12.7	%	$	393	13.4	%	$	23.58
2011	40	240,304	9.3	%		7,121	9.8	%		29.63	6	17,179	13.1	%		400	13.6	%		23.28
2012	37	269,546	10.5	%		7,148	9.9	%		26.52	9	44,686	34.0	%		1,083	36.8	%		24.24
2013	36	297,431	11.5	%		7,783	10.8	%		26.17	3	8,540	6.5	%		193	6.6	%		22.60
2014	28	564,561	21.9	%		15,891	22.0	%		28.15	5	13,991	10.6	%		247	8.4	%		17.65
2015	15	232,091	9.0	%		7,413	10.2	%		31.94	2	30,397	23.1	%		624	21.2	%		20.53
2016	6	69,552	2.7	%		2,597	3.6	%		37.34	—	—	—			—	—			—
2017	5	95,936	3.7	%		3,463	4.8	%		36.10	—	—	—			—	—			—
2018	3	35,140	1.4	%		1,196	1.7	%		34.04	—	—	—			—	—			—
2019	2	170,596	6.6	%		6,348	8.7	%		37.21	—	—	—			—	—			—
2020 and beyond	—	—	—			—	—			—	—	—	—			—	—			—
Subtotal	216	2,577,631	100.0	%	$	72,330	100.0	%	$	28.06	32	131,462	100.0	%	$	2,940	100.0	%	$	22.36
INDUSTRIAL:
2010	—	—	—			—	—			—	10	243,060	8.0	%	$	1,941	8.5	%	$	7.99
2011	—	—	—			—	—			—	12	376,658	12.4	%		3,345	14.6	%		8.88
2012	—	—	—			—	—			—	12	511,805	16.9	%		3,224	14.1	%		6.30
2013	—	—	—			—	—			—	7	602,455	19.9	%		4,410	19.3	%		7.32
2014	—	—	—			—	—			—	9	466,578	15.4	%		3,743	16.4	%		8.02
2015	—	—	—			—	—			—	9	539,864	17.8	%		3,777	16.5	%		7.00
2016	—	—	—			—	—			—	1	41,225	1.4	%		314	1.4	%		7.62
2017	1	192,053	100.0	%		2,960	100.0	%		15.41	—	—	—			—	—			—
2018	—	—	—			—	—			—	1	82,602	2.7	%		643	2.8	%		7.78
2019	—	—	—			—	—			—	2	168,200	5.5	%		1,467	6.4	%		8.72
2020 and beyond	—	—	—			—	—			—	—	—	—			—	—			—
Subtotal	1	192,053	100.0	%	$	2,960	100.0	%	$	15.41	63	3,032,447	100.0	%	$	22,864	100.0	%	$	7.54
TOTAL PORTFOLIO:
2010	44	602,474	21.8	%	$	13,370	17.8	%	$	22.19	17	259,729	8.2	%	$	2,334	9.0	%	$	8.99
2011	40	240,304	8.7	%		7,121	9.5	%		29.63	18	393,837	12.4	%		3,745	14.5	%		9.51
2012	37	269,546	9.7	%		7,148	9.5	%		26.52	21	556,491	17.6	%		4,307	16.7	%		7.74
2013	36	297,431	10.7	%		7,783	10.3	%		26.17	10	610,995	19.3	%		4,603	17.8	%		7.53
2014	28	564,561	20.4	%		15,891	21.1	%		28.15	14	480,569	15.2	%		3,990	15.5	%		8.30
2015	15	232,091	8.4	%		7,413	9.8	%		31.94	11	570,261	18.0	%		4,401	17.1	%		7.72
2016	6	69,552	2.5	%		2,597	3.4	%		37.34	1	41,225	1.3	%		314	1.2	%		7.62
2017	6	287,989	10.4	%		6,423	8.5	%		22.30	—	—	—			—	—			—
2018	3	35,140	1.3	%		1,196	1.6	%		34.04	1	82,602	2.6	%		643	2.5	%		7.78
2019	2	170,596	6.1	%		6,348	8.5	%		37.21	2	168,200	5.4	%		1,467	5.7	%		8.72
2020 and beyond	—	—	—			—	—			—	—	—	—			—	—			—
Total	217	2,769,684	100.0	%	$	75,290	100.0	%	$	27.18	95	3,163,909	100.0	%	$	25,804	100.0	%	$	8.16

(1) The information presented reflects leasing activity through December 31, 2009. 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 as of December 31, 2009.

