10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number: 1-12675 (Kilroy Realty Corporation)

Commission File Number: 000-54005 (Kilroy Realty, L.P.)

KILROY REALTY CORPORATION

KILROY REALTY, L.P.

(Exact name of registrant as specified in its charter)

Kilroy Realty Corporation	Maryland	95-4598246
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Kilroy Realty, L.P.	Delaware	95-4612685
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
12200 W. Olympic Boulevard, Suite 200, Los Angeles, California 90064
(Address of principal executive offices) (Zip Code)
(310) 481-8400
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    

Kilroy Realty Corporation    Yes  þ    No   o

Kilroy Realty, L. P.         Yes  þ    No   o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    

Kilroy Realty Corporation     Yes  þ    No   o

Kilroy Realty, L.P.         Yes  þ    No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Kilroy Realty Corporation
Large accelerated filer     þ	Accelerated filer     o	Non-accelerated filer     o	Smaller reporting company     o
(Do not check if a smaller reporting company)
Kilroy Realty, L.P.
Large accelerated filer     o	Accelerated filer     o	Non-accelerated filer     þ	Smaller reporting company     o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    

Kilroy Realty Corporation Yes  o     No   þ

Kilroy Realty, L.P. Yes  o     No   þ

As of November 1, 2011, 58,464,412 shares of Kilroy Realty Corporation common stock, par value $.01 per share, were outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2011 of Kilroy Realty Corporation and Kilroy Realty, L.P. Unless stated otherwise or the context otherwise requires, references to "Kilroy Realty Corporation" or the "Company," "we," "our," and "us" mean Kilroy Realty Corporation, a Maryland corporation, and its controlled and consolidated subsidiaries, and references to "Kilroy Realty, L.P." or the "Operating Partnership" mean Kilroy Realty, L.P., a Delaware limited partnership, and its controlled and consolidated subsidiaries.

The Company is a real estate investment trust, or REIT, and the general partner of the Operating Partnership. As of September 30, 2011, the Company owned an approximate 97.1% common general partnership interest in the Operating Partnership. The remaining approximate 2.9% common limited partnership interests are owned by non-affiliated investors and certain directors and officers of the Company. As the sole general partner of the Operating Partnership, the Company exercises exclusive and complete discretion over the Operating Partnership's day-to-day management and control and can cause it to enter into certain major transactions including acquisitions, dispositions, and refinancings and cause changes in its line of business, capital structure, and distribution policies.

There are a few differences between the Company and the Operating Partnership which are reflected in the disclosures in this Form 10-Q. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated, consolidated company. The Company is a REIT, the only material asset of which is the partnership interests it holds in the Operating Partnership. As a result, the Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time and guaranteeing certain debt of the Operating Partnership. The Company itself is not directly obligated under any indebtedness, but guarantees some of the debt of the Operating Partnership. The Operating Partnership owns substantially all of the assets of the Company either directly or through its subsidiaries, conducts the operations of the Company's business and is structured as a limited partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Company, which the Company is required to contribute to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the Company's business through the Operating Partnership's operations, by the Operating Partnership's incurrence of indebtedness or through the issuance of partnership units.

Noncontrolling interests and stockholders' equity and partners' capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership are accounted for as partners' capital in the Operating Partnership's financial statements and as noncontrolling interests in the Company's financial statements. The Operating Partnership's financial statements reflect the noncontrolling interest in Kilroy Realty Finance Partnership, L.P. This noncontrolling interest represents the Company's 1% indirect general partnership interest in Kilroy Realty Finance Partnership, L.P., which is directly held by Kilroy Realty Finance, Inc., a wholly-owned subsidiary of the Company. The differences between stockholders' equity, partners' capital and noncontrolling interests result from the differences in the equity issued by the Company and the Operating Partnership, and in the Company's noncontrolling interest in Kilroy Realty Finance Partnership, L.P.

We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:

• Combined reports better reflect how management and the analyst community view the business as a single operating unit;

• Combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

• Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and

• Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

• consolidated financial statements;

• the following notes to the consolidated financial statements:

◦ Note 5, Secured and Unsecured Debt of the Operating Partnership;

◦ Note 6, Noncontrolling Interests on the Company's Consolidated Financial Statements;

i

◦ Note 7, Stockholders' Equity of the Company;

◦ Note 8, Partners' Capital of the Operating Partnership;

◦ Note 15, Net Income (Loss) Available to Common Stockholders Per Share of the Company;

◦ Note 16, Net Income (Loss) Available to Common Unitholders Per Unit of the Operating Partnership;

◦ Note 18, Pro Forma Results of the Company;

◦ Note 19, Pro Forma Results of the Operating Partnership;

• "Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of the Company";

• "Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of the Operating Partnership".

This report also includes separate sections under Part I, Item 4. Controls and Procedures and separate Exhibit 31 and Exhibit 32 certifications for each of the Company and the Operating Partnership to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and 18 U.S.C. §1350.

ii

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

QUARTERLY REPORT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011

TABLE OF CONTENTS

		Page
	PART I-FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS OF KILROY REALTY CORPORATION	1
	Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010	1
	Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2011 and 2010 (unaudited)	2
	Consolidated Statements of Equity for the Nine Months ended September 30, 2011 and 2010 (unaudited)	3
	Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2011 and 2010 (unaudited)	4
Item 1.	FINANCIAL STATEMENTS OF KILROY REALTY, L.P.	6
	Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010	6
	Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2011 and 2010 (unaudited)	7
	Consolidated Statements of Capital for the Nine Months ended September 30, 2011 and 2010 (unaudited)	8
	Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2011 and 2010 (unaudited)	9
	Notes to Consolidated Financial Statements	11
Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	56
Item 4.	CONTROLS AND PROCEDURES (KILROY REALTY CORPORATION AND KILROY REALTY, L.P.)	56
	PART II-OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	58
Item 1A.	RISK FACTORS	58
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	58
Item 3.	DEFAULTS UPON SENIOR SECURITIES	58
Item 4.	(REMOVED AND RESERVED)	58
Item 5.	OTHER INFORMATION	58
Item 6.	EXHIBITS	59
SIGNATURES		60

PART I-FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS OF KILROY REALTY CORPORATION

KILROY REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	September 30, 2011			December 31, 2010
	(unaudited)
ASSETS
REAL ESTATE ASSETS:
Land and improvements (Note 2)	$	537,973		$	491,333
Buildings and improvements (Note 2)	2,881,504			2,435,173
Undeveloped land and construction in progress (Note 1)	328,785			290,365
Total real estate held for investment	3,748,262			3,216,871
Accumulated depreciation and amortization	(732,162		)	(672,429		)
Total real estate assets, net	3,016,100			2,544,442
CASH AND CASH EQUIVALENTS	15,481			14,840
RESTRICTED CASH (Note 14)	25,436			1,461
MARKETABLE SECURITIES (Note 12)	5,213			4,902
CURRENT RECEIVABLES, NET (Note 4)	6,860			6,258
DEFERRED RENT RECEIVABLES, NET (Note 4)	103,668			89,052
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 2 and 3)	155,757			131,066
DEFERRED FINANCING COSTS, NET (Note 5)	19,638			16,447
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 11)	19,531			8,097
TOTAL ASSETS	$	3,367,684		$	2,816,565
LIABILITIES, NONCONTROLLING INTEREST AND EQUITY
LIABILITIES:
Secured debt, net (Notes 5 and 12)	$	473,997		$	313,009
Exchangeable senior notes, net (Notes 5 and 12)	305,115			299,964
Unsecured senior notes, net (Notes 5 and 12)	980,487			655,803
Unsecured line of credit (Notes 5 and 12)	—			159,000
Accounts payable, accrued expenses and other liabilities	93,050			68,525
Accrued distributions (Note 16)	22,565			20,385
Deferred revenue and acquisition-related intangible liabilities, net (Note 3)	95,120			79,322
Rents received in advance and tenant security deposits	29,369			29,189
Total liabilities	1,999,703			1,625,197
COMMITMENTS AND CONTINGENCIES (Note 11)
NONCONTROLLING INTEREST (Note 6):
7.45% Series A Cumulative Redeemable Preferred units of the Operating Partnership	73,638			73,638
EQUITY:
Stockholders' Equity (Note 7):
Preferred stock, $.01 par value, 30,000,000 shares authorized:
7.45% Series A Cumulative Redeemable Preferred stock, $.01 par value, 1,500,000 shares authorized, none issued and outstanding	—			—
7.80% Series E Cumulative Redeemable Preferred stock, $.01 par value, 1,610,000 shares authorized, issued and outstanding ($40,250 liquidation preference)	38,425			38,425
7.50% Series F Cumulative Redeemable Preferred stock, $.01 par value, 3,450,000 shares authorized, issued and outstanding ($86,250 liquidation preference)	83,157			83,157
Common stock, $.01 par value, 150,000,000 shares authorized, 58,464,412 and 52,349,670 shares issued and outstanding, respectively	585			523
Additional paid-in capital	1,435,580			1,211,498
Distributions in excess of earnings	(296,476		)	(247,252		)
Total stockholders' equity	1,261,271			1,086,351
Noncontrolling interest:
Common units of the Operating Partnership (Note 6)	33,072			31,379
Total equity	1,294,343			1,117,730
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY	$	3,367,684		$	2,816,565

See accompanying notes to consolidated financial statements.

1

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
REVENUES:
Rental income	$	89,306		$	72,135		$	252,102		$	196,883
Tenant reimbursements	7,683			6,156			21,469			18,261
Other property income	348			985			2,863			2,325
Total revenues	97,337			79,276			276,434			217,469
EXPENSES:
Property expenses	19,361			15,802			54,548			42,255
Real estate taxes	8,360			7,582			24,878			20,035
Provision for bad debts	(5		)	(857		)	141			(843		)
Ground leases (Note 11)	503			336			1,266			648
General and administrative expenses	6,355			7,273			20,355			21,096
Acquisition-related expenses	1,163			354			2,829			1,624
Depreciation and amortization	36,152			29,951			97,513			74,405
Total expenses	71,889			60,441			201,530			159,220
OTHER (EXPENSES) INCOME:
Interest income and other net investment gains (Note 12)	30			337			272			703
Interest expense (Note 5)	(24,051		)	(15,853		)	(66,155		)	(40,897		)
Loss on early extinguishment of debt	—			—			—			(4,564		)
Total other (expenses) income	(24,021		)	(15,516		)	(65,883		)	(44,758		)
INCOME FROM CONTINUING OPERATIONS	1,427			3,319			9,021			13,491
DISCONTINUED OPERATIONS (Note 14)
Net income from discontinued operations	308			350			1,053			1,011
Net gain on dispositions of discontinued operations	12,555			—			12,555			—
Total income from discontinued operations	12,863			350			13,608			1,011
NET INCOME	14,290			3,669			22,629			14,502
Net (income) loss attributable to noncontrolling common units of the Operating Partnership	(296		)	4			(320		)	(128		)
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION	13,994			3,673			22,309			14,374
PREFERRED DISTRIBUTIONS AND DIVIDENDS:
Distributions to noncontrolling cumulative redeemable preferred units of the Operating Partnership	(1,397		)	(1,397		)	(4,191		)	(4,191		)
Preferred dividends	(2,402		)	(2,402		)	(7,206		)	(7,206		)
Total preferred distributions and dividends	(3,799		)	(3,799		)	(11,397		)	(11,397		)
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$	10,195		$	(126	)	$	10,912		$	2,977
(Loss) income from continuing operations available to common stockholders per common share - basic (Note 15)	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
(Loss) income from continuing operations available to common stockholders per common share - diluted (Note 15)	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Net income (loss) available to common stockholders per share - basic (Note 15)	$	0.17		$	(0.01	)	$	0.18		$	0.04
Net income (loss) available to common stockholders per share - diluted (Note 15)	$	0.17		$	(0.01	)	$	0.18		$	0.04
Weighted average common shares outstanding - basic (Note 15)	58,355,127			52,274,316			56,136,477			48,561,614
Weighted average common shares outstanding - diluted (Note 15)	58,355,127			52,274,316			56,136,477			48,565,028
Dividends declared per common share	$	0.35		$	0.35		$	1.05		$	1.05

See accompanying notes to consolidated financial statements.

2

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited, in thousands, except share and per share data)

			Common Stock										Total Stock- holders' Equity			Noncontrol- ling Interests - Common Units of the Operating Partnership			Total Equity
	Preferred Stock		Number of Shares		Common Stock		Additional Paid-in Capital			Distributions in Excess of Earnings
BALANCE AS OF DECEMBER 31, 2009	$	121,582	43,148,762		$	431	$	913,657		$	(180,722	)	$	854,948		$	28,890		$	883,838
Net income										14,374			14,374			128			14,502
Issuance of common stock			9,200,000		92		299,755						299,847						299,847
Issuance of share-based compensation awards			3,239				1,904						1,904						1,904
Noncash amortization of share-based compensation							5,050						5,050						5,050
Exercise of stock options			4,000				83						83						83
Repurchase of common stock and restricted stock units			(59,782	)			(2,121		)				(2,121		)				(2,121		)
Settlement of restricted stock units for shares of common stock			53,451				(1,296		)				(1,296		)				(1,296		)
Allocation to the equity component of cash paid upon repurchase of 3.25% Exchangeable Notes							(2,694		)				(2,694		)				(2,694		)
Adjustment for noncontrolling interest							(4,665		)				(4,665		)	4,665			—
Preferred distributions and dividends										(11,397		)	(11,397		)				(11,397		)
Dividends declared per common share and common unit ($1.05 per share/unit)										(52,470		)	(52,470		)	(1,810		)	(54,280		)
BALANCE AS OF SEPTEMBER 30, 2010	$	121,582	52,349,670		$	523	$	1,209,673		$	(230,215	)	$	1,101,563		$	31,873		$	1,133,436
			Common Stock										Total Stock- holders' Equity			Noncontrol- ling Interests - Common Units of the Operating Partnership			Total Equity
	Preferred Stock		Number of Shares		Common Stock		Additional Paid-in Capital			Distributions in Excess of Earnings
BALANCE AS OF DECEMBER 31, 2010	$	121,582	52,349,670		$	523	$	1,211,498		$	(247,252	)	$	1,086,351		$	31,379		$	1,117,730
Net income										22,309			22,309			320			22,629
Issuance of common stock (Note 7)			6,037,500		61		220,954						221,015						221,015
Issuance of share-based compensation awards (Note 9)			68,727		1		2,446						2,447						2,447
Noncash amortization of share-based compensation							4,201						4,201						4,201
Exercise of stock options			15,000				395						395						395
Repurchase of common stock and restricted stock units (Note 9)			(11,485	)			(736		)				(736		)				(736		)
Exchange of common units of the Operating Partnership			5,000				91						91			(91		)	—
Adjustment for noncontrolling interest							(3,269		)				(3,269		)	3,269			—
Preferred distributions and dividends										(11,397		)	(11,397		)				(11,397		)
Dividends declared per common share and common unit ($1.05 per share/unit)										(60,136		)	(60,136		)	(1,805		)	(61,941		)
BALANCE AS OF SEPTEMBER 30, 2011	$	121,582	58,464,412		$	585	$	1,435,580		$	(296,476	)	$	1,261,271		$	33,072		$	1,294,343

See accompanying notes to consolidated financial statements.

3

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine Months Ended September 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	22,629		$	14,502
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations):
Depreciation and amortization of building and improvements and leasing costs	96,971			74,049
Increase (decrease) in provision for bad debts	141			(843		)
Depreciation of furniture, fixtures and equipment	839			665
Noncash amortization of share-based compensation awards	3,365			5,328
Noncash amortization of deferred financing costs and debt discounts and premiums	10,164			9,098
Noncash amortization of net above market rents (Note 3)	1,519			696
Net gain on dispositions of discontinued operations (Note 14)	(12,555		)	—
Loss on early extinguishment of debt	—			4,564
Noncash amortization of deferred revenue related to tenant-funded tenant improvements	(7,005		)	(7,108		)
Other	(630		)	—
Changes in operating assets and liabilities:
Marketable securities	(311		)	(1,029		)
Current receivables	(1,022		)	(706		)
Deferred rent receivables	(15,543		)	(8,441		)
Other deferred leasing costs	535			(2,516		)
Prepaid expenses and other assets	(3,528		)	(2,765		)
Accounts payable, accrued expenses and other liabilities	18,914			3,049
Deferred revenue	(598		)	5,546
Rents received in advance and tenant security deposits	180			839
Net cash provided by operating activities	114,065			94,928
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for acquisition of operating properties (Note 2)	(481,756		)	(373,574		)
Expenditures for operating properties	(41,087		)	(56,393		)
Expenditures for development and redevelopment properties and undeveloped land	(18,682		)	(14,681		)
Net increase in escrow deposits	(11,000		)	(2,002		)
(Increase) decrease in restricted cash	(690		)	1,316
Receipt of principal payments on note receivable	—			10,679
Net cash used in investing activities	(553,215		)	(434,655		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock (Note 7)	221,015			299,847
Borrowings on unsecured line of credit	302,000			553,000
Repayments on unsecured line of credit	(461,000		)	(445,000		)
Principal payments on secured debt	(5,295		)	(101,653		)
Repurchase of exchangeable senior notes	—			(151,097		)
Proceeds from issuance of secured debt (Note 5)	135,000			71,000
Proceeds from issuance of unsecured debt (Note 5)	324,476			247,870
Repayments of unsecured debt	—			(61,000		)
Financing costs	(8,584		)	(11,200		)
Decrease in loan deposits and other	2,859			1,420
Repurchase of common stock and restricted stock units	(736		)	(3,417		)
Proceeds from exercise of stock options	395			83
Dividends and distributions paid to common stockholders and common unitholders	(58,942		)	(50,299		)
Dividends and distributions paid to preferred stockholders and preferred unitholders	(11,397		)	(11,397		)
Net cash provided by financing activities	439,791			338,157
Net increase (decrease) in cash and cash equivalents	641			(1,570		)
Cash and cash equivalents, beginning of period	14,840			9,883
Cash and cash equivalents, end of period	$	15,481		$	8,313

4

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS-(Continued)

(unaudited, in thousands)

	Nine Months Ended September 30,
	2011		2010
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for interest, net of capitalized interest of $5,361 and $6,140 as of September 30, 2011 and 2010, respectively	$	42,070	$	26,182
NONCASH INVESTING TRANSACTIONS:
Accrual for expenditures for operating properties and development and redevelopment properties	$	13,506	$	13,614
Tenant improvements funded directly by tenants to third parties	$	3,037	$	2,520
Assumption of secured debt with property acquisition (Notes 2 and 5)	$	30,042	$	51,079
Assumption of other liabilities with property acquisitions (Note 2)	$	4,515	$	6,369
Net proceeds from disposition held by a qualified intermediary in connection with Section 1031 exchange (Note 14)	$	23,285	$	—
NONCASH FINANCING TRANSACTIONS:
Accrual of dividends and distributions payable to common stockholders and common unitholders	$	21,064	$	18,925
Accrual of dividends and distributions payable to preferred stockholders and preferred unitholders	$	1,909	$	1,909
Issuance of share-based compensation awards (Note 9)	$	7,505	$	5,418
Exchange of common units of the Operating Partnership into shares of the Company's common stock	$	91	$	—

See accompanying notes to consolidated financial statements.

5

ITEM 1: FINANCIAL STATEMENTS OF KILROY REALTY, L.P.

KILROY REALTY, L.P.

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

	September 30, 2011			December 31, 2010
	(unaudited)
ASSETS
REAL ESTATE ASSETS:
Land and improvements (Note 2)	$	537,973		$	491,333
Buildings and improvements (Note 2)	2,881,504			2,435,173
Undeveloped land and construction in progress (Note 1)	328,785			290,365
Total real estate held for investment	3,748,262			3,216,871
Accumulated depreciation and amortization	(732,162		)	(672,429		)
Total real estate assets, net	3,016,100			2,544,442
CASH AND CASH EQUIVALENTS	15,481			14,840
RESTRICTED CASH (Note 14)	25,436			1,461
MARKETABLE SECURITIES (Note 12)	5,213			4,902
CURRENT RECEIVABLES, NET (Note 4)	6,860			6,258
DEFERRED RENT RECEIVABLES, NET (Note 4)	103,668			89,052
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 2 and 3)	155,757			131,066
DEFERRED FINANCING COSTS, NET (Note 5)	19,638			16,447
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 11)	19,531			8,097
TOTAL ASSETS	$	3,367,684		$	2,816,565
LIABILITIES, NONCONTROLLING INTEREST AND CAPITAL
LIABILITIES:
Secured debt, net (Notes 5 and 12)	$	473,997		$	313,009
Exchangeable senior notes, net (Notes 5 and 12)	305,115			299,964
Unsecured senior notes, net (Notes 5 and 12)	980,487			655,803
Unsecured line of credit (Notes 5 and 12)	—			159,000
Accounts payable, accrued expenses and other liabilities	93,050			68,525
Accrued distributions (Note 16)	22,565			20,385
Deferred revenue and acquisition-related intangible liabilities, net (Note 3)	95,120			79,322
Rents received in advance and tenant security deposits	29,369			29,189
Total liabilities	1,999,703			1,625,197
COMMITMENTS AND CONTINGENCIES (Note 11)
7.45% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS	73,638			73,638
CAPITAL:
Partners' Capital (Note 8):
7.80% Series E Cumulative Redeemable Preferred units, 1,610,000 units issued and outstanding ($40,250 liquidation preference)	38,425			38,425
7.50% Series F Cumulative Redeemable Preferred units, 3,450,000 units issued and outstanding ($86,250 liquidation preference)	83,157			83,157
Common units, 58,464,412 and 52,349,670 held by the general partner and 1,718,131 and 1,723,131 held by common limited partners issued and outstanding, respectively	1,171,049			994,511
Total partners' capital	1,292,631			1,116,093
Noncontrolling interest in consolidated subsidiaries	1,712			1,637
Total capital	1,294,343			1,117,730
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND CAPITAL	$	3,367,684		$	2,816,565

See accompanying notes to consolidated financial statements.

6

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except unit and per unit data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
REVENUES:
Rental income	$	89,306		72,135			$	252,102		$	196,883
Tenant reimbursements	7,683			6,156			21,469			18,261
Other property income	348			985			2,863			2,325
Total revenues	97,337			79,276			276,434			217,469
EXPENSES:
Property expenses	19,361			15,802			54,548			42,255
Real estate taxes	8,360			7,582			24,878			20,035
Provision for bad debts	(5		)	(857		)	141			(843		)
Ground leases (Note 11)	503			336			1,266			648
General and administrative expenses	6,355			7,273			20,355			21,096
Acquisition-related expenses	1,163			354			2,829			1,624
Depreciation and amortization	36,152			29,951			97,513			74,405
Total expenses	71,889			60,441			201,530			159,220
OTHER (EXPENSES) INCOME:
Interest income and other net investment gains (Note 12)	30			337			272			703
Interest expense (Note 5)	(24,051		)	(15,853		)	(66,155		)	(40,897		)
Loss on early extinguishment of debt	—			—			—			(4,564		)
Total other (expenses) income	(24,021		)	(15,516		)	(65,883		)	(44,758		)
INCOME FROM CONTINUING OPERATIONS	1,427			3,319			9,021			13,491
DISCONTINUED OPERATIONS (Note 14)
Net income from discontinued operations	308			350			1,053			1,011
Net gain on dispositions of discontinued operations	12,555			—			12,555			—
Total income from discontinued operations	12,863			350			13,608			1,011
NET INCOME	14,290			3,669			22,629			14,502
Net income attributable to noncontrolling interests in consolidated subsidiaries	(30		)	(41		)	(95		)	(138		)
NET INCOME ATTRIBUTABLE TO KILROY REALTY, L.P.	14,260			3,628			22,534			14,364
PREFERRED DISTRIBUTIONS	(3,799		)	(3,799		)	(11,397		)	(11,397		)
NET INCOME (LOSS) AVAILABLE TO COMMON UNITHOLDERS	$	10,461		$	(171	)	$	11,137		$	2,967
(Loss) income from continuing operations available to common unitholders per common unit - basic (Note 16)	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
(Loss) income from continuing operations available to common unitholders per common unit - diluted (Note 16)	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Net income (loss) available to common unitholders per unit - basic (Note 16)	$	0.17		$	(0.01	)	$	0.18		$	0.04
Net income (loss) available to common unitholders per unit - diluted (Note 16)	$	0.17		$	(0.01	)	$	0.18		$	0.04
Weighted average common units outstanding - basic (Note 16)	60,073,258			53,997,447			57,857,538			50,284,745
Weighted average common units outstanding - diluted (Note 16)	60,073,258			53,997,447			57,857,538			50,288,159
Distributions declared per common unit	$	0.35		$	0.35		$	1.05		$	1.05

See accompanying notes to consolidated financial statements.

7

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

(unaudited, in thousands, except unit and per unit data)

	Partners' Capital							Total Partners' Capital			Noncontrolling Interests in Consolidated Subsidiaries
	Preferred Units		Number of Common Units		Common Units									Total Capital
BALANCE AS OF DECEMBER 31, 2009	$	121,582	44,871,893		$	760,756		$	882,338		$	1,500		$	883,838
Net income					14,364			14,364			138			14,502
Issuance of common units			9,200,000		299,847			299,847						299,847
Issuance of share-based compensation awards			3,239		1,904			1,904						1,904
Noncash amortization of share-based compensation					5,050			5,050						5,050
Exercise of stock options			4,000		83			83						83
Repurchase of common units and restricted stock units			(59,782	)	(2,121		)	(2,121		)				(2,121		)
Settlement of restricted stock units for shares of common stock			53,451		(1,296		)	(1,296		)				(1,296		)
Allocation to the equity component of cash paid upon repurchase of 3.25% Exchangeable Notes					(2,694		)	(2,694		)				(2,694		)
Other					26			26			(26		)	—
Preferred distributions					(11,397		)	(11,397		)				(11,397		)
Distributions declared per common unit ($1.05 per unit)					(54,280		)	(54,280		)				(54,280		)
BALANCE AS OF SEPTEMBER 30, 2010	$	121,582	54,072,801		$	1,010,242		$	1,131,824		$	1,612		$	1,133,436
	Partners' Capital							Total Partners' Capital			Noncontrolling Interests in Consolidated Subsidiaries
	Preferred Units		Number of Common Units		Common Units									Total Capital
BALANCE AS OF DECEMBER 31, 2010	$	121,582	54,072,801		$	994,511		$	1,116,093		$	1,637		$	1,117,730
Net income					22,534			22,534			95			22,629
Issuance of common units (Note 8)			6,037,500		221,015			221,015						221,015
Issuance of share-based compensation awards (Note 9)			68,727		2,447			2,447						2,447
Noncash amortization of share-based compensation					4,201			4,201						4,201
Exercise of stock options			15,000		395			395						395
Repurchase of common units and restricted stock units (Note 9)			(11,485	)	(736		)	(736		)				(736		)
Other					20			20			(20		)	—
Preferred distributions					(11,397		)	(11,397		)				(11,397		)
Distributions declared per common unit ($1.05 per unit)					(61,941		)	(61,941		)				(61,941		)
BALANCE AS OF SEPTEMBER 30, 2011	$	121,582	60,182,543		$	1,171,049		$	1,292,631		$	1,712		$	1,294,343

See accompanying notes to consolidated financial statements.

8

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine Months Ended September 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	22,629		$	14,502
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations):
Depreciation and amortization of building and improvements and leasing costs	96,971			74,049
Increase (decrease) in provision for bad debts	141			(843		)
Depreciation of furniture, fixtures and equipment	839			665
Noncash amortization of share-based compensation awards	3,365			5,328
Noncash amortization of deferred financing costs and debt discounts and premiums	10,164			9,098
Noncash amortization of net above market rents (Note 3)	1,519			696
Net gain on dispositions of discontinued operations (Note 14)	(12,555		)	—
Loss on early extinguishment of debt	—			4,564
Noncash amortization of deferred revenue related to tenant-funded tenant improvements	(7,005		)	(7,108		)
Other	(630		)	—
Changes in operating assets and liabilities:
Marketable securities	(311		)	(1,029		)
Current receivables	(1,022		)	(706		)
Deferred rent receivables	(15,543		)	(8,441		)
Other deferred leasing costs	535			(2,516		)
Prepaid expenses and other assets	(3,528		)	(2,765		)
Accounts payable, accrued expenses and other liabilities	18,914			3,049
Deferred revenue	(598		)	5,546
Rents received in advance and tenant security deposits	180			839
Net cash provided by operating activities	114,065			94,928
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for acquisition of operating properties (Note 2)	(481,756		)	(373,574		)
Expenditures for operating properties	(41,087		)	(56,393		)
Expenditures for development and redevelopment properties and undeveloped land	(18,682		)	(14,681		)
Net increase in escrow deposits	(11,000		)	(2,002		)
(Increase) decrease in restricted cash	(690		)	1,316
Receipt of principal payments on note receivable	—			10,679
Net cash used in investing activities	(553,215		)	(434,655		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common units (Note 8)	221,015			299,847
Borrowings on unsecured line of credit	302,000			553,000
Repayments on unsecured line of credit	(461,000		)	(445,000		)
Principal payments on secured debt	(5,295		)	(101,653		)
Repurchase of exchangeable senior notes	—			(151,097		)
Proceeds from issuance of secured debt (Note 5)	135,000			71,000
Proceeds from issuance of unsecured debt (Note 5)	324,476			247,870
Repayments of unsecured debt	—			(61,000		)
Financing costs	(8,584		)	(11,200		)
Decrease in loan deposits and other	2,859			1,420
Repurchase of common units and restricted stock units	(736		)	(3,417		)
Proceeds from exercise of stock options	395			83
Distributions paid to common unitholders	(58,942		)	(50,299		)
Distributions paid to preferred unitholders	(11,397		)	(11,397		)
Net cash provided by financing activities	439,791			338,157
Net increase (decrease) in cash and cash equivalents	641			(1,570		)
Cash and cash equivalents, beginning of period	14,840			9,883
Cash and cash equivalents, end of period	$	15,481		$	8,313

9

KILROY REALTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS-(Continued)

(unaudited, in thousands)

	Nine Months Ended September 30,
	2011		2010
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for interest, net of capitalized interest of $5,361 and $6,140 as of September 30, 2011 and 2010, respectively	$	42,070	$	26,182
NONCASH INVESTING TRANSACTIONS:
Accrual for expenditures for operating properties and development and redevelopment properties	$	13,506	$	13,614
Tenant improvements funded directly by tenants to third parties	$	3,037	$	2,520
Assumption of secured debt with property acquisitions (Notes 2 and 5)	$	30,042	$	51,079
Assumption of other liabilities with property acquisitions (Note 2)	$	4,515	$	6,369
Net proceeds from disposition held by a qualified intermediary in connection with Section 1031 exchange (Note 14)	$	23,285	$	—
NONCASH FINANCING TRANSACTIONS:
Accrual of distributions payable to common unitholders	$	21,064	18,925
Accrual of distributions payable to preferred unitholders	$	1,909	$	1,909
Issuance of share-based compensation awards (Note 9)	$	7,505	$	5,418

See accompanying notes to consolidated financial statements.

10

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30, 2011 and 2010

(unaudited)

1.    Organization and Basis of Presentation

Organization

Kilroy Realty Corporation (the "Company") is a self-administered real estate investment trust (“REIT”) active in office and industrial submarkets along the West Coast. We own, develop, acquire and manage real estate assets, consisting primarily of Class A properties in the coastal regions of Los Angeles, Orange County, San Diego, greater Seattle and the San Francisco Bay Area, which we believe have strategic advantages and strong barriers to entry. We qualify as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). The Company's common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “KRC.”

We own our interests in all of our real estate assets through Kilroy Realty, L.P. (the "Operating Partnership") and Kilroy Realty Finance Partnership, L.P. (the "Finance Partnership"). We conduct substantially all of our operations through the Operating Partnership. Unless stated otherwise or the context indicates otherwise, the terms "Kilroy Realty Corporation" or the "Company," "we," "our," and "us" refer to Kilroy Realty Corporation and its consolidated subsidiaries and the term "Operating Partnership" refers to Kilroy Realty, L.P. and its consolidated subsidiaries. The descriptions of our business, employees, and properties apply to both the Company and the Operating Partnership.

The following table of office buildings (the "Office Properties") and industrial buildings (the "Industrial Properties") summarizes our stabilized portfolio of operating properties as of September 30, 2011. As of September 30, 2011, all of our properties and all of our business is currently conducted in the state of California with the exception of the operation of six office properties located in the state of Washington.

	Number of Buildings	Rentable Square Feet	Number of Tenants	Percentage Occupied
Office Properties(1)	105	11,574,244	422	90.6	%
Industrial Properties	40	3,605,407	64	100.0	%
Total Stabilized Portfolio	145	15,179,651	486	92.8	%

________________________

(1) Includes nine office properties acquired during the nine months ended September 30, 2011 for a total amount of $516.3 million (see Note 2 for additional information).

Our stabilized portfolio excludes undeveloped land, development and redevelopment properties currently under construction or committed for construction, "lease-up" properties, and one property we are currently in the process of repositioning for residential use. As of September 30, 2011, we had three office redevelopment properties under construction encompassing approximately 508,000 rentable square feet. We commenced redevelopment on two of the three redevelopment properties in the third quarter of 2011. We define "lease-up" properties as properties we recently developed or redeveloped that have not yet reached 95% occupancy and are within one year following cessation of major construction activities.  We had no "lease-up" properties as of September 30, 2011. In addition, as of September 30, 2011 we had one industrial property that we were in the process of demolishing to prepare the land for potential sale. We successfully obtained entitlements to reposition this site for residential use in 2011. Ultimate timing of the potential sale will depend upon market conditions and other factors.

     As of September 30, 2011, the Company owned a 97.1% general partnership interest in the Operating Partnership. The remaining 2.9% common limited partnership interest in the Operating Partnership as of September 30, 2011 was owned by non-affiliated investors and certain of our directors and officers (see Note 6). Both the general and limited common partnership interests in the Operating Partnership are denominated in common units. The number of common units held by the Company is at all times equivalent to the number of outstanding shares of the Company's common stock, and the rights of all the common units to quarterly distributions and payments in liquidation mirror those of the Company's common stockholders. The common limited partners have certain redemption rights as provided in the Operating Partnership's Fifth Amended and Restated Agreement of Limited Partnership (as amended, the “Partnership Agreement”) (see Note 6).

Kilroy Realty Finance, Inc., our wholly-owned subsidiary, is the sole general partner of the Finance Partnership and owns a 1.0% general partnership interest. The Operating Partnership owns the remaining 99.0% limited partnership interest. Kilroy Services, LLC ("KSLLC"), which is a wholly-owned subsidiary of the Operating Partnership, is the entity through which we conduct substantially all of our development activities. With the exception of the Operating Partnership, all of our subsidiaries, which include Kilroy Realty TRS, Inc., Kilroy Realty Management, L.P., Kilroy RB, LLC, Kilroy RB II, LLC, Kilroy Realty

11

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Northside Drive, LLC and Kilroy Realty 303, LLC are wholly-owned.

Basis of Presentation

The consolidated financial statements of the Company include the consolidated financial position and results of operations of the Company, the Operating Partnership, the Finance Partnership, KSLLC, and all of our wholly-owned subsidiaries. The consolidated financial statements of the Operating Partnership include the consolidated financial position and results of operations of the Operating Partnership, the Finance Partnership, KSLLC, and all wholly-owned subsidiaries of the Operating Partnership. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

The consolidated financial statements of the Company and the Operating Partnership also include two variable interest entities ("VIE") in which we are deemed to be the primary beneficiary. We had one bankruptcy-remote VIE, which was formed in 2010 to hold three properties that secure the debt we assumed when we acquired the properties in 2010. The assets held by this entity are not available to satisfy the debts and other obligations of the Company or the Operating Partnership. In September 2011, we acquired a building which was transferred to a special purpose VIE to facilitate a potential tax-deferred property exchange pursuant to Section 1031 of the Code for federal and state income tax purposes ("Section 1031 Exchange"). The Company is obligated to complete the Section 1031 Exchange and take title to the property within 180 days of the initial acquisition date. The VIE will be terminated upon the completion of the Section 1031 Exchange. The impact of consolidating both VIEs increased the Company's total assets and liabilities by approximately $164.0 million and $63.0 million, respectively, at September 30, 2011.

The accompanying interim financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. The interim financial statements for the Company and the Operating Partnership should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2010.

Change in Reportable Segments from Form 10-K for the year ended December 31, 2010

Our chief operating decision-makers internally evaluate the operating performance and financial results of our portfolio based on Net Operating Income for the following two segments of commercial real estate property: Office Properties and Industrial Properties. We define “Net Operating Income” as operating revenues (rental income, tenant reimbursements, and other property income) less operating expenses (property expenses, real estate taxes, provision for bad debts, and ground leases).

During the three and nine months ended September 30, 2011, the amount of revenues and Net Operating Income generated by our Industrial Properties, in relation to our total consolidated operating portfolio revenues and Net Operating Income fell below the required 10% quantitative reporting thresholds for the Industrial Properties to be considered a reportable segment under GAAP. Therefore, for the three and nine months ended September 30, 2011, our only reportable segment is our Office Properties segment. See Note 13 for a reconciliation of our Office Properties segment to our consolidated revenues, Net Operating Income, net income and consolidated assets.

12

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2.    Acquisitions

During the nine months ended September 30, 2011, we acquired the nine office properties listed below from unrelated third parties. Unless otherwise noted, we funded these acquisitions principally with the net proceeds from the public offering of common stock (see Note 7) the Company completed in April 2011, borrowings under the unsecured line of credit (see Note 5), and the net proceeds from the public offering of unsecured senior notes (see Note 5) the Operating Partnership completed in July 2011.

Property	Property Type	Date of Acquisition	Number of Buildings	Rentable Square Feet	Percentage Occupied as of September 30, 2011	Purchase Price (in  millions)(1)
250 Brannan Street	Office	January 28, 2011
San Francisco, CA			1	92,948	100.0%	$	33.0
10210, 10220, and 10230 NE Points Drive; 3933 Lake Washington Boulevard NE	Office	April 21, 2011
Kirkland, WA(2)			4	279,924	89.6%	100.1
10770 Wateridge Circle	Office	May 12, 2011
San Diego, CA			1	174,310	97.5%	32.7
601 108th Avenue N.E.	Office	June 3, 2011
Bellevue, WA			1	488,470	88.1%	215.0
4040 Civic Center Drive	Office	June 9, 2011
San Rafael, CA			1	126,787	93.1%	32.2
201 Third Street	Office	September 15, 2011
San Francisco, CA (3)			1	311,545	90.3%	103.3
Total			9	1,473,984		$	516.3

________________________

(1) Excludes acquisition-related costs.

(2) In connection with this acquisition, we assumed secured debt with an outstanding principal balance of $30.0 million and recorded a premium of $1.0 million in connection with recording this debt at fair value on the acquisition date (see Note 5).

(3) As of September 30, 2011, this property was temporarily being held in a separate VIE to facilitate a potential Section 1031 Exchange (see Note 1).

13

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The related assets, liabilities, and results of operations of all acquired properties are included in the consolidated financial statements as of the date of acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the respective acquisition dates:

	601 108th Avenue N.E., Bellevue, WA(1)		201 Third Street San Francisco, CA (1)		All Other Acquisitions(2)		Total
Assets
Land(3)	$	—	$	19,260	$	36,740	$	56,000
Buildings and improvements(4)	214,095		84,018		143,545		441,658
Undeveloped land	—		—		2,560		2,560
Deferred leasing costs and acquisition-related intangible assets(5)	13,790		8,700		17,500		39,990
Total assets acquired	227,885		111,978		200,345		540,208
Liabilities
Deferred revenue and acquisition-related intangible liabilities(6)	12,850		8,700		1,390		22,940
Secured debt(7)	—		—		30,997		30,997
Accounts payable, accrued expenses and other liabilities	2,380		76		2,059		4,515
Total liabilities assumed	15,230		8,776		34,446		58,452
Net assets and liabilities acquired(8)	$	212,655	$	103,202	$	165,899	$	481,756

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the two largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The purchase price of all other acquisitions completed during the nine months ended September 30, 2011 were individually less than 5% and in the aggregate less than 10% of the Company's total assets as of December 31, 2010.

(3) In connection with the acquisition of 601 108th Avenue N.E., Bellevue, WA, we assumed the lessee's obligations under a noncancellable ground lease that is scheduled to expire in November 2093 (see Notes 3 and 11).

(4) Represents buildings, building improvements and tenant improvements.

(5) Represents in-place leases (approximately $25.2 million with a weighted average amortization period of 3.9 years), above-market leases (approximately $6.8 million with a weighted average amortization period of 4.5 years), and leasing commissions (approximately $7.9 million with a weighted average amortization period of 2.6 years).

(6) Represents below-market leases (approximately $17.7 million with a weighted average amortization period of 3.8 years) and an above-market ground lease obligation (approximately $5.2 million with a weighted average amortization period of 82.5 years), under which we are the lessee.

(7) Represents the mortgage loan, which includes an unamortized premium recorded at the date of acquisition of approximately $1.0 million in connection with recording this debt at fair value, assumed in connection with the properties acquired in April 2011 (see Note 5).

(8) Reflects the purchase price net of assumed secured debt and other lease-related obligations.

14

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

3.     Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net

The following table summarizes our deferred leasing costs and acquisition-related intangible assets (acquired value of leasing costs, above-market leases, and in-place leases) and intangible liabilities (acquired value of below-market leases and above-market ground lease) as of September 30, 2011 and December 31, 2010:

	September 30, 2011			December 31, 2010
	(in thousands)
Deferred Leasing Costs and Acquisition-related Intangible Assets, net(1):
Deferred leasing costs	$	136,374		$	128,980
Accumulated amortization	(48,290		)	(45,869		)
Deferred leasing costs, net	88,084			83,111
Above-market leases	28,143			21,321
Accumulated amortization	(6,250		)	(2,163		)
Above-market leases, net	21,893			19,158
In-place leases	57,195			36,964
Accumulated amortization	(11,415		)	(8,167		)
In-place leases, net	45,780			28,797
Total deferred leasing costs and acquisition-related intangible assets, net	$	155,757		$	131,066
Acquisition-related Intangible Liabilities, net(1)(2):
Below-market leases	$	35,852		$	21,938
Accumulated amortization	(3,844		)	(5,094		)
Below-market leases, net	32,008			16,844
Above-market ground lease obligation	5,200			—
Accumulated amortization	(21		)	—
Above-market ground lease obligation, net	5,179			—
Total acquisition-related intangible liabilities, net	$	37,187		$	16,844

________________________

(1) Balances and accumulated amortization amounts at September 30, 2011 reflect the write-off of the following fully amortized amounts at January 1, 2011: deferred leasing costs (approximately $10.4 million), in-place leases (approximately $5.0 million), and below-market leases (approximately $3.8 million). Our accounting policy is to write-off the asset and corresponding accumulated amortization for fully amortized balances on January 1st of each fiscal year.

