Exhibit 99.2
 
Contact:
FOR RELEASE:
Richard E. Moran Jr.
January 30, 2002
Executive Vice President
and Chief Financial Officer
(310) 563-5533
or
Tyler H. Rose
Senior Vice President
and Treasurer
(310) 563-5531
 
KILROY REALTY CORPORATION REPORTS
ANNUAL FFO PER SHARE GROWTH OF 9.9%
 
LOS ANGELES, January 30, 2002 – Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its fourth quarter ended December 31, 2001, with funds from operations (FFO) of $20.9 million, or $0.68 per share, down from $21.6 million, or $0.71 per share, in the fourth quarter of 2000. Revenues in the fourth quarter totaled $49.6 million, down from $50.8 million in the prior year’s quarter.
 
For its fiscal year ended December 31, 2001, KRC reported FFO of $91.6 million, or $3.00 per share, up from $83.5 million, or $2.73 per share, in 2000, a 9.9% increase. Revenues for 2001 totaled $209.6 million, up from $187.1 million in the prior year.
 
The company said net income in its fourth quarter totaled $7.6 million, or $0.28 per share, down from $8.8 million, or $0.33 per share, in the fourth quarter of 2000. For the year, net income totaled $38.4 million, or $1.40 per share, down from $46.8 million, or $1.75 per share, in 2000. All per-share amounts in this report are presented on a diluted basis.
 
KRC completed and stabilized $67 million of new development in 2001, adding an aggregate 312,000 square feet of space in four new office properties to its stabilized portfolio. At year-end, the stabilized portfolio was 96% occupied. The company also disposed of $70 million of non-strategic real estate assets aggregating 802,000 square feet of space during the year.

1
 
KRC currently has in lease-up 284,500 square feet of space, representing a total estimated investment of approximately $66 million, which is 88% leased or committed. The Company has an additional 549,300 square feet of space under construction, with completion dates scheduled through 2002. The properties under construction, representing a total estimated investment of approximately $158 million, are currently 48% leased. In total the company’s lease-up and under construction development properties are 62% leased or committed, up from 51% in the prior quarter.
 
Some of the information presented in this release is forward-looking in nature within the meaning of the Private Securities Litigation Reform Act of 1995. Although Kilroy Realty Corporation believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that the expectations will be achieved. Certain factors that could cause actual results to differ materially from Kilroy Realty’s expectations are set forth as risk factors in the company’s Securities and Exchange Commission reports and filings. Included among these factors are changes in general economic conditions, including changes in the economic conditions affecting industries in which its principal tenants compete; any failure of the general economy to recover timely from the current economic downturn; Kilroy Realty’s ability to timely lease or re-lease space at current or anticipated rents; changes in interest rates; changes in operating costs, including utility and insurance costs; future demand for its debt and equity securities; its ability to refinance its debt on reasonable terms at maturity; its ability to complete current and future development projects on schedule and on budget; the demand for office space in markets in which Kilroy Realty has a presence; and risks detailed from time to time in the company’s SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Many of these factors are beyond Kilroy Realty’s ability to control or predict. Forward-looking statements are not guarantees of performance. For forward-looking statements herein, Kilroy Realty claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

2
 
Kilroy Realty Corporation is a Southern California-based real estate investment trust active in the office and industrial property sectors. The company is a member of the S&P Small Cap 600 Index. For more than 50 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of California and Washington. Principal submarkets for KRC’s current development program include West Los Angeles, El Segundo and coastal San Diego, where the company’s total development pipeline is more than $500 million. At December 31, 2001, the company owned 7.2 million square feet of commercial office space and 5.1 million square feet of industrial space.
 