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

16

Kilroy Realty Corporation

Fourth Quarter 2009 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.		Annualized Base Rent (2)		% of Total Annualized Base Rent (2)		Annualized Rent per Sq. Ft. (2)		# of Expiring Leases	Total Square Feet	% of Total Regional Sq. Ft.		Annualized Base Rent (2)		% of Total Annualized Base Rent (2)		Annualized Rent per Sq. Ft. (2)
OFFICE:
2010	16	191,034	4.9	%	$	5,732	4.8	%	$	30.01	3	33,739	10.4	%	$	806	14.7	%	$	23.89
2011	4	68,744	1.8	%		1,464	1.2	%		21.30	8	211,666	65.4	%		2,500	45.5	%		11.81
2012	11	438,954	11.4	%		11,548	9.7	%		26.31	1	5,550	1.7	%		194	3.5	%		34.95
2013	6	273,088	7.1	%		6,450	5.4	%		23.62	—	—	—			—	—			—
2014	7	434,037	11.2	%		9,559	8.0	%		22.02	1	6,759	2.1	%		221	4.0	%		32.70
2015	6	288,065	7.4	%		8,495	7.1	%		29.49	7	65,924	20.4	%		1,776	32.3	%		26.94
2016	1	90,000	2.3	%		1,112	0.9	%		12.36	—	—	—			—	—			—
2017	12	1,090,922	28.2	%		30,064	25.2	%		27.56	—	—	—			—	—			—
2018	10	604,362	15.6	%		27,786	23.3	%		45.98	—	—	—			—	—			—
2019	2	44,779	1.2	%		1,639	1.4	%		36.60	—	—	—			—	—			—
2020 and beyond	4	342,868	8.9	%		15,352	13.0	%		44.78	—	—	—			—	—			—
Subtotal	79	3,866,853	100.0	%	$	119,201	100.0	%	$	30.83	20	323,638	100.0	%	$	5,497	100.0	%	$	16.99
INDUSTRIAL:
2010	—	—	—			—	—			—	—	—	—			—	—			—
2011	—	—	—			—	—			—	—	—	—			—	—			—
2012	—	—	—			—	—			—	—	—	—			—	—			—
2013	—	—	—			—	—			—	—	—	—			—	—			—
2014	—	—	—			—	—			—	—	—	—			—	—			—
2015	—	—	—			—	—			—	—	—	—			—	—			—
2016	—	—	—			—	—			—	—	—	—			—	—			—
2017	—	—	—			—	—			—	—	—	—			—	—			—
2018	—	—	—			—	—			—	—	—	—			—	—			—
2019	—	—	—			—	—			—	—	—	—			—	—			—
2020 and beyond	—	—	—			—	—			—	—	—	—			—	—			—
Subtotal	—	—	—			—	—			—	—	—	—			—	—			—
TOTAL PORTFOLIO:
2010	16	191,034	4.9	%	$	5,732	4.8	%	$	30.01	3	33,739	10.4	%	$	806	14.7	%	$	23.89
2011	4	68,744	1.8	%		1,464	1.2	%		21.30	8	211,666	65.4	%		2,500	45.5	%		11.81
2012	11	438,954	11.4	%		11,548	9.7	%		26.31	1	5,550	1.7	%		194	3.5	%		34.95
2013	6	273,088	7.1	%		6,450	5.4	%		23.62	—	—	—			—	—			—
2014	7	434,037	11.2	%		9,559	8.0	%		22.02	1	6,759	2.1	%		221	4.0	%		32.70
2015	6	288,065	7.4	%		8,495	7.1	%		29.49	7	65,924	20.4	%		1,776	32.3	%		26.94
2016	1	90,000	2.3	%		1,112	0.9	%		12.36	—	—	—			—	—			—
2017	12	1,090,922	28.2	%		30,064	25.2	%		27.56	—	—	—			—	—			—
2018	10	604,362	15.6	%		27,786	23.3	%		45.98	—	—	—			—	—			—
2019	2	44,779	1.2	%		1,639	1.4	%		36.60	—	—	—			—	—			—
2020 and beyond	4	342,868	8.9	%		15,352	13.0	%		44.78	—	—	—			—	—			—
Total	79	3,866,853	100.0	%	$	119,201	100.0	%	$	30.83	20	323,638	100.0	%	$	5,497	100.0	%	$	16.99

(1) The information presented reflects leasing activity through December 31, 2009. 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 as of December 31, 2009.