(2) Included in deferred revenue and acquisition-related intangible liabilities, net in the consolidated balance sheets.

15

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth amortization related to deferred leasing costs and acquisition-related intangibles for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)				(in thousands)
Deferred leasing costs(1)	$	4,317	$	3,886	$	12,053	$	9,559
Net above-market leases(2)	121		664		1,519		696
In-place leases(1)	3,379		1,220		8,238		1,505
Above-market ground lease obligation(3)	16		—		21		—
Total	$	7,833	$	5,770	$	21,831	$	11,760

_________________________

(1) The amortization of deferred leasing costs and in-place leases is recorded to depreciation and amortization expense in the consolidated statements of operations for the periods presented.

(2) The amortization of net above-market leases is recorded as a decrease to rental income in the consolidated statements of operations for the periods presented.

(3) The amortization of the above-market ground lease obligation is recorded as a decrease to ground lease expense in the consolidated statements of operations for the periods presented.

The following table sets forth the estimated annual amortization expense related to deferred leasing costs and acquisition-related intangibles as of September 30, 2011 for future periods:

Year Ending	Deferred Leasing Costs		Net Above-/(Below)-Market Leases(1)			In-Place Leases		Above-Market Ground Lease Obligation
	(in thousands)
Remaining 2011	$	4,748	$	(78	)	$	3,643	$	16
2012	17,689		(1,534		)	12,863		63
2013	15,823		(1,690		)	10,578		63
2014	13,796		(1,339		)	7,830		63
2015	10,387		(790		)	4,366		63
Thereafter	25,641		(4,684		)	6,500		4,911
Total	$	88,084	$	(10,115	)	$	45,780	$	5,179

_______________________

(1) Represents estimated annual net amortization related to above-/(below)-market leases. Amounts shown represent net below-market leases which will be recorded as an increase to rental income in the consolidated statements of operations.

16

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

4.    Receivables

Current Receivables, net

Current receivables, net is primarily comprised of contractual rents and other lease-related obligations due from tenants. The balance consisted of the following as of September 30, 2011 and December 31, 2010:

	September 30, 2011			December 31, 2010
	(in thousands)
Current receivables	$	10,001		$	9,077
Allowance for uncollectible tenant receivables	(3,141		)	(2,819		)
Current receivables, net	$	6,860		$	6,258

Deferred Rent Receivables, net

Deferred rent receivables, net consisted of the following as of September 30, 2011 and December 31, 2010:

	September 30, 2011			December 31, 2010
	(in thousands)
Deferred rent receivables	$	107,130		$	92,883
Allowance for deferred rent receivables	(3,462		)	(3,831		)
Deferred rent receivables, net	$	103,668		$	89,052

5.    Secured and Unsecured Debt of the Operating Partnership

Secured Debt

In January 2011, the Operating Partnership borrowed $135.0 million under a mortgage loan that is scheduled to mature on February 1, 2018. The mortgage loan is secured by our 303 Second Street property in San Francisco, bears interest at an annual rate of 4.27%, and requires interest-only payments for the first two years with a 30-year amortization schedule thereafter. We used a portion of the proceeds to repay borrowings under the Operating Partnership's unsecured line of credit (the "Credit Facility").

In April 2011, in connection with the acquisition of four office buildings in Kirkland, Washington, the Operating Partnership assumed a mortgage loan that is secured by the project. The assumed mortgage loan had a principal balance of $30.0 million at the acquisition date and is scheduled to mature on April 15, 2015. The loan bears contractual interest at an annual rate of 4.94% and requires monthly principal and interest payments based on a 30-year amortization period. This mortgage loan was recorded at fair value at the date of acquisition resulting in a premium of approximately $1.0 million. This premium will be accreted on a straight-line basis, which approximates the effective interest method, as a reduction to interest expense from the acquisition date through the maturity date of the mortgage loan. This will result in interest being recorded at an effective interest rate of 4.00% for financial reporting purposes.

Although both new mortgage loans are secured and non-recourse to the Company and the Operating Partnership, the Company provides limited customary secured debt guarantees for items such as voluntary bankruptcy, fraud, misapplication of payments, and environmental liabilities.

17

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Exchangeable Senior Notes

The following table summarizes the balance and significant terms of the Company's 3.25% Exchangeable Notes due 2012 (the "3.25% Exchangeable Notes") and 4.25% Exchangeable Notes due 2014 (the "4.25% Exchangeable Notes" and together with the 3.25% Exchangeable Notes, the "Exchangeable Notes") outstanding as of September 30, 2011 and December 31, 2010:

	3.25% Exchangeable Notes						4.25% Exchangeable Notes
	September 30, 2011			December 31, 2010			September 30, 2011			December 31, 2010
	(in thousands)
Principal amount	$	148,000		$	148,000		$	172,500		$	172,500
Unamortized discount	(1,714		)	(4,004		)	(13,671		)	(16,532		)
Net carrying amount of liability component	$	146,286		$	143,996		$	158,829		$	155,968
Carrying amount of equity component	$33,675						$19,835
Maturity date	April 2012						November 2014
Stated coupon rate (1)(2)	3.25%						4.25%
Effective interest rate (3)	5.45%						7.13%
Exchange rate per $1,000 principal value of the Exchangeable Notes, as adjusted (4)	11.3636						27.8307
Exchange price, as adjusted (4)	$88.00						$35.93
Number of shares on which the aggregate consideration to be delivered on conversion is determined (4)	1,681,813						4,800,796

_____________________

(1) Interest on the 3.25% Exchangeable Notes is payable semi-annually in arrears on April 15^th and October 15^th of each year.

(2) Interest on the 4.25% Exchangeable Notes is payable semi-annually in arrears on May 15^th and November 15^th of each year.

(3) The rate at which we record interest expense for financial reporting purposes, which reflects the amortization of the discounts on the Exchangeable Notes. This rate

represents our conventional debt borrowing rate at the date of issuance.

(4) The exchange rate, exchange price, and the number of shares to be delivered upon conversion are subject to adjustment under certain circumstances including increases in our

common dividends.

Capped Call Transactions

In connection with the offerings of the Exchangeable Notes, we entered into capped call option transactions ("capped calls") to mitigate the dilutive impact of the potential exchange of the Exchangeable Notes. The following table summarizes our capped call option positions as of both September 30, 2011 and December 31, 2010:

	3.25% Exchangeable Notes(1)		4.25% Exchangeable  Notes(2)
Referenced shares of common stock	1,121,201		4,800,796
Exchange price including effect of capped calls	$	102.72	$	42.81

________________________

(1) The capped calls mitigate the dilutive impact to us of the potential exchange of two-thirds of the 3.25% Exchangeable Notes into shares of common stock.

(2) The capped calls mitigate the dilutive impact to us of the potential exchange of all of the 4.25% Exchangeable Notes into shares of common stock.

For the nine months ended September 30, 2011, the per share average trading price of the Company's common stock on the NYSE of $37.92 was higher than the $35.93 exchange price for the 4.25% Exchangeable Notes. Even though the 4.25% Exchangeable Notes were not convertible as of September 30, 2011, if they were convertible as of September 30, 2011, the approximate fair value of the shares upon conversion at that date would have been equal to approximately $180.4 million, which would exceed the $172.5 million principal amount of the 4.25% Exchangeable Notes by approximately $7.9 million. See Notes 15 and 16 for a discussion of the impact of the Exchangeable Notes on our diluted earnings per share and unit calculations for the periods presented.

18

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest Expense for the Exchangeable Notes

The unamortized discount on the Exchangeable Notes is accreted as additional interest expense from the date of issuance through the maturity date of the applicable Exchangeable Notes. The following table summarizes the total interest expense attributable to the Exchangeable Notes based on the effective interest rates set forth above, before the effect of capitalized interest, for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Contractual interest payments	$	3,035	$	3,035	$	9,106	$	11,530
Amortization of discount	1,742		1,818		5,151		6,497
Interest expense attributable to the Exchangeable Notes	$	4,777	$	4,853	$	14,257	$	18,027

Unsecured Senior Notes

In July 2011, the Operating Partnership issued unsecured senior notes in a public offering with an aggregate principal balance of $325.0 million that are scheduled to mature on July 15, 2018. The unsecured senior notes require semi-annual interest payments each January and July based on a stated annual interest rate of 4.80%. The unsecured senior notes are shown net of the initial issuance discount of $0.5 million on the consolidated balance sheets. This discount is being amortized on a straight-line basis, which approximates the effective interest method, as additional interest expense from the date of issuance through the maturity date of the unsecured senior notes, resulting in interest expense being recorded at a net effective interest rate of 4.83%, before the impact of debt issuance costs, for financial reporting purposes. The Company used a portion of the net proceeds for general corporate purposes, including the repayment of borrowings under the Operating Partnership's Credit Facility.

Unsecured Line of Credit

In June 2011, we amended the terms of our Credit Facility to extend the maturity date, and reduce the interest rate and facility fee. The following table summarizes the terms of our Credit Facility as of December 31, 2010 and as amended as of September 30, 2011:

	September 30, 2011			December 31, 2010
	(in thousands)
Outstanding borrowings(1)	$	—		$	159,000
Remaining borrowing capacity	500,000			341,000
Total borrowing capacity(2)	$	500,000		$	500,000
Interest rate(3)				2.99		%
Facility fee-annual rate(4)	0.350		%	0.575		%
Maturity date(5)	August 2015			August 2013

________________________

(1) As of September 30, 2011, there were no borrowings outstanding on the Credit Facility.

(2) We may elect to borrow, subject to lender approval, up to an additional $200 million under an accordion feature under the terms of the Credit Facility.

(3) The Credit Facility interest rate was calculated based on an annual rate of LIBOR plus 1.750% and 2.675% as of September 30, 2011 and December 31, 2010, respectively. No interest rate is shown as of September 30, 2011 because no borrowings were outstanding.

(4) The facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we also incurred debt origination and legal costs

of approximately $5.0 million when we entered into the Credit Facility in 2010 and an additional $3.3 million when we amended the Credit Facility in 2011. The unamortized

balance of these costs will be amortized as additional interest expense over the extended term of the Credit Facility.

(5) Under the original and amended terms of the Credit Facility, we may exercise an option to extend the maturity date by one year.

The Company intends to borrow amounts under the Credit Facility from time to time for general corporate purposes, to fund potential acquisitions, to finance development and redevelopment expenditures, and to potentially repay long-term debt.

19

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Debt Covenants and Restrictions

The Credit Facility, the unsecured senior notes, and certain other secured debt arrangements contain covenants and restrictions requiring us to meet certain financial ratios and reporting requirements. Some of the more restrictive financial covenants include a maximum ratio of total debt to total asset value, a minimum fixed-charge coverage ratio, a minimum unsecured debt ratio, and a minimum unencumbered asset pool debt service coverage ratio. Noncompliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the associated debt becoming immediately due and payable. We believe we were in compliance with all of our debt covenants as of September 30, 2011.

Debt Maturities

The following table summarizes the stated debt maturities and scheduled amortization payments, excluding debt discounts and premiums, as of September 30, 2011:

Year Ending	(in thousands)
Remaining 2011	$	70,371
2012	305,303
2013	6,373
2014	262,443
2015	357,382
Thereafter	775,028
Total	$	1,776,900	(1)

________________________

(1) Includes gross principal balance of outstanding debt before impact of all debt discounts and premiums.

Capitalized Interest and Loan Fees

The following table sets forth our gross interest expense, including debt discount/premium and loan cost amortization, net of capitalized interest, for the three and nine months ended September 30, 2011 and 2010. The capitalized amounts are a cost of development and redevelopment, and increase the carrying value of undeveloped land and construction in progress.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands)
Gross interest expense	$	26,449		$	18,543		$	72,597		$	48,980
Capitalized interest	(2,398		)	(2,690		)	(6,442		)	(8,083		)
Interest expense	$	24,051		$	15,853		$	66,155		$	40,897

6.    Noncontrolling Interests on the Company's Consolidated Financial Statements

7.45% Series A Cumulative Redeemable Preferred Units of the Operating Partnership

As of both September 30, 2011 and December 31, 2010, the Operating Partnership had outstanding 1,500,000 7.45% Series A Cumulative Redeemable Preferred Units representing preferred limited partnership interests in the Operating Partnership with a redemption value of $50.00 per unit. There were no changes to this noncontrolling interest during the three and nine months ended September 30, 2011 and 2010.

Common Units of the Operating Partnership

The Company owned a 97.1%, 96.8% and 96.8% common general partnership interest in the Operating Partnership as of September 30, 2011, December 31, 2010, and September 30, 2010, respectively. The remaining 2.9%, 3.2% and 3.2% common limited partnership interest as of September 30, 2011, December 31, 2010 and September 30, 2010, respectively, was owned in the form of common units by non-affiliate investors and certain of our officers and directors. There were 1,718,131, 1,723,131 and 1,723,131 common units outstanding held by these investors, officers and directors as of September 30, 2011, December 31, 2010 and September 30, 2010, respectively.

The noncontrolling common units may be redeemed by unitholders for cash. We, at our option, may satisfy the cash redemption obligation with shares of the Company's common stock on a one-for-one basis. Whether satisfied in cash or shares of the Company's

20

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

common stock, the value for each noncontrolling common unit upon redemption is the amount equal to the average of the closing quoted price per share of the Company's common stock, par value $.01 per share, as reported on the NYSE for the ten trading days immediately preceding the applicable redemption date. The aggregate value upon redemption of the then-outstanding noncontrolling common units was $56.2 million and $61.4 million as of September 30, 2011 and December 31, 2010, respectively. This redemption value does not necessarily represent the amount that would be distributed with respect to each common unit in the event of our termination or liquidation. In the event of our termination or liquidation, it is expected in most cases that each common unit would be entitled to a liquidating distribution equal to the amount payable with respect to each share of the Company's common stock.

7. Stockholders' Equity of the Company

Issuance of Common Stock

In April 2011, the Company completed an underwritten public offering of 6,037,500 shares of its common stock. The net offering proceeds, after deducting underwriting discounts and commissions and offering expenses, were approximately $221.0 million. We used a portion of the net proceeds from the offering to fund acquisitions and for general corporate purposes.

Periodic Stock Offering Program

In July 2011, the Company commenced a periodic stock offering program under which it may sell up to $200.0 millionaggregate gross sales price of the Company's common stock from time to time in “at the market” ("ATM") offerings.  The Company may sell common stock under this program in amounts and at times to be determined by the Company and the Company has no obligation to sell common stock under this program. As of the date of this report, there have been no sales of common stock under the ATM program.

8.    Partners' Capital of the Operating Partnership

Issuance of Common Units

In April 2011, the Company completed an underwritten public offering of 6,037,500 shares of its common stock as discussed in Note 7. The net offering proceeds of approximately $221.0 million were contributed by the Company to the Operating Partnership in exchange for 6,037,500 common units.

Common Units Outstanding

The Company owned 58,464,412, 52,349,670, and 52,349,670 common units representing a 97.1%, 96.8%, and 96.8% common general partnership interest in the Operating Partnership as of September 30, 2011, December 31, 2010, and September 30, 2010, respectively. The remaining 2.9%, 3.2%, and 3.2% common limited partnership interest as of September 30, 2011, December 31, 2010, and September 30, 2010, respectively, was owned by non-affiliate investorsand certain of our officers and directors in the form of noncontrolling common units.Therewere 1,718,131, 1,723,131, and 1,723,131 common units outstanding held by these investors, officers and directors as of September 30, 2011, December 31, 2010, and September 30, 2010, respectively. For a further discussion of the noncontrolling common units as of September 30, 2011 and December 31, 2010, please refer to Note 6.

21

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

9.    Share-Based Compensation

Stockholder Approved Equity Compensation Plans

As of September 30, 2011, we had one share-based incentive compensation plan, the Kilroy Realty 2006 Incentive Award Plan as amended (the “2006 Plan”). As of September 30, 2011, 3,799,737 shares were available for grant under the 2006 Plan. The number of shares that remains available for grant is calculated using the weighted share counting provisions set forth in the 2006 Plan, which are based on the type of awards that are granted. The maximum number of shares available for grant subject to full value awards (which generally include equity awards other than options and stock appreciation rights) was 1,301,280 shares as of September 30, 2011.

Summary of Nonvested Shares

A summary of our nonvested shares activity from January 1, 2011 through September 30, 2011 is presented below:

Nonvested Shares	Shares		Weighted-Average Grant Date Fair Value Per Share
Outstanding at January 1, 2011	50,032		$	58.40
Granted	68,727		37.83
Vested (1)	(9,474	)	56.76
Outstanding as of September 30, 2011	109,285		$	45.61

________________________

(1) The total shares vested include 2,198 shares that were tendered to satisfy minimum statutory tax withholding requirements related to the restricted shares that have vested in accordance with the terms of the 2006 Plan. We accept the return of shares at the current quoted closing share price of the Company's common stock to satisfy tax obligations.

A summary of our nonvested and vested shares activity for the nine months ended September 30, 2011 and 2010 is presented below:

	Shares Granted			Shares Vested
Nine Months Ended September 30,	Non-Vested Shares Issued	Weighted-Average Grant Date Fair Value Per Share		Vested Shares		Total Vest Date Fair Value (1)          (in thousands)
2011	68,727	$	37.83	(9,474	)	$	370
2010	3,239	30.88		(16,358	)	474

_______________________

(1) Total fair value of shares vested was calculated based on the quoted closing share price of the Company's common stock on the NYSE on the day of vesting.

Summary of Restricted Stock Units

A summary of our restricted stock unit ("RSU") activity from January 1, 2011 through September 30, 2011 is presented below:

	Nonvested RSUs				Vested RSUs		Total RSUs
	Amount		Weighted-Average Grant Date  Fair Value Per Share
Outstanding at January 1, 2011	125,754		$	29.88	588,068		713,822
Granted	107,673		37.94		—		107,673
Vested	(23,035	)	30.57		23,035
Issuance of dividend equivalents (1)					20,790		20,790
Canceled (2)					(8,497	)	(8,497	)
Outstanding as of September 30, 2011	210,392		$	33.93	623,396		833,788

________________________

(1) RSUs issued as dividend equivalents are vested upon issuance.

(2) We accept the return of RSUs, at the current quoted closing share price of the Company's common stock, to satisfy minimum statutory tax-withholding requirements related to either RSUs that have vested or RSU dividend equivalents in accordance with the terms of the 2006 Plan.

22

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A summary of our RSU activity for the nine months ended September 30, 2011 and 2010 is presented below:

	RSUs Granted			RSUs Vested
Nine Months Ended September 30,	Non-Vested RSUs Issued	Weighted-Average Grant Date Fair Value Per Share		Vested RSUs		Total Vest-Date Fair Value (1)         (in thousands)
2011	107,673	$	37.94	(23,035	)	$	897
2010	159,606	30.24		(23,564	)	740

_______________________

(1) Total fair value of RSUs vested was calculated based on the quoted closing share price of the Company's common stock on the NYSE on the day of vesting.

Compensation Cost Recorded During the Period

The total compensation cost for all share-based compensation programs was $1.4 million and $2.2 million for the three months ended September 30, 2011 and 2010, respectively, and $4.2 million and $6.4 million for the nine months ended September 30, 2011 and 2010, respectively. Of the total share-based compensation cost, $0.3 million was capitalized as part of real estate assets for the three months ended September 30, 2011 and 2010, and $0.8 million and $1.1 million was capitalized as part of real estate assets for the nine months ended September 30, 2011 and 2010, respectively. As of September 30, 2011, there was approximately $5.7 million of total unrecognized compensation cost related to nonvested incentive awards granted under share-based compensation arrangements that is expected to be recognized over a weighted-average period of 1.6 years. The remaining compensation cost related to these nonvested incentive awards had been recognized in periods prior to September 30, 2011.

10. Future Minimum Rent

We have operating leases with tenants that expire at various dates through 2031 and are either subject to scheduled fixed increases or adjustments in rent based on the Consumer Price Index. Generally, the leases grant tenants renewal options. Leases also provide for additional rents based on certain operating expenses. Future contractual minimum rent under operating leases as of September 30, 2011 for future periods is summarized as follows:

Year Ending	(in thousands)
Remaining 2011	$	79,636
2012	323,174
2013	307,751
2014	275,387
2015	220,593
Thereafter	687,083
Total	$	1,893,624

23

11. Commitments and Contingencies

Ground Leases

We have noncancellable ground lease obligations at one building in Bellevue, Washington which expires in November 2093 and at Kilroy Airport Center Phases I, II, and III in Long Beach, California which expires in July 2084.

The minimum commitment under our ground leases as of September 30, 2011 for five years and thereafter was as follows:

Year Ending	(in thousands)
Remaining 2011	$	481
2012	1,926
2013	1,926
2014	1,870
2015	1,830
Thereafter(1)(2)	133,212
Total	$	141,245

________________________

(1) One of our ground lease obligations is subject to a fair market value adjustment every five years; however, the lease includes ground rent subprotection and infrastructure rent credits which currently limit our annual rental obligations to $1.0 million. The contractual obligations for that ground lease included above assumes the lesser of $1.0 million or annual lease rental obligation in effect as of September 30, 2011.

(2) One of our ground lease obligations includes a component which is based on the percentage of gross income that exceeds the minimum ground rent. The minimum rent is subject to increases every five years based on 50% of the average annual percentage rent for the previous five years. Currently gross income does not exceed the threshold requiring us to pay percentage rent. The contractual obligations for that ground lease included above assumes the annual lease rental obligation in effect as of September 30, 2011.

Non-refundable Escrow Deposits

As of September 30, 2011, we had $11.0 million in non-refundable escrow deposits, subject only to the failure of satisfaction of conditions precedent to the closing. The escrow deposits are related to potential future acquisitions, which are included in prepaid expenses and other assets, net on the consolidated balance sheets. These potential future acquisitions are currently anticipated to close in 2011 and are subject to customary closing conditions.

12.    Fair Value Measurements and Disclosures

Assets and Liabilities Reported at Fair Value

The only assets and liabilities we record at fair value on our consolidated financial statements are the marketable securities and related deferred compensation plan liability, both of which are related to our deferred compensation plan. The following table sets forth the fair value of our marketable securities and related deferred compensation plan liability as of September 30, 2011 and December 31, 2010:

	Fair Value (Level  1)(1)
Description	September 30, 2011		December 31, 2010
	(in thousands)
Marketable securities (2)	$	5,213	$	4,902
Deferred compensation plan liability (3)	$	5,118	$	4,809

________________________

(1) Based on quoted prices in active markets for identical securities.

(2) The marketable securities are held in a limited rabbi trust.

(3) The deferred compensation liability is reported on our consolidated balance sheets in accounts payable, accrued expenses, and other liabilities.

We report the change in the fair value of the marketable securities at the end of each accounting period in interest income and

24

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

other net investment gains in the consolidated statements of operations. We adjust the deferred compensation plan liability to fair value at the end of each accounting period based on the performance of the benchmark funds selected by each participant, which results in a corresponding increase or decrease to compensation cost for the period. The following table sets forth the related amounts recorded during the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended						Nine Months Ended
Description	September 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
	(in thousands)						(in thousands)
Net (loss) gain on marketable securities	$	(642	)	$	311		$	(429	)	$	190
Decrease (increase) to compensation cost	642			(364		)	429			(206		)

Financial Instruments Disclosed at Fair Value

The following table sets forth the carrying value and the fair value of our other financial instruments as of September 30, 2011 and December 31, 2010:

	Carrying Value		Fair Value		Carrying Value		Fair Value
Description	September 30, 2011				December 31, 2010
	(in thousands)
Liabilities
Secured debt	$	473,997	$	487,807	$	313,009	$	329,456
Exchangeable notes	305,115		321,183		299,964		312,598
Unsecured senior notes	980,487		1,014,863		655,803		661,644
Credit Facility (1)	—		—		159,000		159,659

________________________

(1) As of September 30, 2011, there were no outstanding borrowings on the Credit Facility.

25

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

13.    Segment Disclosure

We have one reportable segment which is our Office Properties segment and we have one non-reportable segment which is our Industrial Properties segment. We also have certain corporate level activities including legal administration, accounting, finance, management information systems, and acquisitions, which are not considered separate operating segments.

We evaluate the performance of our segments based upon Net Operating Income. “Net Operating Income” is defined as operating revenues (rental income, tenant reimbursements, and other property income) less property and related expenses (property expenses, real estate taxes, ground leases, and provisions for bad debts) and excludes other non-property related income and expenses such as interest income and interest expense, depreciation and amortization, acquisition-related expenses and corporate general and administrative expenses. There is no intersegment activity.

The following tables reconcile our reportable segment activity to our consolidated net income for the three and nine months ended September 30, 2011 and 2010 and the assets by segment to the consolidated assets as of September 30, 2011 and December 31, 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands)
Reportable Segment - Office Properties
Operating revenues(1)	$	89,754		$	71,646		$	254,041		$	194,923
Property and related expenses	26,709			21,091			74,199			56,678
Net Operating Income	63,045			50,555			179,842			138,245
Non-Reportable Segment - Industrial Properties
Operating revenues(1)	7,583			7,630			22,393			22,546
Property and related expenses	1,510			1,772			6,634			5,417
Net Operating Income	6,073			5,858			15,759			17,129
Total Segments:
Operating revenues(1)	97,337			79,276			276,434			217,469
Property and related expenses	28,219			22,863			80,833			62,095
Net Operating Income	$	69,118		$	56,413		$	195,601		$	155,374
Reconciliation to Consolidated Net Income:
Total Net Operating Income for segments	$	69,118		$	56,413		$	195,601		$	155,374
Unallocated (expenses) income:
General and administrative expenses	(6,355		)	(7,273		)	(20,355		)	(21,096		)
Acquisition-related expenses	(1,163		)	(354		)	(2,829		)	(1,624		)
Depreciation and amortization	(36,152		)	(29,951		)	(97,513		)	(74,405		)
Interest income and other net investment gains	30			337			272			703
Interest expense	(24,051		)	(15,853		)	(66,155		)	(40,897		)
Loss on early extinguishment of debt	—			—			—			(4,564		)
Income from continuing operations	1,427			3,319			9,021			13,491
Income from discontinued operations(2)	12,863			350			13,608			1,011
Net income	$	14,290		$	3,669		$	22,629		$	14,502

________________________

(1) All operating revenues are comprised of amounts received from third-party tenants.

(2) Income from discontinued operations is from our Reportable Segment - Office Properties.

26

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	September 30, 2011		December 31, 2010
	(in thousands)
Assets:
Reportable Segment - Office Properties
Land, buildings, and improvements, net	$	2,541,029	$	2,108,019
Undeveloped land and construction in progress	328,785		290,365
Total assets(1)	3,121,084		2,611,206
Non-Reportable Segment - Industrial Properties
Land, buildings, and improvements, net	146,286		146,058
Total assets(1)	161,301		159,612
Total Segments
Land, buildings, and improvements, net	2,687,315		2,254,077
Undeveloped land and construction in progress	328,785		290,365
Total assets(1)	3,282,385		2,770,818
Reconciliation to Consolidated Assets:
Total assets allocated to segments	$	3,282,385	$	2,770,818
Other unallocated assets:
Cash and cash equivalents	15,481		14,840
Restricted cash	25,436		1,461
Marketable securities	5,213		4,902
Deferred financing costs, net	19,638		16,447
Prepaid expenses and other assets, net	19,531		8,097
Total consolidated assets	$	3,367,684	$	2,816,565

________________________

(1) Includes land, buildings, and improvements, undeveloped land and construction in progress, current receivables, deferred rent receivables, deferred leasing costs, and acquisition-related intangible assets, all shown on a net basis.

27

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 14. Property Dispositions Reported as Discontinued Operations

The following table summarizes the properties sold during the nine months ended September 30, 2011.

Location	Property Type	Month of Disposition	Number of Buildings	Rentable Square Feet	Sales Price (in millions)
10350 Barnes Canyon and 10120 Pacific Heights Drive, San Diego, CA	Office	September	2	90,558	$	23.9

The following table summarizes the components that comprise income from discontinued operations for the three and nine months ended September 30, 2011 and 2010.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Revenues:
Rental income	$	413	$	473	$	1,359	$	1,419
Tenant reimbursements	56		55		202		151
Total revenues	469		528		1,561		1,570
Expenses:
Property expenses	33		43		118		153
Real estate taxes	29		32		93		97
Depreciation and amortization	99		103		297		309
Total expenses	161		178		508		559
Income from discontinued operations before net gain on dispositions of discontinued operations	308		350		1,053		1,011
Net gain on dispositions of discontinued operations	12,555		—		12,555		—
Total income from discontinued operations	$	12,863	$	350	$	13,608	$	1,011

As of September 30, 2011, the net cash proceeds from this disposition of approximately $23.3 million, after the payment of selling commissions and other closing costs, are being temporarily held at a qualified intermediary, at our direction, for the purpose of facilitating a potential Section 1031 Exchange. The $23.3 million cash proceeds are included in restricted cash on the consolidated balance sheets at September 30, 2011.

28

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

15.    Net Income (Loss) Available to Common Stockholders Per Share of the Company

The following table reconciles the numerator and denominator in computing the Company's basic and diluted per-share computations for net income (loss) available to common stockholders for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands, except share and per share amounts)
Numerator:
Income from continuing operations	$	1,427		$	3,319		$	9,021		$	13,491
Loss (income) from continuing operations attributable to noncontrolling common units of the Operating Partnership	67			15			65			(94		)
Preferred distributions and dividends	(3,799		)	(3,799		)	(11,397		)	(11,397		)
Allocation to participating securities (nonvested shares and RSUs)	(330		)	(273		)	(979		)	(877		)
Numerator for basic and diluted (loss) income from continuing operations available to common stockholders	(2,635		)	(738		)	(3,290		)	1,123
Income from discontinued operations	12,863			350			13,608			1,011
Income from discontinued operations attributable to noncontrolling common units of the Operating Partnership	(363		)	(11		)	(385		)	(34		)
Numerator for basic and diluted net income (loss) available to common stockholders	$	9,865		$	(399	)	$	9,933		$	2,100
Denominator:
Basic weighted average vested shares outstanding	58,355,127			52,274,316			56,136,477			48,561,614
Effect of dilutive securities-Exchangeable Notes and stock options	—			—			—			3,414
Diluted weighted average vested shares and common share equivalents outstanding	58,355,127			52,274,316			56,136,477			48,565,028
Basic earnings per share:
(Loss) income from continuing operations available to common stockholders per share	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common share	0.22			0.00			0.24			0.02
Net income (loss) available to common stockholders per share	$	0.17		$	(0.01	)	$	0.18		$	0.04
Diluted earnings per share:
(Loss) income from continuing operations available to common stockholders per share	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common share	0.22			0.00			0.24			0.02
Net income (loss) available to common stockholders per share	$	0.17		$	(0.01	)	$	0.18		$	0.04

The impact of the Exchangeable Notes and stock options was not considered in our diluted earnings per share calculation for the three and nine months ended September 30, 2011 and the three months ended September 30, 2010 since the Company had losses from continuing operations attributable to common stockholders in the respective periods and the effect was anti-dilutive.

The impact of the Exchangeable Notes was not included in our diluted earnings per share calculation for the nine months ended September 30, 2010 because the average trading price of the Company's common stock on the NYSE was below the respective Exchangeable Notes exchange price for the period. As a result, these instruments were not considered to be dilutive for the purposes of our diluted earnings per share calculation for this period.

29

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

16.    Net Income (Loss) Available to Common Unitholders Per Unit of the Operating Partnership

The following table reconciles the numerator and denominator in computing the Operating Partnership's basic and diluted per-unit computations for net income (loss) available to common unitholders for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands, except unit and per unit amounts)
Numerator:
Income from continuing operations	$	1,427		$	3,319		$	9,021		$	13,491
Income from continuing operations attributable to noncontrolling interests in consolidated subsidiaries	(30		)	(41		)	(95		)	(138		)
Preferred distributions	(3,799		)	(3,799		)	(11,397		)	(11,397		)
Allocation to participating securities (nonvested units and RSUs)	(330		)	(273		)	(979		)	(877		)
Numerator for basic and diluted (loss) income from continuing operations available to common unitholders	(2,732		)	(794		)	(3,450		)	1,079
Income from discontinued operations	12,863			350			13,608			1,011
Numerator for basic and diluted net income (loss) available to common unitholders	$	10,131		$	(444	)	$	10,158		$	2,090
Denominator:
Basic weighted average vested units outstanding	60,073,258			53,997,447			57,857,538			50,284,745
Effect of dilutive securities-Exchangeable Notes and stock options	—			—			—			3,414
Diluted weighted average vested units and common unit equivalents outstanding	60,073,258			53,997,447			57,857,538			50,288,159
Basic earnings per unit:
(Loss) income from continuing operations available to common unitholders per unit	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common unit	0.22			0.00			0.24			0.02
Net income (loss) available to common unitholders per unit	$	0.17		$	(0.01	)	$	0.18		$	0.04
Diluted earnings per unit:
(Loss) income from continuing operations available to common unitholders per unit	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common unit	0.22			0.00			0.24			0.02
Net income (loss) available to common unitholders per unit	$	0.17		$	(0.01	)	$	0.18		$	0.04

The impact of the Exchangeable Notes and stock options was not considered in our diluted earnings per unit calculation for the three and nine months ended September 30, 2011 and the three months ended September 30, 2010 since the Operating Partnership had losses from continuing operations attributable to common unitholders in the respective periods and the effect was anti-dilutive.

The impact of the Exchangeable Notes was not included in our diluted earnings per unit calculation for the nine months ended September 30, 2010 because the average trading price of the Company's common stock on the NYSE was below the respective Exchangeable Notes exchange price for the period. As a result, these instruments were not considered to be dilutive for the purposes of our diluted earnings per unit calculation for this period.

30

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

17.    Subsequent Events

On October 11, 2011, we used borrowings under the Credit Facility to repay a secured mortgage loan with an outstanding principal balance of $68.7 million that was scheduled to mature in December 2011.

On October 17, 2011, aggregate dividends, distributions, and dividend equivalents of $21.4 million were paid to common stockholders and common unitholders of record on September 30, 2011 and RSU holders of record on October 17, 2011.

On October 25, 2011, we paid $25.0 million as a non-refundable escrow deposit, subject only to the failure of satisfaction of conditions precedent to the closing, related to a potential future acquisition. The acquisition is currently anticipated to close in 2011 and is subject to customary closing conditions.

On November 1, 2011, we used borrowings under the Credit Facility to repay a secured mortgage loan with an outstanding principal balance of $52.0 million that was scheduled to mature in April 2012 .

As of the date of this report, we have outstanding borrowings of $165.0 million under our Credit Facility that were primarily used to fund the repayment of debt and a non-refundable escrow deposit as noted above.

18.    Pro Forma Results of the Company

The following pro forma consolidated results of operations of the Company for the three and nine months ended September 30, 2011 and 2010 assumes that the acquisitions of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, were completed as of January 1, 2010. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2010, nor does it intend to be a projection of future results.

	Three Months Ended September 30, (1)					Nine Months Ended September 30, (1)
	2011		2010			2011		2010
	(in thousands except per share amounts)
Revenues	$	99,938	$	86,490		$	291,600	$	239,270
Net income (loss) available to common stockholders(2)(3)	$	11,692	$	(1,284	)	$	9,896	$	2,692
Net income (loss) available to common stockholders per share - basic(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04
Net income (loss) available to common stockholders per share - diluted(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

(3) The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowings and related pro forma interest expense estimate assumed herein are not indicative of actual results.

The following table summarizes the results of operations for the properties at 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, from June 3, 2011 and September 15, 2011, the dates of acquisition, respectively, through September 30, 2011:

	(in thousands)
Revenues	$	6,481
Net loss(1)	(31		)

________________________

(1) Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

31

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

19.    Pro Forma Results of the Operating Partnership

The following pro forma consolidated results of operations of the Operating Partnership for the three and nine months ended September 30, 2011 and 2010 assumes that the acquisitions of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, were completed as of January 1, 2010. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2010, nor does it intend to be a projection of future results.

	Three Months Ended September 30, (1)					Nine Months Ended September 30, (1)
	2011		2010			2011		2010
	(in thousands except per share amounts)
Revenues	$	99,938	$	86,490		$	291,600	$	239,270
Net income (loss) available to common unitholders(2)(3)	$	12,001	$	(1,367	)	$	10,090	$	2,672
Net income (loss) available to common unitholders per unit - basic(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04
Net income (loss) available to common unitholders per unit - diluted(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

(3) The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowing and related pro forma interest expense estimate assumed herein are not indicative of actual results.

The following table summarizes the results of operations for the properties at 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, from June 3, 2011 and September 15, 2011, the dates of acquisition, respectively, through September 30, 2011:

	(in thousands)
Revenues	$	6,481
Net loss(1)	(31		)

________________________

(1) Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

32

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

The following discussion relates to our consolidated financial statements and should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. The results of operations discussion is combined for the Company and the Operating Partnership because there are no material differences in the results of operations between the two reporting entities.

Statements contained in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" that are not historical facts may be forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Some of the information presented is forward-looking in nature, including information concerning projected future occupancy rates, rental rate increases, property development and redevelopment timing and costs, and investment amounts. Numerous factors could affect our actual results, some of which are beyond our control. These include the breadth and duration of the current slowness of economic growth and its impact on our tenants, the strength of commercial and industrial real estate markets, market conditions affecting tenants, our ability to complete and successfully integrate pending and recent acquisitions, the ability to successfully execute our capital recycling program including any potential dispositions and tax-deferred property exchanges, competitive market conditions, interest rate levels, volatility in the trading prices of the Company's securities, 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. We assume no obligation to update publicly any forward-looking information, whether as a result of new information, future events, or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws to disclose material information. For a discussion of important risks related to our business, and related to investing in our 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 “Item 1A: Risk Factors" in the Company's and the Operating Partnership's annual report on Form 10-K for the year ended December 31, 2010, and the discussion below under the captions "—Factors That May Influence Future Results of Operations,” “—Liquidity and Capital Resources of the Company” and "—Liquidity and Capital Resources of the Operating Partnership." In light of these risks, uncertainties, and assumptions, the forward-looking events discussed in this report might not occur.

Overview and Background

We are a self-administered REIT active in office and industrial submarkets along the West Coast. We own, develop, acquire and manage real estate assets, consisting primarily of Class A real estate properties in the coastal regions of Los Angeles, Orange County, San Diego, greater Seattle and the San Francisco Bay Area, which we believe have strategic advantages and strong barriers to entry. We own our interests in all of our properties through the Operating Partnership and the Finance Partnership, and conduct substantially all of our operations through the Operating Partnership. We owned a 97.1%, 96.8% and 96.8% general partnership interest in the Operating Partnership as of September 30, 2011, December 31, 2010 and September 30, 2010, respectively. All our properties are held in fee except for the seven office buildings located at Kilroy Airport Center in Long Beach, California which are held subject to noncancellable ground leases for the land that expire in 2084 and one office building located in Bellevue, Washington which is held subject to a noncancellable ground lease for the land that expires in 2093.

Factors That May Influence Future Results of Operations

Acquisitions. During the nine months ended September 30,2011, we acquired nine office buildings in six transactions for approximately $516.3 million (see Note 2 to our consolidated financial statements included in this report for more information), and during 2010 we acquired ten office buildings in eight transactions for approximately $697.8 million. We generally finance our acquisitions through the assumption of existing debt, new debt and equity offerings, borrowings under our unsecured line of credit (the "Credit Facility") and proceeds from our capital recycling program.

As a key component of our growth strategy, we continually evaluate property acquisition opportunities as they arise. As a result, at any point in time we may have one or more potential acquisitions under consideration that are in varying stages of evaluation, negotiation or due diligence review, including potential acquisitions under contract. Although, as of the date of this report we are a party to agreements to acquire properties, and in the future may enter into additional agreements to acquire properties, those agreements are and will be subject to the satisfaction of due diligence review and customary closing conditions. We cannot provide assurance that we will enter into any additional agreements to acquire properties or that the acquisitions contemplated by the agreements to which we were a party as of the date of this report or any additional agreements we may enter into in the future will be completed. Costs associated with acquisitions are expensed as incurred and we may be unable to complete an acquisition after making a nonrefundable deposit or incurring acquisition-related costs. In addition, acquisitions are subject to various other risks and uncertainties. During the three and nine months ended September 30, 2011, we incurred approximately $1.2 million and $2.8 million, respectively, of third-party acquisition costs and we anticipate that we will incur additional third-

33

party acquisition costs in the fourth quarter of 2011 as we pursue other potential acquisitions.

Capital Recycling Program. As part of our current strategy, we intend to dispose of mature office and industrial assets and then use the proceeds to fund potential acquisitions, to finance development and redevelopment expenditures, to potentially repay long-term debt and general corporate purposes. As part of this strategy, we intend, when practical, to enter into Section 1031 Exchanges to shelter the gains on the sales for federal and state income tax purposes.

In connection with this strategy, during the nine months ended September 30, 2011, we disposed of two office buildings in one transaction for approximately $23.9 million (see Note 14 to our consolidated financial statements included in this report for more information). At September 30, 2011, the net cash proceeds from this disposition were temporarily being held by a qualified intermediary, at our direction, for the purpose of facilitating a potential Section 1031 Exchange. In addition, during the third quarter of 2011 we began demolition of one of our industrial properties to prepare the land for the potential sale to residential developers since we successfully obtained entitlements to reposition this site for residential use. We anticipate that we could potentially sell this land in the next year, however ultimate timing of the sale will depend upon market conditions and other factors.