#########################

3
KILROY REALTY CORPORATION
Summary Quarterly Results
(unaudited, in thousands, except per share data)
 
      
Three Months Ended December 31, 2001
     
Three Months Ended December 31, 2000
     
Year Ended
December 31, 2001
       
Year Ended
December 31, 2000
  
Revenues
     
$
49,598
     
$
50,768
     
$
209,645
 
     
$
187,123
 
Net income available to common stockholders (1)
     
$
7,625
     
$
8,786
     
$
38,431
 
     
$
46,846
 
Weighted average common shares outstanding—basic
     
 
27,426
     
 
26,456
     
 
27,167
 
     
 
26,599
 
Weighted average common shares outstanding—diluted
     
 
27,545
     
 
26,747
     
 
27,373
 
     
 
26,755
 
Net income per share of common stock—basic
     
$
0.28
     
$
0.33
     
$
1.41
 
     
$
1.76
 
Net income per share of common stock—diluted
     
$
0.28
     
$
0.33
     
$
1.40
 
     
$
1.75
 
Funds From Operations
     
$
20,933
     
$
21,572
     
$
91,558
 
     
$
83,471
 
Weighted average common shares/units outstanding—basic(2)
     
 
30,487
     
 
30,205
     
 
30,349
 
     
 
30,394
 
Weighted average common shares/units outstanding—diluted(2)
     
 
30,606
     
 
30,495
     
 
30,555
 
     
 
30,550
 
Funds From Operations per common share/unit—basic(2)
     
$
0.69
     
$
0.71
     
$
3.02
 
     
$
2.75
 
Funds From Operations per common share/unit—diluted(2)
     
$
0.68
     
$
0.71
     
$
3.00
 
     
$
2.73
 
Common shares outstanding at end of period
                   
 
27,426
 
     
 
26,475
 
Common partnership units outstanding at end of period
                   
 
3,061
 
     
 
3,749
 
                    
      
 
Total common shares and units outstanding at end of period
                   
 
30,487
 
     
 
30,224
 
                    
December 31, 2001
       
December 31, 2000
  
Occupancy rates:
                                
California
                   
 
95.6
%
     
 
96.7
%
Washington
                   
 
99.6
%
     
 
100.0
%
Arizona
                   
 
100.0
%
     
 
100.0
%
Nevada
                            
 
100.0
%
                    
      
 
Weighted average total
                   
 
95.8
%
     
 
97.0
%
Total square feet of stabilized properties owned at end of period:
                                
Office
                   
 
7,225
 
     
 
6,624
 
Industrial
                   
 
5,086
 
     
 
5,808
 
                    
      
 
Total
                   
 
12,311
 
     
 
12,432
 
(1)
 
Net income after minority interests.
(2)    Calculated
 
based on weighted average shares outstanding assuming conversion of all common limited partnership units outstanding.

4
KILROY REALTY CORPORATION
Consolidated Balance Sheets
(unaudited, in thousands)
 
    
December 31, 2001
     
December 31, 2000
  
ASSETS
              
INVESTMENT IN REAL ESTATE:
              
  Land and improvements
   
$
269,366
 
   
$
266,444
 
  Buildings and improvements
   
 
1,140,499
 
   
 
1,054,995
 
  Undeveloped land and construction in progress, net
   
 
191,129
 
   
 
162,633
 
  Investment in unconsolidated real estate
          
 
12,405
 
    
    
 
Total investment in real estate
   
 
1,600,994
 
   
 
1,496,477
 
  Accumulated depreciation and amortization
   
 
(241,665
)
   
 
(205,332
)
    
    
 
Investment in real estate, net
   
 
1,359,329
 
   
 
1,291,145
 
  Cash and cash equivalents
   
 
16,487
 
   
 
17,600
 
  Restricted cash
   
 
5,413
 
   
 
35,014
 
  Tenant receivables, net
   
 
32,151
 
   
 
30,720
 
  Note receivable from related party
          
 
33,274
 
  Deferred financing and leasing costs, net
   
 
37,068
 
   
 
39,674
 
  Prepaid expenses and other assets
   
 
6,781
 
   
 
7,941
 
    
    