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

17

KILROY REALTY CORPORATION

Fourth Quarter 2009 Supplemental Financial Report

Quarterly Lease Expirations for 2010 ⁽¹⁾

($ in thousands)

	# of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annualized Base Rent (2)		% of Total Annualized Base Rent (2)		Annualized Rent per Sq. Ft. (2)
OFFICE:
Q1 2010	10	131,113	1.9	%	$	2,906	1.5	%	$	22.16
Q2 2010	15	51,933	0.8	%		1,577	0.8	%		30.37
Q3 2010	27	538,544	7.8	%		12,770	6.4	%		23.71
Q4 2010	18	122,326	1.7	%		3,048	1.5	%		24.92
Subtotal 2010	70	843,916	12.2	%	$	20,301	10.2	%	$	24.06
INDUSTRIAL:
Q1 2010	4	108,446	3.4	%	$	706	2.7	%	$	6.51
Q2 2010	2	38,130	1.2	%		331	1.3	%		8.68
Q3 2010	—	—	—			—	—			—
Q4 2010	4	96,484	2.9	%		904	3.5	%		9.37
Subtotal 2010	10	243,060	7.5	%	$	1,941	7.5	%	$	7.99
TOTAL PORTFOLIO:
Q1 2010	14	239,559	2.4	%	$	3,612	1.6	%	$	15.08
Q2 2010	17	90,063	0.9	%		1,908	0.8	%		21.19
Q3 2010	27	538,544	5.3	%		12,770	5.7	%		23.71
Q4 2010	22	218,810	2.1	%		3,952	1.8	%		18.06
Total 2010	80	1,086,976	10.7	%	$	22,242	9.9	%	$	20.46

(1) The information presented reflects leasing activity through December 31, 2009. 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 as of December 31, 2009.

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

18

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Top Fifteen Tenants ⁽¹⁾

($ in thousands)

Tenant Name	Product Type	Annualized Base Rental Revenues (2)		Rentable Square Feet	Percentage of Total Annualized Base Rental Revenues (2)		Percentage of Total Rentable Square Feet
Intuit, Inc.	Office	$	15,126	536,812	6.7	%	4.3	%
Bridgepoint Education, Inc.	Office		14,257	302,078	6.3	%	2.4	%
Scripps Health	Office		12,562	262,868	5.6	%	2.1	%
CareFusion Corporation	Office		10,087	459,709	4.5	%	3.7	%
DIRECTV, Inc.	Office		8,540	314,207	3.8	%	2.5	%
AMN Healthcare, Inc.	Office		8,341	175,672	3.7	%	1.4	%
Fish & Richardson P.C.	Office		6,071	139,538	2.7	%	1.1	%
The Boeing Company	Office / Industrial		5,905	351,598	2.6	%	2.8	%
Verenium Corporation	Office		5,158	136,908	2.3	%	1.1	%
Epson America, Inc.	Office		4,915	136,026	2.2	%	1.1	%
Hewlett-Packard Company	Office		4,348	117,948	1.9	%	1.0	%
Scan Health Plan	Office		3,810	130,137	1.7	%	1.1	%
Avnet, Inc.	Office		3,768	114,780	1.7	%	0.9	%
Comcast Corporation	Office		3,308	116,881	1.5	%	0.9	%
Northrup Grumman Corporation	Office		3,268	117,376	1.4	%	0.9	%
Total Top Fifteen Tenants		$	109,464	3,412,538	48.6	%	27.3	%

(1) The information presented is as of December 31, 2009.

(2) 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 December 31, 2009.

19

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

2009 Dispositions

($ in millions)

Property	City / Region	Type	Month of Disposition	Rentable Square Feet	Sales Price
1st QUARTER:
NONE
2nd QUARTER:
12400 Industry Street	Garden Grove / Orange County	Industrial	June	64,200	$	5.1
3rd QUARTER:
NONE
4th QUARTER:
NONE

20

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Stabilized Development Projects

($ in millions)

DEVELOPMENT PROJECTS: Project	Location	Type	Start Date	Compl. Date	Rentable Square Feet	Total Estimated Investment		Total Costs as of 12/31/09 (1)		% Leased
1st QUARTER:
NONE
2nd QUARTER:
NONE
3rd QUARTER:
NONE
4th QUARTER
Sorrento Gateway - Lot 1 4910 Directors Place	Sorrento Mesa	Medical Office	4Q 2007	4Q 2008	50,925	$	22.7	$	17.2	25	%

(1) Represents cash paid and costs incurred as of December 31, 2009.

21

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Future Development Pipeline

($ in millions)

Project	Location	Type	Gross Site Acreage	Estimated Rentable Square Feet	Total Costs as of 12/31/2009 (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		27.2
San Diego Corporate Center - Phase I and II	Del Mar	Office	23.0	500,000		102.6
Santa Fe Summit - Phase II and III	56 Corridor	Office	21.8	600,000		73.7
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	$	254.0

(1) Represents cash paid and costs incurred as of December 31, 2009.