As part of our capital recycling program strategy, we are in various stages of negotiation for the disposition of four properties, including the land sale referenced above, with an aggregate sales price of approximately $205 million. In addition, we believe that we could potentially dispose of additional properties over the next 12 to 18 months, depending on market conditions. However, we cannot provide assurance that we will consummate any of these possible dispositions or, if we do, that the amount of proceeds from those dispositions will not be less, perhaps substantially, than the foregoing amounts.

Leasing Activity and Changes in Rental Rates.  The amount of net rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, newly developed or redeveloped properties, newly acquired properties with vacant space, and space available from unscheduled lease terminations. The amount of rental income we generate also depends on our ability to maintain or increase rental rates in our submarkets. Negative trends in one or more of these factors could adversely affect our rental income in future periods. The following tables set forth certain information regarding leases that commenced during the three and nine months ended September 30, 2011.

Lease Commencement Information

For Leases That Commenced During the Three Months Ended September 30, 2011

	1st & 2nd Generation(1)				2nd Generation(1)
	Number of Leases(2)		Rentable Square Feet(2)		Changes  in Rents(3)		Changes in Cash Rents(4)		Retention Rates(5)		Weighted Average Lease Term (in months)
	New	Renewal	New	Renewal
Office Properties	19	15	251,372	157,432	(3.5	)%	(5.7	)%	81.7	%	107
Industrial Properties	3	5	88,200	193,665	(18.9	)%	(28.9	)%	100.0	%	62
Total portfolio	22	20	339,572	351,097	(9.3	)%	(14.1	)%	90.9	%	87

Lease Commencement Information

For Leases That Commenced During the Nine Months Ended September 30, 2011

	1st & 2nd Generation(1)				2nd Generation(1)
	Number of Leases(2)		Rentable Square Feet(2)		Changes  in Rents(3)		Changes in Cash Rents(4)		Retention Rates(5)		Weighted Average Lease Term (in months)
	New	Renewal	New	Renewal
Office Properties	56	32	618,821	276,761	(7.7	)%	(11.4	)%	40.6	%	84
Industrial Properties	8	7	233,470	285,431	(18.5	)%	(27.7	)%	97.9	%	72
Total portfolio	64	39	852,291	562,192	(10.7	)%	(15.7	)%	57.8	%	79

______________ 

(1) First generation leasing includes space where we have made capital expenditures that result in additional revenue generated when the space is re-leased. Second generation leasing includes space where we have made capital expenditures to maintain the current market revenue stream.

(2) Represents leasing activity for leases that commenced during the period, including first and second generation space, net of month-to-month leases. Excludes development and redevelopment leasing.

(3) 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, or vacant when the property was acquired.

(4) 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, or vacant when the property was acquired.

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

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The changes in rents and changes in cash rents reported above exclude leases of approximately 224,500 and 684,600 rentable square feet for the three and nine months ended September 30, 2011, respectively, for which the space was vacant longer than one year or we are leasing the space for the first time. We exclude space vacant for more than one year in our change in rents calculations to provide a meaningful market comparison.

During the three months ended September 30, 2011, we executed 30 leases for an aggregate of approximately 530,300 rentable square feet. The weighted average change in rents as compared to the expiring rents for the same space for these new leases was a 1.8% decrease in GAAP rents and a 8.0% decrease in cash rents, excluding leases for which the space was vacant longer than one year, or spaces we leased for the first time. As of September 30, 2011, we believe that the weighted average cash rental rates for our overall portfolio, including recently acquired properties, are approximately 5% to 10% above the current average market rental rates, although individual properties within any particular submarket presently may be leased either above, below, or at the current market rates within that submarket, and the average rental rates for individual submarkets may be above, below, or at the average cash rental rate of our portfolio.

In general, rental rates have stabilized in many of our submarkets over the last several quarters. Our rental rates and occupancy are impacted by general economic conditions, including the pace of regional economic growth and access to capital. Therefore, we cannot give any assurance that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates. Additionally, decreased demand and other negative trends or unforeseeable events that impair our ability to timely renew or re-lease space could have further negative effects on our future financial condition, results of operations, and cash flows.

Scheduled Lease Expirations.   The following table sets forth certain information regarding our lease expirations for the remainder of 2011 and the next five years.

Lease Expirations⁽¹⁾

Year of Lease Expiration	Number of Expiring Leases	Net Rentable Area Subject to Expiring Leases (Sq. Ft.)	Percentage of Leased Square Feet Represented by Expiring Leases		Annualized Base Rental Revenue Under Expiring Leases (000's)(2)		Percentage of Annualized Base Rental Revenue Represented by Expiring Leases(2)		Average Annualized Base Rental Revenue Per Square Foot Under Expiring Leases (000's)(2)
Office Properties:
Remainder of 2011	8	66,433	0.5	%	$	1,351	0.4	%	$	20.34
2012	79	790,207	5.6	%	22,021		6.5	%	27.87
2013	87	1,149,860	8.3	%	32,839		9.6	%	28.56
2014	86	1,398,332	10.1	%	38,133		11.1	%	27.27
2015	123	1,993,201	14.3	%	61,115		17.9	%	30.66
2016	55	644,833	4.6	%	15,855		4.6	%	24.59
Total Office	438	6,042,866	43.4	%	171,314		50.1	%	$	28.35
Industrial Properties:
Remainder of 2011	—	—	—	%	—		—	%
2012	9	354,994	2.6	%	2,491		0.7	%	$	7.02
2013	10	665,357	4.8	%	4,857		1.4	%	7.30
2014	19	574,386	4.1	%	4,604		1.3	%	8.02
2015	11	655,351	4.7	%	4,314		1.3	%	6.58
2016	5	139,845	1.0	%	825		0.2	%	5.90
Total Industrial	54	2,389,933	17.2	%	17,091		4.9	%	$	7.15
Total	492	8,432,799	60.6	%	$	188,405	55.0	%	$	22.34

________________________ 

(1) The information presented reflects leasing activity through September 30, 2011. For leases that have been renewed early or space that has been re-leased to a new tenant, the expiration date and annualized base rent information presented takes into consideration the renewed or re-leased lease terms. Excludes space leased under month-to-month leases and vacant space as of September 30, 2011.

(2) Reflects annualized contractual base rent calculated on a straight-line basis in accordance with GAAP excluding the amortization of deferred revenue related to tenant-funded tenant improvements and expense reimbursement revenue.  Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net. Amounts represent percentage of total portfolio annualized contractual base rental revenue.

In addition to the 1.1 million rentable square feet, or 7.2%, of currently available space in our stabilized portfolio, leases representing approximately 0.5% and 8.2% of the occupied square footage of our stabilized portfolio are scheduled to expire during the remainder of 2011 and in 2012, respectively. The leases scheduled to expire during the remainder of 2011 and in 2012

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represent approximately 0.9 million rentable square feet of office space, or 6.9% of our total annualized base rental revenue, and 0.4 million rentable square feet of industrial space, or 0.7% of our total annualized base rental revenue, respectively. We believe that the weighted average cash rental rates are approximately 10% to 15% above the current average quoted market rates for leases scheduled to expire during the remainder of 2011 and 2012, although individual properties within any particular submarket presently may be leased either above, below, or at the current quoted market rates within that submarket, and the average rental rates for individual submarkets may be above, below, or at the average cash rental rate of our overall portfolio. Our ability to re-lease available space depends upon both general market conditions and the market conditions in the specific regions in which individual properties are located.

Development and Redevelopment Programs.    We believe that a portion of our long-term future potential growth will continue to come from our development pipeline and redevelopment opportunities within our existing portfolio. Redevelopment opportunities are those projects in which we spend significant development and construction costs on existing buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property.

During the three months ended September 30, 2011, we commenced the redevelopment of two of our existing office properties to upgrade and modernize the buildings and adjacent common areas. One office property is located in the Long Beach submarket of Los Angeles and encompasses approximately 98,000 rentable square feet. The redevelopment will occur in two phases and the existing tenant will occupy approximately 50% of the property during redevelopment. The redevelopment project has a total estimated investment of approximately $19.3 million at completion, including the $6.3 million net carrying value of the project at the commencement of redevelopment. Construction is currently expected to be completed in the second quarter of 2012.

The second office redevelopment property is located in the Sorrento Mesa submarket of San Diego and encompasses approximately 111,000 rentable square feet. The property is 100% pre-leased to a single tenant. As part of the redevelopment, we will be incorporating one of our undeveloped land parcels. The redevelopment project has a total estimated investment of approximately $38.8 million at completion, including the $22.2 million net carrying value of the project at the commencement of redevelopment. Construction is currently expected to be completed in the third quarter of 2012.

During the three months ended September 30, 2010 we commenced the redevelopment of one of our buildings in the El Segundo submarket of Los Angeles County which encompasses approximately 299,000 rentable square feet. We are currently upgrading and modernizing the building and adjacent common areas since it was previously occupied by the Boeing Company and its predecessors for more than 25 years. The redevelopment project has a total estimated investment of approximately $58.3 million at completion, including the $9.1 million net carrying value of the project at the commencement of redevelopment. Construction is currently expected to be completed in the third quarter of 2012. The building is 100% pre-leased to DIRECTV, Inc.   Upon commencement of the lease for the 299,000 rentable square feet at this building, we project that DIRECTV, Inc. will become our largest tenant based on annualized base rental revenue.   Upon completion of the redevelopment, DIRECTV, Inc. will lease approximately 630,000 rentable square feet and represent approximately 6% of our projected annualized base rental revenue.

In recent periods we have delayed the timing and reduced the scope of our development program, which impacts the average development and redevelopment asset balances qualifying for interest and other carry cost capitalization. During the three months ended September 30, 2011, we did not capitalize interest on six of our seven development pipeline properties with an aggregate cost basis of approximately $147.8 million, as it was determined these projects did not qualify for interest and other carry cost capitalization under GAAP. As of September 30, 2011, our development pipeline included 110.2 gross acres of land with an aggregate cost basis of approximately $267.5 million. While in recent periods we have delayed the timing and reduced the scope of our development program activity as a result of economic conditions in our submarkets, we continue to proactively evaluate development and redevelopment opportunities throughout the West Coast. In addition, we plan to continue to focus on enhancing the entitlements for our existing development land pipeline, and performing additional activities to prepare for the time when development will again be economically attractive.

We also plan to continue to evaluate other redevelopment opportunities within our property portfolio.

Incentive Compensation.    Our Executive Compensation Committee determines compensation, including equity and cash incentive programs, for our executive officers in accordance with the terms and conditions of applicable agreements and incentive award programs. The programs approved by the Executive Compensation Committee have historically provided for equity and cash incentive compensation to be earned by our executive officers based on the attainment of certain performance measures, including financial, operating, development and other targets. Incentive compensation for our executive officers for 2011 has been structured to allow the Executive Compensation Committee to evaluate a variety of key factors and metrics at the end of the year and make a determination of incentive compensation for executive officers based on the Company's and management's overall performance. As a result, accrued incentive compensation and compensation expense for future incentive compensation awards will be affected by our operating and development performance, financial results, the performance of the trading price of the Company's common stock, market conditions and other performance conditions. Consequently, we cannot predict the amounts that will be recorded in future periods related to such incentive compensation.

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Share-Based Compensation.    As of September 30, 2011, there was $5.7 million of total unrecognized compensation cost related to outstanding nonvested shares of restricted common stock and nonvested RSUs issued under share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 1.6 years. The $5.7 million of unrecognized compensation cost does not reflect the future compensation cost for any potential share-based awards that may be issued based on the Company's and management's performance in 2011. Share-based compensation expense for future incentive compensation awards will be affected by our operating and development performance, financial results, the performance of the trading price of the Company's common stock, and market conditions. Consequently, we cannot predict the amounts that will be recorded in future periods for such share-based awards. See Note 9 to our consolidated financial statements included in this report for additional information regarding our share-based incentive compensation plan.

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Stabilized Portfolio Information

The following table reconciles the changes in the rentable square feet in our stabilized portfolio of operating properties from September 30, 2010 to September 30, 2011:

	Office Properties				Industrial Properties				Total
	Number of Buildings		Rentable Square Feet		Number of Buildings		Rentable Square Feet		Number of Buildings		Rentable Square Feet
Total as of September 30, 2010	99		9,809,506		41		3,654,463		140		13,463,969
Acquisitions	12		2,164,271						12		2,164,271
Properties moved to the redevelopment portfolio	(2	)	(209,561	)					(2	)	(209,561	)
Dispositions	(4	)	(197,349	)	(1	)	(51,567	)	(5	)	(248,916	)
Remeasurement			7,377				2,511		—		9,888
Total as of September 30, 2011	105		11,574,244		40		3,605,407		145		15,179,651

Occupancy Information

The following table sets forth certain information regarding our stabilized portfolio:

Stabilized Portfolio Occupancy

Region	Number of Buildings	Square Feet Total	Occupancy at(1)
			9/30/2011		6/30/2011		12/31/2010
Office Properties:
Los Angeles and Ventura Counties	28	2,976,006	84.1	%	82.9	%	89.3	%
San Diego	61	5,435,280	92.6		88.4		86.4
Orange County	5	540,656	91.4		92.5		93.1
San Francisco Bay Area	5	1,731,805	95.4		93.1		84.3
Greater Seattle	6	890,497	90.2		90.4		100.0
	105	11,574,244	90.6		87.9		87.5
Industrial Properties:
Los Angeles County	1	192,053	100.0		100.0		100.0
Orange County	39	3,413,354	100.0		97.4		93.5
	40	3,605,407	100.0		97.6		93.9
Total Stabilized Portfolio	145	15,179,651	92.8	%	90.2	%	89.1	%

	Average Occupancy for Three Months Ended September 30,
	Stabilized  Portfolio(1)				Core  Portfolio(2)
	2011		2010		2011		2010
Office Properties	90.1	%	84.9	%	89.4	%	85.8	%
Industrial Properties	98.4	%	86.8	%	98.4	%	86.5	%
Total Portfolio	92.1	%	85.4	%	92.3	%	86.0	%

	Average Occupancy for Nine Months Ended September 30,
	Stabilized  Portfolio(1)				Core  Portfolio(2)
	2011		2010		2011		2010
Office Properties	89.0	%	83.5	%	89.2	%	84.4	%
Industrial Properties	96.6	%	85.7	%	96.6	%	85.4	%
Total Portfolio	90.8	%	84.1	%	91.5	%	84.7	%

________________________

(1) Occupancy percentages reported are based on our stabilized portfolio as of the end of the period presented.

(2) Occupancy percentages reported are based on Office Properties and Industrial Properties owned and stabilized as of January 1, 2010 and still owned and stabilized as of September 30, 2011.

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As of September 30, 2011, the Office Properties and Industrial Properties represented approximately 92.1% and 7.9%, respectively, of our total annualized base rental revenue. During the three months ended September 30, 2011, the Office and Industrial Properties represented approximately 91.2% and 8.8%, respectively, of our total Net Operating Income, as defined. During the nine months ended September 30, 2011, the Office Properties and Industrial Properties represented approximately 91.9% and 8.1%, respectively, of our total Net Operating Income, as defined.

Current Regional Information

Although real estate fundamentals continue to be challenging in many of our regional submarkets, we have started to see a general increase in occupancy across our portfolio, and we have generally seen a modest decrease in vacancy rates and positive net absorption across many of our regional submarkets as well as a stabilization in rental rates and lease concession packages.

Los Angeles and Ventura Counties.    Our Los Angeles and Ventura Counties stabilized office portfolio of 3.0 million rentable square feet was 84.1% occupied with approximately 472,400 available rentable square feet as of September 30, 2011 compared to 89.3% occupied with approximately 328,800 available rentable square feet as of December 31, 2010. The decrease in occupancy is primarily attributable to 205,000 of rentable square feet related to a lease with one tenant in buildings along the 101-Corridor in Ventura County. The tenant vacated the properties upon expiration of the lease.

As of September 30, 2011, leases representing an aggregate of approximately 62,600 and 188,800 rentable square feet are scheduled to expire in this region during the remainder of 2011 and in 2012, respectively. The aggregate rentable square feet under the leases scheduled to expire in this region during the remainder of 2011 and in 2012 represents approximately 1.8% of our occupied rentable square feet and 2.1% of our annualized base rental revenues in our total stabilized portfolio. As of September 30, 2011, we have leased approximately 86,800 rentable square feet in this region that was vacant at September 30, 2011. The new leases are scheduled to commence during the fourth quarter of 2011.

San Diego County.    Our San Diego County stabilized office portfolio of 5.4 million rentable square feet was 92.6% occupied with approximately 402,000 available rentable square feet as of September 30, 2011 compared to 86.4% occupied with approximately 744,300 available rentable square feet as of December 31, 2010.

No leases are scheduled to expire during the remainder of 2011 and leases representing an aggregate of approximately 465,200 rentable square feet are scheduled to expire in 2012 in this region. The aggregate rentable square feet under leases scheduled to expire in this region in 2012 represents approximately 3.3% of our occupied rentable square feet and 3.6% of our annualized base rental revenues in our total stabilized portfolio.

Orange County.    As of September 30, 2011, our Orange County stabilized industrial portfolio of 3.4 million rentable square feet was 100.0% occupied compared to 93.5% occupied with approximately 220,100 available rentable square feet as of December 31, 2010.

Our Orange County stabilized office portfolio of approximately 540,700 rentable square feet was 91.4% occupied with approximately 46,600 available rentable square feet as of September 30, 2011 compared to 93.1% occupied with approximately 37,300 available rentable square feet as of December 31, 2010.

No leases are scheduled to expire during the remainder of 2011 and leases representing an aggregate of approximately 381,900 rentable square feet are scheduled to expire in 2012 in this region. The aggregate rentable square feet under leases scheduled to expire in 2012 represents approximately 2.7% of our occupied rentable square feet and 0.9% of our annualized base rental revenues in our total stabilized portfolio. Of the 381,900 rentable square feet scheduled to expire in 2012, approximately 355,000 rentable square feet is industrial space.

San Francisco Bay Area.    As of September 30, 2011, our San Francisco Bay Area stabilized office portfolio of 1.7 million rentable square feet was 95.4% occupied with approximately 80,000 available rentable square feet, compared to 84.3% occupied with approximately 188,900 available rentable square feet as of December 31, 2010. The increase in occupancy is primarily attributable to three leases encompassing approximately 143,800 rentable square feet that commenced during the first three quarters of 2011.  Additionally, during the nine months ended September 30, 2011, we have acquired three buildings in the San Francisco Bay Area encompassing approximately 531,300 rentable square feet.  These three buildings were approximately 92.7% occupied as of September 30, 2011.  See Note 2 to our consolidated financial statements included in this report for additional information regarding our 2011 acquisitions.

As of September 30, 2011, leases representing an aggregate of approximately 800 and 56,600 rentable square feet are scheduled to expire during the remainder of 2011 and in 2012, respectively. The aggregate rentable square feet under leases scheduled to expire in this region during the remainder of 2011 and in 2012 represents approximately 0.4% of our occupied rentable square feet and 0.6% of our annualized base rental revenues in our total stabilized portfolio.

Greater Seattle.    As of September 30, 2011, our Greater Seattle stabilized office portfolio of 0.9 million rentable square feet was 90.2% occupied with approximately 87,300 available rentable square feet as of September 30, 2011 compared to being 100.0%

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occupied as of December 31, 2010. The decrease in occupancy is primarily attributable to the acquisitions of five office buildings encompassing approximately 768,400 rentable square feet during the nine months ended September 30, 2011 that were 88.6% occupied at September 30, 2011.

As of September 30, 2011, leases representing an aggregate of approximately 3,100 and 52,600 rentable square feet are scheduled to expire during the remainder of 2011 and in 2012, respectively. The aggregate rentable square feet under leases scheduled to expire in this region during the remainder of 2011 and in 2012 represents approximately 0.4% of our occupied rentable square feet and 0.3% of our annualized base rental revenues in our total stabilized portfolio.

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Results of Operations

Management internally evaluates the operating performance and financial results of our portfolio based on Net Operating Income for the consolidated portfolio. We define “Net Operating Income (Loss)” as operating revenues (rental income, tenant reimbursements, and other property income) less operating expenses (property expenses, real estate taxes, provision for bad debts, and ground leases). The Net Operating Income information presented within this Management's Discussion and Analysis of Financial Condition and Results of Operations is the same Net Operating Income information disclosed in our segment information in Note 13 to our consolidated financial statements.

Comparison of the Three Months Ended September 30, 2011 to the Three Months Ended September 30, 2010

The following table reconciles our Net Operating Income, as defined, to our net income for the three months ended September 30, 2011 and 2010.

	Three Months Ended September 30,						Dollar Change			Percentage Change
	2011			2010
	($ in thousands)
Net Operating Income, as defined	$	69,118		$	56,413		$	12,705		22.5	%
Unallocated (expense) income:
General and administrative expenses	(6,355		)	(7,273		)	918			(12.6	)
Acquisition-related expenses	(1,163		)	(354		)	(809		)	228.5
Depreciation and amortization	(36,152		)	(29,951		)	(6,201		)	20.7
Interest income and other net investment gains	30			337			(307		)	(91.1	)
Interest expense	(24,051		)	(15,853		)	(8,198		)	51.7
Income from continuing operations	1,427			3,319			(1,892		)	(57.0	)%
Income from discontinued operations	12,863			350			12,513			3,575.1	%
Net income	$	14,290		$	3,669		$	10,621		289.5	%

Rental Operations

The following tables summarize the Net Operating Income (Loss), as defined, for our total portfolio for the three months ended September 30, 2011 and 2010.

	2011											2010
	Core Portfolio(1)			Acquisitions Portfolio(2)		Other			Total Portfolio			Core Portfolio(1)			Acquisitions Portfolio(2)		Other		Total Portfolio
	(in thousands)											(in thousands)
Operating revenues:
Rental income	$	62,578		$	26,363	$	365		$	89,306		$	60,036		$	11,145	$	954	$	72,135
Tenant reimbursements	5,038			2,547		98			7,683			5,692			220		244		6,156
Other property income	328			20		—			348			799			86		100		985
Total	67,944			28,930		463			97,337			66,527			11,451		1,298		79,276
Property and related expenses:
Property expenses	12,364			6,702		295			19,361			12,444			2,803		555		15,802
Real estate taxes	5,143			2,880		337			8,360			5,867			1,221		494		7,582
Provision for bad debts	(5		)	—		—			(5		)	(857		)	—		—		(857		)
Ground leases	274			193		36			503			300			—		36		336
Total	17,776			9,775		668			28,219			17,754			4,024		1,085		22,863
Net Operating Income (Loss), as defined	$	50,168		$	19,155	$	(205	)	$	69,118		$	48,773		$	7,427	$	213	$	56,413

_______________________

(1) Properties owned and stabilized as of January 1, 2010 and still owned and stabilized as of September 30, 2011.

(2) Includes results, from the dates of acquisition through the periods presented, for the ten office buildings we acquired during 2010 and the nine office buildings we acquired during the nine months ended September 30, 2011.

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	Three Months Ended September 30, 2011 As Compared to the Three Months Ended September 30, 2010
	Core Portfolio					Acquisitions Portfolio					Total Portfolio
	Dollar Change			Percentage Change		Dollar Change			Percentage Change		Dollar Change			Percentage Change
						($ in thousands)
Operating revenues:
Rental income	$	2,542		4.2	%	$	15,218		136.5	%	$	17,171		23.8	%
Tenant reimbursements	(654		)	(11.5	)	2,327			1,057.7		1,527			24.8
Other property income	(471		)	(58.9	)	(66		)	(76.7	)	(637		)	(64.7	)
Total	1,417			2.1		17,479			152.6		18,061			22.8
Property and related expenses:
Property expenses	(80		)	(0.6	)	3,899			139.1		3,559			22.5
Real estate taxes	(724		)	(12.3	)	1,659			135.9		778			10.3
Provision for bad debts	852			99.4		—			—		852			99.4
Ground leases	(26		)	(8.7	)	193			100.0		167			49.7
Total	22			0.1		5,751			142.9		5,356			23.4
Net Operating Income, as defined	$	1,395		2.9	%	$	11,728		157.9	%	$	12,705		22.5	%

Net Operating Income increased $12.7 million, or 22.5%, for the three months ended September 30, 2011 as compared to the three months ended September 30, 2010 primarily resulting from:

• An increase of $11.7 million attributable to the ten office buildings we acquired during 2010 and the nine office buildings we acquired during the nine months ended September 30, 2011 (the “Acquisitions Portfolio”);

• An increase of $1.4 million attributable to the properties owned and stabilized as of January 1, 2010 and still owned and stabilized as of September 30, 2011 (the “Core Portfolio”) primarily as a result of:

▪ An increase in rental income of $2.5 million primarily resulting from an increase in average occupancy of 6.3%, from 86.0% for the three months ended September 30, 2010, to 92.3% for the three months ended September 30, 2011;

▪ An offsetting decrease in tenant reimbursements of $0.7 million primarily resulting from the resetting of base year expense levels for recent lease renewals and reduced tenant reimbursement revenue attributable to one tenant that vacated one of our buildings at the end of their lease;

▪ An increase to Net Operating Income of $0.7 million resulting from a decrease in real estate taxes as a result of successful property tax appeals and lower than expected supplemental tax increases;

• A decrease to Net Operating Income of approximately $1.2 million resulting from:

• The reversal of $0.6 million of provision for bad debts during the three months ended September 30, 2010 resulting from the settlement of outstanding litigation at one of our properties;

• The recognition of $0.6 million in other property income during the three months ended September 30, 2010 as a result of a lease termination fee; and

• An offsetting decrease of $0.5 million generated by one office building that was moved from the stabilized portfolio to the redevelopment portfolio during the three months ended September 30, 2010 and two office buildings that were moved to the redevelopment portfolio from the stabilized portfolio upon commencement of redevelopment in 2011 (the "Redevelopment Properties").

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Other Expenses and Income

General and Administrative Expenses

General and administrative expenses decreased $0.9 million, or 12.6%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 primarily as a result of a net decrease in compensation expense resulting from:

• A decrease in share-based compensation expense (see Note 9 to our consolidated financial statements for more information); and

• An adjustment to decrease our deferred compensation plan liability to fair value (see Note 12 to our consolidated financial statements included in this report and the discussion under the caption — Interest Income and Other Net Investment Gains below for more information).

These decreases were partially offset by an increase in compensation expense associated with the growth of the Company primarily as a result of the ongoing acquisition activities.

Depreciation and Amortization

Depreciation and amortization increased by $6.2 million, or 20.7%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010, primarily related to the Acquisitions Portfolio.

Interest Income and Other Net Investment Gains

Total interest income and other net investment gains decreased by approximately $0.3 million, or 91.1%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010, primarily as a result of a decrease in the fair value of the marketable securities held in connection with our deferred compensation plan (see Note 12 to our consolidated financial statements included in this report for additional information), partially offset by interest income and other non-property related gains. The decrease to interest income and other net investment gains resulting from the decrease in the fair value of the marketable securities offsets the decrease in compensation expense discussed in the general and administrative expenses section above.

Interest Expense

The following table sets forth our gross interest expense, including debt discounts/premiums and loan cost amortization, net of capitalized interest for the three months ended September 30, 2011 and 2010:

	2011			2010			Dollar Change		Percentage Change
	($ in thousands)
Gross interest expense	$	26,449		$	18,543		$	7,906	42.6	%
Capitalized interest	(2,398		)	(2,690		)	292		(10.9	)%
Interest expense	$	24,051		$	15,853		$	8,198	51.7	%

Gross interest expense, before the effect of capitalized interest, increased $7.9 million, or 42.6%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 resulting from an increase in our average outstanding debt balances primarily as a result of our acquisition activity.

Capitalized interest decreased $0.3 million, or 10.9%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 primarily as a result of a decrease in our weighted-average effective rate from approximately 6.4% to 6.0%, and, to a lesser extent, as a result of a decrease in our average development and redevelopment asset balances qualifying for interest capitalization.

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Comparison of the Nine Months Ended September 30, 2011 to the Nine Months Ended September 30, 2010

The following table reconciles our Net Operating Income, as defined to our net income for the nine months ended September 30, 2011 and 2010.

	Nine Months Ended September 30,						Dollar Change			Percentage Change
	2011			2010
	($ in thousands)
Net Operating Income, as defined	$	195,601		$	155,374		$	40,227		25.9	%
Unallocated (expense) income:
General and administrative expenses	(20,355		)	(21,096		)	741			(3.5	)
Acquisition-related expenses	(2,829		)	(1,624		)	(1,205		)	74.2
Depreciation and amortization	(97,513		)	(74,405		)	(23,108		)	31.1
Interest income and other net investment gains	272			703			(431		)	(61.3	)
Interest expense	(66,155		)	(40,897		)	(25,258		)	61.8
Loss on early extinguishment of debt	—			(4,564		)	4,564			100.0
Income from continuing operations	9,021			13,491			(4,470		)	(33.1	)%
Income from discontinued operations	13,608			1,011			12,597			1,246.0	%
Net income	$	22,629		$	14,502		$	8,127		56.0	%

The following tables summarize the Net Operating Income (Loss), as defined, for our total portfolio for the nine months ended September 30, 2011 and 2010.

	2011									2010
	Core Portfolio(1)		Acquisitions Portfolio(2)		Other			Total Portfolio		Core Portfolio(1)			Acquisitions Portfolio(2)		Other			Total Portfolio
	(in thousands)									(in thousands)
Operating revenues:
Rental income	$	185,913	$	65,093	$	1,096		$	252,102	$	177,726		$	14,479	$	4,678		$	196,883
Tenant reimbursements	16,058		5,259		152			21,469		16,696			287		1,278			18,261
Other property income	2,767		64		32			2,863		1,938			87		300			2,325
Total	204,738		70,416		1,280			276,434		196,360			14,853		6,256			217,469
Property and related expenses:
Property expenses	37,215		16,234		1,099			54,548		36,652			3,653		1,950			42,255
Real estate taxes	16,536		7,152		1,190			24,878		16,981			1,588		1,466			20,035
Provision for bad debts	141		—		—			141		(843		)	—		—			(843		)
Ground leases	906		253		107			1,266		673			—		(25		)	648
Total	54,798		23,639		2,396			80,833		53,463			5,241		3,391			62,095
Net Operating Income (Loss), as defined	$	149,940	$	46,777	$	(1,116	)	$	195,601	$	142,897		$	9,612	$	2,865		$	155,374

________________________

(1) Properties owned and stabilized as of January 1, 2010 and still owned and stabilized as of September 30, 2011.

(2) Includes results, from the dates of acquisition through the periods presented, for the ten office buildings we acquired during 2010 and the nine office buildings we acquired during the nine months ended September 30, 2011.

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The following table compares the Net Operating Income, as defined, for our total portfolio for the nine months ended September 30, 2011 and 2010.

	Nine Months Ended September 30, 2011 As Compared to the Nine Months Ended September 30, 2010
	Core Portfolio					Acquisitions Portfolio					Total Portfolio
	Dollar Change			Percentage Change		Dollar Change			Percentage Change		Dollar Change		Percentage Change
						($ in thousands)
Operating revenues:
Rental income	$	8,187		4.6	%	$	50,614		349.6	%	$	55,219	28.0	%
Tenant reimbursements	(638		)	(3.8	)	4,972			1,732.4		3,208		17.6
Other property income	829			42.8		(23		)	(26.4	)	538		23.1
Total	8,378			4.3		55,563			374.1		58,965		27.1
Property and related expenses:
Property expenses	563			1.5		12,581			344.4		12,293		29.1
Real estate taxes	(445		)	(2.6	)	5,564			350.4		4,843		24.2
Provision for bad debts	984			(116.7	)	—			—		984		(116.7	)
Ground leases	233			34.6		253			100.0		618		95.4
Total	1,335			2.5		18,398			351.0		18,738		30.2
Net Operating Income, as defined	$	7,043		4.9	%	$	37,165		386.7	%	$	40,227	25.9	%

Net Operating Income increased $40.2 million, or 25.9%, for the nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010 primarily resulting from:

• An increase of $37.2 million attributable to the Acquisitions Portfolio;

• An increase of $7.0 million attributable to the Core Portfolio primarily as a result of:

▪ An increase in rental income of $8.2 million primarily resulting from an increase in average occupancy of 6.8%, from 84.7% for the nine months ended September 30, 2010, to 91.5% for the nine months ended September 30, 2011;

• A decrease to Net Operating Income of approximately $1.2 million resulting from:

• The reversal of $0.6 million of provision for bad debts during the nine months ended September 30, 2010 related to the settlement of outstanding litigation at one of our properties. The remaining year over year increase in the provision for bad debts resulted from changes in our estimates of the collectibility of receivables from certain watchlist tenants; and

• The recognition of $0.6 million in other property income during the nine months ended September 30, 2010 related to a lease termination fee; and

• An offsetting decrease of $4.0 million primarily attributable to the Redevelopment Properties that were removed from the stabilized portfolio upon commencement of redevelopment.

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Other Expenses and Income

General and Administrative Expenses

General and administrative expenses decreased $0.7 million, or 3.5%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 primarily as a result of a net decrease in compensation expense resulting from:

• A decrease in share-based compensation expense (see Note 9 to our consolidated financial statements for more information); and

• An adjustment to decrease our deferred compensation plan liability to fair value (see Note 12 to our consolidated financial statements included in this report and the discussion under the caption — Interest Income and Other Net Investment Gains below for more information).

These decreases were partially offset by an increase in compensation expense associated with the growth of the Company primarily as a result of the ongoing acquisition activities.

Depreciation and Amortization

Depreciation and amortization increased by $23.1 million, or 31.1%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010, primarily related to the Acquisitions Portfolio.

Interest Income and Other Net Investment Gains

Total interest income and other net investment gains decreased by approximately $0.4 million, or 61.3%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010, primarily as a result of a decrease in the fair value of the marketable securities held in connection with our deferred compensation plan (see Note 12 to our consolidated financial statements included in this report for additional information), partially offset by interest income and other non-property related gains. The decrease to interest income and other net investment gains resulting from the decrease in the fair value of the marketable securities offsets the decrease in compensation expense discussed in the general and administrative expenses section above.

Interest Expense

The following table sets forth our gross interest expense, including debt discounts/premiums and loan cost amortization, net of capitalized interest, for the nine months ended September 30, 2011 and 2010:

	2011			2010			Dollar Change		Percentage Change
	($ in thousands)
Gross interest expense	$	72,597		$	48,980		$	23,617	48.2	%
Capitalized interest	(6,442		)	(8,083		)	1,641		(20.3	)%
Interest expense	$	66,155		$	40,897		$	25,258	61.8	%

Gross interest expense, before the effect of capitalized interest, increased $23.6 million, or 48.2%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 resulting from an increase in our average outstanding debt balances primarily as a result of our acquisition activity.

Capitalized interest decreased $1.6 million, or 20.3%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 primarily attributable to a decrease in our average development and redevelopment asset balances qualifying for interest capitalization.

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Liquidity and Capital Resources of the Company

In this "Liquidity and Capital Resources of the Company" section, the term the "Company" refers only to Kilroy Realty Corporation on an unconsolidated basis, and excludes the Operating Partnership and all other subsidiaries.

The Company's business is operated primarily through the Operating Partnership. Distributions from the Operating Partnership are the Company's source of capital. The Company believes the Operating Partnership's sources of working capital, specifically its cash flow from operations and borrowings available under its Credit Facility, are adequate for it to make its distribution payments to the Company and, in turn, for the Company to make its dividend payments to its preferred and common stockholders. Cash flows from operating activities generated by the Operating Partnership for the three and nine months ended September 30, 2011 were sufficient to cover the Company's payment of cash dividends to its stockholders. However, there can be no assurance that the Operating Partnership's sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including its ability to make distributions to the Company. The unavailability of capital could adversely affect the Operating Partnership's ability to make distributions to the Company, which would in turn, adversely affect the Company's ability to pay cash dividends to its stockholders.

The Company is a well-known seasoned issuer with an effective shelf registration statement for the public issuance of preferred or common equity securities and guarantees of debt securities, and for the public issuance by the Operating Partnership of debt securities. As circumstances warrant, the Company may issue securities from time to time on an opportunistic basis, depending upon market conditions and available pricing. When the Company receives proceeds from preferred or common equity issuances, it is required by the Operating Partnership's partnership agreement to contribute the proceeds from its equity issuances to the Operating Partnership in exchange for corresponding interest in preferred or common partnership units of the Operating Partnership. The Operating Partnership may use the proceeds to repay debt, including borrowings under its Credit Facility, develop new or existing properties, to make acquisitions of properties, portfolios of properties, or for general corporate purposes.

As the sole general partner with control of the Operating Partnership, the Company consolidates the Operating Partnership for financial reporting purposes, and the Company does not have significant assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities and the revenues and expenses of the Company and the Operating Partnership are substantially the same on their respective financial statements. The section entitled "Liquidity and Capital Resources of the Operating Partnership" should be read in conjunction with this section to understand the liquidity and capital resources of the Company on a consolidated basis and how the Company is operated as a whole.

Distribution Requirements

The Company is required to distribute 90% of its taxable income (excluding capital gains) on an annual basis to maintain qualification as a REIT for federal income tax purposes, and is required to pay tax at regular corporate rates to the extent it distributes less than 100% of its taxable income (including capital gains). While historically the Company has satisfied its distribution requirement by making cash distributions to its stockholders, for distributions with respect to taxable years ending on or before December 31, 2011, IRS guidance allows the Company to satisfy up to 90% of this requirement through the distribution of shares of the Company's common stock, if certain conditions are met. The Company intends to continue to make, but has not committed to make, regular quarterly cash distributions to common stockholders and common unitholders from cash flow from operating activities. All such distributions are at the discretion of the board of directors. The Company has historically distributed amounts in excess of our taxable income resulting in a return of capital to its stockholders and the Company currently believes it has the ability to maintain distributions at the 2010 levels to meet its REIT requirements for 2011. The Company considers market factors and its performance in addition to REIT requirements in determining our distribution levels. In addition, one of the covenants contained within the Credit Facility prohibits the Company from paying dividends in excess of 95% of Funds From Operations ("FFO").

On September 15, 2011, the Board of Directors declared a regular quarterly cash dividend of $0.35 per common share payable on October 17, 2011 to stockholders of record on September 30, 2011 and caused a $0.35 per Operating Partnership unit cash distribution to be paid in respect of the Operating Partnership's common limited partnership interests, including those owned by the Company.

On September 15, 2011, the Board of Directors declared a dividend of $0.4875 per share on the Company's Series E Preferred Stock and a dividend of $0.46875 per share on the Company's Series F Preferred Stock for the period commencing on and including August 15, 2011 and ending on and including November 14, 2011. The Company is also required to make quarterly cash distributions to the 7.45% Series A Preferred unitholders of $0.7 million, payable on November 15, 2011.

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Capitalization

As of September 30, 2011, our total debt as a percentage of total market capitalization was 46.0% and the total debt and liquidation value of our preferred equity as a percentage of total market capitalization was 51.1%, which was calculated based on the closing price per share of the Company's common stock of $31.30 on September 30, 2011 as shown in the table below.

	Shares/Units at September 30, 2011	Aggregate Principal Amount or $ Value Equivalent		% of Total Market Capitalization
	($ in thousands)
Debt:
Credit Facility		$	—	—	%
3.25% Exchangeable Notes due 2012(1)		148,000		3.8
4.25% Exchangeable Notes due 2014(1)		172,500		4.5
Unsecured Senior Notes due 2014		83,000		2.1
Unsecured Senior Notes due 2015(1)		325,000		8.4
Unsecured Senior Notes due 2018(1)		325,000		8.4
Unsecured Senior Notes due 2020(1)		250,000		6.5
Secured debt(1)		473,400		12.3
Total debt		$	1,776,900	46.0
Equity and Noncontrolling Interest:
7.450% Series A Cumulative Redeemable Preferred units(2)	1,500,000	$	75,000	1.9	%
7.800% Series E Cumulative Redeemable Preferred stock(3)	1,610,000	40,250		1.0
7.500% Series F Cumulative Redeemable Preferred stock(3)	3,450,000	86,250		2.2
Common units outstanding(4)(5)	1,718,131	53,778		1.4
Common shares outstanding(5)	58,464,412	1,829,936		47.5
Total equity and noncontrolling interests		2,085,214		54.0
Total Market Capitalization		$	3,862,114	100.0	%

________________________

(1) Represents gross aggregate principal amount due at maturity, before the effect of the unamortized discounts and premiums as of September 30, 2011.

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

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

(4) Represents common units not owned by the Company.     

(5) Value based on closing price per share of our common stock of $31.30 as of September 30, 2011.

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Liquidity and Capital Resources of the Operating Partnership

In this "Liquidity and Capital Resources of the Operating Partnership" section, the terms "we," "our," and "us" refer to the Operating Partnership or the Company, as the context requires.

General

Our primary liquidity sources and uses are as follows:

Liquidity Sources

• Net cash flow from operations;

• Borrowings under the Credit Facility;

• Proceeds from additional secured or unsecured debt financings;

• Proceeds from public or private issuance of debt or equity securities; and

• Proceeds from the disposition of nonstrategic assets.

Liquidity Uses

• Property or undeveloped land acquisitions;

• Property operating and corporate expenses;

• Capital expenditures, tenant improvement and leasing costs;

• Debt service and principal payments, including debt maturities;

• Distributions to common and preferred security holders;

• Development and redevelopment costs; and

• Outstanding debt repurchases.

General Strategy

Our general strategy is to maintain a conservative balance sheet with a top credit profile and to maintain a capital structure that allows for financial flexibility and diversification of capital resources. We manage our capital structure to reflect a long−term investment approach and utilize multiple sources of capital to meet our long−term capital requirements. We believe that our current projected liquidity requirements for the next twelve-month period, as set forth above under the caption “ —Liquidity Uses,” will be satisfied using a combination of the liquidity sources listed above. We believe our conservative leverage and staggered debt maturities provide us with financial flexibility and enhances our ability to obtain additional sources of liquidity if necessary, and, therefore, we are well−positioned to refinance or repay maturing debt and to pursue our strategy of seeking attractive acquisition opportunities, which we may finance, as necessary, with future public and private issuances of debt and equity securities or dispositions of non-strategic assets.