 
TOTAL ASSETS
   
$
1,457,229
 
   
$
1,455,368
 
    
    
 
LIABILITIES & STOCKHOLDERS' EQUITY
             
LIABILITIES:
              
  Secured debt
   
$
459,587
 
   
$
432,688
 
  Unsecured line of credit
   
 
155,000
 
   
 
191,000
 
  Unsecured term facility
   
 
100,000
 
   
 
100,000
 
  Accounts payable, accrued expenses and other liabilities
   
 
53,879
 
   
 
33,911
 
  Accrued distributions
   
 
14,634
 
   
 
13,601
 
  Rents received in advance and tenant security deposits
   
 
15,955
 
   
 
16,009
 
    
    
 
Total liabilities
   
 
799,055
 
   
 
787,209
 
    
    
 
MINORITY INTERESTS:
              
  8.075% Series A Cumulative Redeemable
Preferred unitholders
   
 
73,716
 
   
 
73,716
 
  9.375% Series C Cumulative Redeemable
Preferred unitholders
   
 
34,464
 
   
 
34,464
 
  9.250% Series D Cumulative Redeemable
Preferred unitholders
   
 
44,321
 
   
 
44,321
 
  Common unitholders of the Operating Partnership
   
 
49,176
 
   
 
62,485
 
  Minority interest in Development LLCs
   
 
15,869
 
   
 
11,748
 
    
    
 
Total minority interests
   
 
217,546
 
   
 
226,734
 
    
    
 
STOCKHOLDERS' EQUITY:
              
  Common stock
   
 
274
 
   
 
265
 
  Additional paid-in capital
   
 
479,295
 
   
 
460,390
 
  Distributions in excess of earnings
   
 
(33,163
)
   
 
(19,230
)
  Accumulated other comprehensive loss
   
 
(5,778
)
       
    
    
 
Total stockholders' equity
   
 
440,628
 
   
 
441,425
 
    
    
 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
   
$
1,457,229
 
   
$
1,455,368
 
    
    
 

5
KILROY REALTY CORPORATION
Consolidated Statements of Operations
(unaudited, in thousands, except per share data)
 
   
Three Months
Ended
December 31, 2001
     
Three Months
Ended
December 31, 2000
     
Year
Ended
December 31, 2001
     
Year
Ended
December 31, 2000
  
REVENUES:
                            
Rental income
   
$
45,152
 
   
$
43,609
 
   
$
180,552
 
   
$
161,236
 
Tenant reimbursements
   
 
4,261
 
   
 
5,405
 
   
 
21,852
 
   
 
19,441
 
Interest income
   
 
147
 
   
 
1,594
 
   
 
1,030
 
   
 
4,602
 
Other income
   
 
38
 
   
 
160
 
   
 
6,211
 
   
 
1,844
 
    
    
    
    
 
Total revenues
   
 
49,598
 
   
 
50,768
 
   
 
209,645
 
   
 
187,123
 
    
    
    
    
 
EXPENSES:
                            
Property expenses
   
 
7,550
 
   
 
5,598
 
   
 
29,804
 
   
 
23,347
 
Real estate taxes
   
 
3,015
 
   
 
4,632
 
   
 
15,495
 
   
 
14,591
 
General and administrative expenses
   
 
3,098
 
   
 
3,037
 
   
 
12,435
 
   
 
11,114
 
Ground leases
   
 
361
 
   
 
432
 
   
 
1,507
 
   
 
1,643
 
Interest expense
   
 
9,619
 
   
 
11,309
 
   
 
41,679
 
   
 
39,109
 
Depreciation and amortization
   
 
13,279
 
   
 
12,216
 
   
 
51,913
 
   
 
41,125
 
    
    
    
    
 
Total expenses
   
 
36,922
 
   
 
37,224
 
   
 
152,833
 
   
 
130,929
 
    
    
    
    
 
Income from operations
   
 
12,676
 
   
 