22

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Capital Structure

As of December 31, 2009

($ in thousands)

	Shares/Units As of December 31, 2009	Aggregate Principal Amount or $ Value Equivalent		% of Total Market Capitalization
DEBT:
Unsecured Line of Credit		$	97,000	3.8	%
Unsecured Exchangeable Senior Notes due 2012 (1)			298,000	11.5	%
Unsecured Exchangeable Senior Notes due 2014 (2)			172,500	6.7	%
Unsecured Senior Notes due 2010			61,000	2.4	%
Unsecured Senior Notes due 2014			83,000	3.2	%
Secured Debt			294,574	11.4	%
Total Debt		$	1,006,074	39.0	%
EQUITY AND NONCONTROLLING INTERESTS:
7.450% Series A Cumulative Redeemable Preferred Units (3)	1,500,000	$	75,000	2.9	%
7.800% Series E Cumulative Redeemable Preferred Stock (4)	1,610,000		40,250	1.6	%
7.500% Series F Cumulative Redeemable Preferred Stock (4)	3,450,000		86,250	3.3	%
Common Units Outstanding (5)	1,723,131		52,848	2.0	%
Common Shares Outstanding (5)	43,148,762		1,323,373	51.2	%
Total Equity and Noncontrolling Interests		$	1,577,721	61.0	%
TOTAL MARKET CAPITALIZATION		$	2,583,795	100.0	%

(1) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $13.9 million as of December 31, 2009. During the third and fourth quarters of 2009, the Company repurchased exchangeable senior notes with an aggregate gross stated principal amount of $162.0 million for approximately $150.4 million in cash.

(2) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $20.1 million as of December 31, 2009.

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

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

(5) Value based on closing share price of $30.67 on December 31, 2009.

23

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Debt Analysis

As of December 31, 2009

($ in millions)

TOTAL DEBT COMPOSITION

	% of Total Debt		Weighted Average
			Interest Rate		Maturity
Secured vs. Unsecured Debt:
Unsecured Debt (1) (2)	70.7	%	3.8	%	2.8
Secured Debt	29.3	%	5.7	%	2.1
Floating- vs. Fixed-Rate Debt:
Floating-Rate Debt (2)	13.0	%	1.1	%	0.3
Fixed-Rate Debt (1)	87.0	%	4.8	%	2.9
Total Debt (1) (2)			4.3	%	2.6
Total Debt Including Loan Fees (1)			4.8	%
GAAP Effective Interest Rate (3)			5.9	%

UNSECURED LINE OF CREDIT

Total Line	Outstanding Balance	Expiration Date
$550.0	$97.0	April 2010 (2)

DEBT COVENANTS

Key Financial Covenants (as defined per Credit Agreement):	Covenant	Actual Performance as of December 31, 2009
Total debt to total asset value (4)	< 60%	36%
Fixed charge coverage ratio	> 1.5x	2.4x
Minimum consolidated tangible net worth	> $700 million + 75% of all Net Offering Proceeds (5)	$1.8 billion
Dividend coverage ratio	< 95% of FFO	63% of FFO
Unsecured debt ratio (4)(6)	> 1.67x	3.09x
Unencumbered asset pool debt service coverage (7)	³ 2.0x	5.7x

CAPITALIZED INTEREST, LOAN FEES, AND DEBT DISCOUNT

Quarter-to-Date	Year-to-Date
$2.7	$9.7

(1) Excludes the impact of the amortization of the noncash debt discount on the Company’s exchangeable senior notes.

(2) The maturity does not reflect the Company’s option to extend the maturity of the unsecured line of credit by one year.

(3) Represents the GAAP effective interest rate for total debt, which includes the impact of the amortization of the noncash debt discount related to the accounting for the Company’s exchangeable senior notes.

(4) In the event of an acquisition of one or more properties for $150 million or more, the total debt to total asset value may exceed 60% for up to two consecutive quarters but in no event exceed 65%, and the unsecured debt ratio may be less than 1.67x for up to two consecutive quarters but in no event be less than 1.54x.

(5) This covenant level was calculated at $974 million as of December 31, 2009.

(6) The unsecured debt ratio is calculated by dividing the unsecured asset pool value by the amount of unsecured senior debt.

(7) The unencumbered asset pool debt service coverage is calculated by dividing the unencumbered asset pool net operating cash flow by the unsecured debt service.