2011 Financing Activities

• In November 2011, the Operating Partnership used borrowings under the Credit Facility to repay a secured mortgage loan with an outstanding principal balance of $52.0 million that was scheduled to mature in April 2012.

• In October 2011, the Operating Partnership used borrowings under the Credit Facility to repay a secured mortgage loan with an outstanding principal balance of $68.7 million that was scheduled to mature in December 2011.

• In July 2011, we commenced a periodic stock offering program under which we may sell up to $200.0 million aggregate gross sales price of the Company's common stock from time to time. We have not issued any stock under this program as of the date of this report (see "- Liquidity Sources" below for additional information).

• In July 2011, the Operating Partnership issued $325.0 million in aggregate principal amount of 4.80% unsecured senior notes due July 15, 2018 (see Note 5 to our consolidated financial statements included in this report for additional information).

• In June 2011, the Operating Partnership amended the terms of the Credit Facility to, among other things, extend the maturity date to August 2015, reduce the interest rate to an annual rate of LIBOR plus 1.750% and reduce the facility fee to an annual rate of 0.35% (see Note 5 to our consolidated financial statements included in this report for additional information).

• In April 2011, the Operating Partnership assumed secured debt with a principal balance of $30.0 million in conjunction with the acquisition of four office buildings in Kirkland, Washington (see Note 5 to our consolidated financial statements included in this report for additional information).

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• In April 2011, the Company completed an underwritten public offering of 6,037,500 shares of its common stock. The net offering proceeds, after deducting underwriting discounts and commissions and offering expenses, of approximately $221.0 million were contributed to the Operating Partnership (see Notes 7 and 8 to our consolidated financial statements included in this report for additional information).

• In January 2011, the Operating Partnership borrowed $135.0 million under a mortgage loan. The mortgage loan is secured by one property in San Francisco, bears interest at an annual rate of 4.27%, requires interest-only payments for the first two years with a 30-year amortization schedule thereafter, and is scheduled to mature on February 1, 2018 (see Note 5 to our consolidated financial statements included in this report for additional information).

Liquidity Sources

Credit Facility

In June 2011, we amended the terms of our Credit Facility, among other things, to extend the maturity date and reduce the interest rate and facility fee. The following table summarizes the terms of our Credit Facility as of December 31, 2010 and as amended as of September 30, 2011:

	September 30, 2011			December 31, 2010
	(in thousands)
Outstanding borrowings (1)	$	—		$	159,000
Remaining borrowing capacity	500,000			341,000
Total borrowing capacity (2)	$	500,000		$	500,000
Interest rate(3)	—			2.99		%
Facility fee - annual rate (4)	0.350		%	0.575		%
Maturity date (5)	August 2015			August 2013

________________________

(1) As of September 30, 2011 there were no borrowings outstanding under the Credit Facility.

(2) We may elect to borrow, subject to lender approval, up to an additional $200 million under an accordion feature under the terms of the Credit Facility.

(3) The Credit Facility interest rate was calculated based on an annual rate of LIBOR plus 1.750% and 2.675% as of September 30, 2011 and December 31, 2010, respectively. No interest rate is shown as of September 30, 2011 because no borrowings were outstanding.

(4) The facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we also incurred debt origination and legal costs of approximately $5.0 million when we entered into the Credit Facility in 2010 and an additional $3.3 million when we amended the Credit Facility in 2011. The unamortized balance of these costs will be amortized as additional interest expense over the extended term of the Credit Facility.

(5) Under the original and amended terms of the Credit Facility, we may exercise an option to extend the maturity date by one year.

Periodic Stock Offering Program

In July 2011, we commenced a periodic stock offering program under which we may sell up to $200 million aggregate gross sales price of the Company's common stock from time to time. As of the date of this report, no shares have been sold under the program. Actual sales will depend upon a variety of factors including but not limited to market conditions, the trading price of the Company's common stock, and our capital needs. We have no obligation to sell shares under this program.

Capital Recycling Program

As part of our current strategy, we intend to dispose of mature office and industrial assets and then use the proceeds to fund potential acquisitions, to finance development and redevelopment expenditures, to potentially repay long-term debt and general corporate purposes. As part of this strategy, we intend, when practical, to enter into Section 1031 Exchanges. During the nine months ended September 30, 2011, we disposed of two office buildings in one transaction for approximately $23.9 million. At September 30, 2011, the net cash proceeds from this disposition were temporarily being held by a qualified intermediary, at our direction, for the purpose of facilitating a potential Section 1031 Exchange. As part of our capital recycling program strategy, we are in various stages of negotiation for the disposition of four additional properties with an aggregate sales price of approximately $205 million. In addition, we believe that we could potentially dispose of additional properties over the next 12 to 18 months, depending on market conditions. However, we cannot provide assurance that we will consummate any of these possible dispositions or, if we do, that the anticipated proceeds from these dispositions will not be less, perhaps substantially, than the foregoing amounts or that these dispositions will be completed as part of a Section 1031 exchange.

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Exchangeable Notes, Unsecured Senior Notes, and Secured Debt

The aggregate principal amount of our Exchangeable Notes, unsecured senior notes, and secured debt of the Operating Partnership outstanding as of September 30, 2011 was as follows:

	Aggregate  Principal  Amount Outstanding
	(in thousands)
3.25% Exchangeable Notes due 2012 (1)	$	148,000
4.25% Exchangeable Notes due 2014 (1)	172,500
Unsecured Senior Notes due 2014	83,000
Unsecured Senior Notes due 2015 (1)	325,000
Unsecured Senior Notes due 2018 (1)	325,000
Unsecured Senior Notes due 2020 (1)	250,000
Secured Debt (1)	473,400
Total Exchangeable Notes, Unsecured Senior Notes, and Secured Debt	$	1,776,900

 _______________

(1) Represents gross aggregate principal amount before the effect of the unamortized discounts and premiums as of September 30, 2011.

Debt Composition

The composition of the Operating Partnership's aggregate debt balances between secured and unsecured and fixed-rate and variable-rate debt as of September 30, 2011 and December 31, 2010 was as follows:

	Percentage of Total Debt				Weighted Average Interest Rate
	September 30, 2011		December 31, 2010		September 30, 2011		December 31, 2010
Secured vs. unsecured:
Unsecured(1)	73.4	%	78.4	%	5.1	%	4.8	%
Secured	26.6		21.6		5.4		6.0
Variable-rate vs. fixed-rate:
Variable-rate(2) (3)	—		11.0		—		2.9
Fixed-rate(1)	100.0		89.0		5.2		5.3
Total (stated rate)(1)					5.2		5.1
GAAP effective rate(4)					5.6		5.7
Total GAAP effective rate including debt issuance costs					6.0	%	6.3	%

________________________

(1) Excludes the impact of the amortization of any debt discounts/premiums.

(2) As of September 30, 2011 the Credit Facility was our only variable-rate debt. There were no borrowings outstanding under the Credit Facility at September 30, 2011.

(3) As of the date of this report, we have outstanding borrowings of $165.0 million under our Credit Facility.

(4) Includes the impact of the amortization of any debt discounts/premiums, excluding debt issuance costs.

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Liquidity Uses

Contractual Obligations

The following table provides information with respect to the Operating Partnership's contractual obligations as of September 30, 2011. The table includes the changes in our contractual obligations as result of transactions that occurred during the nine months ended September 30, 2011, including the debt and ground lease obligation assumed with property acquisitions (see Note 2 to our consolidated financial statements for more information), the amendment of the Credit Facility which extended the maturity date by two years, the issuance of $325 million unsecured senior notes and new redevelopment commitments. The table: (i) indicates the maturities and scheduled principal repayments of our secured debt, Exchangeable Notes, unsecured senior notes, and Credit Facility; (ii) indicates the scheduled interest payments of our fixed-rate and variable-rate debt as of September 30, 2011; (iii) provides information about the minimum commitments due in connection with our ground lease obligations and other lease and contractual commitments; and (iv) provides estimated redevelopment commitments as of September 30, 2011. Note that the table does not reflect our available debt maturity extension options and reflects gross aggregate principal amounts before the effect of unamortized discounts/premiums.

	Payment Due by Period
	Less than 1 Year ( Remainder of 2011)		1–3 Years (2012-2013)		3–5 Years (2014-2015)		More than 5 Years (After 2015)		Total
	(in thousands)
Principal payments—secured debt (1)(2)	$	70,371	$	163,676	$	39,325	$	200,028	$	473,400
Principal payments—Exchangeable Notes (3)	—		148,000		172,500		—		320,500
Principal payments—unsecured senior notes (4)	—		—		408,000		575,000		983,000
Principal payments—Credit Facility (5)	—		—		—		—		—
Interest payments—fixed-rate debt (6)	21,813		151,886		127,854		132,611		434,164
Interest payments—variable-rate debt (5)	—		—		—		—		—
Ground lease obligations(7)	481		3,852		3,700		133,212		141,245
Lease and contractual commitments (8)	40,668		4,183		4,021		—		48,872
Redevelopment commitments (9)	11,000		18,000		—		—		29,000
Total	$	144,333	$	489,597	$	755,400	$	1,040,851	$	2,430,181

________________________

(1) Includes the $52.0 million gross aggregate principal amount of the loan due in April 2012 before the effect of the unamortized discount of approximately $0.3 million as of September 30, 2011. Also includes the $30.0 million gross aggregate principal amount of the loan due in April 2015 before the effect of the unamortized premium of approximately $0.9 million as of September 30, 2011.

(2) Subsequent to September 30, 2011, we repaid two secured mortgages with principal balances of $68.7 million due in December 2011 and $52.0 million due in April 2012. These repayments were financed with proceeds from the Credit Facility.

(3) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $15.4 million as of September 30, 2011.

(4) Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $2.5 million as of September 30, 2011.

(5) As of September 30, 2011 the Credit Facility was our only variable-rate debt. There were no borrowings outstanding under the Credit Facility at September 30, 2011. As of the date of this report, we had $165.0 million in outstanding borrowings under the Credit Facility.

(6) The information in the table above reflects our projected interest rate obligations for our fixed-rate payments based on the contractual interest rates, interest payment dates, and scheduled maturity dates.

(7) One of our ground lease obligations is subject to a fair market value adjustment every five years; however, the lease includes ground rent subprotection and infrastructure rent credits which currently limit our annual rental obligations to $1.0 million. The contractual obligations for that ground lease included above assumes the lesser of $1.0 million or annual lease rental obligation in effect as of September 30, 2011. Another one of our ground lease obligations includes a component which is based on the percentage of gross income that exceeds the minimum ground rent. The minimum rent is subject to increases every five years based on 50% of the average annual percentage rent for the previous five years. Currently gross income does not exceed the threshold requiring us to pay percentage rent. The contractual obligations for that ground lease included above assumes the annual lease rental obligation in effect as of September 30, 2011.

(8) Amounts represent commitments under signed leases and contracts for operating properties, excluding tenant-funded tenant improvements. The timing of these expenditures may fluctuate.

(9) Amounts represent contractual commitments for redevelopment projects under construction at September 30, 2011. The timing of these expenditures may fluctuate based on the ultimate progress of construction.

Other Potential Liquidity Uses

In 2010 we acquired ten properties for approximately $637.6 million in cash and through September 30, 2011 we have acquired nine properties for approximately $481.8 million in cash, all of which we funded through various capital raising activities, and in selected instances, the assumption of existing indebtedness. We continually evaluate acquisition opportunities as they arise. As a result, we typically have one or more potential acquisitions under consideration that are in varying stages of negotiation and due diligence review, or under contract, at any point in time. We expect that any material acquisitions will be funded with borrowings

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under our Credit Facility, the public or private issuance of debt or equity securities, or through the disposition of assets under our capital recycling program.

We may seek to repurchase Exchangeable Notes depending on prevailing market conditions, our liquidity requirements, and other factors.

Factors That May Influence Future Sources of Capital and Liquidity of the Company and the Operating Partnership

We continue to evaluate sources of financing for our business activities, including borrowings under the Credit Facility, issuance of public and private equity securities, unsecured debt and fixed-rate secured mortgage financing. However, the Operating Partnership's ability to obtain new financing or refinance existing borrowings on favorable terms could be impacted by various factors including the state of economic conditions, significant tenant defaults, a decline in the demand for office or industrial properties, a decrease in market rental rates or market values of real estate assets in our submarkets, and the amount of future borrowings. These events could result in the following:

• Decreases in our cash flows from operations, which could create further dependence on our Credit Facility;

• An increase in the proportion of variable-rate debt, which could increase our sensitivity to interest rate fluctuations in the future;

• A decrease in the value of our properties, which could have an adverse effect on the Operating Partnership's ability to incur additional debt, refinance existing debt at competitive rates, or comply with its existing debt obligations; and

• A decrease in the value of our stock, which could impact our ability to issue equity.

In addition to the factors noted above, the Operating Partnership's credit ratings are subject to ongoing evaluation by credit rating agencies and may be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. In the event that the Operating Partnership's credit ratings are downgraded, we may incur higher borrowing costs and may experience difficulty in obtaining additional financing or refinancing existing indebtedness.

Debt Covenants

The Credit Facility, unsecured senior notes, and certain other secured debt arrangements contain covenants and restrictions requiring us to meet certain financial ratios and reporting requirements. Key existing financial covenants and their covenant levels include:

Credit Facility (as defined in the Credit Agreement):	Covenant Level	Actual Performance at September 30, 2011
Total debt to total asset value	less than 60%	39%
Fixed charge coverage ratio	greater than 1.5x	2.3x
Unsecured debt ratio	greater than 1.67x	2.34x
Unencumbered asset pool debt service coverage	greater than 2.0x	3.5x
Unsecured Senior Notes due 2015, 2018 and 2020 (as defined in the Indentures):
Total debt to total asset value	less than 60%	45%
Interest coverage	greater than 1.5x	2.8x
Secured debt to total asset value	less than 40%	12%
Unencumbered asset pool value to unsecured debt	greater than 150%	234%

The Operating Partnership was in compliance with all its debt covenants as of September 30, 2011. Our current expectation is that the Operating Partnership will continue to meet the requirements of its debt covenants in both the short and long term. However, in the event of a renewed economic slow down or continued volatility in the credit markets, there is no certainty that the Operating Partnership will be able to continue to satisfy all the covenant requirements.

53

Consolidated Historical Cash Flow Summary

Our historical cash flow activity for the nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010 is as follows:

	Nine Months Ended September 30,
	2011			2010			Dollar Change			Percentage Change
	($ in thousands)
Net cash provided by operating activities	$	114,065		$	94,928		$	19,137		20.2	%
Net cash used in investing activities	(553,215		)	(434,655		)	(118,560		)	27.3	%
Net cash provided by financing activities	439,791			338,157			101,634			30.1	%

Operating Activities

Our cash flows from operations depends on numerous factors including the occupancy level of our portfolio, the rental rates achieved on our leases, the collectability of rent and recoveries from our tenants, the level of operating expenses, the impact of property acquisitions and related financing activities, and other general and administrative costs. Our net cash provided by operating activities increased by $19.1 million, or 20.2%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 primarily as a result of an increase in cash Net Operating Income generated primarily from our Acquisitions Portfolio partially offset by increased interest expense attributable to the increase in our average outstanding debt balances as a result of our acquisition activity. See additional information under the caption "−Rental Operations."

Investing Activities

Our net cash used in investing activities is generally used to fund property acquisitions, recurring and nonrecurring capital expenditures for our operating properties, and development and redevelopment projects. Our net cash used in investing activities increased $118.6 million, or 27.3%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. This net increase was primarily attributable to our increased acquisition activity and the $11.0 million in non-refundable escrow deposits, subject only to the failure of satisfaction of conditions precedent to the closing, made during the nine months ended September 30, 2011 for potential future acquisitions.

Financing Activities

Our net cash provided by financing activities is generally impacted by our capital raising activities net of dividends and distributions paid to common and preferred security holders. Net cash provided by financing activities increased by $101.6 million, or 30.1%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010, and was primarily attributable to the following:

• A net increase of approximately $105.8 million provided by our various capital raising activities and

• An offsetting decrease of $8.6 million as a result of the dividends paid on the 6.0 million common shares we issued in our April 2011 equity offering.

Consolidated Off-Balance Sheet Arrangements

As of September 30, 2011 and as of the date this report was filed, we did not have any off-balance sheet transactions, arrangements, or obligations, including contingent obligations.

54

Non-GAAP Supplemental Financial Measure: Funds From Operations

We calculate 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.

We believe that FFO is a useful supplemental measure of our 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, our 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, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our 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 our 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 our properties, which are significant economic costs and could materially impact our results from operations.

The following table presents our FFO for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands)
Net income (loss) available to common stockholders	$	10,195		$	(126	)	$	10,912		$	2,977
Adjustments:
Net income (loss) attributable to noncontrolling common units of the Operating Partnership	296			(4		)	320			128
Depreciation and amortization of real estate assets	35,942			29,820			96,971			74,049
Net gain on dispositions of discontinued operations	(12,555		)	—			(12,555		)	—
Funds From Operations(1)	$	33,878		$	29,690		$	95,648		$	77,154

________________________

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

55

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary market risk we face is interest rate risk. We mitigate this risk by following established risk management policies and procedures. These policies include maintaining prudent amounts of debt, including a greater amount of fixed-rate debt as compared to variable-rate debt in our portfolio, and may include the periodic use of derivative instruments. As of September 30, 2011 and December 31, 2010, we did not have any interest-rate sensitive derivative assets or liabilities.

Information about our changes in interest rate risk exposures from December 31, 2010 to September 30, 2011 is incorporated herein by reference from "Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources of the Operating Partnership."

Market Risk

As of September 30, 2011, 100.0% of our total outstanding debt of $1.8 billion was subject to interest at fixed rates. We had no floating rate debt as of September 30, 2011 since our only floating rate debt is our Credit Facility and there were no borrowings outstanding under the Credit Facility as of September 30, 2011. All of our interest rate sensitive financial instruments are held for purposes other than trading purposes.

In general, interest rate fluctuations applied to our variable-rate debt will impact our future earnings and cash flows. Conversely, interest rate fluctuations applied to our fixed-rate debt will generally not impact our future earnings and cash flows, unless such instruments mature or are otherwise terminated and need to be refinanced. However, interest rate fluctuations will impact the fair value of the fixed-rate debt instruments.

With the exception of the Exchangeable Notes and our publicly traded unsecured senior notes, we generally determine the fair value of our fixed-rate debt by performing discounted cash flow analyses using an appropriate market rate. We calculate the market rate by obtaining period-end treasury rates for maturities that correspond to the maturities of our fixed-rate debt and then adding an appropriate credit spread based on information obtained from third-party financial institutions. These credit spreads take into account factors, including but not limited to, our credit profile, the tenure of the debt, amortization period, whether the debt is secured or unsecured, and the loan-to-value ratio of the debt. We determine the fair value of the liability component of our Exchangeable Notes by performing discounted cash flow analysis using an appropriate market interest rate derived from spreads for our publicly traded debt. We determine the fair value of each of our publicly traded unsecured senior notes based on their quoted trading price at the end of the reporting period. See Note 12 to our consolidated financial statements included in this report for additional information on the fair value of our financial assets and liabilities as of September 30, 2011 and December 31, 2010.

As of September 30, 2011, we did not have any variable-rate debt since we did not have any outstanding borrowings on our Credit Facility. As of December 31, 2010, the total outstanding balance of our variable-rate debt included borrowings of $159.0 million and was indexed to LIBOR plus a spread of 2.675% (weighted average interest rate was 2.99%). Assuming no changes in the outstanding balance of our existing variable-rate debt as of December 31, 2010, a 100 basis point increase in the LIBOR rate would increase our projected annual interest expense, before the effect of capitalization, by approximately $1.6 million.

The total carrying value of our fixed-rate debt, including our Exchangeable Notes, was approximately $1.8 billion and $1.3 billion as of September 30, 2011 and December 31, 2010, respectively. The total estimated fair value of our fixed-rate debt was approximately $1.8 billion and $1.3 billion as of September 30, 2011 and December 31, 2010, respectively. For sensitivity purposes, a 100 basis point increase in the discount rate equates to a decrease in the total fair value of our fixed-rate debt of approximately $67.8 million, or 3.7%, as of September 30, 2011. Comparatively, a 100 basis point increase in the discount rate equates to a decrease in the total fair value of our fixed-rate debt of approximately $47.2 million, or 3.6%, as of December 31, 2010.

The above sensitivity analyses do not consider interrelationships between different market movements, which could result in additional changes in the fair value of our debt and Exchangeable Notes, beyond the amounts calculated.

56

ITEM  4. CONTROLS AND PROCEDURES

Kilroy Realty Corporation

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the Company's reports under the Exchange Act is processed, recorded, summarized, and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures as of September 30, 2011, the end of the period covered by this report. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded, as of that time, that disclosure controls and procedures were effective at the reasonable assurance level.

There have been no significant changes that occurred during the quarter covered by this report in the Company's internal control over financial reporting identified in connection with the evaluation referenced above that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Kilroy Realty, L.P.

The Operating Partnership maintains disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the Operating Partnership's reports under the Exchange Act is processed, recorded, summarized, and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), the Operating Partnership carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures as of September 30, 2011, the end of the period covered by this report. Based on the foregoing, the Operating Partnership's Chief Executive Officer and Chief Financial Officer concluded, as of that time, that disclosure controls and procedures were effective at the reasonable assurance level.

There have been no significant changes that occurred during the quarter covered by this report in the Operating Partnership's internal control over financial reporting identified in connection with the evaluation referenced above that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

57

PART II-OTHER INFORMATION

ITEM  1. LEGAL PROCEEDINGS

We are not defendants in, and our properties are not subject to, any legal proceedings that, if determined adversely to us, would have a material adverse effect upon our financial condition, results of operations, or cash flows.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors included in the Company's and the Operating Partnership's annual report on Form 10-K for the year ended December 31, 2010.

ITEM  2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS-None

ITEM  3. DEFAULTS UPON SENIOR SECURITIES-None

ITEM  4. (REMOVED and RESERVED)

ITEM  5. OTHER INFORMATION-None

58

ITEM 6. EXHIBITS

Exhibit Number	Description
3.(i)1	Kilroy Realty Corporation Articles of Restatement(1)
3.(i)2	Certificate of Limited Partnership of Kilroy Realty, L.P.(2)
3.(i)3	Amendment to the Certificate of Limited Partnership of Kilroy Realty, L.P.(2)
3.(ii)1	Second Amended and Restated Bylaws of Kilroy Realty Corporation(3)
3.(ii)2	Amendment No. 1 to Second Amended and Restated Bylaws of Kilroy Realty Corporation(4)
10.1	Sales Agreement, dated July 25, 2011, between Kilroy Realty Corporation, Kilroy Realty, LP. and Barclays Capital Inc.(5)
10.2	Sales Agreement, dated July 25, 2011, between Kilroy Realty Corporation, Kilroy Realty, LP. and Wells Fargo Securities, LLC(5)
10.3	Sales Agreement, dated July 25, 2011, between Kilroy Realty Corporation, Kilroy Realty, LP. and Merrill Lynch, Pierce, Fenner & Smith Incorporated(5)
10.4	Sales Agreement, dated July 25, 2011, between Kilroy Realty Corporation, Kilroy Realty, LP. and J.P. Morgan Securities LLC(5)
31.1*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty Corporation
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty Corporation
31.3*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty, L.P.
31.4*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty, L.P.
32.1*	Section 1350 Certification of Chief Executive Officer of Kilroy Realty Corporation
32.2*	Section 1350 Certification of Chief Financial Officer of Kilroy Realty Corporation
32.3*	Section 1350 Certification of Chief Executive Officer of Kilroy Realty, L.P.
32.4*	Section 1350 Certification of Chief Financial Officer of Kilroy Realty, L.P.
101.1	The following Kilroy Realty Corporation and Kilroy Realty, L.P. financial information for the quarter ended September 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Equity (unaudited), (iv) Consolidated Statements of Capital, (v) Consolidated Statements of Cash Flows (unaudited) and (vi) Notes to the Consolidated Financial Statements (unaudited).(6)

________________________

* Filed herewith

(1) Previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2009.

(2) Previously filed by Kilroy Realty, L.P. as an exhibit to the General Form for Registration of Securities on Form 10 as filed with the Securities and Exchange Commission on August 18, 2010.

(3) Previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2008.

(4) Previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May 27, 2009.

(5) Previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on July 28, 2011.

(6) Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.

59

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, thereunto duly authorized on November 2, 2011.

KILROY REALTY CORPORATION
	By:	/s/   John B. Kilroy, Jr
		John B. Kilroy, Jr. President and Chief Executive Officer (Principal Executive Officer)
	By:	/s/   Tyler H. Rose
		Tyler H. Rose Executive Vice President and Chief  Financial Officer (Principal Financial Officer)
	By:	/s/    Heidi R. Roth
		Heidi R. Roth Senior Vice President and Controller (Principal Accounting Officer)

60

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, thereunto duly authorized on November 2, 2011.

KILROY REALTY, L.P.
BY:	KILROY REALTY CORPORATION
	Its general partner
	By:	/s/   John B. Kilroy, Jr.
		John B. Kilroy, Jr. President and Chief Executive Officer (Principal Executive Officer)
	By:	/s/   Tyler H. Rose
		Tyler H. Rose Executive Vice President and Chief  Financial Officer (Principal Financial Officer)
	By:	/s/    Heidi R. Roth
		Heidi R. Roth Senior Vice President and Controller (Principal Accounting Officer)

61

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John B. Kilroy, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/    John B. Kilroy, Jr.

John B. Kilroy, Jr.

President and Chief Executive Officer

Date: November 2, 2011

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Tyler H. Rose, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/   Tyler H. Rose

Tyler H. Rose

Executive Vice President and

Chief Financial Officer

Date: November 2, 2011

EX-31.3

Exhibit 31.3

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of

2002

I, John B. Kilroy, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kilroy Realty, L.P. ;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/    John B. Kilroy, Jr.

John B. Kilroy, Jr.

President and Chief Executive Officer

Kilroy Realty Corporation, sole general partner of

Kilroy Realty, L.P.

Date: November 2, 2011

EX-31.4

Exhibit 31.4

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of

2002

I, Tyler H. Rose , certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kilroy Realty, L.P. ;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/    Tyler H. Rose

Tyler H. Rose

Executive Vice President and

Chief Financial Officer

Kilroy Realty Corporation, sole general partner of

Kilroy Realty, L.P.

Date: November 2, 2011

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Kilroy Realty Corporation (the “Company”) hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    John B. Kilroy, Jr.

John B. Kilroy, Jr.

President and Chief Executive Officer

Date: November 2, 2011

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350, is not being filed as part of the Report or as a separate disclosure document, and is not being incorporated by reference into any filing of the Company or Kilroy Realty, L.P. under the Securities Act of 1933, as amended, or the Securities Act of 1934, as amended, (whether made before or after the date of the Report) irrespective of any general incorporation language contained in such filing. The signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Kilroy Realty Corporation (the “Company”) hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    Tyler H. Rose

Tyler H. Rose

Executive Vice President and

Chief Financial Officer

Date: November 2, 2011

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350, is not being filed as part of the Report or as a separate disclosure document, and is not being incorporated by reference into any filing of the Company or Kilroy Realty, L.P. under the Securities Act of 1933, as amended, or the Securities Act of 1934, as amended, (whether made before or after the date of the Report) irrespective of any general incorporation language contained in such filing. The signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.3

Exhibit 32.3

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Kilroy Realty Corporation, the sole general partner of Kilroy Realty, L.P. (the "Operating Partnership"), hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended September 30, 2011 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.

/s/    John B. Kilroy, Jr.

John B. Kilroy, Jr.

President and Chief Executive Officer

Kilroy Realty Corporation, sole general partner of

Kilroy Realty, L.P.

Date: November 2, 2011

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350, is not being filed as part of the Report or as a separate disclosure document, and is not being incorporated by reference into any filing of Kilroy Realty Corporation or the Operating Partnership under the Securities Act of 1933, as amended, or the Securities Act of 1934, as amended, (whether made before or after the date of the Report) irrespective of any general incorporation language contained in such filing. The signed original of this written statement required by Section 906 has been provided to the Operating Partnership and will be retained by the Operating Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.4

Exhibit 32.4

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Kilroy Realty Corporation, the sole general partner of Kilroy Realty, L.P. (the "Operating Partnership"), hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended September 30, 2011 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.

/s/    Tyler H. Rose

Tyler H. Rose

Executive Vice President and

Chief Financial Officer

Kilroy Realty Corporation, sole general partner of

Kilroy Realty, L.P.

Date: November 2, 2011

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350, is not being filed as part of the Report or as a separate disclosure document, and is not being incorporated by reference into any filing of Kilroy Realty Corporation or the Operating Partnership under the Securities Act of 1933, as amended, or the Securities Act of 1934, as amended, (whether made before or after the date of the Report) irrespective of any general incorporation language contained in such filing. The signed original of this written statement required by Section 906 has been provided to the Operating Partnership and will be retained by the Operating Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Pro Forma Results of the Operating Partnership (Tables)

9 Months Ended

Sep. 30, 2011

Pro forma results of the operating partnership

The following pro forma consolidated results of operations of the Company for the three and nine months ended September 30, 2011 and 2010 assumes that the acquisitions of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, were completed as of January 1, 2010. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2010, nor does it intend to be a projection of future results.

	Three Months Ended September 30, (1)					Nine Months Ended September 30, (1)
	2011		2010			2011		2010
	(in thousands except per share amounts)
Revenues	$	99,938	$	86,490		$	291,600	$	239,270
Net income (loss) available to common stockholders(2)(3)	$	11,692	$	(1,284	)	$	9,896	$	2,692
Net income (loss) available to common stockholders per share - basic(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04
Net income (loss) available to common stockholders per share - diluted(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

(3) The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowings and related pro forma interest expense estimate assumed herein are not indicative of actual results.

Actual results for certain operating data for the property

The following table summarizes the results of operations for the properties at 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, from June 3, 2011 and September 15, 2011, the dates of acquisition, respectively, through September 30, 2011:

	(in thousands)
Revenues	$	6,481
Net loss(1)	(31		)

________________________

(1) Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

Kilroy Realty, L.P. [Member]

Pro forma results of the operating partnership

The following pro forma consolidated results of operations of the Operating Partnership for the three and nine months ended September 30, 2011 and 2010 assumes that the acquisitions of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, were completed as of January 1, 2010. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2010, nor does it intend to be a projection of future results.

	Three Months Ended September 30, (1)					Nine Months Ended September 30, (1)
	2011		2010			2011		2010
	(in thousands except per share amounts)
Revenues	$	99,938	$	86,490		$	291,600	$	239,270
Net income (loss) available to common unitholders(2)(3)	$	12,001	$	(1,367	)	$	10,090	$	2,672
Net income (loss) available to common unitholders per unit - basic(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04
Net income (loss) available to common unitholders per unit - diluted(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

(3) The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowing and related pro forma interest expense estimate assumed herein are not indicative of actual results.

Actual results for certain operating data for the property

The following table summarizes the results of operations for the properties at 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, from June 3, 2011 and September 15, 2011, the dates of acquisition, respectively, through September 30, 2011:

	(in thousands)
Revenues	$	6,481
Net loss(1)	(31		)

________________________

(1) Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2011	Dec. 31, 2010
Preferred stock, $.01 par value, 30,000,000 shares authorized:
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	30,000,000	30,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	58,464,412	52,349,670
Common stock, shares outstanding	58,464,412	52,349,670
Series A Cumulative Redeemable Preferred Stock
Preferred stock, $.01 par value, 30,000,000 shares authorized:
Preferred stock dividend rate percentage	7.45%	7.45%
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,500,000	1,500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series E Cumulative Redeemable Preferred Stock
Preferred stock, $.01 par value, 30,000,000 shares authorized:
Preferred stock dividend rate percentage	7.80%	7.80%
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,610,000	1,610,000
Preferred stock, shares issued	1,610,000	1,610,000
Preferred stock, shares outstanding	1,610,000	1,610,000
Preferred Stock Liquidation preference	$ 40,250	$ 40,250
Series F Cumulative Redeemable Preferred Stock
Preferred stock, $.01 par value, 30,000,000 shares authorized:
Preferred stock dividend rate percentage	7.50%	7.50%
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	3,450,000	3,450,000
Preferred stock, shares issued	3,450,000	3,450,000
Preferred stock, shares outstanding	3,450,000	3,450,000
Preferred Stock Liquidation preference	$ 86,250	$ 86,250

XML

Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
REVENUES:
Rental income	$ 89,306		$ 72,135		$ 252,102		$ 196,883
Tenant reimbursements	7,683		6,156		21,469		18,261
Other property income	348		985		2,863		2,325
Total revenues	97,337	[1]	79,276	[1]	276,434	[1]	217,469	[1]
EXPENSES:
Property expenses	19,361		15,802		54,548		42,255
Real estate taxes	8,360		7,582		24,878		20,035
Provision for bad debts	(5)		(857)		141		(843)
Ground leases (Note 11)	503		336		1,266		648
General and administrative expenses	6,355		7,273		20,355		21,096
Acquisition-related expenses	1,163		354		2,829		1,624
Depreciation and amortization	36,152		29,951		97,513		74,405
Total expenses	71,889		60,441		201,530		159,220
OTHER (EXPENSES) INCOME:
Interest income and other net investment gains (Note 12)	30		337		272		703
Interest expense (Note 5)	(24,051)		(15,853)		(66,155)		(40,897)
Loss on early extinguishment of debt	0		0		0		(4,564)
Total other (expenses) income	(24,021)		(15,516)		(65,883)		(44,758)
INCOME FROM CONTINUING OPERATIONS	1,427		3,319		9,021		13,491
DISCONTINUED OPERATIONS (Note 14)
Net income from discontinued operations	308		350		1,053		1,011
Net gain on dispositions of discontinued operations	12,555		0		12,555		0
Total income from discontinued operations	12,863	[2]	350	[2]	13,608	[2]	1,011	[2]
NET INCOME	14,290		3,669		22,629		14,502
Net (income) loss attributable to noncontrolling common units of the Operating Partnership	(296)		4		(320)		(128)
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION	13,994		3,673		22,309		14,374
PREFERRED DISTRIBUTIONS AND DIVIDENDS:
Distributions to noncontrolling cumulative redeemable preferred units of the Operating Partnership	(1,397)		(1,397)		(4,191)		(4,191)
Preferred dividends	(2,402)		(2,402)		(7,206)		(7,206)
Total preferred distributions and dividends	(3,799)		(3,799)		(11,397)		(11,397)
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$ 10,195		$ (126)		$ 10,912		$ 2,977
(Loss) income from continuing operations available to common stockholders per common share-basic	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
(Loss) income from continuing operations available to common stockholders per common share-diluted	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
Net income (loss) available to common stockholders per share-basic (Note 15)	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Net income (loss) available to common stockholders per share-diluted (Note 15)	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Weighted average common shares outstanding-basic (Note 15)	58,355,127		52,274,316		56,136,477		48,561,614
Weighted average common shares outstanding-diluted (Note 15)	58,355,127		52,274,316		56,136,477		48,565,028
Dividends declared per common share	$ 0.35		$ 0.35		$ 1.05		$ 1.05

[1] All operating revenues are comprised of amounts received from third-party tenants.

[2] Income from discontinued operations is from our Reportable Segment - Office Properties.

XML

Commitments and Contingencies (Details 1) (USD $) In Millions	9 Months Ended
	Sep. 30, 2011
Commitments and Contingencies (Textuals) [Abstract]
Period after which Ground lease rentals are adjusted based on fair market value and the Consumer Price Index	5 years
Annual ground lease rental obligations limit	$ 1.0
Contractual obligations for ground lease including annual rental obligation	The minimum rent is subject to increases every five years based on 50% of the average annual percentage rent for the previous five years.
Non-refundable escrow deposits related to potential future acquisitions	$ 11.0

XML

Acquisitions (Details) (USD $)	9 Months Ended
	Sep. 30, 2011 NumberofTradingDays Years RSF NumberofBuildings Share_Based_Incentive_Compensation_Plans
Acquired operating properties from unrelated third parties
Number of Buildings	9
Rentable Square Feet	1,473,984
Purchase Price	$ 516,300,000	[1]
Assets
Land	56,000,000
Buildings and improvements	441,658,000	[2]
Undeveloped Land	2,560,000
Deferred leasing costs and acquisition-related intangible assets	39,990,000	[3]
Total Assets Acquired	540,208,000
Liabilities
Deferred revenue and acquisition-related intangible liabilities	22,940,000	[4]
Secured debt	30,997,000	[5]
Accounts payable, accrued expenses, and other liabilities	4,515,000
Total liabilities assumed	58,452,000
Net assets and liabilities acquired	481,756,000	[6]
Office Properties [Member]
Acquired operating properties from unrelated third parties
Number of Buildings	9
Office Properties [Member] | 601 108th Avenue N.E Bellevue, WA [Member]
Acquired operating properties from unrelated third parties
Date of Acquisition	June 3, 2011
Number of Buildings	1
Rentable Square Feet	488,470
Percentage Occupied	88.10%
Purchase Price	215,000,000	[1]
Office Properties [Member] | 201 Third Street San Francisco CA [Member]
Acquired operating properties from unrelated third parties
Date of Acquisition	September 15, 2011	[7]
Number of Buildings	1	[7]
Rentable Square Feet	311,545	[7]
Percentage Occupied	90.30%	[7]
Purchase Price	103,300,000	[1],[7]
Office Properties [Member] | 250 Brannan Street San Francisco, CA [Member]
Acquired operating properties from unrelated third parties
Date of Acquisition	January 28, 2011
Number of Buildings	1
Rentable Square Feet	92,948
Percentage Occupied	100.00%
Purchase Price	33,000,000	[1]
Office Properties [Member] | 10210, 10220, and 1023 NE Points Drive; 3933 Lake Washington Boulevard NE Kirkland, WA [Member]
Acquired operating properties from unrelated third parties
Date of Acquisition	April 21, 2011	[8]
Number of Buildings	4	[8]
Rentable Square Feet	279,924	[8]
Percentage Occupied	89.60%	[8]
Purchase Price	100,100,000	[1],[8]
Office Properties [Member] | 10770 Wateridge Circle San Diego, CA [Member]
Acquired operating properties from unrelated third parties
Date of Acquisition	May 12, 2011
Number of Buildings	1
Rentable Square Feet	174,310
Percentage Occupied	97.50%
Purchase Price	32,700,000	[1]
Office Properties [Member] | 4040 Civic Center Drive San Rafael, CA [Member]
Acquired operating properties from unrelated third parties
Date of Acquisition	June 9, 2011
Number of Buildings	1
Rentable Square Feet	126,787
Percentage Occupied	93.10%
Purchase Price	32,200,000	[1]
601 108th Avenue N.E Bellevue, WA [Member]
Assets
Land	0	[10],[9]
Buildings and improvements	214,095,000	[10],[2]
Undeveloped Land	0	[10]
Deferred leasing costs and acquisition-related intangible assets	13,790,000	[10]
Total Assets Acquired	227,885,000
Liabilities
Deferred revenue and acquisition-related intangible liabilities	12,850,000	[10]
Secured debt	0	[10]
Accounts payable, accrued expenses, and other liabilities	2,380,000	[10]
Total liabilities assumed	15,230,000	[10]
Net assets and liabilities acquired	212,655,000	[10],[6]
201 Third Street San Francisco CA [Member]
Assets
Land	19,260,000	[10]
Buildings and improvements	84,018,000	[10],[2]
Undeveloped Land	0	[10]
Deferred leasing costs and acquisition-related intangible assets	8,700,000	[10]
Total Assets Acquired	111,978,000	[10]
Liabilities
Deferred revenue and acquisition-related intangible liabilities	8,700,000	[10]
Secured debt	0	[10]
Accounts payable, accrued expenses, and other liabilities	76,000	[10]
Total liabilities assumed	8,776,000	[10]
Net assets and liabilities acquired	103,202,000	[10],[6]
All Other Acquisitions [Member]
Assets
Land	36,740,000	[11]
Buildings and improvements	143,545,000	[11],[2]
Undeveloped Land	2,560,000	[11]
Deferred leasing costs and acquisition-related intangible assets	17,500,000	[11]
Total Assets Acquired	200,345,000
Liabilities
Deferred revenue and acquisition-related intangible liabilities	1,390,000	[11]
Secured debt	30,997,000	[11],[5]
Accounts payable, accrued expenses, and other liabilities	2,059,000	[11]
Total liabilities assumed	34,446,000	[11]
Net assets and liabilities acquired	$ 165,899,000	[11],[6]

[1] Excludes acquisition-related costs.

[2] Represents buildings, building improvements and tenant improvements.

[3] Represents in-place leases (approximately $25.2 million with a weighted average amortization period of 3.9 years), above-market leases (approximately $6.8 million with a weighted average amortization period of 4.5 years), and leasing commissions (approximately $7.9 million with a weighted average amortization period of 2.6 years).

[4] Represents below-market leases (approximately $17.7 million with a weighted average amortization period of 3.8 years) and an above-market ground lease obligation (approximately $5.2 million with a weighted average amortization period of 82.5 years), under which we are the lessee.

[5] Represents the mortgage loan, which includes an unamortized premium recorded at the date of acquisition of approximately $1.0 million in connection with recording this debt at fair value, assumed in connection with the properties acquired in April 2011 (see Note 5).

[6] Reflects the purchase price net of assumed secured debt and other lease-related obligations.

[7] As of September 30, 2011, this property was temporarily being held in a separate VIE to facilitate a potential Section 1031 Exchange (see Note 1).

[8] In connection with this acquisition, we assumed secured debt with an outstanding principal balance of $30.0 million and recorded a premium of $1.0 million in connection with recording this debt at fair value on the acquisition date (see Note 5).

[9] In connection with the acquisition of 601 108th Avenue N.E., Bellevue, WA, we assumed the lessee's obligations under a noncancellable ground lease that is scheduled to expire in November 2093 (see Notes 3 and 11).