24

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Debt Analysis

As of December 31, 2009

($ in thousands)

DEBT MATURITY SCHEDULE
Floating/ Fixed Rate	Rate		Maturity Date		2010		2011		2012		2013		2014		After 2014		Total
Unsecured Debt:
Floating	1.11	%	4/26/2010	(1)	$	97,000											$	97,000
Fixed	3.25	%	4/15/2012							298,000								298,000	(2)
Fixed	4.25	%	11/15/2014											172,500				172,500	(3)
Fixed	5.72	%	8/4/2010			61,000												61,000
Fixed	6.45	%	8/4/2014											83,000				83,000
						158,000				298,000				255,500				711,500
Secured Debt:
Floating	1.00	%	4/26/2010			33,500												33,500
Fixed	7.20	%	4/1/2010			63,170												63,170
Fixed	6.70	%	12/27/2011			1,453		69,980										71,433
Fixed	5.57	%	8/1/2012			1,448		1,532		71,517								74,497
Fixed	4.95	%	8/1/2012			653		687		29,754								31,094
Fixed	8.13	%	11/1/2014			516												516
Fixed	7.15	%	5/1/2017			1,807		1,941		2,084		2,238		2,404		6,569		17,043
Fixed	Various	(4)	Various	(4)		40		52		55		58		59		3,057		3,321
						102,587		74,192		103,410		2,296		2,463		9,626		294,574
Total	4.35	%			$	260,587	$	74,192	$	401,410	$	2,296	$	257,963	$	9,626	$	1,006,074

(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 $13.9 million as of December 31, 2009.

(3) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $20.1 million as of December 31, 2009.

(4) 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, 2010 through September 1, 2038, with interest rates ranging from 4.00% to 6.20%.

25

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures

Included in this section are management’s statements regarding certain non-GAAP financial measures provided in this supplemental financial report and, with respect to Funds From Operations (“FFO”), in the Company’s earnings release on January 25, 2010, 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 nonproperty income and losses, 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, other nonproperty income and losses, 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 nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.

26

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures

EBITDA:

Management believes that earnings before interest expense, depreciation and amortization, gain on early extinguishment of debt, net gains and losses on disposition of discontinued operations, net income attributable to noncontrolling interests, preferred dividends and distributions, and impairment losses (“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, including the impact of general and administrative expenses, 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 the Company’s 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 alone to be insufficient. 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 noncash amortization of deferred financing costs, debt discount and share-based compensation awards, additional cash gain on early extinguishment of debt and contractual cash rents received in advance of revenue recognition, then subtracting tenant improvements, leasing commissions and recurring capital expenditures, and eliminating the net effect of straight-line rents, amortization of deferred revenue related to tenant improvements and cash received prior to revenue recognition and amortization of 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 noncash items, as well as adjusting FFO for recurring capital expenditures and leasing costs. Management also believes that FAD provides useful information to the investment community about the Company’s financial position as compared to other REITs since FAD is a liquidity measure used by other REITs. However, other REITs may use different methodologies for calculating FAD and, accordingly, the Company's FAD may not be comparable to other REITs.

27

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

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

(unaudited, $ in thousands)

	Three Months Ended December 31,						Year Ended December 31,
	2009			2008			2009			2008
Same Store Cash Net Operating Income	$	41,782		$	46,966		$	174,112		$	198,012
Adjustments:
GAAP Operating Revenues Adjustments, net		3,187			2,554			12,775			11,224
GAAP Operating Expenses Adjustments, net		(174	)		(383	)		(569	)		(4,051	)
Same Store GAAP Net Operating Income		44,795			49,137			186,318			205,185
Non-Same Store GAAP Net Operating Income		3,872			3,743			16,911			7,578
Net Operating Income excluding discontinued operations		48,667			52,880			203,229			212,763
Adjustment:
Net Operating Income (Loss) from discontinued operations		—			269			(199	)		888
Net Operating Income, as defined (1)		48,667			53,149			203,030			213,651
Adjustments:
General and administrative expenses		(17,915	)		(10,210	)		(39,938	)		(38,260	)
Interest expense		(11,078	)		(12,923	)		(46,119	)		(45,346	)
Depreciation and amortization (including discontinued operations)		(21,019	)		(21,212	)		(87,652	)		(83,275	)
Interest income and other net investment gains (losses)		226			(285	)		1,300			(93	)
Gain on early extinguishment of debt		1,790			—			4,909			—
Net gain on dispositions of discontinued operations		—			—			2,485			234
Net Income		671			8,519			38,015			46,911
Net loss (income) attributable to noncontrolling common units of the Operating Partnership		119			(198	)		(1,025	)		(1,886	)
Preferred distributions and dividends		(3,799	)		(3,799	)		(15,196	)		(15,196	)
Net (Loss) Income Available to Common Stockholders	$	(3,009	)	$	4,522		$	21,794		$	29,829

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

28

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

Reconciliation of EBITDA to Net Income Available to Common Stockholders

(unaudited, $ in thousands)

	Three Months Ended December 31,
	2009			2008
Net (Loss) Income Available to Common Stockholders	$	(3,009	)	$	4,522
Interest expense		11,078			12,923
Depreciation and amortization		21,019			21,197
Gain on early extinguishment of debt		(1,790	)		—
Net (loss) income attributable to noncontrolling common units of the Operating Partnership		(119	)		198
Preferred distributions and dividends		3,799			3,799
Adjustments for Discontinued Operations:
Depreciation and amortization		—			15
EBITDA (1)	$	30,978		$	42,654

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

29

Kilroy Realty Corporation

Fourth Quarter 2009 Supplemental Financial Report

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

(unaudited, $ in thousands)

	Three Months Ended December 31,						Year Ended December 31,
	2009			2008			2009			2008
Funds Available for Distribution (1)	$	12,921		$	20,076		$	85,886		$	99,256
Adjustments:
Tenant improvements, leasing commissions and recurring capital expenditures		12,434			7,228			31,131			26,620
Gain on early extinguishment of debt		(1,790	)		—			(4,909	)		—
Additional cash gain on early extinguishment of debt		(5,129	)		—			(6,678	)		—
Depreciation for furniture, fixtures and equipment		212			195			827			784
Preferred distributions and dividends		3,799			3,799			15,196			15,196
Provision for uncollectible tenant receivables		174			384			575			675
Changes in assets and liabilities and other adjustments, net (2)		4,344			(2,643	)		2,937			1,950
GAAP Net Cash Provided by Operating Activities	$	26,965		$	29,039		$	124,965		$	144,481

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

(2) Primarily 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; and rents received in advance and tenant security deposits.

30

EX-99.2

Exhibit 99.2

Contact:	FOR RELEASE:
Tyler H. Rose	January 25, 2010
Executive Vice President and Chief Financial Officer
(310) 481-8484 or
Michelle Ngo
Vice President and Treasurer
(310) 481-8581

KILROY REALTY CORPORATION REPORTS

FOURTH QUARTER FINANCIAL RESULTS

Southern California-based REIT Announces It Signed

1.1 Million Square Feet of Leases During the Quarter

LOS ANGELES, January 25, 2010 – Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its fourth quarter and fiscal year ended December 31, 2009, and also announced that it had executed 1.1 million square feet of leases during the final quarter of the year, a number that exceeded its leasing volume for the first three quarters of 2009 combined.

For the quarter ended December 31, 2009, KRC reported a net loss available to common stockholders of $3.0 million, or $0.08 per share, compared to net income available to common stockholders of $4.5 million, or $0.14 per share, in the fourth quarter of 2008. Revenues from continuing operations in the fourth quarter totaled $67.4 million, compared to $72.3 million in the prior year’s fourth quarter. Funds from operations (FFO) for the period totaled $17.7 million, or $0.39 per share, compared to $25.7 million, or $0.73 per share, in the prior year period. The results for the fourth quarter and fiscal year ended December 31, 2009 include a previously announced one-

time $7.0 million charge for separation payments related to the resignation for personal reasons of the company’s former chief financial officer in December 2009.

For its fiscal year ended December 31, 2009, KRC reported net income available to common stockholders of $21.8 million, or $0.53 per share, compared to $29.8 million, or $0.91 per share, in fiscal year ended December 31, 2008. Revenues from continuing operations in 2009 totaled $279.4 million, compared to $289.4 million in 2008. FFO for the year totaled $107.2 million, or $2.60 per share, compared to $114.0 million, or $3.26 per share, in 2008.

Results for the fourth quarter and fiscal year ended December 31, 2009 also include gains on early extinguishment of debt of approximately $1.8 million, or $0.04 per share, and $4.9 million, or $0.12 per share, respectively, related to the company’s repurchase of $122.0 million and $162.0 million, respectively, of its exchangeable senior notes, which mature in 2012. Results for the fiscal year ended December 31, 2008 include a net lease termination fee of approximately $5.0 million, or $0.14 per share, related to an early termination agreement. All per share amounts in this report are presented on a diluted basis. Financial information for prior periods has been adjusted for the retroactive application of new accounting guidance adopted by the company effective January 1, 2009.

KRC said that new or renewing leases the company signed in the fourth quarter included approximately 583,000 square feet of office leases and 545,000 square feet of industrial leases. Approximately 281,000 square feet was leased in San Diego, 273,000 square feet was leased in Los Angeles and 553,000 square feet was leased in Orange County. For the full year, the company executed 2.0 million square feet of leases.

“We made tremendous and encouraging progress in our leasing program during the fourth quarter,” said John B. Kilroy, Jr., the company’s president and chief executive officer, “with results that exceeded our efforts through the first three quarters of 2009 combined. Nonetheless, we expect real estate markets to remain choppy going forward until job growth resumes.”