[10] The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the two largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

[11] The purchase price of all other acquisitions completed during the nine months ended September 30, 2011 were individually less than 5% and in the aggregate less than 10% of the Company's total assets as of December 31, 2010.

XML

Partners' Capital of the Operating Partnership

9 Months Ended

Sep. 30, 2011

Partners' Capital Notes [Abstract]

Partners' Capital of the Operating Partnership

8.    Partners' Capital of the Operating Partnership

Issuance of Common Units

In April 2011, the Company completed an underwritten public offering of 6,037,500 shares of its common stock as discussed in Note 7. The net offering proceeds of approximately $221.0 million were contributed by the Company to the Operating Partnership in exchange for 6,037,500 common units.

Common Units Outstanding

The Company owned 58,464,412, 52,349,670, and 52,349,670 common units representing a 97.1%, 96.8%, and 96.8% common general partnership interest in the Operating Partnership as of September 30, 2011, December 31, 2010, and September 30, 2010, respectively. The remaining 2.9%, 3.2%, and 3.2% common limited partnership interest as of September 30, 2011, December 31, 2010, and September 30, 2010, respectively, was owned by non-affiliate investorsand certain of our officers and directors in the form of noncontrolling common units.Therewere 1,718,131, 1,723,131, and 1,723,131 common units outstanding held by these investors, officers and directors as of September 30, 2011, December 31, 2010, and September 30, 2010, respectively. For a further discussion of the noncontrolling common units as of September 30, 2011 and December 31, 2010, please refer to Note 6.

XML

Pro Forma Results of the Company (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended				3 Months Ended			9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011 Material Acquisitions [Member]	Sep. 30, 2011 Material Acquisitions [Member]		Sep. 30, 2011 Material Acquisitions [Member]
Pro forma Results of the Company
Revenues	$ 99,938	[1]	$ 86,490	[1]	$ 291,600	[1]	$ 239,270	[1]
Net income (loss) available to common stockholders	11,692	[1],[2],[3]	(1,284)	[1],[2],[3]	9,896	[1],[2],[3]	2,692	[1],[2],[3]
Net income (loss) available to common stockholders per share - basic	$ 0.19	[1],[2],[3]	$ (0.03)	[1],[2],[3]	$ 0.16	[1],[2],[3]	$ 0.04	[1],[2],[3]
Net income (loss) available to common stockholders per share - diluted	$ 0.19	[1],[2],[3]	$ (0.03)	[1],[2],[3]	$ 0.16	[1],[2],[3]	$ 0.04	[1],[2],[3]
Actual results for material acquisitions
Revenues										6,481
Net loss										(31)	[4]
Pro Forma Results of the Company (Textuals) [Abstract]
Purchase price for material acquistions as a percentage of the total purchase price of all acquisitions									61.70%	61.70%		61.70%
Acquisition-related expenses	$ 1,163		$ 354		$ 2,829		$ 1,624		$ 400			$ 600

[1] The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

[2] The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowings and related pro forma interest expense estimate assumed herein are not indicative of actual results.

[3] The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

[4] Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2011	Nov. 01, 2011
Entity Registrant Name	KILROY REALTY CORP
Entity Central Index Key	0001025996
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		58,464,412
Kilroy Realty, L.P. [Member]
Entity Registrant Name	Kilroy Realty, L.P.
Entity Central Index Key	0001493976
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer

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Net Income (Loss) Available to Common Unitholders Per Unit of the Operating Partnership (Tables)

9 Months Ended

Sep. 30, 2011

Net Income Available To Common Unitholders [Line Items]

Net income (loss) available to common unitholders

The following table reconciles the numerator and denominator in computing the Company's basic and diluted per-share computations for net income (loss) available to common stockholders for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands, except share and per share amounts)
Numerator:
Income from continuing operations	$	1,427		$	3,319		$	9,021		$	13,491
Loss (income) from continuing operations attributable to noncontrolling common units of the Operating Partnership	67			15			65			(94		)
Preferred distributions and dividends	(3,799		)	(3,799		)	(11,397		)	(11,397		)
Allocation to participating securities (nonvested shares and RSUs)	(330		)	(273		)	(979		)	(877		)
Numerator for basic and diluted (loss) income from continuing operations available to common stockholders	(2,635		)	(738		)	(3,290		)	1,123
Income from discontinued operations	12,863			350			13,608			1,011
Income from discontinued operations attributable to noncontrolling common units of the Operating Partnership	(363		)	(11		)	(385		)	(34		)
Numerator for basic and diluted net income (loss) available to common stockholders	$	9,865		$	(399	)	$	9,933		$	2,100
Denominator:
Basic weighted average vested shares outstanding	58,355,127			52,274,316			56,136,477			48,561,614
Effect of dilutive securities-Exchangeable Notes and stock options	—			—			—			3,414
Diluted weighted average vested shares and common share equivalents outstanding	58,355,127			52,274,316			56,136,477			48,565,028
Basic earnings per share:
(Loss) income from continuing operations available to common stockholders per share	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common share	0.22			0.00			0.24			0.02
Net income (loss) available to common stockholders per share	$	0.17		$	(0.01	)	$	0.18		$	0.04
Diluted earnings per share:
(Loss) income from continuing operations available to common stockholders per share	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common share	0.22			0.00			0.24			0.02
Net income (loss) available to common stockholders per share	$	0.17		$	(0.01	)	$	0.18		$	0.04

Kilroy Realty, L.P. [Member]

Net Income Available To Common Unitholders [Line Items]

Net income (loss) available to common unitholders

The following table reconciles the numerator and denominator in computing the Operating Partnership's basic and diluted per-unit computations for net income (loss) available to common unitholders for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands, except unit and per unit amounts)
Numerator:
Income from continuing operations	$	1,427		$	3,319		$	9,021		$	13,491
Income from continuing operations attributable to noncontrolling interests in consolidated subsidiaries	(30		)	(41		)	(95		)	(138		)
Preferred distributions	(3,799		)	(3,799		)	(11,397		)	(11,397		)
Allocation to participating securities (nonvested units and RSUs)	(330		)	(273		)	(979		)	(877		)
Numerator for basic and diluted (loss) income from continuing operations available to common unitholders	(2,732		)	(794		)	(3,450		)	1,079
Income from discontinued operations	12,863			350			13,608			1,011
Numerator for basic and diluted net income (loss) available to common unitholders	$	10,131		$	(444	)	$	10,158		$	2,090
Denominator:
Basic weighted average vested units outstanding	60,073,258			53,997,447			57,857,538			50,284,745
Effect of dilutive securities-Exchangeable Notes and stock options	—			—			—			3,414
Diluted weighted average vested units and common unit equivalents outstanding	60,073,258			53,997,447			57,857,538			50,288,159
Basic earnings per unit:
(Loss) income from continuing operations available to common unitholders per unit	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common unit	0.22			0.00			0.24			0.02
Net income (loss) available to common unitholders per unit	$	0.17		$	(0.01	)	$	0.18		$	0.04
Diluted earnings per unit:
(Loss) income from continuing operations available to common unitholders per unit	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common unit	0.22			0.00			0.24			0.02
Net income (loss) available to common unitholders per unit	$	0.17		$	(0.01	)	$	0.18		$	0.04

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

Ground Leases

We have noncancellable ground lease obligations at one building in Bellevue, Washington which expires in November 2093 and at Kilroy Airport Center Phases I, II, and III in Long Beach, California which expires in July 2084.

The minimum commitment under our ground leases as of September 30, 2011 for five years and thereafter was as follows:

Year Ending	(in thousands)
Remaining 2011	$	481
2012	1,926
2013	1,926
2014	1,870
2015	1,830
Thereafter(1)(2)	133,212
Total	$	141,245

________________________

(1) One of our ground lease obligations is subject to a fair market value adjustment every five years; however, the lease includes ground rent subprotection and infrastructure rent credits which currently limit our annual rental obligations to $1.0 million. The contractual obligations for that ground lease included above assumes the lesser of $1.0 million or annual lease rental obligation in effect as of September 30, 2011.

(2) One of our ground lease obligations includes a component which is based on the percentage of gross income that exceeds the minimum ground rent. The minimum rent is subject to increases every five years based on 50% of the average annual percentage rent for the previous five years. Currently gross income does not exceed the threshold requiring us to pay percentage rent. The contractual obligations for that ground lease included above assumes the annual lease rental obligation in effect as of September 30, 2011.

Non-refundable Escrow Deposits

As of September 30, 2011, we had $11.0 million in non-refundable escrow deposits, subject only to the failure of satisfaction of conditions precedent to the closing. The escrow deposits are related to potential future acquisitions, which are included in prepaid expenses and other assets, net on the consolidated balance sheets. These potential future acquisitions are currently anticipated to close in 2011 and are subject to customary closing conditions.

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Net Income (Loss) Available to Common Stockholders Per Share of the Company (Tables)

9 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Net income (loss) available to common stockholders

The following table reconciles the numerator and denominator in computing the Company's basic and diluted per-share computations for net income (loss) available to common stockholders for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands, except share and per share amounts)
Numerator:
Income from continuing operations	$	1,427		$	3,319		$	9,021		$	13,491
Loss (income) from continuing operations attributable to noncontrolling common units of the Operating Partnership	67			15			65			(94		)
Preferred distributions and dividends	(3,799		)	(3,799		)	(11,397		)	(11,397		)
Allocation to participating securities (nonvested shares and RSUs)	(330		)	(273		)	(979		)	(877		)
Numerator for basic and diluted (loss) income from continuing operations available to common stockholders	(2,635		)	(738		)	(3,290		)	1,123
Income from discontinued operations	12,863			350			13,608			1,011
Income from discontinued operations attributable to noncontrolling common units of the Operating Partnership	(363		)	(11		)	(385		)	(34		)
Numerator for basic and diluted net income (loss) available to common stockholders	$	9,865		$	(399	)	$	9,933		$	2,100
Denominator:
Basic weighted average vested shares outstanding	58,355,127			52,274,316			56,136,477			48,561,614
Effect of dilutive securities-Exchangeable Notes and stock options	—			—			—			3,414
Diluted weighted average vested shares and common share equivalents outstanding	58,355,127			52,274,316			56,136,477			48,565,028
Basic earnings per share:
(Loss) income from continuing operations available to common stockholders per share	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common share	0.22			0.00			0.24			0.02
Net income (loss) available to common stockholders per share	$	0.17		$	(0.01	)	$	0.18		$	0.04
Diluted earnings per share:
(Loss) income from continuing operations available to common stockholders per share	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common share	0.22			0.00			0.24			0.02
Net income (loss) available to common stockholders per share	$	0.17		$	(0.01	)	$	0.18		$	0.04

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Net Income (Loss) Available to Common Stockholders Per Share of the Company (Details) (USD $) In Thousands, except Share data	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
Numerator:
Income from continuing operations	$ 1,427		$ 3,319		$ 9,021		$ 13,491
Loss (income) from continuing operations attributable to noncontrolling common units of the Operating Partnership	67		15		65		(94)
Preferred distributions and dividends	(3,799)		(3,799)		(11,397)		(11,397)
Allocation to participating securities (nonvested shares and RSUs)	(330)		(273)		(979)		(877)
Numerator for basic and diluted (loss) income from continuing operations available to common stockholders	(2,635)		(738)		(3,290)		1,123
Income from discontinued operations	12,863	[1]	350	[1]	13,608	[1]	1,011	[1]
Income from discontinued operations attributable to noncontrolling common units of the Operating Partnership	(363)		(11)		(385)		(34)
Numerator for basic and diluted net income (loss) available to common stockholders	$ 9,865		$ (399)		$ 9,933		$ 2,100
Denominator:
Weighted average common shares outstanding-basic (Note 15)	58,355,127		52,274,316		56,136,477		48,561,614
Effect of dilutive securities - Exchangeable Notes and stock options	0		0		0		3,414
Weighted average common shares outstanding-diluted	58,355,127		52,274,316		56,136,477		48,565,028
Basic earnings per share:
(Loss) income from continuing operations available to common stockholders per common share-basic	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
Income from discontinued operations per common share	$ 0.22		$ 0.00		$ 0.24		$ 0.02
Net (loss) income available to common stockholders per share-basic (Note 15)	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Diluted earnings per share:
(Loss) income from continuing operations available to common stockholders per common share-diluted	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
Income from discontinued operations per common share	$ 0.22		$ 0.00		$ 0.24		$ 0.02
Net (loss) income available to common stockholders per share-diluted (Note 15)	$ 0.17		$ (0.01)		$ 0.18		$ 0.04

[1] Income from discontinued operations is from our Reportable Segment - Office Properties.

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Consolidated Statements of Capital (KILROY REALTY, L.P.) (Kilroy Realty, L.P. [Member], USD $) In Thousands, except Share data	9 Months Ended								9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Total Partners Capital [Member]	Sep. 30, 2010 Total Partners Capital [Member]	Sep. 30, 2011 Partners Capital Preferred Units [Member]	Dec. 31, 2010 Partners Capital Preferred Units [Member]	Sep. 30, 2010 Partners Capital Preferred Units [Member]	Dec. 31, 2009 Partners Capital Preferred Units [Member]	Sep. 30, 2011 Partners Capital Common Unit [Member]	Sep. 30, 2010 Partners Capital Common Unit [Member]	Sep. 30, 2011 Noncontrolling Interest In Consolidated Subsidiaries [Member]	Sep. 30, 2010 Noncontrolling Interest In Consolidated Subsidiaries [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ 1,117,730	$ 883,838	$ 1,116,093	$ 882,338	$ 121,582	$ 121,582	$ 121,582	$ 121,582	$ 994,511	$ 760,756	$ 1,637	$ 1,500
Beginning Balance units									54,072,801	44,871,893
Net income	22,629	14,502	22,534	14,364					22,534	14,364	95	138
Issuance of common units (Note 8)	221,015	299,847	221,015	299,847					221,015	299,847
Issuance of common units, units (Note 8)									6,037,500	9,200,000
Issuance of share-based compensation awards (Note 9)	2,447	1,904	2,447	1,904					2,447	1,904
Issuance of share-based compensation awards, units (Note 9)									68,727	3,239
Noncash amortization of share-based compensation	4,201	5,050	4,201	5,050					4,201	5,050
Exercise of stock options	395	83	395	83					395	83
Exercise of stock options, units									15,000	4,000
Repurchase of common units and restricted stock units (Note 9)	(736)	(2,121)	(736)	(2,121)					(736)	(2,121)
Repurchase of common units and restricted stock units, units (Note 9)									(11,485)	(59,782)
Settlement of restricted stock units for shares of common stock		(1,296)		(1,296)						(1,296)
Settlement of restricted stock units for shares of common stock units										53,451
Allocation to the equity component of cash paid upon repurchase of 3.25% Exchangeable Notes		(2,694)		(2,694)						(2,694)
Other	0	0	20	26					20	26	(20)	(26)
Preferred distributions and dividends	(11,397)	(11,397)	(11,397)	(11,397)					(11,397)	(11,397)
Distributions declared per common unit ($1.05 per unit)	(61,941)	(54,280)	(61,941)	(54,280)					(61,941)	(54,280)
Ending Balance	$ 1,294,343	$ 1,133,436	$ 1,292,631	$ 1,131,824	$ 121,582	$ 121,582	$ 121,582	$ 121,582	$ 1,171,049	$ 1,010,242	$ 1,712	$ 1,612
Ending Balance units									60,182,543	54,072,801

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Fair Value Measurements and Disclosures

9 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Measurements and Disclosures

12.    Fair Value Measurements and Disclosures

Assets and Liabilities Reported at Fair Value

The only assets and liabilities we record at fair value on our consolidated financial statements are the marketable securities and related deferred compensation plan liability, both of which are related to our deferred compensation plan. The following table sets forth the fair value of our marketable securities and related deferred compensation plan liability as of September 30, 2011 and December 31, 2010:

	Fair Value (Level  1)(1)
Description	September 30, 2011		December 31, 2010
	(in thousands)
Marketable securities (2)	$	5,213	$	4,902
Deferred compensation plan liability (3)	$	5,118	$	4,809

________________________

(1) Based on quoted prices in active markets for identical securities.

(2) The marketable securities are held in a limited rabbi trust.

(3) The deferred compensation liability is reported on our consolidated balance sheets in accounts payable, accrued expenses, and other liabilities.

We report the change in the fair value of the marketable securities at the end of each accounting period in interest income and other net investment gains in the consolidated statements of operations. We adjust the deferred compensation plan liability to fair value at the end of each accounting period based on the performance of the benchmark funds selected by each participant, which results in a corresponding increase or decrease to compensation cost for the period. The following table sets forth the related amounts recorded during the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended						Nine Months Ended
Description	September 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
	(in thousands)						(in thousands)
Net (loss) gain on marketable securities	$	(642	)	$	311		$	(429	)	$	190
Decrease (increase) to compensation cost	642			(364		)	429			(206		)

Financial Instruments Disclosed at Fair Value

The following table sets forth the carrying value and the fair value of our other financial instruments as of September 30, 2011 and December 31, 2010:

	Carrying Value		Fair Value		Carrying Value		Fair Value
Description	September 30, 2011				December 31, 2010
	(in thousands)
Liabilities
Secured debt	$	473,997	$	487,807	$	313,009	$	329,456
Exchangeable notes	305,115		321,183		299,964		312,598
Unsecured senior notes	980,487		1,014,863		655,803		661,644
Credit Facility (1)	—		—		159,000		159,659

________________________

(1) As of September 30, 2011, there were no outstanding borrowings on the Credit Facility.

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies Disclosure [Abstract]

Summary of minimum commitment

The minimum commitment under our ground leases as of September 30, 2011 for five years and thereafter was as follows:

Year Ending	(in thousands)
Remaining 2011	$	481
2012	1,926
2013	1,926
2014	1,870
2015	1,830
Thereafter(1)(2)	133,212
Total	$	141,245

________________________

(1) One of our ground lease obligations is subject to a fair market value adjustment every five years; however, the lease includes ground rent subprotection and infrastructure rent credits which currently limit our annual rental obligations to $1.0 million. The contractual obligations for that ground lease included above assumes the lesser of $1.0 million or annual lease rental obligation in effect as of September 30, 2011.

(2) One of our ground lease obligations includes a component which is based on the percentage of gross income that exceeds the minimum ground rent. The minimum rent is subject to increases every five years based on 50% of the average annual percentage rent for the previous five years. Currently gross income does not exceed the threshold requiring us to pay percentage rent. The contractual obligations for that ground lease included above assumes the annual lease rental obligation in effect as of September 30, 2011.

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Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net (Tables)

9 Months Ended

Sep. 30, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of identified deferred leasing costs and acquisition-related intangible assets

The following table summarizes our deferred leasing costs and acquisition-related intangible assets (acquired value of leasing costs, above-market leases, and in-place leases) and intangible liabilities (acquired value of below-market leases and above-market ground lease) as of September 30, 2011 and December 31, 2010:

	September 30, 2011			December 31, 2010
	(in thousands)
Deferred Leasing Costs and Acquisition-related Intangible Assets, net(1):
Deferred leasing costs	$	136,374		$	128,980
Accumulated amortization	(48,290		)	(45,869		)
Deferred leasing costs, net	88,084			83,111
Above-market leases	28,143			21,321
Accumulated amortization	(6,250		)	(2,163		)
Above-market leases, net	21,893			19,158
In-place leases	57,195			36,964
Accumulated amortization	(11,415		)	(8,167		)
In-place leases, net	45,780			28,797
Total deferred leasing costs and acquisition-related intangible assets, net	$	155,757		$	131,066
Acquisition-related Intangible Liabilities, net(1)(2):
Below-market leases	$	35,852		$	21,938
Accumulated amortization	(3,844		)	(5,094		)
Below-market leases, net	32,008			16,844
Above-market ground lease obligation	5,200			—
Accumulated amortization	(21		)	—
Above-market ground lease obligation, net	5,179			—
Total acquisition-related intangible liabilities, net	$	37,187		$	16,844

________________________

(1) Balances and accumulated amortization amounts at September 30, 2011 reflect the write-off of the following fully amortized amounts at January 1, 2011: deferred leasing costs (approximately $10.4 million), in-place leases (approximately $5.0 million), and below-market leases (approximately $3.8 million). Our accounting policy is to write-off the asset and corresponding accumulated amortization for fully amortized balances on January 1st of each fiscal year.

(2) Included in deferred revenue and acquisition-related intangible liabilities, net in the consolidated balance sheets.

Amortization for the period related to deferred leasing costs and acquisition-related intangibles

The following table sets forth amortization related to deferred leasing costs and acquisition-related intangibles for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)				(in thousands)
Deferred leasing costs(1)	$	4,317	$	3,886	$	12,053	$	9,559
Net above-market leases(2)	121		664		1,519		696
In-place leases(1)	3,379		1,220		8,238		1,505
Above-market ground lease obligation(3)	16		—		21		—
Total	$	7,833	$	5,770	$	21,831	$	11,760

_________________________

(1) The amortization of deferred leasing costs and in-place leases is recorded to depreciation and amortization expense in the consolidated statements of operations for the periods presented.

(2) The amortization of net above-market leases is recorded as a decrease to rental income in the consolidated statements of operations for the periods presented.

(3) The amortization of the above-market ground lease obligation is recorded as a decrease to ground lease expense in the consolidated statements of operations for the periods presented.

Estimated annual amortization related to deferred leasing costs and acquisition-related intangibles

The following table sets forth the estimated annual amortization expense related to deferred leasing costs and acquisition-related intangibles as of September 30, 2011 for future periods:

Year Ending	Deferred Leasing Costs		Net Above-/(Below)-Market Leases(1)			In-Place Leases		Above-Market Ground Lease Obligation
	(in thousands)
Remaining 2011	$	4,748	$	(78	)	$	3,643	$	16
2012	17,689		(1,534		)	12,863		63
2013	15,823		(1,690		)	10,578		63
2014	13,796		(1,339		)	7,830		63
2015	10,387		(790		)	4,366		63
Thereafter	25,641		(4,684		)	6,500		4,911
Total	$	88,084	$	(10,115	)	$	45,780	$	5,179

_______________________

(1) Represents estimated annual net amortization related to above-/(below)-market leases. Amounts shown represent net below-market leases which will be recorded as an increase to rental income in the consolidated statements of operations.

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Future Minimum Rent

9 Months Ended

Sep. 30, 2011

Leases [Abstract]

Future Minimum Rent

10. Future Minimum Rent

We have operating leases with tenants that expire at various dates through 2031 and are either subject to scheduled fixed increases or adjustments in rent based on the Consumer Price Index. Generally, the leases grant tenants renewal options. Leases also provide for additional rents based on certain operating expenses. Future contractual minimum rent under operating leases as of September 30, 2011 for future periods is summarized as follows:

Year Ending	(in thousands)
Remaining 2011	$	79,636
2012	323,174
2013	307,751
2014	275,387
2015	220,593
Thereafter	687,083
Total	$	1,893,624

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Acquisitions

9 Months Ended

Sep. 30, 2011

Business Combinations [Abstract]

Acquisitions

2.    Acquisitions

During the nine months ended September 30, 2011, we acquired the nine office properties listed below from unrelated third parties. Unless otherwise noted, we funded these acquisitions principally with the net proceeds from the public offering of common stock (see Note 7) the Company completed in April 2011, borrowings under the unsecured line of credit (see Note 5), and the net proceeds from the public offering of unsecured senior notes (see Note 5) the Operating Partnership completed in July 2011.

Property	Property Type	Date of Acquisition	Number of Buildings	Rentable Square Feet	Percentage Occupied as of September 30, 2011	Purchase Price (in  millions)(1)
250 Brannan Street	Office	January 28, 2011
San Francisco, CA			1	92,948	100.0%	$	33.0
10210, 10220, and 10230 NE Points Drive; 3933 Lake Washington Boulevard NE	Office	April 21, 2011
Kirkland, WA(2)			4	279,924	89.6%	100.1
10770 Wateridge Circle	Office	May 12, 2011
San Diego, CA			1	174,310	97.5%	32.7
601 108th Avenue N.E.	Office	June 3, 2011
Bellevue, WA			1	488,470	88.1%	215.0
4040 Civic Center Drive	Office	June 9, 2011
San Rafael, CA			1	126,787	93.1%	32.2
201 Third Street	Office	September 15, 2011
San Francisco, CA (3)			1	311,545	90.3%	103.3
Total			9	1,473,984		$	516.3

________________________

(1) Excludes acquisition-related costs.

(2) In connection with this acquisition, we assumed secured debt with an outstanding principal balance of $30.0 million and recorded a premium of $1.0 million in connection with recording this debt at fair value on the acquisition date (see Note 5).

(3) As of September 30, 2011, this property was temporarily being held in a separate VIE to facilitate a potential Section 1031 Exchange (see Note 1).

The related assets, liabilities, and results of operations of all acquired properties are included in the consolidated financial statements as of the date of acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the respective acquisition dates:

	601 108th Avenue N.E., Bellevue, WA(1)		201 Third Street San Francisco, CA (1)		All Other Acquisitions(2)		Total
Assets
Land(3)	$	—	$	19,260	$	36,740	$	56,000
Buildings and improvements(4)	214,095		84,018		143,545		441,658
Undeveloped land	—		—		2,560		2,560
Deferred leasing costs and acquisition-related intangible assets(5)	13,790		8,700		17,500		39,990
Total assets acquired	227,885		111,978		200,345		540,208
Liabilities
Deferred revenue and acquisition-related intangible liabilities(6)	12,850		8,700		1,390		22,940
Secured debt(7)	—		—		30,997		30,997
Accounts payable, accrued expenses and other liabilities	2,380		76		2,059		4,515
Total liabilities assumed	15,230		8,776		34,446		58,452
Net assets and liabilities acquired(8)	$	212,655	$	103,202	$	165,899	$	481,756

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the two largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The purchase price of all other acquisitions completed during the nine months ended September 30, 2011 were individually less than 5% and in the aggregate less than 10% of the Company's total assets as of December 31, 2010.

(3) In connection with the acquisition of 601 108th Avenue N.E., Bellevue, WA, we assumed the lessee's obligations under a noncancellable ground lease that is scheduled to expire in November 2093 (see Notes 3 and 11).

(4) Represents buildings, building improvements and tenant improvements.

(5) Represents in-place leases (approximately $25.2 million with a weighted average amortization period of 3.9 years), above-market leases (approximately $6.8 million with a weighted average amortization period of 4.5 years), and leasing commissions (approximately $7.9 million with a weighted average amortization period of 2.6 years).

(6) Represents below-market leases (approximately $17.7 million with a weighted average amortization period of 3.8 years) and an above-market ground lease obligation (approximately $5.2 million with a weighted average amortization period of 82.5 years), under which we are the lessee.

(7) Represents the mortgage loan, which includes an unamortized premium recorded at the date of acquisition of approximately $1.0 million in connection with recording this debt at fair value, assumed in connection with the properties acquired in April 2011 (see Note 5).

(8) Reflects the purchase price net of assumed secured debt and other lease-related obligations.

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Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
SUPPLEMENTAL CASH FLOWS INFORMATION:
Interest Paid, Capitalized	$ 5,361	$ 6,140

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Organization and Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidation variable interest entities

The consolidated financial statements of the Company include the consolidated financial position and results of operations of the Company, the Operating Partnership, the Finance Partnership, KSLLC, and all of our wholly-owned subsidiaries. The consolidated financial statements of the Operating Partnership include the consolidated financial position and results of operations of the Operating Partnership, the Finance Partnership, KSLLC, and all wholly-owned subsidiaries of the Operating Partnership. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

The consolidated financial statements of the Company and the Operating Partnership also include two variable interest entities ("VIE") in which we are deemed to be the primary beneficiary.

Segment reporting

Our chief operating decision-makers internally evaluate the operating performance and financial results of our portfolio based on Net Operating Income for the following two segments of commercial real estate property: Office Properties and Industrial Properties. We define “Net Operating Income” as operating revenues (rental income, tenant reimbursements, and other property income) less operating expenses (property expenses, real estate taxes, provision for bad debts, and ground leases).

During the three and nine months ended September 30, 2011, the amount of revenues and Net Operating Income generated by our Industrial Properties, in relation to our total consolidated operating portfolio revenues and Net Operating Income fell below the required 10% quantitative reporting thresholds for the Industrial Properties to be considered a reportable segment under GAAP. Therefore, for the three and nine months ended September 30, 2011, our only reportable segment is our Office Properties segment. See Note 13 for a reconciliation of our Office Properties segment to our consolidated revenues, Net Operating Income, net income and consolidated assets.

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Consolidated Statements of Cash Flows (KILROY REALTY, L.P.) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 22,629	$ 14,502
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations):
Depreciation and amortization of building and improvements and leasing costs	96,971	74,049
Increase (decrease) in provision for bad debts	141	(843)
Depreciation of furniture, fixtures and equipment	839	665
Noncash amortization of share-based compensation awards	3,365	5,328
Noncash amortization of deferred financing costs and debt discounts and premiums	10,164	9,098
Noncash amortization of above/(below) market rents (Note 3)	1,519	696
Net gain on dispositions of discontinued operations (Note 14)	(12,555)	0
Loss on early extinguishment of debt	0	4,564
Noncash amortization of deferred revenue related to tenant-funded tenant improvements	(7,005)	(7,108)
Other	(630)	0
Changes in operating assets and liabilities:
Marketable securities	(311)	(1,029)
Current receivables	(1,022)	(706)
Deferred rent receivables	(15,543)	(8,441)
Other deferred leasing costs	535	(2,516)
Prepaid expenses and other assets	(3,528)	(2,765)
Accounts payable, accrued expenses and other liabilities	18,914	3,049
Deferred revenue	(598)	5,546
Rents received in advance and tenant security deposits	180	839
Net cash provided by operating activities	114,065	94,928
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for acquisition of operating properties (Note 2)	(481,756)	(373,574)
Expenditures for operating properties	(41,087)	(56,393)
Expenditures for development and redevelopment properties and undeveloped land	(18,682)	(14,681)
Net increase in escrow deposits	(11,000)	(2,002)
(Increase) decrease in restricted cash	(690)	1,316
Receipt of principal payments on note receivable	0	10,679
Net cash used in investing activities	(553,215)	(434,655)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on unsecured line of credit	302,000	553,000
Repayments on unsecured line of credit	(461,000)	(445,000)
Principal payments on secured debt	(5,295)	(101,653)
Repurchase of exchangeable senior notes	0	(151,097)
Proceeds from issuance of secured debt (Note 5)	135,000	71,000
Proceeds from issuance of unsecured debt (Note 5)	324,476	247,870
Repayments of unsecured debt	0	61,000
Financing costs	(8,584)	(11,200)
Decrease in loan deposits and other	2,859	1,420
Repurchase of common stock and restricted stock units	(736)	(3,417)
Proceeds from exercise of stock options	395	83
Distributions paid to common unitholders	(58,942)	(50,299)
Distributions paid to preferred unitholders	(11,397)	(11,397)
Net cash provided by financing activities	439,791	338,157
Net increase (decrease) in cash and cash equivalents	641	(1,570)
Cash and cash equivalents, beginning of period	14,840	9,883
Cash and cash equivalents, end of period	15,481	8,313
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for interest, net of capitalized interest of $5,361 and $6,140 as of September 30, 2011 and 2010, respectively	42,070	26,182
NONCASH INVESTING TRANSACTIONS:
Accrual for expenditures for operating properties and development and redevelopment properties	13,506	13,614
Tenant improvements funded directly by tenants to third parties	3,037	2,520
Assumption of secured debt with property acquisition (Notes 2 and 5)	30,042	51,079
Assumption of other liabilities with property acquisitions (Note 2)	4,515	6,369
Net proceeds from disposition held by a qualified intermediary in connection wtih Section 1031 exchange (Note 14)	23,285	0
NONCASH FINANCING TRANSACTIONS:
Accrual of distributions payable to common unitholders	21,064	18,925
Accrual of distributions payable to preferred unitholders	1,909	1,909
Issuance of share-based compensation awards (Note 9)	7,505	5,418
Kilroy Realty, L.P. [Member]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	22,629	14,502
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations):
Depreciation and amortization of building and improvements and leasing costs	96,971	74,049
Increase (decrease) in provision for bad debts	141	(843)
Depreciation of furniture, fixtures and equipment	839	665
Noncash amortization of share-based compensation awards	3,365	5,328
Noncash amortization of deferred financing costs and debt discounts and premiums	10,164	9,098
Noncash amortization of above/(below) market rents (Note 3)	1,519	696
Net gain on dispositions of discontinued operations (Note 14)	(12,555)	0
Loss on early extinguishment of debt	0	4,564
Noncash amortization of deferred revenue related to tenant-funded tenant improvements	(7,005)	(7,108)
Other	(630)	0
Changes in operating assets and liabilities:
Marketable securities	(311)	(1,029)
Current receivables	(1,022)	(706)
Deferred rent receivables	(15,543)	(8,441)
Other deferred leasing costs	535	(2,516)
Prepaid expenses and other assets	(3,528)	(2,765)
Accounts payable, accrued expenses and other liabilities	18,914	3,049
Deferred revenue	(598)	5,546
Rents received in advance and tenant security deposits	180	839
Net cash provided by operating activities	114,065	94,928
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for acquisition of operating properties (Note 2)	(481,756)	(373,574)
Expenditures for operating properties	(41,087)	(56,393)
Expenditures for development and redevelopment properties and undeveloped land	(18,682)	(14,681)
Net increase in escrow deposits	(11,000)	(2,002)
(Increase) decrease in restricted cash	(690)	1,316
Receipt of principal payments on note receivable	0	10,679
Net cash used in investing activities	(553,215)	(434,655)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common units (Note 8)	221,015	299,847
Borrowings on unsecured line of credit	302,000	553,000
Repayments on unsecured line of credit	(461,000)	(445,000)
Principal payments on secured debt	(5,295)	(101,653)
Repurchase of exchangeable senior notes	0	(151,097)
Proceeds from issuance of secured debt (Note 5)	135,000	71,000
Proceeds from issuance of unsecured debt (Note 5)	324,476	247,870
Repayments of unsecured debt	0	(61,000)
Financing costs	(8,584)	(11,200)
Decrease in loan deposits and other	2,859	1,420
Repurchase of common stock and restricted stock units	(736)	(3,417)
Proceeds from exercise of stock options	395	83
Distributions paid to common unitholders	(58,942)	(50,299)
Distributions paid to preferred unitholders	(11,397)	(11,397)
Net cash provided by financing activities	439,791	338,157
Net increase (decrease) in cash and cash equivalents	641	(1,570)
Cash and cash equivalents, beginning of period	14,840	9,883
Cash and cash equivalents, end of period	15,481	8,313
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for interest, net of capitalized interest of $5,361 and $6,140 as of September 30, 2011 and 2010, respectively	42,070	26,182
NONCASH INVESTING TRANSACTIONS:
Accrual for expenditures for operating properties and development and redevelopment properties	13,506	13,614
Tenant improvements funded directly by tenants to third parties	3,037	2,520
Assumption of secured debt with property acquisition (Notes 2 and 5)	30,042	51,079
Assumption of other liabilities with property acquisitions (Note 2)	4,515	6,369
Net proceeds from disposition held by a qualified intermediary in connection wtih Section 1031 exchange (Note 14)	23,285	0
NONCASH FINANCING TRANSACTIONS:
Accrual of distributions payable to common unitholders	21,064	18,925
Accrual of distributions payable to preferred unitholders	1,909	1,909
Issuance of share-based compensation awards (Note 9)	$ 7,505	$ 5,418

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Receivables

9 Months Ended

Sep. 30, 2011

Receivables [Abstract]

Receivables

4.    Receivables

Current Receivables, net

Current receivables, net is primarily comprised of contractual rents and other lease-related obligations due from tenants. The balance consisted of the following as of September 30, 2011 and December 31, 2010:

	September 30, 2011			December 31, 2010
	(in thousands)
Current receivables	$	10,001		$	9,077
Allowance for uncollectible tenant receivables	(3,141		)	(2,819		)
Current receivables, net	$	6,860		$	6,258

Deferred Rent Receivables, net

Deferred rent receivables, net consisted of the following as of September 30, 2011 and December 31, 2010:

	September 30, 2011			December 31, 2010
	(in thousands)
Deferred rent receivables	$	107,130		$	92,883
Allowance for deferred rent receivables	(3,462		)	(3,831		)
Deferred rent receivables, net	$	103,668		$	89,052

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Fair Value Measurements and Disclosures (Details 1) (USD $) In Thousands	Sep. 30, 2011		Dec. 31, 2010
Liabilities
Secured Debt	$ 473,997		$ 313,009
Exchangeable notes	305,115		299,964
Unsecured senior notes	980,487		655,803
Credit Facility	0		159,000
Carrying Value [Member]
Liabilities
Secured Debt	473,997		313,009
Exchangeable notes	305,115		299,964
Unsecured senior notes	980,487		655,803
Credit Facility	0	[1]	159,000
Fair Value [Member]
Liabilities
Secured Debt	487,807		329,456
Exchangeable notes	321,183		312,598
Unsecured senior notes	1,014,863		661,644
Credit Facility	$ 0		$ 159,659

[1] As of September 30, 2011, there were no outstanding borrowings on the Credit Facility.

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Consolidated Statements of Cash Fiows (Kilroy Realty, L.P.) (Parenthetical) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
SUPPLEMENTAL CASH FLOWS INFORMATION:
Interest Paid, Capitalized	$ 5,361	$ 6,140
Kilroy Realty, L.P. [Member]
SUPPLEMENTAL CASH FLOWS INFORMATION:
Interest Paid, Capitalized	$ 5,361	$ 6,140

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Subsequent Events

3 Months Ended

Sep. 30, 2011

Subsequent Events [Abstract]

Subsequent Events

17.    Subsequent Events

On October 11, 2011, we used borrowings under the Credit Facility to repay a secured mortgage loan with an outstanding principal balance of $68.7 million that was scheduled to mature in December 2011.

On October 17, 2011, aggregate dividends, distributions, and dividend equivalents of $21.4 million were paid to common stockholders and common unitholders of record on September 30, 2011 and RSU holders of record on October 17, 2011.

On October 25, 2011, we paid $25.0 million as a non-refundable escrow deposit, subject only to the failure of satisfaction of conditions precedent to the closing, related to a potential future acquisition. The acquisition is currently anticipated to close in 2011 and is subject to customary closing conditions.

On November 1, 2011, we used borrowings under the Credit Facility to repay a secured mortgage loan with an outstanding principal balance of $52.0 million that was scheduled to mature in April 2012 .

As of the date of this report, we have outstanding borrowings of $165.0 million under our Credit Facility that were primarily used to fund the repayment of debt and a non-refundable escrow deposit as noted above.

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Consolidated Statements of Capital (KILROY REALTY, L.P.) (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Stated coupon rate		3.25%
Kilroy Realty, L.P. [Member]
Stated coupon rate		3.25%
Distributions declared per common unit	$ 1.05	$ 1.05

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Organization and Basis of Presentation (Details Textuals) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2011 NumberofBuildings Share_Based_Incentive_Compensation_Plans		Sep. 30, 2011 NumberofTradingDays Years RSF NumberofBuildings Share_Based_Incentive_Compensation_Plans		Dec. 31, 2010	Sep. 30, 2010
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of properties of the company in Washington	6		6
Number of Buildings	9		9
Cost of Buildings	$ 516.3	[1]	$ 516.3	[1]
Stabilized Occupancy			95.00%
Percentage of general partnership interest owned by the company in the Operating Partnership	97.10%		97.10%		96.80%	96.80%
Percentage of Common limited partnership interest owned by certain non-affiliated investors and certain directors and officers of the Company in the Operating Partnership	2.90%		2.90%		3.20%	3.20%
Percentage of General partnership interest owned by wholly-owned subsidiary of the Company	1.00%		1.00%
Percentage of limited partnership interest owned by Operating Partnership	99.00%		99.00%
Number of consolidated variable interest entities	2		2
Number of days to complete Section 1031 Exchange	180
Variable Interest Entity, Consolidated, Carrying Amount, Assets	164.0		164.0
Variable Interest Entity, Consolidated, Carrying Amount, Liabilities	$ 63		$ 63
Threshhold limits for segment reporting			10.00%
Kilroy Realty Northside Drive, LLC [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of Buildings	3		3
Office Properties [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of Buildings	9		9
Redevelopment Properties [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of Buildings	3		3
Rentable Square Feet	508,000		508,000
Properties Under Repositioning [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of Buildings	1		1
Properties Commenced Redevelopment During the Period [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of Buildings	2		2
Lease Up Properties [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of Buildings	0		0

[1] Excludes acquisition-related costs.