KRC’s stabilized portfolio increased slightly to just under 12.4 million square feet during the fourth quarter, as the company’s one remaining development project, a 51,000 square-foot medical office building located in the company’s Sorrento Gateway

2

development in coastal San Diego County, was added to the stabilized portfolio. It is currently 25% leased. The stabilized portfolio was 82.8% occupied at year-end 2009.

KRC management will discuss earnings guidance for fiscal 2010 during the company’s January 26, 2010 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) 679-8038, reservation # 12058680. A replay of the conference call will be available via phone through February 9, 2010 at (888) 286-8010, reservation # 55849524, 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. At December 31, 2009, the company owned 8.7 million rentable square feet of commercial office space and 3.7 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 December 31, 2009			Three Months Ended December 31, 2008(1)		Year Ended December 31, 2009			Year Ended December 31, 2008(1)
Revenues from continuing operations	$	67,379		$	72,284	$	279,434		$	289,355
Revenues including discontinued operations	$	67,379		$	72,437	$	279,434		$	290,167
Net (loss) income available for common stockholders	$	(3,009	)	$	4,522	$	21,794		$	29,829
Weighted average common shares outstanding - basic		42,936			32,719		38,705			32,467
Weighted average common shares outstanding - diluted		42,936			32,929		38,732			32,541
Net (loss) income available to common stockholders per share - basic	$	(0.08	)	$	0.14	$	0.53		$	0.91
Net (loss) income available to common stockholders per share - diluted	$	(0.08	)	$	0.14	$	0.53		$	0.91
Funds From Operations (2), (3)	$	17,679		$	25,737	$	107,159		$	113,972
Weighted average common shares/units outstanding - basic (4)		45,502			34,848		41,222			34,904
Weighted average common shares/units outstanding - diluted (4)		45,557			35,058		41,249			34,979
Funds From Operations per common share/unit - basic (4)	$	0.39		$	0.74	$	2.60		$	3.27
Funds From Operations per common share/unit - diluted (4)	$	0.39		$	0.73	$	2.60		$	3.26
Common shares outstanding at end of period							43,149			33,086
Common partnership units outstanding at end of period							1,723			1,754
Total common shares and units outstanding at end of period							44,872			34,840
						December 31, 2009			December 31, 2008
Stabilized portfolio occupancy rates:
Office							80.6	%		86.2	%
Industrial							88.2	%		96.3	%
Weighted average total							82.8	%		89.2	%
Los Angeles							88.9	%		92.6	%
San Diego							76.8	%		83.1	%
Orange County							84.8	%		94.1	%
Other							93.9	%		94.2	%
Weighted average total							82.8	%		89.2	%
Total square feet of stabilized properties owned at end of period:
Office							8,709			8,650
Industrial							3,654			3,719
Total							12,363			12,369

(1) Results have been adjusted for the retroactive application of the new accounting pronouncements adopted by the company on January 1, 2009.

(2) Reconciliation of Net Income Available to Common Stockholders 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 including participating share-based awards and assuming the exchange of all common limited partnership units outstanding.

5

KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31, 2009			December 31, 2008(1)
ASSETS
REAL ESTATE ASSETS:
Land and improvements	$	335,932		$	336,874
Buildings and improvements		1,920,543			1,889,833
Undeveloped land and construction in progress		263,608			248,889
Total real estate held for investment		2,520,083			2,475,596
Accumulated depreciation and amortization		(605,976	)		(532,769	)
Total real estate assets, net		1,914,107			1,942,827
Cash and cash equivalents		9,883			9,553
Restricted cash		2,059			672
Marketable securities		3,452			1,888
Current receivables, net		3,236			5,753
Deferred rent receivables, net		74,392			67,144
Notes receivable		10,679			10,824
Deferred leasing costs and acquisition-related intangibles, net		51,832			53,539
Deferred financing costs, net		8,334			5,883
Prepaid expenses and other assets, net		6,307			4,835
TOTAL ASSETS	$	2,084,281		$	2,102,918
LIABILITIES, NONCONTROLLING INTERESTS AND EQUITY
LIABILITIES:
Secured debt	$	294,574		$	316,456
Exchangeable senior notes, net		436,442			429,892
Unsecured senior notes		144,000			144,000
Unsecured line of credit		97,000			252,000
Accounts payable, accrued expenses and other liabilities		52,533			55,066
Accrued distributions		17,136			21,421
Deferred revenue and acquisition-related liabilities		66,890			76,219
Rents received in advance and tenant security deposits		18,230			19,340
Total liabilities		1,126,805			1,314,394
NONCONTROLLING INTEREST:
7.45% Series A cumulative redeemable preferred units of the Operating Partnership		73,638			73,638
EQUITY
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		431			331
Additional paid-in capital		913,657			700,122
Distributions in excess of earnings		(180,722	)		(137,052	)
Total stockholders’ equity		854,948			684,983
Noncontrolling Interest
Common units of the Operating Partnership		28,890			29,903
Total equity		883,838			714,886
TOTAL LIABILITIES, NONCONTROLLING INTERESTS AND EQUITY	$	2,084,281		$	2,102,918

(1) Results have been adjusted for the retroactive application of the new accounting pronouncements adopted by the company on January 1, 2009.