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Consolidated Statements of Equity (Unaudited) (Parenthetical) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Stated coupon rate		3.25%		3.25%
Dividends declared, per common share and common unit	$ 0.35	$ 0.35	$ 1.05	$ 1.05

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Consolidated Balance Sheets (KILROY REALTY, L.P.) (USD $) In Thousands	Sep. 30, 2011		Dec. 31, 2010
REAL ESTATE ASSETS:
Land and improvements (Note 2)	$ 537,973		$ 491,333
Buildings and improvements (Note 2)	2,881,504		2,435,173
Undeveloped land and construction in progress (Note 1)	328,785		290,365
Total real estate held for investment	3,748,262		3,216,871
Accumulated depreciation and amortization	(732,162)		(672,429)
Total real estate assets, net	3,016,100		2,544,442
CASH AND CASH EQUIVALENTS	15,481		14,840
RESTRICTED CASH (Note 14)	25,436		1,461
MARKETABLE SECURITIES (Note 12)	5,213		4,902
CURRENT RECEIVABLES, NET (Note 4)	6,860		6,258
DEFERRED RENT RECEIVABLES, NET (Note 4)	103,668		89,052
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 2 and 3)	155,757	[1]	131,066
DEFERRED FINANCING COSTS, NET (Note 5)	19,638		16,447
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 11)	19,531		8,097
Total Assets	3,367,684		2,816,565
LIABILITIES:
Secured debt, net (Notes 5 and 12)	473,997		313,009
Exchangeable senior notes, net (Notes 5 and 12)	305,115		299,964
Unsecured senior notes, net (Notes 5 and 12)	980,487		655,803
Unsecured line of credit (Notes 5 and 12)	0		159,000
Accounts payable, accrued expenses and other liabilities	93,050		68,525
Accrued distributions (Note 16)	22,565		20,385
Deferred revenue and acquisition-related intangible liabilities, net (Note 3)	95,120		79,322
Rents received in advance and tenant security deposits	29,369		29,189
Total liabilities	1,999,703		1,625,197
COMMITMENTS AND CONTINGENCIES (Note 11)
7.45% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS	73,638		73,638
Partners' Capital (Note 8):
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY/CAPITAL	3,367,684		2,816,565
Kilroy Realty, L.P. [Member]
REAL ESTATE ASSETS:
Land and improvements (Note 2)	537,973		491,333
Buildings and improvements (Note 2)	2,881,504		2,435,173
Undeveloped land and construction in progress (Note 1)	328,785		290,365
Total real estate held for investment	3,748,262		3,216,871
Accumulated depreciation and amortization	(732,162)		(672,429)
Total real estate assets, net	3,016,100		2,544,442
CASH AND CASH EQUIVALENTS	15,481		14,840
RESTRICTED CASH (Note 14)	25,436		1,461
MARKETABLE SECURITIES (Note 12)	5,213		4,902
CURRENT RECEIVABLES, NET (Note 4)	6,860		6,258
DEFERRED RENT RECEIVABLES, NET (Note 4)	103,668		89,052
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 2 and 3)	155,757		131,066
DEFERRED FINANCING COSTS, NET (Note 5)	19,638		16,447
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 11)	19,531		8,097
Total Assets	3,367,684		2,816,565
LIABILITIES:
Secured debt, net (Notes 5 and 12)	473,997		313,009
Exchangeable senior notes, net (Notes 5 and 12)	305,115		299,964
Unsecured senior notes, net (Notes 5 and 12)	980,487		655,803
Unsecured line of credit (Notes 5 and 12)	0	[2]	159,000
Accounts payable, accrued expenses and other liabilities	93,050		68,525
Accrued distributions (Note 16)	22,565		20,385
Deferred revenue and acquisition-related intangible liabilities, net (Note 3)	95,120		79,322
Rents received in advance and tenant security deposits	29,369		29,189
Total liabilities	1,999,703		1,625,197
COMMITMENTS AND CONTINGENCIES (Note 11)
7.45% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS	73,638		73,638
Partners' Capital (Note 8):
Common units, 58,464,412 and 52,349,670 held by the general partner and 1,718,131 and 1,723,131 held by common limited partners issued and outstanding, respectively	1,171,049		994,511
Total Partners' Capital	1,292,631		1,116,093
Noncontrolling interests in consolidated subsidiaries	1,712		1,637
Total capital	1,294,343		1,117,730
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY/CAPITAL	3,367,684		2,816,565
Kilroy Realty, L.P. [Member] | Series E Cumulative Redeemable Preferred Stock
Partners' Capital (Note 8):
Cumulative Redeemable Preferred stock	38,425		38,425
Kilroy Realty, L.P. [Member] | Series F Cumulative Redeemable Preferred Stock
Partners' Capital (Note 8):
Cumulative Redeemable Preferred stock	83,157		83,157
Series E Cumulative Redeemable Preferred Stock
Partners' Capital (Note 8):
Cumulative Redeemable Preferred stock	38,425		38,425
Series F Cumulative Redeemable Preferred Stock
Partners' Capital (Note 8):
Cumulative Redeemable Preferred stock	$ 83,157		$ 83,157

[1] Balances and accumulated amortization amounts at September 30, 2011 reflect the write-off of the following fully amortized amounts at January 1, 2011: deferred leasing costs (approximately $10.4 million), in-place leases (approximately $5.0 million), and below-market leases (approximately $3.8 million). Our accounting policy is to write-off the asset and corresponding accumulated amortization for fully amortized balances on January 1st of each fiscal year.

[2] As of September 30, 2011, there were no borrowings outstanding on the Credit Facility.

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Secured and Unsecured Debt of the Operating Partnership (Tables)

9 Months Ended

Sep. 30, 2011

Debt Disclosure [Abstract]

Balance and significant terms of the exchangeable notes outstanding

The following table summarizes the balance and significant terms of the Company's 3.25% Exchangeable Notes due 2012 (the "3.25% Exchangeable Notes") and 4.25% Exchangeable Notes due 2014 (the "4.25% Exchangeable Notes" and together with the 3.25% Exchangeable Notes, the "Exchangeable Notes") outstanding as of September 30, 2011 and December 31, 2010:

	3.25% Exchangeable Notes						4.25% Exchangeable Notes
	September 30, 2011			December 31, 2010			September 30, 2011			December 31, 2010
	(in thousands)
Principal amount	$	148,000		$	148,000		$	172,500		$	172,500
Unamortized discount	(1,714		)	(4,004		)	(13,671		)	(16,532		)
Net carrying amount of liability component	$	146,286		$	143,996		$	158,829		$	155,968
Carrying amount of equity component	$33,675						$19,835
Maturity date	April 2012						November 2014
Stated coupon rate (1)(2)	3.25%						4.25%
Effective interest rate (3)	5.45%						7.13%
Exchange rate per $1,000 principal value of the Exchangeable Notes, as adjusted (4)	11.3636						27.8307
Exchange price, as adjusted (4)	$88.00						$35.93
Number of shares on which the aggregate consideration to be delivered on conversion is determined (4)	1,681,813						4,800,796

_____________________

(1) Interest on the 3.25% Exchangeable Notes is payable semi-annually in arrears on April 15^th and October 15^th of each year.

(2) Interest on the 4.25% Exchangeable Notes is payable semi-annually in arrears on May 15^th and November 15^th of each year.

(3) The rate at which we record interest expense for financial reporting purposes, which reflects the amortization of the discounts on the Exchangeable Notes. This rate

represents our conventional debt borrowing rate at the date of issuance.

(4) The exchange rate, exchange price, and the number of shares to be delivered upon conversion are subject to adjustment under certain circumstances including increases in our

common dividends.

Capped call Transactions

The following table summarizes our capped call option positions as of both September 30, 2011 and December 31, 2010:

	3.25% Exchangeable Notes(1)		4.25% Exchangeable  Notes(2)
Referenced shares of common stock	1,121,201		4,800,796
Exchange price including effect of capped calls	$	102.72	$	42.81

________________________

(1) The capped calls mitigate the dilutive impact to us of the potential exchange of two-thirds of the 3.25% Exchangeable Notes into shares of common stock.

(2) The capped calls mitigate the dilutive impact to us of the potential exchange of all of the 4.25% Exchangeable Notes into shares of common stock.

Interest expense for the exchangeable notes

The following table summarizes the total interest expense attributable to the Exchangeable Notes based on the effective interest rates set forth above, before the effect of capitalized interest, for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Contractual interest payments	$	3,035	$	3,035	$	9,106	$	11,530
Amortization of discount	1,742		1,818		5,151		6,497
Interest expense attributable to the Exchangeable Notes	$	4,777	$	4,853	$	14,257	$	18,027

Terms of the Credit Facility

. The following table summarizes the terms of our Credit Facility as of December 31, 2010 and as amended as of September 30, 2011:

	September 30, 2011			December 31, 2010
	(in thousands)
Outstanding borrowings(1)	$	—		$	159,000
Remaining borrowing capacity	500,000			341,000
Total borrowing capacity(2)	$	500,000		$	500,000
Interest rate(3)				2.99		%
Facility fee-annual rate(4)	0.350		%	0.575		%
Maturity date(5)	August 2015			August 2013

________________________

(1) As of September 30, 2011, there were no borrowings outstanding on the Credit Facility.

(2) We may elect to borrow, subject to lender approval, up to an additional $200 million under an accordion feature under the terms of the Credit Facility.

(3) The Credit Facility interest rate was calculated based on an annual rate of LIBOR plus 1.750% and 2.675% as of September 30, 2011 and December 31, 2010, respectively. No interest rate is shown as of September 30, 2011 because no borrowings were outstanding.

(4) The facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we also incurred debt origination and legal costs

of approximately $5.0 million when we entered into the Credit Facility in 2010 and an additional $3.3 million when we amended the Credit Facility in 2011. The unamortized

balance of these costs will be amortized as additional interest expense over the extended term of the Credit Facility.

(5) Under the original and amended terms of the Credit Facility, we may exercise an option to extend the maturity date by one year.

Stated debt maturities and scheduled amortization payments, excluding debt discounts

The following table summarizes the stated debt maturities and scheduled amortization payments, excluding debt discounts and premiums, as of September 30, 2011:

Year Ending	(in thousands)
Remaining 2011	$	70,371
2012	305,303
2013	6,373
2014	262,443
2015	357,382
Thereafter	775,028
Total	$	1,776,900	(1)

________________________

(1) Includes gross principal balance of outstanding debt before impact of all debt discounts and premiums.

Capitalized interest and loan fees

The following table sets forth our gross interest expense, including debt discount/premium and loan cost amortization, net of capitalized interest, for the three and nine months ended September 30, 2011 and 2010. The capitalized amounts are a cost of development and redevelopment, and increase the carrying value of undeveloped land and construction in progress.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands)
Gross interest expense	$	26,449		$	18,543		$	72,597		$	48,980
Capitalized interest	(2,398		)	(2,690		)	(6,442		)	(8,083		)
Interest expense	$	24,051		$	15,853		$	66,155		$	40,897

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Net Income (Loss) Available to Common Unitholders Per Unit of the Operating Partnership

9 Months Ended

Sep. 30, 2011

Earnings Per Unit [Abstract]

Net (Loss) Income Available to Common Unitholders per Unit of the Operating Partnership

16.    Net Income (Loss) Available to Common Unitholders Per Unit of the Operating Partnership

The following table reconciles the numerator and denominator in computing the Operating Partnership's basic and diluted per-unit computations for net income (loss) available to common unitholders for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands, except unit and per unit amounts)
Numerator:
Income from continuing operations	$	1,427		$	3,319		$	9,021		$	13,491
Income from continuing operations attributable to noncontrolling interests in consolidated subsidiaries	(30		)	(41		)	(95		)	(138		)
Preferred distributions	(3,799		)	(3,799		)	(11,397		)	(11,397		)
Allocation to participating securities (nonvested units and RSUs)	(330		)	(273		)	(979		)	(877		)
Numerator for basic and diluted (loss) income from continuing operations available to common unitholders	(2,732		)	(794		)	(3,450		)	1,079
Income from discontinued operations	12,863			350			13,608			1,011
Numerator for basic and diluted net income (loss) available to common unitholders	$	10,131		$	(444	)	$	10,158		$	2,090
Denominator:
Basic weighted average vested units outstanding	60,073,258			53,997,447			57,857,538			50,284,745
Effect of dilutive securities-Exchangeable Notes and stock options	—			—			—			3,414
Diluted weighted average vested units and common unit equivalents outstanding	60,073,258			53,997,447			57,857,538			50,288,159
Basic earnings per unit:
(Loss) income from continuing operations available to common unitholders per unit	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common unit	0.22			0.00			0.24			0.02
Net income (loss) available to common unitholders per unit	$	0.17		$	(0.01	)	$	0.18		$	0.04
Diluted earnings per unit:
(Loss) income from continuing operations available to common unitholders per unit	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common unit	0.22			0.00			0.24			0.02
Net income (loss) available to common unitholders per unit	$	0.17		$	(0.01	)	$	0.18		$	0.04

The impact of the Exchangeable Notes and stock options was not considered in our diluted earnings per unit calculation for the three and nine months ended September 30, 2011 and the three months ended September 30, 2010 since the Operating Partnership had losses from continuing operations attributable to common unitholders in the respective periods and the effect was anti-dilutive.

The impact of the Exchangeable Notes was not included in our diluted earnings per unit calculation for the nine months ended September 30, 2010 because the average trading price of the Company's common stock on the NYSE was below the respective Exchangeable Notes exchange price for the period. As a result, these instruments were not considered to be dilutive for the purposes of our diluted earnings per unit calculation for this period.

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Receivables (Details) (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Current Receivables, net
Current receivables	$ 10,001	$ 9,077
Allowance for uncollectible tenant receivables	(3,141)	(2,819)
Current receivables, net	6,860	6,258
Deferred Rent Receivables, net
Deferred rent receivables	107,130	92,883
Allowance for deferred rent receivables	(3,462)	(3,831)
Deferred rent receivables, net	$ 103,668	$ 89,052

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Secured and Unsecured Debt of the Operating Partnership (Details 1) (USD $) In Thousands, unless otherwise specified			9 Months Ended		12 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2011 Kilroy Realty, L.P. [Member]		Dec. 31, 2010 Kilroy Realty, L.P. [Member]		Sep. 30, 2011 Kilroy Realty, L.P. [Member] Exchangeable Notes [Member]	Sep. 30, 2010 Kilroy Realty, L.P. [Member] Exchangeable Notes [Member]	Sep. 30, 2011 Kilroy Realty, L.P. [Member] Exchangeable Notes [Member]	Sep. 30, 2010 Kilroy Realty, L.P. [Member] Exchangeable Notes [Member]
Interest Expense for the Exchangeable Notes
Contractual interest payments							$ 3,035	$ 3,035	$ 9,106	$ 11,530
Amortization of discount							1,742	1,818	5,151	6,497
Interest expense attributable to the Exchangeable Notes							4,777	4,853	14,257	18,027
Terms of the Credit Facility
Credit Facility	0	159,000	0	[1]	159,000
Remaining borrowing capacity			500,000		341,000
Total borrowing capacity			$ 500,000	[2]	$ 500,000	[2]
Interest rate				[3]	2.99%	[3]
Facility fee - annual rate			0.35%	[4]	0.575%	[4]
Maturity date			August 2015	[5]	August 2013	[5]

[1] As of September 30, 2011, there were no borrowings outstanding on the Credit Facility.

[2] We may elect to borrow, subject to lender approval, up to an additional $200 million under an accordion feature under the terms of the Credit Facility.

[3] The Credit Facility interest rate was calculated based on an annual rate of LIBOR plus 1.750% and 2.675% as of September 30, 2011 and December 31, 2010, respectively. No interest rate is shown as of September 30, 2011 because no borrowings were outstanding.

[4] The facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we also incurred debt origination and legal costs of approximately $5.0 million when we entered into the Credit Facility in 2010 and an additional $3.3 million when we amended the Credit Facility in 2011. The unamortized balance of these costs will be amortized as additional interest expense over the extended term of the Credit Facility.

[5] Under the original and amended terms of the Credit Facility, we may exercise an option to extend the maturity date by one year.

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Organization and Basis of Presentation (Details)	Sep. 30, 2011 NumberofBuildings Share_Based_Incentive_Compensation_Plans
Summary of stabilized portfolio of operating properties
Number of Buildings	9
Stabilized Portfolio [Member]
Summary of stabilized portfolio of operating properties
Number of Buildings	145
Rentable square feet	15,179,651
Number of Tenants	486
Percentage Occupied	92.80%
Stabilized Portfolio [Member] | Office Properties [Member]
Summary of stabilized portfolio of operating properties
Number of Buildings	105	[1]
Rentable square feet	11,574,244	[1]
Number of Tenants	422	[1]
Percentage Occupied	90.60%	[1]
Stabilized Portfolio [Member] | Industrial Properties [Member]
Summary of stabilized portfolio of operating properties
Number of Buildings	40
Rentable square feet	3,605,407
Number of Tenants	64
Percentage Occupied	100.00%
Office Properties [Member]
Summary of stabilized portfolio of operating properties
Number of Buildings	9

[1] Includes nine office properties acquired during the nine months ended September 30, 2011 for a total amount of $516.3 million (see Note 2 for additional information).

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Stockholders' Equity of the Company (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2011	Sep. 30, 2010
Stockholders' Equity of the Company [Abstract]
Proceeds from Issuance of Common Stock		$ 221,015,000	$ 299,847,000
At Market Stock Offering Program Aggregate Value Of Common Stock	$ 200,000,000
Common Stock [Member]
Stockholders' Equity of the Company [Abstract]
Underwriting public offering of common stock, shares		6,037,500	9,200,000

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Consolidated Balance Sheets (KILROY REALTY, L.P.) (Parenthetical) (Kilroy Realty, L.P. [Member], USD $) In Thousands, except Share data, unless otherwise specified			9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2011 Series E Cumulative Redeemable Preferred Stock	Dec. 31, 2010 Series E Cumulative Redeemable Preferred Stock	Sep. 30, 2011 Series F Cumulative Redeemable Preferred Stock	Dec. 31, 2010 Series F Cumulative Redeemable Preferred Stock
Partners' Capital (Note 8):
General partner, units issued	58,464,412	52,349,670
General partners, units outstanding	58,464,412	52,349,670
Limited partners, units issued	1,718,131	1,723,131
Limited partnership units outstanding	1,718,131	1,723,131
Preferred stock, shares issued			1,610,000	1,610,000	3,450,000	3,450,000
Preferred stock, shares outstanding			1,610,000	1,610,000	3,450,000	3,450,000
Preferred stock dividend rate percentage			7.80%	7.80%	7.50%	7.50%
Preferred Stock Liquidation preference			$ 40,250	$ 40,250	$ 86,250	$ 86,250

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Property Dispositions Reported as Discontinued Operations Property Dispositions Reported as Discontinued Operations (Details) (USD $)	3 Months Ended				9 Months Ended
	Sep. 30, 2011 NumberofBuildings Share_Based_Incentive_Compensation_Plans		Sep. 30, 2010		Sep. 30, 2011 NumberofTradingDays Years RSF NumberofBuildings Share_Based_Incentive_Compensation_Plans		Sep. 30, 2010
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of Buildings	9				9
Rental income	$ 89,306,000		$ 72,135,000		$ 252,102,000		$ 196,883,000
Tenant reimbursements	7,683,000		6,156,000		21,469,000		18,261,000
Property expenses	19,361,000		15,802,000		54,548,000		42,255,000
Real estate taxes	8,360,000		7,582,000		24,878,000		20,035,000
Depreciation and amortization	36,152,000		29,951,000		97,513,000		74,405,000
Income from discontinued operations before net gain on dispositions of discontinued operations	308,000		350,000		1,053,000		1,011,000
Net gain on dispositions of discontinued operations	12,555,000		0		12,555,000		0
Total income from discontinued operations	12,863,000	[1]	350,000	[1]	13,608,000	[1]	1,011,000	[1]
Net proceeds from disposition held by a qualified intermediary in connection wtih Section 1031 exchange					23,285,000		0
Total Property Dispositions [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Rental income	413,000		473,000		1,359,000		1,419,000
Tenant reimbursements	56,000		55,000		202,000		151,000
Total revenues	469,000		528,000		1,561,000		1,570,000
Property expenses	33,000		43,000		118,000		153,000
Real estate taxes	29,000		32,000		93,000		97,000
Depreciation and amortization	99,000		103,000		297,000		309,000
Total expenses	161,000		178,000		508,000		559,000
Income from discontinued operations before net gain on dispositions of discontinued operations	308,000		350,000		1,053,000		1,011,000
Net gain on dispositions of discontinued operations	12,555,000		0		12,555,000		0
Total income from discontinued operations	12,863,000		350,000		13,608,000		1,011,000
Barnes Canyon Pacific Heights Drive Disposition [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Property Type					Office
Month of Disposition	September				September
Number of Buildings	2				2
Rentable Square Feet	90,558				90,558
Sales Price					23,900,000
Net proceeds from disposition held by a qualified intermediary in connection wtih Section 1031 exchange					$ 23,285,000

[1] Income from discontinued operations is from our Reportable Segment - Office Properties.

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Future Minimum Rent (Tables)

9 Months Ended

Sep. 30, 2011

Leases [Abstract]

Future contractual minimum rent under operating lease

Future contractual minimum rent under operating leases as of September 30, 2011 for future periods is summarized as follows:

Year Ending	(in thousands)
Remaining 2011	$	79,636
2012	323,174
2013	307,751
2014	275,387
2015	220,593
Thereafter	687,083
Total	$	1,893,624

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Segment Disclosure

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Segment Disclosure

13.    Segment Disclosure

We have one reportable segment which is our Office Properties segment and we have one non-reportable segment which is our Industrial Properties segment. We also have certain corporate level activities including legal administration, accounting, finance, management information systems, and acquisitions, which are not considered separate operating segments.

We evaluate the performance of our segments based upon Net Operating Income. “Net Operating Income” is defined as operating revenues (rental income, tenant reimbursements, and other property income) less property and related expenses (property expenses, real estate taxes, ground leases, and provisions for bad debts) and excludes other non-property related income and expenses such as interest income and interest expense, depreciation and amortization, acquisition-related expenses and corporate general and administrative expenses. There is no intersegment activity.

The following tables reconcile our reportable segment activity to our consolidated net income for the three and nine months ended September 30, 2011 and 2010 and the assets by segment to the consolidated assets as of September 30, 2011 and December 31, 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands)
Reportable Segment - Office Properties
Operating revenues(1)	$	89,754		$	71,646		$	254,041		$	194,923
Property and related expenses	26,709			21,091			74,199			56,678
Net Operating Income	63,045			50,555			179,842			138,245
Non-Reportable Segment - Industrial Properties
Operating revenues(1)	7,583			7,630			22,393			22,546
Property and related expenses	1,510			1,772			6,634			5,417
Net Operating Income	6,073			5,858			15,759			17,129
Total Segments:
Operating revenues(1)	97,337			79,276			276,434			217,469
Property and related expenses	28,219			22,863			80,833			62,095
Net Operating Income	$	69,118		$	56,413		$	195,601		$	155,374
Reconciliation to Consolidated Net Income:
Total Net Operating Income for segments	$	69,118		$	56,413		$	195,601		$	155,374
Unallocated (expenses) income:
General and administrative expenses	(6,355		)	(7,273		)	(20,355		)	(21,096		)
Acquisition-related expenses	(1,163		)	(354		)	(2,829		)	(1,624		)
Depreciation and amortization	(36,152		)	(29,951		)	(97,513		)	(74,405		)
Interest income and other net investment gains	30			337			272			703
Interest expense	(24,051		)	(15,853		)	(66,155		)	(40,897		)
Loss on early extinguishment of debt	—			—			—			(4,564		)
Income from continuing operations	1,427			3,319			9,021			13,491
Income from discontinued operations(2)	12,863			350			13,608			1,011
Net income	$	14,290		$	3,669		$	22,629		$	14,502

________________________

(1) All operating revenues are comprised of amounts received from third-party tenants.

(2) Income from discontinued operations is from our Reportable Segment - Office Properties.

	September 30, 2011		December 31, 2010
	(in thousands)
Assets:
Reportable Segment - Office Properties
Land, buildings, and improvements, net	$	2,541,029	$	2,108,019
Undeveloped land and construction in progress	328,785		290,365
Total assets(1)	3,121,084		2,611,206
Non-Reportable Segment - Industrial Properties
Land, buildings, and improvements, net	146,286		146,058
Total assets(1)	161,301		159,612
Total Segments
Land, buildings, and improvements, net	2,687,315		2,254,077
Undeveloped land and construction in progress	328,785		290,365
Total assets(1)	3,282,385		2,770,818
Reconciliation to Consolidated Assets:
Total assets allocated to segments	$	3,282,385	$	2,770,818
Other unallocated assets:
Cash and cash equivalents	15,481		14,840
Restricted cash	25,436		1,461
Marketable securities	5,213		4,902
Deferred financing costs, net	19,638		16,447
Prepaid expenses and other assets, net	19,531		8,097
Total consolidated assets	$	3,367,684	$	2,816,565

________________________

(1) Includes land, buildings, and improvements, undeveloped land and construction in progress, current receivables, deferred rent receivables, deferred leasing costs, and acquisition-related intangible assets, all shown on a net basis.

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Share-Based Compensation (Details) (Restricted Stock [Member], USD $) In Thousands, except Share data	9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010
Restricted Stock [Member]
Summary of Nonvested Shares
Outstanding at January 1, 2011 , Shares	50,032
Outstanding at January 1, 2011, Weighted Average Grant Date Fair Value Per Share	$ 58.40
Granted, Non-Vested Shares	68,727		3,239
Granted, Weighted Average Grant Date Fair Value Per Share	$ 37.83		$ 30.88
Vested, Shares	(9,474)	[1]	(16,358)
Vested, Weighted Average Grant Date Fair Value Per Share	$ 56.76
Outstanding as of September 30, 2011, Shares	109,285
Outstanding as of September 30, 2011, Weighted Average Grant Date Fair Value Per Share	$ 45.61
Summary of Granted and Vested Shares
Granted, Non-Vested Shares	68,727		3,239
Granted, Weighted Average Grant Date Fair Value Per Share	$ 37.83		$ 30.88
Vested, Shares	(9,474)	[1]	(16,358)
Vested shares, total fair value	$ 370	[2]	$ 474	[2]

[1] The total shares vested include 2,198 shares that were tendered to satisfy minimum statutory tax withholding requirements related to the restricted shares that have vested in accordance with the terms of the 2006 Plan. We accept the return of shares at the current quoted closing share price of the Company's common stock to satisfy tax obligations.

[2] Total fair value of shares vested was calculated based on the quoted closing share price of the Company's common stock on the NYSE on the day of vesting.

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Net Income (Loss) Available to Common Unitholders Per Unit of the Operating Partnership (Details) (USD $) In Thousands, except Share data	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
Numerator:
Income from continuing operations	$ 1,427		$ 3,319		$ 9,021		$ 13,491
Preferred distributions	(3,799)		(3,799)		(11,397)		(11,397)
Allocation to participating securities (nonvested units and RSUs)	(330)		(273)		(979)		(877)
Numerator for basic and diluted (loss) income from continuing operations available to common unitholders	(2,635)		(738)		(3,290)		1,123
Income from discontinued operations	12,863	[1]	350	[1]	13,608	[1]	1,011	[1]
Numerator for basic and diluted net income (loss) available to common unitholders	9,865		(399)		9,933		2,100
Denominator:
Weighted average common units outstanding - basic (Note 16)	58,355,127		52,274,316		56,136,477		48,561,614
Effect of dilutive securities - Exchangeable Notes and stock options	0		0		0		3,414
Weighted average common units outstanding - diluted (Note 16)	58,355,127		52,274,316		56,136,477		48,565,028
Basic earnings per unit:
(Loss) income from continuing operations available to common unitholders per common unit-basic	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
Income from discontinued operations per common unit	$ 0.22		$ 0.00		$ 0.24		$ 0.02
Net income (loss) available to common unitholders per unit-basic	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Diluted earnings per unit:
(Loss) income from continuing operations available to common unitholders per common unit-diluted	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
Income from discontinued operations per common unit	$ 0.22		$ 0.00		$ 0.24		$ 0.02
Net income (loss) available to common unitholders per unit-diluted	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Kilroy Realty, L.P. [Member]
Numerator:
Income from continuing operations	1,427		3,319		9,021		13,491
Income from continuing operations attributable to noncontrolling interests in consolidated subsidiaries	(30)		(41)		(95)		(138)
Preferred distributions	(3,799)		(3,799)		(11,397)		(11,397)
Allocation to participating securities (nonvested units and RSUs)	(330)		(273)		(979)		(877)
Numerator for basic and diluted (loss) income from continuing operations available to common unitholders	(2,732)		(794)		(3,450)		1,079
Income from discontinued operations	12,863		350		13,608		1,011
Numerator for basic and diluted net income (loss) available to common unitholders	$ 10,131		$ (444)		$ 10,158		$ 2,090
Denominator:
Weighted average common units outstanding - basic (Note 16)	60,073,258		53,997,447		57,857,538		50,284,745
Effect of dilutive securities - Exchangeable Notes and stock options	0		0		0		3,414
Weighted average common units outstanding - diluted (Note 16)	60,073,258		53,997,447		57,857,538		50,288,159
Basic earnings per unit:
(Loss) income from continuing operations available to common unitholders per common unit-basic	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
Income from discontinued operations per common unit	$ 0.22		$ 0.00		$ 0.24		$ 0.02
Net income (loss) available to common unitholders per unit-basic	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Diluted earnings per unit:
(Loss) income from continuing operations available to common unitholders per common unit-diluted	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
Income from discontinued operations per common unit	$ 0.22		$ 0.00		$ 0.24		$ 0.02
Net income (loss) available to common unitholders per unit-diluted	$ 0.17		$ (0.01)		$ 0.18		$ 0.04

[1] Income from discontinued operations is from our Reportable Segment - Office Properties.

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Secured and Unsecured Debt of the Operating Partnership (Details 3) (USD $)	9 Months Ended			9 Months Ended		12 Months Ended		1 Months Ended	9 Months Ended		12 Months Ended		9 Months Ended		12 Months Ended		9 Months Ended	12 Months Ended	1 Months Ended
	Sep. 30, 2011 NumberofTradingDays Years RSF NumberofBuildings Share_Based_Incentive_Compensation_Plans	Sep. 30, 2010	Apr. 30, 2011 Kilroy Realty, L.P. [Member] Drive Lake Washington Boulevard Kirkland Member 4.94% Mortgage Payable due April 15, 2015 [Member] NumberofBuildings	Sep. 30, 2011 Kilroy Realty, L.P. [Member]		Dec. 31, 2010 Kilroy Realty, L.P. [Member]	Sep. 30, 2010 Kilroy Realty, L.P. [Member]	Apr. 30, 2011 Kilroy Realty, L.P. [Member] 4.94% Mortgage Payable due April 15, 2015 [Member] Years	Sep. 30, 2011 Kilroy Realty, L.P. [Member] 3.25% Exchangeable Notes [Member]		Dec. 31, 2010 Kilroy Realty, L.P. [Member] 3.25% Exchangeable Notes [Member]		Sep. 30, 2011 Kilroy Realty, L.P. [Member] 4.25% Exchangeable Notes [Member]		Dec. 31, 2010 Kilroy Realty, L.P. [Member] 4.25% Exchangeable Notes [Member]		Sep. 30, 2011 Kilroy Realty, L.P. [Member] New Amendment to Credit Facility [Member]	Dec. 31, 2010 Kilroy Realty, L.P. [Member] Prior Credit Facility [Member]	Jan. 31, 2011 Kilroy Realty, L.P. [Member] 4.27% Mortgage Payable due Feb 1, 2018 [Member] Years	Jul. 31, 2011 Kilroy Realty, L.P. [Member] 4.80% Unsecured Senior Notes due July 15, 2018 [Member]
Secured and Unsecured Debt of the Operating Partnership (Textuals) (Abstract)
Principal amount of secured debt								$ 30,000,000											$ 135,000,000	$ 325,000,000
Maturity Date								Apr. 15, 2015	Apr. 15, 2012		Apr. 15, 2012		Nov. 15, 2014		Nov. 15, 2014				Feb. 01, 2018	Jul. 15, 2018
Stated coupon rate		3.25%					3.25%	4.94%	3.25%	[1]	3.25%	[1]	4.25%	[2]	4.25%	[2]			4.27%	4.80%
Debt Amortization Period in Number of Years								30											30
Number of Buildings	9		4
Debt premium								1,000,000
Debt discount									1,714,000		4,004,000		13,671,000		16,532,000					505,000
Debt Instrument, Interest Rate, Effective Percentage								4.00%	5.45%	[3]	5.45%	[3]	7.13%	[3]	7.13%	[3]				4.83%
Average Trading Price Of The Companys Stock	$ 37.92
Debt Instrument, Convertible, Conversion Price									$ 88	[4]	$ 88	[4]	$ 35.93	[4]	$ 35.93	[4]
Fair value of the shares upon conversion if Exchangeable Notes were converted on specified date													180,400,000
Principal amount				1,776,900,000	[5]				148,000,000		148,000,000		172,500,000		172,500,000
Amount by which fair value of the shares upon conversion exceeds principal amount of the Exchangeable Notes on the specified date													7,900,000
Additional line of credit under Credit Facility				200,000,000
Credit facility spread				1.75%		2.675%
Amount Incurred In Debt Origination And Legal Costs																	$ 3,300,000	$ 5,000,000
Line of Credit Facility Maturity Extension				1 year		1 year

[1] Interest on the 3.25% Exchangeable Notes is payable semi-annually in arrears on April 15th and October 15th of each year.

[2] Interest on the 4.25% Exchangeable Notes is payable semi-annually in arrears on May 15th and November 15th of each year.

[3] The rate at which we record interest expense for financial reporting purposes, which reflects the amortization of the discounts on the Exchangeable Notes. This rate represents our conventional debt borrowing rate at the date of issuance.

[4] The exchange rate, exchange price, and the number of shares to be delivered upon conversion are subject to adjustment under certain circumstances including increases in our common dividends.

[5] Includes gross principal balance of outstanding debt before impact of all debt discounts and premiums.

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Pro Forma Results of the Company

9 Months Ended

Sep. 30, 2011

Business Combinations [Abstract]

Pro Forma Results of the Company

18.    Pro Forma Results of the Company

The following pro forma consolidated results of operations of the Company for the three and nine months ended September 30, 2011 and 2010 assumes that the acquisitions of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, were completed as of January 1, 2010. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2010, nor does it intend to be a projection of future results.

	Three Months Ended September 30, (1)					Nine Months Ended September 30, (1)
	2011		2010			2011		2010
	(in thousands except per share amounts)
Revenues	$	99,938	$	86,490		$	291,600	$	239,270
Net income (loss) available to common stockholders(2)(3)	$	11,692	$	(1,284	)	$	9,896	$	2,692
Net income (loss) available to common stockholders per share - basic(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04
Net income (loss) available to common stockholders per share - diluted(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

(3) The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowings and related pro forma interest expense estimate assumed herein are not indicative of actual results.

The following table summarizes the results of operations for the properties at 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, from June 3, 2011 and September 15, 2011, the dates of acquisition, respectively, through September 30, 2011:

	(in thousands)
Revenues	$	6,481
Net loss(1)	(31		)

________________________

(1) Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of nonvested shares

A summary of our nonvested shares activity from January 1, 2011 through September 30, 2011 is presented below:

Nonvested Shares	Shares		Weighted-Average Grant Date Fair Value Per Share
Outstanding at January 1, 2011	50,032		$	58.40
Granted	68,727		37.83
Vested (1)	(9,474	)	56.76
Outstanding as of September 30, 2011	109,285		$	45.61

________________________

(1) The total shares vested include 2,198 shares that were tendered to satisfy minimum statutory tax withholding requirements related to the restricted shares that have vested in accordance with the terms of the 2006 Plan. We accept the return of shares at the current quoted closing share price of the Company's common stock to satisfy tax obligations.

Summary of nonvested and vested shares

A summary of our nonvested and vested shares activity for the nine months ended September 30, 2011 and 2010 is presented below:

	Shares Granted			Shares Vested
Nine Months Ended September 30,	Non-Vested Shares Issued	Weighted-Average Grant Date Fair Value Per Share		Vested Shares		Total Vest Date Fair Value (1)          (in thousands)
2011	68,727	$	37.83	(9,474	)	$	370
2010	3,239	30.88		(16,358	)	474

_______________________

(1) Total fair value of shares vested was calculated based on the quoted closing share price of the Company's common stock on the NYSE on the day of vesting.

Summary of Restricted Stock Units

A summary of our restricted stock unit ("RSU") activity from January 1, 2011 through September 30, 2011 is presented below:

	Nonvested RSUs				Vested RSUs		Total RSUs
	Amount		Weighted-Average Grant Date  Fair Value Per Share
Outstanding at January 1, 2011	125,754		$	29.88	588,068		713,822
Granted	107,673		37.94		—		107,673
Vested	(23,035	)	30.57		23,035
Issuance of dividend equivalents (1)					20,790		20,790
Canceled (2)					(8,497	)	(8,497	)
Outstanding as of September 30, 2011	210,392		$	33.93	623,396		833,788

________________________

(1) RSUs issued as dividend equivalents are vested upon issuance.

(2) We accept the return of RSUs, at the current quoted closing share price of the Company's common stock, to satisfy minimum statutory tax-withholding requirements related to either RSUs that have vested or RSU dividend equivalents in accordance with the terms of the 2006 Plan.

Summary of Nonvested and Vested Restricted Stock Units

A summary of our RSU activity for the nine months ended September 30, 2011 and 2010 is presented below:

	RSUs Granted			RSUs Vested
Nine Months Ended September 30,	Non-Vested RSUs Issued	Weighted-Average Grant Date Fair Value Per Share		Vested RSUs		Total Vest-Date Fair Value (1)         (in thousands)
2011	107,673	$	37.94	(23,035	)	$	897
2010	159,606	30.24		(23,564	)	740

_______________________

(1) Total fair value of RSUs vested was calculated based on the quoted closing share price of the Company's common stock on the NYSE on the day of vesting.

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Net Income (Loss) Available to Common Stockholders Per Share of the Company

9 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Net (Loss) Income Available to Common Stockholders Per Share of the Company

15.    Net Income (Loss) Available to Common Stockholders Per Share of the Company

The following table reconciles the numerator and denominator in computing the Company's basic and diluted per-share computations for net income (loss) available to common stockholders for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands, except share and per share amounts)
Numerator:
Income from continuing operations	$	1,427		$	3,319		$	9,021		$	13,491
Loss (income) from continuing operations attributable to noncontrolling common units of the Operating Partnership	67			15			65			(94		)
Preferred distributions and dividends	(3,799		)	(3,799		)	(11,397		)	(11,397		)
Allocation to participating securities (nonvested shares and RSUs)	(330		)	(273		)	(979		)	(877		)
Numerator for basic and diluted (loss) income from continuing operations available to common stockholders	(2,635		)	(738		)	(3,290		)	1,123
Income from discontinued operations	12,863			350			13,608			1,011
Income from discontinued operations attributable to noncontrolling common units of the Operating Partnership	(363		)	(11		)	(385		)	(34		)
Numerator for basic and diluted net income (loss) available to common stockholders	$	9,865		$	(399	)	$	9,933		$	2,100
Denominator:
Basic weighted average vested shares outstanding	58,355,127			52,274,316			56,136,477			48,561,614
Effect of dilutive securities-Exchangeable Notes and stock options	—			—			—			3,414
Diluted weighted average vested shares and common share equivalents outstanding	58,355,127			52,274,316			56,136,477			48,565,028
Basic earnings per share:
(Loss) income from continuing operations available to common stockholders per share	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common share	0.22			0.00			0.24			0.02
Net income (loss) available to common stockholders per share	$	0.17		$	(0.01	)	$	0.18		$	0.04
Diluted earnings per share:
(Loss) income from continuing operations available to common stockholders per share	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	0.02
Income from discontinued operations per common share	0.22			0.00			0.24			0.02
Net income (loss) available to common stockholders per share	$	0.17		$	(0.01	)	$	0.18		$	0.04

The impact of the Exchangeable Notes and stock options was not considered in our diluted earnings per share calculation for the three and nine months ended September 30, 2011 and the three months ended September 30, 2010 since the Company had losses from continuing operations attributable to common stockholders in the respective periods and the effect was anti-dilutive.

The impact of the Exchangeable Notes was not included in our diluted earnings per share calculation for the nine months ended September 30, 2010 because the average trading price of the Company's common stock on the NYSE was below the respective Exchangeable Notes exchange price for the period. As a result, these instruments were not considered to be dilutive for the purposes of our diluted earnings per share calculation for this period.

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Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net

9 Months Ended

Sep. 30, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net

3.     Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net

The following table summarizes our deferred leasing costs and acquisition-related intangible assets (acquired value of leasing costs, above-market leases, and in-place leases) and intangible liabilities (acquired value of below-market leases and above-market ground lease) as of September 30, 2011 and December 31, 2010:

	September 30, 2011			December 31, 2010
	(in thousands)
Deferred Leasing Costs and Acquisition-related Intangible Assets, net(1):
Deferred leasing costs	$	136,374		$	128,980
Accumulated amortization	(48,290		)	(45,869		)
Deferred leasing costs, net	88,084			83,111
Above-market leases	28,143			21,321
Accumulated amortization	(6,250		)	(2,163		)
Above-market leases, net	21,893			19,158
In-place leases	57,195			36,964
Accumulated amortization	(11,415		)	(8,167		)
In-place leases, net	45,780			28,797
Total deferred leasing costs and acquisition-related intangible assets, net	$	155,757		$	131,066
Acquisition-related Intangible Liabilities, net(1)(2):
Below-market leases	$	35,852		$	21,938
Accumulated amortization	(3,844		)	(5,094		)
Below-market leases, net	32,008			16,844
Above-market ground lease obligation	5,200			—
Accumulated amortization	(21		)	—
Above-market ground lease obligation, net	5,179			—
Total acquisition-related intangible liabilities, net	$	37,187		$	16,844

________________________

(1) Balances and accumulated amortization amounts at September 30, 2011 reflect the write-off of the following fully amortized amounts at January 1, 2011: deferred leasing costs (approximately $10.4 million), in-place leases (approximately $5.0 million), and below-market leases (approximately $3.8 million). Our accounting policy is to write-off the asset and corresponding accumulated amortization for fully amortized balances on January 1st of each fiscal year.

(2) Included in deferred revenue and acquisition-related intangible liabilities, net in the consolidated balance sheets.

The following table sets forth amortization related to deferred leasing costs and acquisition-related intangibles for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)				(in thousands)
Deferred leasing costs(1)	$	4,317	$	3,886	$	12,053	$	9,559
Net above-market leases(2)	121		664		1,519		696
In-place leases(1)	3,379		1,220		8,238		1,505
Above-market ground lease obligation(3)	16		—		21		—
Total	$	7,833	$	5,770	$	21,831	$	11,760

_________________________

(1) The amortization of deferred leasing costs and in-place leases is recorded to depreciation and amortization expense in the consolidated statements of operations for the periods presented.

(2) The amortization of net above-market leases is recorded as a decrease to rental income in the consolidated statements of operations for the periods presented.

(3) The amortization of the above-market ground lease obligation is recorded as a decrease to ground lease expense in the consolidated statements of operations for the periods presented.

The following table sets forth the estimated annual amortization expense related to deferred leasing costs and acquisition-related intangibles as of September 30, 2011 for future periods:

Year Ending	Deferred Leasing Costs		Net Above-/(Below)-Market Leases(1)			In-Place Leases		Above-Market Ground Lease Obligation
	(in thousands)
Remaining 2011	$	4,748	$	(78	)	$	3,643	$	16
2012	17,689		(1,534		)	12,863		63
2013	15,823		(1,690		)	10,578		63
2014	13,796		(1,339		)	7,830		63
2015	10,387		(790		)	4,366		63
Thereafter	25,641		(4,684		)	6,500		4,911
Total	$	88,084	$	(10,115	)	$	45,780	$	5,179

_______________________

(1) Represents estimated annual net amortization related to above-/(below)-market leases. Amounts shown represent net below-market leases which will be recorded as an increase to rental income in the consolidated statements of operations.

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Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net (Details 1) (USD $) In Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
Amortization for the period related to deferred leasing costs and acquisition-related intangibles
Amortization for the period related to deferred leasing costs and acquisition-related intangibles	$ 7,833		$ 5,770		$ 21,831		$ 11,760
Deferred Leasing Costs [Member]
Amortization for the period related to deferred leasing costs and acquisition-related intangibles
Amortization for the period related to deferred leasing costs and acquisition-related intangibles	4,317	[1]	3,886	[1]	12,053	[1]	9,559	[1]
Estimated annual amortization related to acquisition-related intangibles
Remaining 2011					4,748
2012					17,689
2013					15,823
2014					13,796
2015					10,387
Thereafter					25,641
Total					88,084
Net Above (Below)-Market Leases [Member]
Amortization for the period related to deferred leasing costs and acquisition-related intangibles
Amortization for the period related to deferred leasing costs and acquisition-related intangibles	121	[2]	664	[2]	1,519	[2]	696	[2]
Estimated annual amortization related to acquisition-related intangibles
Remaining 2011					(78)	[3]
2012					(1,534)	[3]
2013					(1,690)	[3]
2014					(1,339)	[3]
2015					(790)	[3]
Thereafter					(4,684)	[3]
Total					(10,115)	[3]
In-Place Leases [Member]
Amortization for the period related to deferred leasing costs and acquisition-related intangibles
Amortization for the period related to deferred leasing costs and acquisition-related intangibles	3,379	[1]	1,220	[1]	8,238	[1]	1,505	[1]
Estimated annual amortization related to acquisition-related intangibles
Remaining 2011					3,643
2012					12,863
2013					10,578
2014					7,830
2015					4,366
Thereafter					6,500
Total					45,780
Above-Market Ground Lease Obligation [Member]
Amortization for the period related to deferred leasing costs and acquisition-related intangibles
Amortization for the period related to deferred leasing costs and acquisition-related intangibles	16	[4]	0	[4]	21	[4]	0	[4]
Estimated annual amortization related to acquisition-related intangibles
Remaining 2011					16
2012					63
2013					63
2014					63
2015					63
Thereafter					4,911
Total					$ 5,179

[1] The amortization of deferred leasing costs and in-place leases is recorded to depreciation and amortization expense in the consolidated statements of operations for the periods presented.

[2] he amortization of net above-market leases is recorded as a decrease to rental income in the consolidated statements of operations for the periods presented.

[3] Represents estimated annual net amortization related to above-/(below)-market leases. Amounts shown represent net below-market leases which will be recorded as an increase to rental income in the consolidated statements of operations.

[4] The amortization of the above-market ground lease obligation is recorded as a decrease to ground lease expense in the consolidated statements of operations for the periods presented.

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Pro Forma Results of the Operating Partnership (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended				3 Months Ended			9 Months Ended	3 Months Ended			9 Months Ended	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011 Kilroy Realty, L.P. [Member] Material Acquisitions [Member]	Sep. 30, 2011 Kilroy Realty, L.P. [Member] Material Acquisitions [Member]		Sep. 30, 2011 Kilroy Realty, L.P. [Member] Material Acquisitions [Member]	Sep. 30, 2011 Material Acquisitions [Member]	Sep. 30, 2011 Material Acquisitions [Member]		Sep. 30, 2011 Material Acquisitions [Member]	Sep. 30, 2011 Kilroy Realty, L.P. [Member]		Sep. 30, 2010 Kilroy Realty, L.P. [Member]		Sep. 30, 2011 Kilroy Realty, L.P. [Member]		Sep. 30, 2010 Kilroy Realty, L.P. [Member]
Pro Forma Results of the Operating Partnership
Revenues	$ 99,938	[1]	$ 86,490	[1]	$ 291,600	[1]	$ 239,270	[1]									$ 99,938	[1]	$ 86,490	[1]	$ 291,600	[1]	$ 239,270	[1]
Net income (loss) available to common unitholders	11,692	[1],[2],[3]	(1,284)	[1],[2],[3]	9,896	[1],[2],[3]	2,692	[1],[2],[3]									12,001	[1],[3],[4]	(1,367)	[1],[3],[4]	10,090	[1],[3],[4]	2,672	[1],[3],[4]
Net income (loss) available to common unitholders per unit - basic	$ 0.19	[1],[2],[3]	$ (0.03)	[1],[2],[3]	$ 0.16	[1],[2],[3]	$ 0.04	[1],[2],[3]									$ 0.19	[1],[3],[4]	$ (0.03)	[1],[3],[4]	$ 0.16	[1],[3],[4]	$ 0.04	[1],[3],[4]
Net income (loss) available to common unitholders per unit - diluted	$ 0.19	[1],[2],[3]	$ (0.03)	[1],[2],[3]	$ 0.16	[1],[2],[3]	$ 0.04	[1],[2],[3]									$ 0.19	[1],[3],[4]	$ (0.03)	[1],[3],[4]	$ 0.16	[1],[3],[4]	$ 0.04	[1],[3],[4]
Actual results for material acquisitions
Revenues										6,481				6,481
Net loss										(31)	[5]			(31)	[5]
Pro Forma Results of the Operating Partnership (Textuals) [Abstract]
Purchase price for material acquistions as a percentage of the total purchase price of all acquisitions									61.70%	61.70%		61.70%	61.70%	61.70%		61.70%
Acquisition-related expenses	$ 1,163		$ 354		$ 2,829		$ 1,624		$ 400			$ 600	$ 400			$ 600	$ 1,163		$ 354		$ 2,829		$ 1,624

[1] The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

[2] The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowings and related pro forma interest expense estimate assumed herein are not indicative of actual results.

[3] The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

[4] The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowing and related pro forma interest expense estimate assumed herein are not indicative of actual results.

[5] Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

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Segment Disclosure (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
Consolidated net income
Operating revenues	$ 97,337	[1]	$ 79,276	[1]	$ 276,434	[1]	$ 217,469	[1]
Property and related expenses	28,219		22,863		80,833		62,095
Net Operating Income	69,118		56,413		195,601		155,374
Reconciliation to Consolidated Net Income:
Total Net Operating Income for segments	69,118		56,413		195,601		155,374
Unallocated Expenses Income [Abstract]
General and administrative expenses	(6,355)		(7,273)		(20,355)		(21,096)
Acquisition-related expenses	(1,163)		(354)		(2,829)		(1,624)
Depreciation and Amortization	(36,152)		(29,951)		(97,513)		(74,405)
Interest income and other net investment gains (Note 12)	30		337		272		703
Interest expense (Note 5)	(24,051)		(15,853)		(66,155)		(40,897)
Loss on early extinguishment of debt	0		0		0		(4,564)
INCOME FROM CONTINUING OPERATIONS	1,427		3,319		9,021		13,491
Total income from discontinued operations	12,863	[2]	350	[2]	13,608	[2]	1,011	[2]
Net income	14,290		3,669		22,629		14,502
Reportable Segment - Office Properties [Member]
Segment Reporting Information [Line Items]
Business Segment	1				1
Consolidated net income
Operating revenues	89,754	[1]	71,646	[1]	254,041	[1]	194,923	[1]
Property and related expenses	26,709		21,091		74,199		56,678
Net Operating Income	63,045		50,555		179,842		138,245
Reconciliation to Consolidated Net Income:
Total Net Operating Income for segments	63,045		50,555		179,842		138,245
Non-Reportable Segment - Industrial Properties [Member]
Segment Reporting Information [Line Items]
Business Segment	1				1
Consolidated net income
Operating revenues	7,583	[1]	7,630	[1]	22,393	[1]	22,546	[1]
Property and related expenses	1,510		1,772		6,634		5,417
Net Operating Income	6,073		5,858		15,759		17,129
Reconciliation to Consolidated Net Income:
Total Net Operating Income for segments	$ 6,073		$ 5,858		$ 15,759		$ 17,129

[1] All operating revenues are comprised of amounts received from third-party tenants.

[2] Income from discontinued operations is from our Reportable Segment - Office Properties.

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Secured and Unsecured Debt of the Operating Partnership (Details 2) (USD $) In Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010	Sep. 30, 2011		Sep. 30, 2010
Capitalized interest and loan fees
Interest expense (Note 5)	$ 24,051		$ 15,853	$ 66,155		$ 40,897
Kilroy Realty, L.P. [Member]
Stated debt maturities and scheduled amortization payments, excluding debt discounts
Remaining 2011	70,371			70,371
2012	305,303			305,303
2013	6,373			6,373
2014	262,443			262,443
2015	357,382			357,382
Thereafter	775,028			775,028
Total	1,776,900	[1]		1,776,900	[1]
Capitalized interest and loan fees
Gross interest expense	26,449		18,543	72,597		48,980
Capitalized interest	(2,398)		(2,690)	(6,442)		(8,083)
Interest expense (Note 5)	$ 24,051		$ 15,853	$ 66,155		$ 40,897

[1] Includes gross principal balance of outstanding debt before impact of all debt discounts and premiums.

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Consolidated Statements of Operations (KILROY REALTY, L.P.) (USD $) In Thousands, except Share data	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
REVENUES:
Rental income	$ 89,306		$ 72,135		$ 252,102		$ 196,883
Tenant reimbursements	7,683		6,156		21,469		18,261
Other property income	348		985		2,863		2,325
Total revenues	97,337	[1]	79,276	[1]	276,434	[1]	217,469	[1]
EXPENSES:
Property expenses	19,361		15,802		54,548		42,255
Real estate taxes	8,360		7,582		24,878		20,035
Provision for bad debts	(5)		(857)		141		(843)
Ground leases (Note 11)	503		336		1,266		648
General and administrative expenses	6,355		7,273		20,355		21,096
Acquisition-related expenses	1,163		354		2,829		1,624
Depreciation and amortization	36,152		29,951		97,513		74,405
Total expenses	71,889		60,441		201,530		159,220
OTHER (EXPENSES) INCOME:
Interest income and other net investment gains (Note 12)	30		337		272		703
Interest expense (Note 5)	(24,051)		(15,853)		(66,155)		(40,897)
Loss on early extinguishment of debt	0		0		0		(4,564)
Total other (expenses) income	(24,021)		(15,516)		(65,883)		(44,758)
INCOME FROM CONTINUING OPERATIONS	1,427		3,319		9,021		13,491
DISCONTINUED OPERATIONS (Note 14)
Net income from discontinued operations	308		350		1,053		1,011
Net gain on dispositions of discontinued operations	12,555		0		12,555		0
Total income from discontinued operations	12,863	[2]	350	[2]	13,608	[2]	1,011	[2]
NET INCOME	14,290		3,669		22,629		14,502
NET INCOME ATTRIBUTABLE TO KILROY REALTY, L.P.	13,994		3,673		22,309		14,374
Preferred distributions	(3,799)		(3,799)		(11,397)		(11,397)
NET INCOME (LOSS) AVAILABLE TO COMMON UNITHOLDERS	10,195		(126)		10,912		2,977
(Loss) income from continuing operations available to common unitholders per common unit-basic	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
(Loss) income from continuing operations available to common unitholders per common unit-diluted	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
Net income (loss) available to common unitholders per unit-basic	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Net income (loss) available to common unitholders per unit-diluted	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Weighted average common units outstanding - basic (Note 16)	58,355,127		52,274,316		56,136,477		48,561,614
Weighted average common units outstanding - diluted (Note 16)	58,355,127		52,274,316		56,136,477		48,565,028
Kilroy Realty, L.P. [Member]
REVENUES:
Rental income	89,306		72,135		252,102		196,883
Tenant reimbursements	7,683		6,156		21,469		18,261
Other property income	348		985		2,863		2,325
Total revenues	97,337		79,276		276,434		217,469
EXPENSES:
Property expenses	19,361		15,802		54,548		42,255
Real estate taxes	8,360		7,582		24,878		20,035
Provision for bad debts	(5)		(857)		141		(843)
Ground leases (Note 11)	503		336		1,266		648
General and administrative expenses	6,355		7,273		20,355		21,096
Acquisition-related expenses	1,163		354		2,829		1,624
Depreciation and amortization	36,152		29,951		97,513		74,405
Total expenses	71,889		60,441		201,530		159,220
OTHER (EXPENSES) INCOME:
Interest income and other net investment gains (Note 12)	30		337		272		703
Interest expense (Note 5)	(24,051)		(15,853)		(66,155)		(40,897)
Loss on early extinguishment of debt	0		0		0		(4,564)
Total other (expenses) income	(24,021)		(15,516)		(65,883)		(44,758)
INCOME FROM CONTINUING OPERATIONS	1,427		3,319		9,021		13,491
DISCONTINUED OPERATIONS (Note 14)
Net income from discontinued operations	308		350		1,053		1,011
Net gain on dispositions of discontinued operations	12,555		0		12,555		0
Total income from discontinued operations	12,863		350		13,608		1,011
NET INCOME	14,290		3,669		22,629		14,502
Net income attributable to noncontrolling interests in consolidated subsidiaries	(30)		(41)		(95)		(138)
NET INCOME ATTRIBUTABLE TO KILROY REALTY, L.P.	14,260		3,628		22,534		14,364
Preferred distributions	(3,799)		(3,799)		(11,397)		(11,397)
NET INCOME (LOSS) AVAILABLE TO COMMON UNITHOLDERS	$ 10,461		$ (171)		$ 11,137		$ 2,967
(Loss) income from continuing operations available to common unitholders per common unit-basic	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
(Loss) income from continuing operations available to common unitholders per common unit-diluted	$ (0.05)		$ (0.01)		$ (0.06)		$ 0.02
Net income (loss) available to common unitholders per unit-basic	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Net income (loss) available to common unitholders per unit-diluted	$ 0.17		$ (0.01)		$ 0.18		$ 0.04
Weighted average common units outstanding - basic (Note 16)	60,073,258		53,997,447		57,857,538		50,284,745
Weighted average common units outstanding - diluted (Note 16)	60,073,258		53,997,447		57,857,538		50,288,159
Distributions declared per common unit	$ 0.35		$ 0.35		$ 1.05		$ 1.05

[1] All operating revenues are comprised of amounts received from third-party tenants.

[2] Income from discontinued operations is from our Reportable Segment - Office Properties.

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Noncontrolling Interests on the Company's Consolidated Financial Statements

9 Months Ended

Sep. 30, 2011

Noncontrolling Interest [Abstract]

Noncontrolling Interests on the Company's Consolidated Financial Statements

6.    Noncontrolling Interests on the Company's Consolidated Financial Statements

7.45% Series A Cumulative Redeemable Preferred Units of the Operating Partnership

As of both September 30, 2011 and December 31, 2010, the Operating Partnership had outstanding 1,500,000 7.45% Series A Cumulative Redeemable Preferred Units representing preferred limited partnership interests in the Operating Partnership with a redemption value of $50.00 per unit. There were no changes to this noncontrolling interest during the three and nine months ended September 30, 2011 and 2010.

Common Units of the Operating Partnership

The Company owned a 97.1%, 96.8% and 96.8% common general partnership interest in the Operating Partnership as of September 30, 2011, December 31, 2010, and September 30, 2010, respectively. The remaining 2.9%, 3.2% and 3.2% common limited partnership interest as of September 30, 2011, December 31, 2010 and September 30, 2010, respectively, was owned in the form of common units by non-affiliate investors and certain of our officers and directors. There were 1,718,131, 1,723,131 and 1,723,131 common units outstanding held by these investors, officers and directors as of September 30, 2011, December 31, 2010 and September 30, 2010, respectively.

The noncontrolling common units may be redeemed by unitholders for cash. We, at our option, may satisfy the cash redemption obligation with shares of the Company's common stock on a one-for-one basis. Whether satisfied in cash or shares of the Company's common stock, the value for each noncontrolling common unit upon redemption is the amount equal to the average of the closing quoted price per share of the Company's common stock, par value $.01 per share, as reported on the NYSE for the ten trading days immediately preceding the applicable redemption date. The aggregate value upon redemption of the then-outstanding noncontrolling common units was $56.2 million and $61.4 million as of September 30, 2011 and December 31, 2010, respectively. This redemption value does not necessarily represent the amount that would be distributed with respect to each common unit in the event of our termination or liquidation. In the event of our termination or liquidation, it is expected in most cases that each common unit would be entitled to a liquidating distribution equal to the amount payable with respect to each share of the Company's common stock.

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Partners' Capital of the Operating Partnership (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
Partners Capital of the Operating Partnership [Abstract]
Net proceeds from issuance of common stock	$ 221,015	$ 299,847
Limited partnership units outstanding	1,718,131	1,723,131	1,723,131
Kilroy Realty, L.P. [Member]
Partners Capital of the Operating Partnership [Abstract]
Common units in Operating Partnership held by the Company, the general partner	58,464,412	52,349,670	52,349,670
Common general partnership interest in operating partnership	97.10%	96.80%	96.80%
Common limited partnership interest in the operating partnership	2.90%	3.20%	3.20%
Limited partnership units outstanding	1,718,131	1,723,131	1,723,131
Kilroy Realty, L.P. [Member] | Partners Capital Common Unit [Member]
Partners Capital of the Operating Partnership [Abstract]
Issuance of common units, units (Note 8)	6,037,500	9,200,000
Common Stock [Member]
Partners Capital of the Operating Partnership [Abstract]
Underwriting public offering of common stock, shares	6,037,500	9,200,000

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Noncontrolling Interests on the Company's Consolidated Financial Statements (Details) (USD $)	9 Months Ended
	Sep. 30, 2011 NumberofTradingDays Years RSF NumberofBuildings Share_Based_Incentive_Compensation_Plans	Dec. 31, 2010	Sep. 30, 2010
Noncontrolling Interest (Textuals) [Abstract]
Percentage of general partnership interest owned by the company in the Operating Partnership	97.10%	96.80%	96.80%
Percentage of Common limited partnership interest owned by certain non-affiliated investors and certain directors and officers of the Company in the Operating Partnership	2.90%	3.20%	3.20%
Common units outstanding held by common limited partners	1,718,131	1,723,131	1,723,131
Conversion ratio of common units for common stock	one-for-one basis
Common stock, par value	$ 0.01	$ 0.01
Number of trading days	10
Aggregate value upon redemption of outstanding noncontrolling common units	$ 56,200,000	$ 61,400,000
Series A Preferred Units [Member]
Temporary Equity [Line Items]
7.45% Series A cumulative redeemable preferred units of the Operating Partnership outstanding	1,500,000	1,500,000
Preferred units redemption value per unit	$ 50	$ 50
Changes to noncontrolling interest	$ 0

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Receivables (Tables)

9 Months Ended

Sep. 30, 2011

Receivables [Abstract]

Current Receivables, net

Current receivables, net is primarily comprised of contractual rents and other lease-related obligations due from tenants. The balance consisted of the following as of September 30, 2011 and December 31, 2010:

	September 30, 2011			December 31, 2010
	(in thousands)
Current receivables	$	10,001		$	9,077
Allowance for uncollectible tenant receivables	(3,141		)	(2,819		)
Current receivables, net	$	6,860		$	6,258

Deferred Rent Receivables, net

Deferred rent receivables, net consisted of the following as of September 30, 2011 and December 31, 2010:

	September 30, 2011			December 31, 2010
	(in thousands)
Deferred rent receivables	$	107,130		$	92,883
Allowance for deferred rent receivables	(3,462		)	(3,831		)
Deferred rent receivables, net	$	103,668		$	89,052

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Commitments and Contingencies (Details) (USD $) In Thousands	Sep. 30, 2011
Summary of minimum commitment
Remaining 2011	$ 481
2012	1,926
2013	1,926
2014	1,870
2015	1,830
Thereafter	133,212	[1],[2]
Total	$ 141,245

[1] One of our ground lease obligations includes a component which is based on the percentage of gross income that exceeds the minimum ground rent. The minimum rent is subject to increases every five years based on 50% of the average annual percentage rent for the previous five years. Currently gross income does not exceed the threshold requiring us to pay percentage rent. The contractual obligations for that ground lease included above assumes the annual lease rental obligation in effect as of September 30, 2011.

[2] One of our ground lease obligations is subject to a fair market value adjustment every five years; however, the lease includes ground rent subprotection and infrastructure rent credits which currently limit our annual rental obligations to $1.0 million. The contractual obligations for that ground lease included above assumes the lesser of $1.0 million or annual lease rental obligation in effect as of September 30, 2011.

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Property Dispositions Reported as Discontinued Operations Property Dispositions Reported as Discontinued Operations

9 Months Ended

Sep. 30, 2011

Discontinued Operations and Disposal Groups [Abstract]

Property dispositions reported as discontinued operations

Note 14. Property Dispositions Reported as Discontinued Operations

The following table summarizes the properties sold during the nine months ended September 30, 2011.

Location	Property Type	Month of Disposition	Number of Buildings	Rentable Square Feet	Sales Price (in millions)
10350 Barnes Canyon and 10120 Pacific Heights Drive, San Diego, CA	Office	September	2	90,558	$	23.9

The following table summarizes the components that comprise income from discontinued operations for the three and nine months ended September 30, 2011 and 2010.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Revenues:
Rental income	$	413	$	473	$	1,359	$	1,419
Tenant reimbursements	56		55		202		151
Total revenues	469		528		1,561		1,570
Expenses:
Property expenses	33		43		118		153
Real estate taxes	29		32		93		97
Depreciation and amortization	99		103		297		309
Total expenses	161		178		508		559
Income from discontinued operations before net gain on dispositions of discontinued operations	308		350		1,053		1,011
Net gain on dispositions of discontinued operations	12,555		—		12,555		—
Total income from discontinued operations	$	12,863	$	350	$	13,608	$	1,011

As of September 30, 2011, the net cash proceeds from this disposition of approximately $23.3 million, after the payment of selling commissions and other closing costs, are being temporarily held at a qualified intermediary, at our direction, for the purpose of facilitating a potential Section 1031 Exchange. The $23.3 million cash proceeds are included in restricted cash on the consolidated balance sheets at September 30, 2011.

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Consolidated Statements of Equity (Unaudited) (USD $) In Thousands, except Share data	Total	Total Stockholders' Equity	Preferred Stock [Member]	Common Stock [Member]	Common Stock Additional Paid-in Capital	Common Stock Distributions in Excess of Earnings	Noncontrolling Interests - Common Units of the Operating Partnership
Beginning Balance at Dec. 31, 2009	$ 883,838	$ 854,948	$ 121,582	$ 431	$ 913,657	$ (180,722)	$ 28,890
Beginning Balance, shares at Dec. 31, 2009				43,148,762
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	14,502	14,374				14,374	128
Issuance of common stock (Note 7)	299,847	299,847		92	299,755
Issuance of common stock, shares (Note 7)				9,200,000
Issuance of share-based compensation awards (Note 9)	1,904	1,904			1,904
Issuance of share-based compensation awards, shares (Note 9)				3,239
Noncash amortization of share-based compensation	5,050	5,050			5,050
Exercise of stock options	83	83			83
Exercise of stock options, shares				4,000
Repurchase of common stock and restricted stock units (Note9)	(2,121)	(2,121)			(2,121)
Repurchase of common stock and restricted stock units, shares (Note9)				(59,782)
Settlement of restricted stock units for shares of common stock	(1,296)	(1,296)			(1,296)
Settlement of restricted stock units for shares of common stock, shares				53,451
Allocation to the equity component of cash paid upon repurchase of 3.25% Exchangeable Notes	(2,694)	(2,694)			(2,694)
Adjustment for noncontrolling interest	0	(4,665)			(4,665)		4,665
Preferred distributions and dividends	(11,397)	(11,397)				(11,397)
Dividends declared per common share and common unit ($1.05 per share/ unit)	(54,280)	(52,470)				(52,470)	(1,810)
Ending Balance at Sep. 30, 2010	1,133,436	1,101,563	121,582	523	1,209,673	(230,215)	31,873
Ending Balance, shares at Sep. 30, 2010				52,349,670
Beginning Balance at Dec. 31, 2010	1,117,730	1,086,351	121,582	523	1,211,498	(247,252)	31,379
Beginning Balance, shares at Dec. 31, 2010	52,349,670			52,349,670
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	22,629	22,309				22,309	320
Issuance of common stock (Note 7)	221,015	221,015		61	220,954
Issuance of common stock, shares (Note 7)				6,037,500
Issuance of share-based compensation awards (Note 9)	2,447	2,447		1	2,446
Issuance of share-based compensation awards, shares (Note 9)				68,727
Noncash amortization of share-based compensation	4,201	4,201			4,201
Exercise of stock options	395	395			395
Exercise of stock options, shares				15,000
Repurchase of common stock and restricted stock units (Note9)	(736)	(736)			(736)
Repurchase of common stock and restricted stock units, shares (Note9)				(11,485)
Exchange of common units of the Operating Partnership	0	91			91		(91)
Exchange of common units of the Operating Partnership, shares				5,000
Adjustment for noncontrolling interest	0	3,269			3,269		(3,269)
Preferred distributions and dividends	(11,397)	(11,397)				(11,397)
Dividends declared per common share and common unit ($1.05 per share/ unit)	(61,941)	(60,136)				(60,136)	(1,805)
Ending Balance at Sep. 30, 2011	$ 1,294,343	$ 1,261,271	$ 121,582	$ 585	$ 1,435,580	$ (296,476)	$ 33,072
Ending Balance, shares at Sep. 30, 2011	58,464,412			58,464,412

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Stockholders' Equity of the Company

9 Months Ended

Sep. 30, 2011

Equity [Abstract]

Stockholders' Equity of the Company

7. Stockholders' Equity of the Company

Issuance of Common Stock

In April 2011, the Company completed an underwritten public offering of 6,037,500 shares of its common stock. The net offering proceeds, after deducting underwriting discounts and commissions and offering expenses, were approximately $221.0 million. We used a portion of the net proceeds from the offering to fund acquisitions and for general corporate purposes.

Periodic Stock Offering Program

In July 2011, the Company commenced a periodic stock offering program under which it may sell up to $200.0 millionaggregate gross sales price of the Company's common stock from time to time in “at the market” ("ATM") offerings.  The Company may sell common stock under this program in amounts and at times to be determined by the Company and the Company has no obligation to sell common stock under this program. As of the date of this report, there have been no sales of common stock under the ATM program.

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Fair Value Measurements and Disclosures (Tables)

9 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

Fair value of the company's marketable securities

The following table sets forth the fair value of our marketable securities and related deferred compensation plan liability as of September 30, 2011 and December 31, 2010:

	Fair Value (Level  1)(1)
Description	September 30, 2011		December 31, 2010
	(in thousands)
Marketable securities (2)	$	5,213	$	4,902
Deferred compensation plan liability (3)	$	5,118	$	4,809

________________________

(1) Based on quoted prices in active markets for identical securities.

(2) The marketable securities are held in a limited rabbi trust.

(3) The deferred compensation liability is reported on our consolidated balance sheets in accounts payable, accrued expenses, and other liabilities.

Fair value adjustment of marketable securities and deferred compensation plan liability

The following table sets forth the related amounts recorded during the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended						Nine Months Ended
Description	September 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
	(in thousands)						(in thousands)
Net (loss) gain on marketable securities	$	(642	)	$	311		$	(429	)	$	190
Decrease (increase) to compensation cost	642			(364		)	429			(206		)

Carrying value and fair value of company's remaining financial assets and liabilities

The following table sets forth the carrying value and the fair value of our other financial instruments as of September 30, 2011 and December 31, 2010:

	Carrying Value		Fair Value		Carrying Value		Fair Value
Description	September 30, 2011				December 31, 2010
	(in thousands)
Liabilities
Secured debt	$	473,997	$	487,807	$	313,009	$	329,456
Exchangeable notes	305,115		321,183		299,964		312,598
Unsecured senior notes	980,487		1,014,863		655,803		661,644
Credit Facility (1)	—		—		159,000		159,659

________________________

(1) As of September 30, 2011, there were no outstanding borrowings on the Credit Facility.

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Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

9.    Share-Based Compensation

Stockholder Approved Equity Compensation Plans

As of September 30, 2011, we had one share-based incentive compensation plan, the Kilroy Realty 2006 Incentive Award Plan as amended (the “2006 Plan”). As of September 30, 2011, 3,799,737 shares were available for grant under the 2006 Plan. The number of shares that remains available for grant is calculated using the weighted share counting provisions set forth in the 2006 Plan, which are based on the type of awards that are granted. The maximum number of shares available for grant subject to full value awards (which generally include equity awards other than options and stock appreciation rights) was 1,301,280 shares as of September 30, 2011.

Summary of Nonvested Shares

A summary of our nonvested shares activity from January 1, 2011 through September 30, 2011 is presented below:

Nonvested Shares	Shares		Weighted-Average Grant Date Fair Value Per Share
Outstanding at January 1, 2011	50,032		$	58.40
Granted	68,727		37.83
Vested (1)	(9,474	)	56.76
Outstanding as of September 30, 2011	109,285		$	45.61

________________________

(1) The total shares vested include 2,198 shares that were tendered to satisfy minimum statutory tax withholding requirements related to the restricted shares that have vested in accordance with the terms of the 2006 Plan. We accept the return of shares at the current quoted closing share price of the Company's common stock to satisfy tax obligations.

A summary of our nonvested and vested shares activity for the nine months ended September 30, 2011 and 2010 is presented below:

	Shares Granted			Shares Vested
Nine Months Ended September 30,	Non-Vested Shares Issued	Weighted-Average Grant Date Fair Value Per Share		Vested Shares		Total Vest Date Fair Value (1)          (in thousands)
2011	68,727	$	37.83	(9,474	)	$	370
2010	3,239	30.88		(16,358	)	474

_______________________

(1) Total fair value of shares vested was calculated based on the quoted closing share price of the Company's common stock on the NYSE on the day of vesting.

Summary of Restricted Stock Units

A summary of our restricted stock unit ("RSU") activity from January 1, 2011 through September 30, 2011 is presented below:

	Nonvested RSUs				Vested RSUs		Total RSUs
	Amount		Weighted-Average Grant Date  Fair Value Per Share
Outstanding at January 1, 2011	125,754		$	29.88	588,068		713,822
Granted	107,673		37.94		—		107,673
Vested	(23,035	)	30.57		23,035
Issuance of dividend equivalents (1)					20,790		20,790
Canceled (2)					(8,497	)	(8,497	)
Outstanding as of September 30, 2011	210,392		$	33.93	623,396		833,788

________________________

(1) RSUs issued as dividend equivalents are vested upon issuance.

(2) We accept the return of RSUs, at the current quoted closing share price of the Company's common stock, to satisfy minimum statutory tax-withholding requirements related to either RSUs that have vested or RSU dividend equivalents in accordance with the terms of the 2006 Plan.

A summary of our RSU activity for the nine months ended September 30, 2011 and 2010 is presented below:

	RSUs Granted			RSUs Vested
Nine Months Ended September 30,	Non-Vested RSUs Issued	Weighted-Average Grant Date Fair Value Per Share		Vested RSUs		Total Vest-Date Fair Value (1)         (in thousands)
2011	107,673	$	37.94	(23,035	)	$	897
2010	159,606	30.24		(23,564	)	740

_______________________

(1) Total fair value of RSUs vested was calculated based on the quoted closing share price of the Company's common stock on the NYSE on the day of vesting.

Compensation Cost Recorded During the Period

The total compensation cost for all share-based compensation programs was $1.4 million and $2.2 million for the three months ended September 30, 2011 and 2010, respectively, and $4.2 million and $6.4 million for the nine months ended September 30, 2011 and 2010, respectively. Of the total share-based compensation cost, $0.3 million was capitalized as part of real estate assets for the three months ended September 30, 2011 and 2010, and $0.8 million and $1.1 million was capitalized as part of real estate assets for the nine months ended September 30, 2011 and 2010, respectively. As of September 30, 2011, there was approximately $5.7 million of total unrecognized compensation cost related to nonvested incentive awards granted under share-based compensation arrangements that is expected to be recognized over a weighted-average period of 1.6 years. The remaining compensation cost related to these nonvested incentive awards had been recognized in periods prior to September 30, 2011.

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Fair Value Measurements and Disclosures (Details) (USD $) In Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010	Sep. 30, 2011		Sep. 30, 2010	Dec. 31, 2010
Assets and Liabilities Reported at Fair Value
Marketable securities	$ 5,213			$ 5,213			$ 4,902
Fair value adjustment of marketable securities and deferred compensation plan liability
Net loss (gain) on marketable securities	(642)		311	(429)		190
Decrease (increase) to compensation cost	642		(364)	429		(206)
Fair Value (Level 1) [Member]
Assets and Liabilities Reported at Fair Value
Marketable securities	5,213	[1],[2]		5,213	[1],[2]		4,902	[1],[2]
Deferred compensation plan liability	$ 5,118	[1],[3]		$ 5,118	[1],[3]		$ 4,809	[1],[3]

[1] Based on quoted prices in active markets for identical securities.

[2] The marketable securities are held in a limited rabbi trust.

[3] The deferred compensation liability is reported on our consolidated balance sheets in accounts payable, accrued expenses, and other liabilities.

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Share-Based Compensation (Details Textuals) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2011 NumberofBuildings Share_Based_Incentive_Compensation_Plans	Sep. 30, 2010	Sep. 30, 2011 NumberofTradingDays Years RSF NumberofBuildings Share_Based_Incentive_Compensation_Plans	Sep. 30, 2010
Share-Based Compensation (Textuals) [Abstract]
Share-Based Compensation Plans	1		1
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	3,799,737		3,799,737
Share based compensation available for grant full value awards subject to full value awards	1,301,280		1,301,280
Share-based compensation programs, total compensation cost	$ 1.4	$ 2.2	$ 4.2	$ 6.4
Share-based compensation cost capitalized as part of real estate assets	0.3	0.3	0.8	1.1
Total unrecognized compensation cost related to nonvested incentive awards granted	$ 5.7		$ 5.7
Total unrecognized compensation cost weighted-average period			1.6
Restricted Stock [Member]
Share-Based Compensation (Textuals) [Abstract]
Number of shares that were tendered to satisfy minimum statutory tax withholding requirements			2,198

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 22,629	$ 14,502
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations):
Depreciation and amortization of building and improvements and leasing costs	96,971	74,049
Increase (decrease) in provision for bad debts	141	(843)
Depreciation of furniture, fixtures and equipment	839	665
Noncash amortization of share-based compensation awards	3,365	5,328
Noncash amortization of deferred financing costs and debt discounts and premiums	10,164	9,098
Noncash amortization of above/(below) market rents (Note 3)	1,519	696
Net gain on dispositions of discontinued operations (Note 14)	(12,555)	0
Loss on early extinguishment of debt	0	4,564
Noncash amortization of deferred revenue related to tenant-funded tenant improvements	(7,005)	(7,108)
Other	(630)	0
Changes in operating assets and liabilities:
Marketable securities	(311)	(1,029)
Current receivables	(1,022)	(706)
Deferred rent receivables	(15,543)	(8,441)
Other deferred leasing costs	535	(2,516)
Prepaid expenses and other assets	(3,528)	(2,765)
Accounts payable, accrued expenses and other liabilities	18,914	3,049
Deferred revenue	(598)	5,546
Rents received in advance and tenant security deposits	180	839
Net cash provided by operating activities	114,065	94,928
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for acquisition of operating properties (Note 2)	(481,756)	(373,574)
Expenditures for operating properties	(41,087)	(56,393)
Expenditures for development and redevelopment properties and undeveloped land	(18,682)	(14,681)
Net increase in escrow deposits	(11,000)	(2,002)
(Increase) decrease in restricted cash	(690)	1,316
Receipt of principal payments on note receivable	0	10,679
Net cash used in investing activities	(553,215)	(434,655)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock (Note 7)	221,015	299,847
Borrowings on unsecured line of credit	302,000	553,000
Repayments on unsecured line of credit	(461,000)	(445,000)
Principal payments on secured debt	(5,295)	(101,653)
Repurchase of exchangeable senior notes	0	(151,097)
Proceeds from issuance of secured debt (Note 5)	135,000	71,000
Proceeds from issuance of unsecured debt (Note 5)	324,476	247,870
Repayments of unsecured debt	0	(61,000)
Financing costs	(8,584)	(11,200)
Decrease in loan deposits and other	2,859	1,420
Repurchase of common stock and restricted stock units	(736)	(3,417)
Proceeds from exercise of stock options	395	83
Dividends and distributions paid to common stockholders and common unitholders	(58,942)	(50,299)
Dividends and distributions paid to preferred stockholders and preferred unitholders	(11,397)	(11,397)
Net cash provided by financing activities	439,791	338,157
Net increase (decrease) in cash and cash equivalents	641	(1,570)
Cash and cash equivalents, beginning of period	14,840	9,883
Cash and cash equivalents, end of period	15,481	8,313
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for interest, net of capitalized interest of $5,361 and $6,140 as of September 30, 2011 and 2010, respectively	42,070	26,182
NONCASH INVESTING TRANSACTIONS:
Accrual for expenditures for operating properties and development and redevelopment properties	13,506	13,614
Tenant improvements funded directly by tenants to third parties	3,037	2,520
Assumption of secured debt with property acquisition (Notes 2 and 5)	30,042	51,079
Assumption of other liabilities with property acquisitions (Note 2)	4,515	6,369
Net proceeds from disposition held by a qualified intermediary in connection wtih Section 1031 exchange (Note 14)	23,285	0
NONCASH FINANCING TRANSACTIONS:
Accrual of dividends and distributions payable to common stockholders and common unitholders	21,064	18,925
Accrual of dividends and distributions payable to preferred stockholders and preferred unitholders	1,909	1,909
Issuance of share-based compensation awards (Note 9)	7,505	5,418
Exchange of common units of the Operating Partnership into shares of the Company's common stock	$ 91	$ 0

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Organization and Basis of Presentation

9 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

1.    Organization and Basis of Presentation

Organization

Kilroy Realty Corporation (the "Company") is a self-administered real estate investment trust (“REIT”) active in office and industrial submarkets along the West Coast. We own, develop, acquire and manage real estate assets, consisting primarily of Class A properties in the coastal regions of Los Angeles, Orange County, San Diego, greater Seattle and the San Francisco Bay Area, which we believe have strategic advantages and strong barriers to entry. We qualify as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). The Company's common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “KRC.”

We own our interests in all of our real estate assets through Kilroy Realty, L.P. (the "Operating Partnership") and Kilroy Realty Finance Partnership, L.P. (the "Finance Partnership"). We conduct substantially all of our operations through the Operating Partnership. Unless stated otherwise or the context indicates otherwise, the terms "Kilroy Realty Corporation" or the "Company," "we," "our," and "us" refer to Kilroy Realty Corporation and its consolidated subsidiaries and the term "Operating Partnership" refers to Kilroy Realty, L.P. and its consolidated subsidiaries. The descriptions of our business, employees, and properties apply to both the Company and the Operating Partnership.

The following table of office buildings (the "Office Properties") and industrial buildings (the "Industrial Properties") summarizes our stabilized portfolio of operating properties as of September 30, 2011. As of September 30, 2011, all of our properties and all of our business is currently conducted in the state of California with the exception of the operation of six office properties located in the state of Washington.

	Number of Buildings	Rentable Square Feet	Number of Tenants	Percentage Occupied
Office Properties(1)	105	11,574,244	422	90.6	%
Industrial Properties	40	3,605,407	64	100.0	%
Total Stabilized Portfolio	145	15,179,651	486	92.8	%

________________________

(1) Includes nine office properties acquired during the nine months ended September 30, 2011 for a total amount of $516.3 million (see Note 2 for additional information).

Our stabilized portfolio excludes undeveloped land, development and redevelopment properties currently under construction or committed for construction, "lease-up" properties, and one property we are currently in the process of repositioning for residential use. As of September 30, 2011, we had three office redevelopment properties under construction encompassing approximately 508,000 rentable square feet. We commenced redevelopment on two of the three redevelopment properties in the third quarter of 2011. We define "lease-up" properties as properties we recently developed or redeveloped that have not yet reached 95% occupancy and are within one year following cessation of major construction activities.  We had no "lease-up" properties as of September 30, 2011. In addition, as of September 30, 2011 we had one industrial property that we were in the process of demolishing to prepare the land for potential sale. We successfully obtained entitlements to reposition this site for residential use in 2011. Ultimate timing of the potential sale will depend upon market conditions and other factors.

     As of September 30, 2011, the Company owned a 97.1% general partnership interest in the Operating Partnership. The remaining 2.9% common limited partnership interest in the Operating Partnership as of September 30, 2011 was owned by non-affiliated investors and certain of our directors and officers (see Note 6). Both the general and limited common partnership interests in the Operating Partnership are denominated in common units. The number of common units held by the Company is at all times equivalent to the number of outstanding shares of the Company's common stock, and the rights of all the common units to quarterly distributions and payments in liquidation mirror those of the Company's common stockholders. The common limited partners have certain redemption rights as provided in the Operating Partnership's Fifth Amended and Restated Agreement of Limited Partnership (as amended, the “Partnership Agreement”) (see Note 6).

Kilroy Realty Finance, Inc., our wholly-owned subsidiary, is the sole general partner of the Finance Partnership and owns a 1.0% general partnership interest. The Operating Partnership owns the remaining 99.0% limited partnership interest. Kilroy Services, LLC ("KSLLC"), which is a wholly-owned subsidiary of the Operating Partnership, is the entity through which we conduct substantially all of our development activities. With the exception of the Operating Partnership, all of our subsidiaries, which include Kilroy Realty TRS, Inc., Kilroy Realty Management, L.P., Kilroy RB, LLC, Kilroy RB II, LLC, Kilroy Realty Northside Drive, LLC and Kilroy Realty 303, LLC are wholly-owned.