6

KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended December 31, 2009			Three Months Ended December 31, 2008(1)			Year Ended December 31, 2009			Year Ended December 31, 2008(1)
REVENUES:
Rental income	$	60,690		$	63,606		$	247,649		$	251,520
Tenant reimbursements		6,177			7,875			28,075			30,986
Other property income		512			803			3,710			6,849
Total revenues		67,379			72,284			279,434			289,355
EXPENSES:
Property expenses		12,099			12,682			49,709			48,861
Real estate taxes		6,069			5,948			24,330			22,063
Provision for bad debts		174			383			569			4,051
Ground leases		370			391			1,597			1,617
General and administrative expenses		17,915			10,210			39,938			38,260
Interest expense		11,078			12,923			46,119			45,346
Depreciation and amortization		21,019			21,197			87,627			83,215
Total expenses		68,724			63,734			249,889			243,413
OTHER INCOME (LOSS):
Interest income and other net investment gains (losses)		226			(285	)		1,300			(93	)
Gain on early extinguishment of debt		1,790			—			4,909			—
Total other income (loss)		2,016			(285	)		6,209			(93	)
INCOME FROM CONTINUING OPERATIONS		671			8,265			35,754			45,849
DISCONTINUED OPERATIONS:
Revenues from discontinued operations		—			153			—			812
Expenses from discontinued operations		—			101			(224	)		16
Net gain on dispositions of discontinued operations		—			—			2,485			234
Total income from discontinued operations		—			254			2,261			1,062
NET INCOME		671			8,519			38,015			46,911
Net loss (income) attributable to noncontrolling common units of the Operating Partnership		119			(198	)		(1,025	)		(1,886	)
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION		790			8,321			36,990			45,025
PREFERRED DISTRIBUTIONS AND DIVIDENDS:
Distributions on noncontrolling cumulative redeemable preferred units of the Operating Partnership		(1,397	)		(1,397	)		(5,588	)		(5,588	)
Preferred dividends		(2,402	)		(2,402	)		(9,608	)		(9,608	)
Total preferred distributions and dividends		(3,799	)		(3,799	)		(15,196	)		(15,196	)
NET (LOSS) INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	(3,009	)	$	4,522		$	21,794		$	29,829
Weighted average common shares outstanding - basic		42,936			32,719			38,705			32,467
Weighted average common shares outstanding - diluted		42,936			32,929			38,732			32,541
Net (loss) income available to common stockholders per share - basic	$	(0.08	)	$	0.14		$	0.53		$	0.91
Net (loss) income available to common stockholders per share - diluted	$	(0.08	)	$	0.14		$	0.53		$	0.91

(1) Results have been adjusted for the retroactive application of the new accounting pronouncements adopted by the company on January 1, 2009.

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KILROY REALTY CORPORATION FUNDS FROM OPERATIONS

(unaudited, in thousands, except per share data)

	Three Months Ended December 31, 2009			Three Months Ended December 31, 2008(1)		Year Ended December 31, 2009			Year Ended December 31, 2008(1)
Net (loss) income available for common stockholders	$	(3,009	)	$	4,522	$	21,794		$	29,829
Adjustments:
Net (loss) income attributable to noncontrolling common units of the Operating Partnership		(119	)		198		1,025			1,886
Depreciation and amortization of real estate assets		20,807			21,017		86,825			82,491
Net gain on dispositions of discontinued operations		—			—		(2,485	)		(234	)
Funds From Operations (2)	$	17,679		$	25,737	$	107,159		$	113,972
Weighted average common shares/units outstanding - basic		45,502			34,848		41,222			34,904
Weighted average common shares/units outstanding - diluted		45,557			35,058		41,249			34,979
Funds From Operations per common share/unit - basic (3)	$	0.39		$	0.74	$	2.60		$	3.27
Funds From Operations per common share/unit - diluted (3)	$	0.39		$	0.73	$	2.60		$	3.26

(1) Results have been adjusted for the retroactive application of the new accounting pronouncements adopted by the company on January 1, 2009.

(2) 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 the company’s 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 the company’s 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 alone to be insufficient. 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.

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

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