Basis of Presentation

The consolidated financial statements of the Company include the consolidated financial position and results of operations of the Company, the Operating Partnership, the Finance Partnership, KSLLC, and all of our wholly-owned subsidiaries. The consolidated financial statements of the Operating Partnership include the consolidated financial position and results of operations of the Operating Partnership, the Finance Partnership, KSLLC, and all wholly-owned subsidiaries of the Operating Partnership. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

The consolidated financial statements of the Company and the Operating Partnership also include two variable interest entities ("VIE") in which we are deemed to be the primary beneficiary. We had one bankruptcy-remote VIE, which was formed in 2010 to hold three properties that secure the debt we assumed when we acquired the properties in 2010. The assets held by this entity are not available to satisfy the debts and other obligations of the Company or the Operating Partnership. In September 2011, we acquired a building which was transferred to a special purpose VIE to facilitate a potential tax-deferred property exchange pursuant to Section 1031 of the Code for federal and state income tax purposes ("Section 1031 Exchange"). The Company is obligated to complete the Section 1031 Exchange and take title to the property within 180 days of the initial acquisition date. The VIE will be terminated upon the completion of the Section 1031 Exchange. The impact of consolidating both VIEs increased the Company's total assets and liabilities by approximately $164.0 million and $63.0 million, respectively, at September 30, 2011.

The accompanying interim financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. The interim financial statements for the Company and the Operating Partnership should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2010.

Change in Reportable Segments from Form 10-K for the year ended December 31, 2010

Our chief operating decision-makers internally evaluate the operating performance and financial results of our portfolio based on Net Operating Income for the following two segments of commercial real estate property: Office Properties and Industrial Properties. We define “Net Operating Income” as operating revenues (rental income, tenant reimbursements, and other property income) less operating expenses (property expenses, real estate taxes, provision for bad debts, and ground leases).

During the three and nine months ended September 30, 2011, the amount of revenues and Net Operating Income generated by our Industrial Properties, in relation to our total consolidated operating portfolio revenues and Net Operating Income fell below the required 10% quantitative reporting thresholds for the Industrial Properties to be considered a reportable segment under GAAP. Therefore, for the three and nine months ended September 30, 2011, our only reportable segment is our Office Properties segment. See Note 13 for a reconciliation of our Office Properties segment to our consolidated revenues, Net Operating Income, net income and consolidated assets.

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Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net (Details) (USD $) In Thousands	Sep. 30, 2011		Dec. 31, 2010
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, Net
Total deferred leasing costs and acquisition-related intangible assets, net	$ 155,757	[1]	$ 131,066
Total acquisitions-related intangible liabilities, net	37,187	[1],[2]	16,844	[2]
Deferred Leasing Costs [Member]
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, Net
Finite-lived intangible assets/liabilities, gross	136,374	[1]	128,980
Accumulated amortization	(48,290)	[1]	(45,869)
Finite-lived intangible assets/liabilities, net	88,084	[1]	83,111
Above-Market Leases [Member]
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, Net
Finite-lived intangible assets/liabilities, gross	28,143		21,321
Accumulated amortization	(6,250)		(2,163)
Finite-lived intangible assets/liabilities, net	21,893		19,158
In-Place Leases [Member]
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, Net
Finite-lived intangible assets/liabilities, gross	57,195	[1]	36,964
Accumulated amortization	(11,415)	[1]	(8,167)
Finite-lived intangible assets/liabilities, net	45,780	[1]	28,797
Below-Market Leases [Member]
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, Net
Finite-lived intangible assets/liabilities, gross	35,852	[1],[2]	21,938	[2]
Accumulated amortization	(3,844)	[1],[2]	(5,094)	[2]
Finite-lived intangible assets/liabilities, net	32,008	[1],[2]	16,844	[2]
Above-Market Ground Lease Obligation [Member]
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, Net
Finite-lived intangible assets/liabilities, gross	5,200	[2]	0	[2]
Accumulated amortization	(21)	[2]	0	[2]
Finite-lived intangible assets/liabilities, net	$ 5,179	[2]	$ 0	[2]

[1] Balances and accumulated amortization amounts at September 30, 2011 reflect the write-off of the following fully amortized amounts at January 1, 2011: deferred leasing costs (approximately $10.4 million), in-place leases (approximately $5.0 million), and below-market leases (approximately $3.8 million). Our accounting policy is to write-off the asset and corresponding accumulated amortization for fully amortized balances on January 1st of each fiscal year.

[2] Included in deferred revenue and acquisition-related intangible liabilities, net in the consolidated balance sheets.

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Secured and Unsecured Debt of the Operating Partnership (Details) (USD $) In Thousands, except Share data, unless otherwise specified								9 Months Ended		12 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2010	Sep. 30, 2011 Kilroy Realty, L.P. [Member]		Dec. 31, 2010 Kilroy Realty, L.P. [Member]	Sep. 30, 2010 Kilroy Realty, L.P. [Member]	Sep. 30, 2011 Kilroy Realty, L.P. [Member] 3.25% Exchangeable Notes [Member]		Dec. 31, 2010 Kilroy Realty, L.P. [Member] 3.25% Exchangeable Notes [Member]		Sep. 30, 2011 Kilroy Realty, L.P. [Member] 4.25% Exchangeable Notes [Member]		Dec. 31, 2010 Kilroy Realty, L.P. [Member] 4.25% Exchangeable Notes [Member]
Balance and significant terms of the Exchangeable Notes outstanding
Principal amount				$ 1,776,900	[1]			$ 148,000		$ 148,000		$ 172,500		$ 172,500
Unamortized discount								(1,714)		(4,004)		(13,671)		(16,532)
Net carrying amount of liability component	305,115	299,964		305,115		299,964		146,286		143,996		158,829		155,968
Carrying amount of equity component								$ 33,675		$ 33,675		$ 19,835		$ 19,835
Maturity Date								Apr. 15, 2012		Apr. 15, 2012		Nov. 15, 2014		Nov. 15, 2014
Stated coupon rate			3.25%				3.25%	3.25%	[2]	3.25%	[2]	4.25%	[3]	4.25%	[3]
Effective interest rate								5.45%	[4]	5.45%	[4]	7.13%	[4]	7.13%	[4]
Exchange rate per $1,000 principal value of the Exchangeable Notes, as adjusted								11.3636	[5]	11.3636	[5]	27.8307	[5]	27.8307	[5]
Exchange price, as adjusted								$ 88	[5]	$ 88	[5]	$ 35.93	[5]	$ 35.93	[5]
Number of Shares on which aggregate consideration to be delivered upon conversion is determined								1,681,813	[5]	1,681,813	[5]	4,800,796	[5]	4,800,796	[5]
Capped call transactions
Referenced shares of common stock under capped call options								1,121,201	[6]	1,121,201	[6]	4,800,796	[7]	4,800,796	[7]
Exchange price including effect of capped calls								$ 102.72	[6]	$ 102.72	[6]	$ 42.81	[7]	$ 42.81	[7]

[1] Includes gross principal balance of outstanding debt before impact of all debt discounts and premiums.

[2] Interest on the 3.25% Exchangeable Notes is payable semi-annually in arrears on April 15th and October 15th of each year.

[3] Interest on the 4.25% Exchangeable Notes is payable semi-annually in arrears on May 15th and November 15th of each year.

[4] The rate at which we record interest expense for financial reporting purposes, which reflects the amortization of the discounts on the Exchangeable Notes. This rate represents our conventional debt borrowing rate at the date of issuance.

[5] The exchange rate, exchange price, and the number of shares to be delivered upon conversion are subject to adjustment under certain circumstances including increases in our common dividends.

[6] The capped calls mitigate the dilutive impact to us of the potential exchange of two-thirds of the 3.25% Exchangeable Notes into shares of common stock.

[7] The capped calls mitigate the dilutive impact to us of the potential exchange of all of the 4.25% Exchangeable Notes into shares of common stock.

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Future Minimum Rent (Details) (USD $) In Thousands	Sep. 30, 2011
Future contractual minimum rent under operating lease
Remaining 2011	$ 79,636
2012	323,174
2013	307,751
2014	275,387
2015	220,593
Thereafter	687,083
Total	$ 1,893,624

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Pro Forma Results of the Operating Partnership

9 Months Ended

Sep. 30, 2011

Business Acquisition, Equity Interests Issued or Issuable [Line Items]

Pro Forma Results of the Operating Partnership

18.    Pro Forma Results of the Company

The following pro forma consolidated results of operations of the Company for the three and nine months ended September 30, 2011 and 2010 assumes that the acquisitions of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, were completed as of January 1, 2010. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2010, nor does it intend to be a projection of future results.

	Three Months Ended September 30, (1)					Nine Months Ended September 30, (1)
	2011		2010			2011		2010
	(in thousands except per share amounts)
Revenues	$	99,938	$	86,490		$	291,600	$	239,270
Net income (loss) available to common stockholders(2)(3)	$	11,692	$	(1,284	)	$	9,896	$	2,692
Net income (loss) available to common stockholders per share - basic(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04
Net income (loss) available to common stockholders per share - diluted(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

(3) The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowings and related pro forma interest expense estimate assumed herein are not indicative of actual results.

The following table summarizes the results of operations for the properties at 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, from June 3, 2011 and September 15, 2011, the dates of acquisition, respectively, through September 30, 2011:

	(in thousands)
Revenues	$	6,481
Net loss(1)	(31		)

________________________

(1) Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

Kilroy Realty, L.P. [Member]

Business Acquisition, Equity Interests Issued or Issuable [Line Items]

Pro Forma Results of the Operating Partnership

19.    Pro Forma Results of the Operating Partnership

The following pro forma consolidated results of operations of the Operating Partnership for the three and nine months ended September 30, 2011 and 2010 assumes that the acquisitions of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, were completed as of January 1, 2010. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2010, nor does it intend to be a projection of future results.

	Three Months Ended September 30, (1)					Nine Months Ended September 30, (1)
	2011		2010			2011		2010
	(in thousands except per share amounts)
Revenues	$	99,938	$	86,490		$	291,600	$	239,270
Net income (loss) available to common unitholders(2)(3)	$	12,001	$	(1,367	)	$	10,090	$	2,672
Net income (loss) available to common unitholders per unit - basic(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04
Net income (loss) available to common unitholders per unit - diluted(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

(3) The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowing and related pro forma interest expense estimate assumed herein are not indicative of actual results.

The following table summarizes the results of operations for the properties at 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, from June 3, 2011 and September 15, 2011, the dates of acquisition, respectively, through September 30, 2011:

	(in thousands)
Revenues	$	6,481
Net loss(1)	(31		)

________________________

(1) Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

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Secured and Unsecured Debt of the Operating Partnership

9 Months Ended

Sep. 30, 2011

Debt Disclosure [Abstract]

Secured and Unsecured Debt of the Operating Partnership

5.    Secured and Unsecured Debt of the Operating Partnership

Secured Debt

In January 2011, the Operating Partnership borrowed $135.0 million under a mortgage loan that is scheduled to mature on February 1, 2018. The mortgage loan is secured by our 303 Second Street property in San Francisco, bears interest at an annual rate of 4.27%, and requires interest-only payments for the first two years with a 30-year amortization schedule thereafter. We used a portion of the proceeds to repay borrowings under the Operating Partnership's unsecured line of credit (the "Credit Facility").

In April 2011, in connection with the acquisition of four office buildings in Kirkland, Washington, the Operating Partnership assumed a mortgage loan that is secured by the project. The assumed mortgage loan had a principal balance of $30.0 million at the acquisition date and is scheduled to mature on April 15, 2015. The loan bears contractual interest at an annual rate of 4.94% and requires monthly principal and interest payments based on a 30-year amortization period. This mortgage loan was recorded at fair value at the date of acquisition resulting in a premium of approximately $1.0 million. This premium will be accreted on a straight-line basis, which approximates the effective interest method, as a reduction to interest expense from the acquisition date through the maturity date of the mortgage loan. This will result in interest being recorded at an effective interest rate of 4.00% for financial reporting purposes.

Although both new mortgage loans are secured and non-recourse to the Company and the Operating Partnership, the Company provides limited customary secured debt guarantees for items such as voluntary bankruptcy, fraud, misapplication of payments, and environmental liabilities.

Exchangeable Senior Notes

The following table summarizes the balance and significant terms of the Company's 3.25% Exchangeable Notes due 2012 (the "3.25% Exchangeable Notes") and 4.25% Exchangeable Notes due 2014 (the "4.25% Exchangeable Notes" and together with the 3.25% Exchangeable Notes, the "Exchangeable Notes") outstanding as of September 30, 2011 and December 31, 2010:

	3.25% Exchangeable Notes						4.25% Exchangeable Notes
	September 30, 2011			December 31, 2010			September 30, 2011			December 31, 2010
	(in thousands)
Principal amount	$	148,000		$	148,000		$	172,500		$	172,500
Unamortized discount	(1,714		)	(4,004		)	(13,671		)	(16,532		)
Net carrying amount of liability component	$	146,286		$	143,996		$	158,829		$	155,968
Carrying amount of equity component	$33,675						$19,835
Maturity date	April 2012						November 2014
Stated coupon rate (1)(2)	3.25%						4.25%
Effective interest rate (3)	5.45%						7.13%
Exchange rate per $1,000 principal value of the Exchangeable Notes, as adjusted (4)	11.3636						27.8307
Exchange price, as adjusted (4)	$88.00						$35.93
Number of shares on which the aggregate consideration to be delivered on conversion is determined (4)	1,681,813						4,800,796

_____________________

(1) Interest on the 3.25% Exchangeable Notes is payable semi-annually in arrears on April 15^th and October 15^th of each year.

(2) Interest on the 4.25% Exchangeable Notes is payable semi-annually in arrears on May 15^th and November 15^th of each year.

(3) The rate at which we record interest expense for financial reporting purposes, which reflects the amortization of the discounts on the Exchangeable Notes. This rate

represents our conventional debt borrowing rate at the date of issuance.

(4) The exchange rate, exchange price, and the number of shares to be delivered upon conversion are subject to adjustment under certain circumstances including increases in our

common dividends.

Capped Call Transactions

In connection with the offerings of the Exchangeable Notes, we entered into capped call option transactions ("capped calls") to mitigate the dilutive impact of the potential exchange of the Exchangeable Notes. The following table summarizes our capped call option positions as of both September 30, 2011 and December 31, 2010:

	3.25% Exchangeable Notes(1)		4.25% Exchangeable  Notes(2)
Referenced shares of common stock	1,121,201		4,800,796
Exchange price including effect of capped calls	$	102.72	$	42.81

________________________

(1) The capped calls mitigate the dilutive impact to us of the potential exchange of two-thirds of the 3.25% Exchangeable Notes into shares of common stock.

(2) The capped calls mitigate the dilutive impact to us of the potential exchange of all of the 4.25% Exchangeable Notes into shares of common stock.

For the nine months ended September 30, 2011, the per share average trading price of the Company's common stock on the NYSE of $37.92 was higher than the $35.93 exchange price for the 4.25% Exchangeable Notes. Even though the 4.25% Exchangeable Notes were not convertible as of September 30, 2011, if they were convertible as of September 30, 2011, the approximate fair value of the shares upon conversion at that date would have been equal to approximately $180.4 million, which would exceed the $172.5 million principal amount of the 4.25% Exchangeable Notes by approximately $7.9 million. See Notes 15 and 16 for a discussion of the impact of the Exchangeable Notes on our diluted earnings per share and unit calculations for the periods presented.

Interest Expense for the Exchangeable Notes

The unamortized discount on the Exchangeable Notes is accreted as additional interest expense from the date of issuance through the maturity date of the applicable Exchangeable Notes. The following table summarizes the total interest expense attributable to the Exchangeable Notes based on the effective interest rates set forth above, before the effect of capitalized interest, for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Contractual interest payments	$	3,035	$	3,035	$	9,106	$	11,530
Amortization of discount	1,742		1,818		5,151		6,497
Interest expense attributable to the Exchangeable Notes	$	4,777	$	4,853	$	14,257	$	18,027

Unsecured Senior Notes

In July 2011, the Operating Partnership issued unsecured senior notes in a public offering with an aggregate principal balance of $325.0 million that are scheduled to mature on July 15, 2018. The unsecured senior notes require semi-annual interest payments each January and July based on a stated annual interest rate of 4.80%. The unsecured senior notes are shown net of the initial issuance discount of $0.5 million on the consolidated balance sheets. This discount is being amortized on a straight-line basis, which approximates the effective interest method, as additional interest expense from the date of issuance through the maturity date of the unsecured senior notes, resulting in interest expense being recorded at a net effective interest rate of 4.83%, before the impact of debt issuance costs, for financial reporting purposes. The Company used a portion of the net proceeds for general corporate purposes, including the repayment of borrowings under the Operating Partnership's Credit Facility.

Unsecured Line of Credit

In June 2011, we amended the terms of our Credit Facility to extend the maturity date, and reduce the interest rate and facility fee. The following table summarizes the terms of our Credit Facility as of December 31, 2010 and as amended as of September 30, 2011:

	September 30, 2011			December 31, 2010
	(in thousands)
Outstanding borrowings(1)	$	—		$	159,000
Remaining borrowing capacity	500,000			341,000
Total borrowing capacity(2)	$	500,000		$	500,000
Interest rate(3)				2.99		%
Facility fee-annual rate(4)	0.350		%	0.575		%
Maturity date(5)	August 2015			August 2013

________________________

(1) As of September 30, 2011, there were no borrowings outstanding on the Credit Facility.

(2) We may elect to borrow, subject to lender approval, up to an additional $200 million under an accordion feature under the terms of the Credit Facility.

(3) The Credit Facility interest rate was calculated based on an annual rate of LIBOR plus 1.750% and 2.675% as of September 30, 2011 and December 31, 2010, respectively. No interest rate is shown as of September 30, 2011 because no borrowings were outstanding.

(4) The facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we also incurred debt origination and legal costs

of approximately $5.0 million when we entered into the Credit Facility in 2010 and an additional $3.3 million when we amended the Credit Facility in 2011. The unamortized

balance of these costs will be amortized as additional interest expense over the extended term of the Credit Facility.

(5) Under the original and amended terms of the Credit Facility, we may exercise an option to extend the maturity date by one year.

The Company intends to borrow amounts under the Credit Facility from time to time for general corporate purposes, to fund potential acquisitions, to finance development and redevelopment expenditures, and to potentially repay long-term debt.

Debt Covenants and Restrictions

The Credit Facility, the unsecured senior notes, and certain other secured debt arrangements contain covenants and restrictions requiring us to meet certain financial ratios and reporting requirements. Some of the more restrictive financial covenants include a maximum ratio of total debt to total asset value, a minimum fixed-charge coverage ratio, a minimum unsecured debt ratio, and a minimum unencumbered asset pool debt service coverage ratio. Noncompliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the associated debt becoming immediately due and payable. We believe we were in compliance with all of our debt covenants as of September 30, 2011.

Debt Maturities

The following table summarizes the stated debt maturities and scheduled amortization payments, excluding debt discounts and premiums, as of September 30, 2011:

Year Ending	(in thousands)
Remaining 2011	$	70,371
2012	305,303
2013	6,373
2014	262,443
2015	357,382
Thereafter	775,028
Total	$	1,776,900	(1)

________________________

(1) Includes gross principal balance of outstanding debt before impact of all debt discounts and premiums.

Capitalized Interest and Loan Fees

The following table sets forth our gross interest expense, including debt discount/premium and loan cost amortization, net of capitalized interest, for the three and nine months ended September 30, 2011 and 2010. The capitalized amounts are a cost of development and redevelopment, and increase the carrying value of undeveloped land and construction in progress.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands)
Gross interest expense	$	26,449		$	18,543		$	72,597		$	48,980
Capitalized interest	(2,398		)	(2,690		)	(6,442		)	(8,083		)
Interest expense	$	24,051		$	15,853		$	66,155		$	40,897

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands	Sep. 30, 2011		Dec. 31, 2010
REAL ESTATE ASSETS:
Land and improvements (Note 2)	$ 537,973		$ 491,333
Buildings and improvements (Note 2)	2,881,504		2,435,173
Undeveloped land and construction in progress (Note 1)	328,785		290,365
Total real estate held for investment	3,748,262		3,216,871
Accumulated depreciation and amortization	(732,162)		(672,429)
Total real estate assets, net	3,016,100		2,544,442
CASH AND CASH EQUIVALENTS	15,481		14,840
RESTRICTED CASH (Note 14)	25,436		1,461
MARKETABLE SECURITIES (Note 12)	5,213		4,902
CURRENT RECEIVABLES, NET (Note 4)	6,860		6,258
DEFERRED RENT RECEIVABLES, NET (Note 4)	103,668		89,052
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 2 and 3)	155,757	[1]	131,066
DEFERRED FINANCING COSTS, NET (Note 5)	19,638		16,447
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 11)	19,531		8,097
TOTAL ASSETS	3,367,684		2,816,565
LIABILITIES:
Secured debt, net (Notes 5 and 12)	473,997		313,009
Exchangeable senior notes, net (Notes 5 and 12)	305,115		299,964
Unsecured senior notes, net (Notes 5 and 12)	980,487		655,803
Unsecured line of credit (Notes 5 and 12)	0		159,000
Accounts payable, accrued expenses and other liabilities	93,050		68,525
Accrued distributions (Note 16)	22,565		20,385
Deferred revenue and acquisition-related intangible liabilities, net (Note 3)	95,120		79,322
Rents received in advance and tenant security deposits	29,369		29,189
Total liabilities	1,999,703		1,625,197
COMMITMENTS AND CONTINGENCIES (Note 11)
NONCONTROLLING INTEREST (Note 6):
7.45% Series A Cumulative Redeemable Preferred units of the Operating Partnership	73,638		73,638
Preferred stock, $.01 par value, 30,000,000 shares authorized:
Common stock, $.01 par value, 150,000,000 shares authorized, 58,464,412 and 52,349,670 shares issued and outstanding, respectively	585		523
Additional paid-in capital	1,435,580		1,211,498
Distributions in excess of earnings	(296,476)		(247,252)
Total stockholders' equity	1,261,271		1,086,351
Noncontrolling interest :
Common units of the Operating Partnership ( Note 6 )	33,072		31,379
Total equity	1,294,343		1,117,730
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY	3,367,684		2,816,565
Series A Cumulative Redeemable Preferred Stock
Preferred stock, $.01 par value, 30,000,000 shares authorized:
Cumulative Redeemable Preferred stock	0		0
Series E Cumulative Redeemable Preferred Stock
Preferred stock, $.01 par value, 30,000,000 shares authorized:
Cumulative Redeemable Preferred stock	38,425		38,425
Series F Cumulative Redeemable Preferred Stock
Preferred stock, $.01 par value, 30,000,000 shares authorized:
Cumulative Redeemable Preferred stock	$ 83,157		$ 83,157

[1] Balances and accumulated amortization amounts at September 30, 2011 reflect the write-off of the following fully amortized amounts at January 1, 2011: deferred leasing costs (approximately $10.4 million), in-place leases (approximately $5.0 million), and below-market leases (approximately $3.8 million). Our accounting policy is to write-off the asset and corresponding accumulated amortization for fully amortized balances on January 1st of each fiscal year.

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Organization and Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of stabilized portfolio of operating properties

The following table of office buildings (the "Office Properties") and industrial buildings (the "Industrial Properties") summarizes our stabilized portfolio of operating properties as of September 30, 2011. As of September 30, 2011, all of our properties and all of our business is currently conducted in the state of California with the exception of the operation of six office properties located in the state of Washington.

	Number of Buildings	Rentable Square Feet	Number of Tenants	Percentage Occupied
Office Properties(1)	105	11,574,244	422	90.6	%
Industrial Properties	40	3,605,407	64	100.0	%
Total Stabilized Portfolio	145	15,179,651	486	92.8	%

________________________

(1) Includes nine office properties acquired during the nine months ended September 30, 2011 for a total amount of $516.3 million (see Note 2 for additional information).

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Subsequent Events (Details) (USD $)	9 Months Ended			3 Months Ended					9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010	Sep. 30, 2011 Kilroy Realty, L.P. [Member] 6.70% Mortgage Payable due Dec 27, 2011 [Member] Repayment of Debt [Member]	Sep. 30, 2011 Kilroy Realty, L.P. [Member] 5.10% Mortgage Payable due April 1, 2012 [Member] Repayment of Debt [Member]	Sep. 30, 2011 Dividend Paid [Member]	Sep. 30, 2011 Acquisition [Member]	Sep. 30, 2011 Kilroy Realty, L.P. [Member] Line of Credit [Member]	Sep. 30, 2011 Kilroy Realty, L.P. [Member]		Sep. 30, 2010 Kilroy Realty, L.P. [Member]	Dec. 31, 2010 Kilroy Realty, L.P. [Member]
Subsequent Events (Textuals) [Abstract]
Secured Debt	$ 473,997,000		$ 313,009,000	$ 68,700,000	$ 52,000,000				$ 473,997,000			$ 313,009,000
Debt Instrument, Maturity Date				Dec. 27, 2011	Apr. 01, 2012
Aggregate dividends, distributions, and dividend equivalents paid to common stockholders and common unitholders	58,942,000	50,299,000				21,400,000			58,942,000		50,299,000
Non-refundable escrow deposits related to potential future acquisitions	11,000,000						25,000,000
Credit Facility	$ 0		$ 159,000,000					$ 165,000,000	$ 0	[1]		$ 159,000,000

[1] As of September 30, 2011, there were no borrowings outstanding on the Credit Facility.

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Segment Disclosure (Details 1) (USD $) In Thousands	Sep. 30, 2011		Dec. 31, 2010		Sep. 30, 2010	Dec. 31, 2009
Assets:
Land, buildings and improvement, net	$ 2,687,315		$ 2,254,077
Undeveloped land and construction in progress	328,785		290,365
Total Assets	3,367,684		2,816,565
Reconciliation to Consolidated Assets:
Total assets allocated to segments	3,367,684		2,816,565
Other unallocated asset:
Cash and cash equivalents	15,481		14,840		8,313	9,883
Restricted cash	25,436		1,461
Marketable securities	5,213		4,902
Deferred financing costs, net	19,638		16,447
Prepaid expenses and other assets, net	19,531		8,097
Total Assets	3,367,684		2,816,565
Operating Segments [Member]
Assets:
Total Assets	3,282,385	[1]	2,770,818	[1]
Reconciliation to Consolidated Assets:
Total assets allocated to segments	3,282,385	[1]	2,770,818	[1]
Other unallocated asset:
Total Assets	3,282,385	[1]	2,770,818	[1]
Reportable Segment - Office Properties [Member]
Assets:
Land, buildings and improvement, net	2,541,029		2,108,019
Undeveloped land and construction in progress	328,785		290,365
Total Assets	3,121,084	[1]	2,611,206	[1]
Reconciliation to Consolidated Assets:
Total assets allocated to segments	3,121,084	[1]	2,611,206	[1]
Other unallocated asset:
Total Assets	3,121,084	[1]	2,611,206	[1]
Non-Reportable Segment - Industrial Properties [Member]
Assets:
Land, buildings and improvement, net	146,286		146,058
Total Assets	161,301	[1]	159,612	[1]
Reconciliation to Consolidated Assets:
Total assets allocated to segments	161,301	[1]	159,612	[1]
Other unallocated asset:
Total Assets	$ 161,301	[1]	$ 159,612	[1]

[1] Includes land, buildings, and improvements, undeveloped land and construction in progress, current receivables, deferred rent receivables, deferred leasing costs, and acquisition-related intangible assets, all shown on a net basis.

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Pro Forma Results of the Company (Tables)

9 Months Ended

Sep. 30, 2011

Business Combinations [Abstract]

Pro forma consolidated results of operations of the company

The following pro forma consolidated results of operations of the Company for the three and nine months ended September 30, 2011 and 2010 assumes that the acquisitions of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, were completed as of January 1, 2010. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2010, nor does it intend to be a projection of future results.

	Three Months Ended September 30, (1)					Nine Months Ended September 30, (1)
	2011		2010			2011		2010
	(in thousands except per share amounts)
Revenues	$	99,938	$	86,490		$	291,600	$	239,270
Net income (loss) available to common stockholders(2)(3)	$	11,692	$	(1,284	)	$	9,896	$	2,692
Net income (loss) available to common stockholders per share - basic(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04
Net income (loss) available to common stockholders per share - diluted(2)(3)	$	0.19	$	(0.03	)	$	0.16	$	0.04

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The pro forma results for the three and nine months ended September 30, 2011 were adjusted to exclude acquisition-related expenses of approximately $0.4 million and $0.6 million, respectively, incurred in 2011 for the acquisition of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA. The pro forma results for the three and nine months ended September 30, 2010 were adjusted to include these expenses.

(3) The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowings and related pro forma interest expense estimate assumed herein are not indicative of actual results.

Actual results for certain operating data for the property

The following table summarizes the results of operations for the properties at 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, from June 3, 2011 and September 15, 2011, the dates of acquisition, respectively, through September 30, 2011:

	(in thousands)
Revenues	$	6,481
Net loss(1)	(31		)

________________________

(1) Reflects the net operating income less depreciation for these properties and amortization of acquisition-related intangibles.

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Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net (Details Textuals) (USD $) In Millions	9 Months Ended
	Sep. 30, 2011
Deferred Leasing Costs [Member]
Finite-Lived Intangible Assets [Line Items]
Fully amortized deferred leasing costs and intangibles	$ 10.4
In-Place Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Fully amortized deferred leasing costs and intangibles	5.0
Below-Market Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Fully amortized deferred leasing costs and intangibles	$ 3.8

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Share-Based Compensation (Details 1) (USD $) In Thousands, except Share data	9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010
Restricted Stock Units (RSUs) [Member]
Summary of restricted stock units
Outstanding at January 1, 2011, Vested RSUs and Total RSUs	713,822
Granted, Non-Vested Shares	107,673
Issuance of dividend equivalents	20,790	[1]
Cancelled	(8,497)	[2]
Outstanding as of September 30, 2011,Vested RSUs and Total RSUs	833,788
Summary of Granted and Vested Restricted Stock Units
Granted, Non-Vested Shares	107,673
Nonvested Restricted Stock Units RSU [Member]
Summary of restricted stock units
Outstanding at January 1, 2011 , Shares	125,754
Outstanding at January 1, 2011, Weighted Average Grant Date Fair Value Per Share	$ 29.88
Granted, Non-Vested Shares	107,673		159,606
Granted, Weighted Average Grant Date Fair Value Per Share	$ 37.94		$ 30.24
Vested, Shares	(23,035)		(23,564)
Vested, Weighted Average Grant Date Fair Value Per Share	$ 30.57
Outstanding as of September 30, 2011, Shares	210,392
Outstanding as of September 30, 2011, Weighted Average Grant Date Fair Value Per Share	$ 33.93
Summary of Granted and Vested Restricted Stock Units
Granted, Non-Vested Shares	107,673		159,606
Granted, Weighted Average Grant Date Fair Value Per Share	$ 37.94		$ 30.24
Vested, Shares	(23,035)		(23,564)
Vested shares, total fair value	$ 897	[3]	$ 740	[3]
Vested Restricted Stock Units R S U [Member]
Summary of restricted stock units
Outstanding at January 1, 2011, Vested RSUs and Total RSUs	588,068
Granted, Non-Vested Shares	0
Vested, Shares	(23,035)
Issuance of dividend equivalents	20,790	[1]
Cancelled	(8,497)	[2]
Outstanding as of September 30, 2011,Vested RSUs and Total RSUs	623,396
Summary of Granted and Vested Restricted Stock Units
Granted, Non-Vested Shares	0
Vested, Shares	(23,035)

[1] RSUs issued as dividend equivalents are vested upon issuance.

[2] We accept the return of RSUs, at the current quoted closing share price of the Company's common stock, to satisfy minimum statutory tax-withholding requirements related to either RSUs that have vested or RSU dividend equivalents in accordance with the terms of the 2006 Plan.

[3] Total fair value of RSUs vested was calculated based on the quoted closing share price of the Company's common stock on the NYSE on the day of vesting.

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Segment Disclosure (Tables)

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Reconciliation of operating profit loss to consolidated and segment information by segment

The following tables reconcile our reportable segment activity to our consolidated net income for the three and nine months ended September 30, 2011 and 2010 and the assets by segment to the consolidated assets as of September 30, 2011 and December 31, 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(in thousands)
Reportable Segment - Office Properties
Operating revenues(1)	$	89,754		$	71,646		$	254,041		$	194,923
Property and related expenses	26,709			21,091			74,199			56,678
Net Operating Income	63,045			50,555			179,842			138,245
Non-Reportable Segment - Industrial Properties
Operating revenues(1)	7,583			7,630			22,393			22,546
Property and related expenses	1,510			1,772			6,634			5,417
Net Operating Income	6,073			5,858			15,759			17,129
Total Segments:
Operating revenues(1)	97,337			79,276			276,434			217,469
Property and related expenses	28,219			22,863			80,833			62,095
Net Operating Income	$	69,118		$	56,413		$	195,601		$	155,374
Reconciliation to Consolidated Net Income:
Total Net Operating Income for segments	$	69,118		$	56,413		$	195,601		$	155,374
Unallocated (expenses) income:
General and administrative expenses	(6,355		)	(7,273		)	(20,355		)	(21,096		)
Acquisition-related expenses	(1,163		)	(354		)	(2,829		)	(1,624		)
Depreciation and amortization	(36,152		)	(29,951		)	(97,513		)	(74,405		)
Interest income and other net investment gains	30			337			272			703
Interest expense	(24,051		)	(15,853		)	(66,155		)	(40,897		)
Loss on early extinguishment of debt	—			—			—			(4,564		)
Income from continuing operations	1,427			3,319			9,021			13,491
Income from discontinued operations(2)	12,863			350			13,608			1,011
Net income	$	14,290		$	3,669		$	22,629		$	14,502

________________________

(1) All operating revenues are comprised of amounts received from third-party tenants.

(2) Income from discontinued operations is from our Reportable Segment - Office Properties.

	September 30, 2011		December 31, 2010
	(in thousands)
Assets:
Reportable Segment - Office Properties
Land, buildings, and improvements, net	$	2,541,029	$	2,108,019
Undeveloped land and construction in progress	328,785		290,365
Total assets(1)	3,121,084		2,611,206
Non-Reportable Segment - Industrial Properties
Land, buildings, and improvements, net	146,286		146,058
Total assets(1)	161,301		159,612
Total Segments
Land, buildings, and improvements, net	2,687,315		2,254,077
Undeveloped land and construction in progress	328,785		290,365
Total assets(1)	3,282,385		2,770,818
Reconciliation to Consolidated Assets:
Total assets allocated to segments	$	3,282,385	$	2,770,818
Other unallocated assets:
Cash and cash equivalents	15,481		14,840
Restricted cash	25,436		1,461
Marketable securities	5,213		4,902
Deferred financing costs, net	19,638		16,447
Prepaid expenses and other assets, net	19,531		8,097
Total consolidated assets	$	3,367,684	$	2,816,565

________________________

(1) Includes land, buildings, and improvements, undeveloped land and construction in progress, current receivables, deferred rent receivables, deferred leasing costs, and acquisition-related intangible assets, all shown on a net basis.

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Property Dispositions Reported as Discontinued Operations Property Dispositions Reported as Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2011

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Property Dispositions [Table Text Block]

The following table summarizes the properties sold during the nine months ended September 30, 2011.

Location	Property Type	Month of Disposition	Number of Buildings	Rentable Square Feet	Sales Price (in millions)
10350 Barnes Canyon and 10120 Pacific Heights Drive, San Diego, CA	Office	September	2	90,558	$	23.9

Components comprising income from discontinued operations

The following table summarizes the components that comprise income from discontinued operations for the three and nine months ended September 30, 2011 and 2010.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Revenues:
Rental income	$	413	$	473	$	1,359	$	1,419
Tenant reimbursements	56		55		202		151
Total revenues	469		528		1,561		1,570
Expenses:
Property expenses	33		43		118		153
Real estate taxes	29		32		93		97
Depreciation and amortization	99		103		297		309
Total expenses	161		178		508		559
Income from discontinued operations before net gain on dispositions of discontinued operations	308		350		1,053		1,011
Net gain on dispositions of discontinued operations	12,555		—		12,555		—
Total income from discontinued operations	$	12,863	$	350	$	13,608	$	1,011

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Acquisitions (Details Textuals) (USD $) In Thousands, unless otherwise specified	9 Months Ended				9 Months Ended						9 Months Ended
	Sep. 30, 2011		Sep. 30, 2011 Subsidiaries [Member] Material Acquisitions [Member]	Apr. 30, 2011 Subsidiaries [Member] 4.94% Mortgage Payable due April 15, 2015 [Member]	Sep. 30, 2011 In-Place Leases [Member]	Sep. 30, 2011 Above-Market Leases [Member]	Sep. 30, 2011 Deferred Leasing Costs [Member]	Sep. 30, 2011 Below-Market Leases [Member]	Sep. 30, 2011 Above Market Ground Lease [Member]	Sep. 30, 2011 Material Acquisitions [Member]	Sep. 30, 2011 Avenue Ne Bellevue Member
Aquisitions (Textuals) [Abstract]
Secured debt, net (Notes 5 and 12)				$ 30,000
Initial premium on outstanding amount of secured debt				1,000
Purchase price for material acquistions as a percentage of the total purchase price of all acquisitions			61.70%							61.70%
Purchase price of each acquisition as percentage of company's total assets	less than 5%
Purchase price of each acquisition as percentage of company's total assets	less than 10%
Assumed noncancellable ground lease expiration											Nov. 30, 2093
Deferred leasing costs and acquisition-related intangible assets	39,990	[1]			25,200	6,800	7,900				13,790	[2]
Weighted average amortization period in years					3.9	4.5	2.6	3.8	82.5
Deferred revenue and acquisition-related intangible liabilities	$ 22,940	[3]						$ 17,700	$ 5,200		$ 12,850	[2]

[1] Represents in-place leases (approximately $25.2 million with a weighted average amortization period of 3.9 years), above-market leases (approximately $6.8 million with a weighted average amortization period of 4.5 years), and leasing commissions (approximately $7.9 million with a weighted average amortization period of 2.6 years).

[2] The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the two largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

[3] Represents below-market leases (approximately $17.7 million with a weighted average amortization period of 3.8 years) and an above-market ground lease obligation (approximately $5.2 million with a weighted average amortization period of 82.5 years), under which we are the lessee.

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2011

Business Combinations [Abstract]

Acquired operating properties from unrelated third parties

Property	Property Type	Date of Acquisition	Number of Buildings	Rentable Square Feet	Percentage Occupied as of September 30, 2011	Purchase Price (in  millions)(1)
250 Brannan Street	Office	January 28, 2011
San Francisco, CA			1	92,948	100.0%	$	33.0
10210, 10220, and 10230 NE Points Drive; 3933 Lake Washington Boulevard NE	Office	April 21, 2011
Kirkland, WA(2)			4	279,924	89.6%	100.1
10770 Wateridge Circle	Office	May 12, 2011
San Diego, CA			1	174,310	97.5%	32.7
601 108th Avenue N.E.	Office	June 3, 2011
Bellevue, WA			1	488,470	88.1%	215.0
4040 Civic Center Drive	Office	June 9, 2011
San Rafael, CA			1	126,787	93.1%	32.2
201 Third Street	Office	September 15, 2011
San Francisco, CA (3)			1	311,545	90.3%	103.3
Total			9	1,473,984		$	516.3

________________________

(1) Excludes acquisition-related costs.

(2) In connection with this acquisition, we assumed secured debt with an outstanding principal balance of $30.0 million and recorded a premium of $1.0 million in connection with recording this debt at fair value on the acquisition date (see Note 5).

(3) As of September 30, 2011, this property was temporarily being held in a separate VIE to facilitate a potential Section 1031 Exchange (see Note 1).

Fair values of assets acquired and liabilities assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the respective acquisition dates:

	601 108th Avenue N.E., Bellevue, WA(1)		201 Third Street San Francisco, CA (1)		All Other Acquisitions(2)		Total
Assets
Land(3)	$	—	$	19,260	$	36,740	$	56,000
Buildings and improvements(4)	214,095		84,018		143,545		441,658
Undeveloped land	—		—		2,560		2,560
Deferred leasing costs and acquisition-related intangible assets(5)	13,790		8,700		17,500		39,990
Total assets acquired	227,885		111,978		200,345		540,208
Liabilities
Deferred revenue and acquisition-related intangible liabilities(6)	12,850		8,700		1,390		22,940
Secured debt(7)	—		—		30,997		30,997
Accounts payable, accrued expenses and other liabilities	2,380		76		2,059		4,515
Total liabilities assumed	15,230		8,776		34,446		58,452
Net assets and liabilities acquired(8)	$	212,655	$	103,202	$	165,899	$	481,756

________________________

(1) The purchase of 601 108th Avenue N.E., Bellevue, WA, and 201 Third Street, San Francisco, CA, represent the two largest acquisitions and 61.7% of the total aggregate purchase price of the properties acquired during the nine months ended September 30, 2011.

(2) The purchase price of all other acquisitions completed during the nine months ended September 30, 2011 were individually less than 5% and in the aggregate less than 10% of the Company's total assets as of December 31, 2010.

(3) In connection with the acquisition of 601 108th Avenue N.E., Bellevue, WA, we assumed the lessee's obligations under a noncancellable ground lease that is scheduled to expire in November 2093 (see Notes 3 and 11).

(4) Represents buildings, building improvements and tenant improvements.

(5) Represents in-place leases (approximately $25.2 million with a weighted average amortization period of 3.9 years), above-market leases (approximately $6.8 million with a weighted average amortization period of 4.5 years), and leasing commissions (approximately $7.9 million with a weighted average amortization period of 2.6 years).

(6) Represents below-market leases (approximately $17.7 million with a weighted average amortization period of 3.8 years) and an above-market ground lease obligation (approximately $5.2 million with a weighted average amortization period of 82.5 years), under which we are the lessee.

(7) Represents the mortgage loan, which includes an unamortized premium recorded at the date of acquisition of approximately $1.0 million in connection with recording this debt at fair value, assumed in connection with the properties acquired in April 2011 (see Note 5).

(8) Reflects the purchase price net of assumed secured debt and other lease-related obligations.