13,544
 
   
 
56,812
 
   
 
56,194
 
Net gains on dispositions of operating properties
   
 
707
 
          
 
4,714
 
   
 
11,256
 
    
    
    
    
 
Income before minority interests and cumulative effect of change in accounting principle
   
 
13,383
 
   
 
13,544
 
   
 
61,526
 
   
 
67,450
 
    
    
    
    
 
Minority interests:
                            
Distributions on Cumulative Redeemable Preferred units
   
 
(3,375
)
   
 
(3,375
)
   
 
(13,500
)
   
 
(13,500
)
Minority interest in earnings of Operating Partnership
   
 
(834
)
   
 
(1,241
)
   
 
(4,502
)
   
 
(6,683
)
Minority interest in earnings of Development LLCs
   
 
(1,549
)
   
 
(142
)
   
 
(3,701
)
   
 
(421
)
    
    
    
    
 
Total minority interests
   
 
(5,758
)
   
 
(4,758
)
   
 
(21,703
)
   
 
(20,604
)
    
    
    
    
 
Net income before cumulative effect of change in accounting principle
   
 
7,625
 
   
 
8,786
 
   
 
39,823
 
   
 
46,846
 
Cumulative effect of change in accounting principle
                 
 
(1,392
)
       
    
    
    
    
 
Net income
   
$
7,625
 
   
$
8,786
 
   
$
38,431
 
   
$
46,846
 
    
    
    
    
 
Weighted average shares outstanding—basic
   
 
27,426
 
   
 
26,456
 
   
 
27,167
 
   
 
26,599
 
Weighted average shares outstanding—diluted
   
 
27,545
 
   
 
26,747
 
   
 
27,373
 
   
 
26,755
 
Income per common share—basic
   
$
0.28
 
   
$
0.33
 
   
$
1.41
 
   
$
1.76
 
    
    
    
    
 
Income per common share—diluted
   
$
0.28
 
   
$
0.33
 
   
$
1.40
 
   
$
1.75
 
    
    
    
    
 

6

KILROY REALTY CORPORATION
Funds from Operations
(unaudited, in thousands, except per share data)
 
      
Three Months
Ended
December 31, 2001
       
Three Months
Ended
December 31, 2000
     
Year
Ended
December 31, 2001
       
Year
Ended
December 31, 2000
  
Net income
     
$
7,625
 
     
$
8,786
     
$
38,431
 
     
$
46,846
 
Adjustments:
                                  
Minority interest in earnings of Operating Partnership
     
 
834
 
     
 
1,241
     
 
4,502
 
     
 
6,683
 
Depreciation and amortization
     
 
12,634
 
     
 
11,037
     
 
49,757
 
     
 
39,946
 
Net gains on dispositions of operating properties
     
 
(707
)
            
 
(4,714
)
     
 
(11,256
)
Cumulative effect of change in accounting principle
                     
 
1,392
 
         
Non-cash amortization of restricted stock grants
     
 
547
 
     
 
508
     
 
2,190
 
     
 
1,252
 
      
      
    
      
 
Funds From Operations
     
$
20,933
 
     
$
21,572
     
$
91,558
 
     
$
83,471
 
      
      
    
      
 
Weighted average common shares/units outstanding—basic
     
 
30,487
 
     
 
30,205
     
 
30,349
 
     
 
30,394
 
Weighted average common shares/units outstanding—diluted
     
 
30,606
 
     
 
30,495
     
 
30,555
 
     
 
30,550
 
Funds From Operations per common share/unit—basic
     
$
0.69
 
     
$
0.71
     
$
3.02
 
     
$
2.75
 
      
      
    
      
 
Funds From Operations per common share/unit—diluted
     
$
0.68
 
     
$
0.71
     
$
3.00
 
     
$
2.73
 
      
      
    
      
 
 
KILROY REALTY CORPORATION
Funds Available for Distribution
(unaudited, in thousands, except per share data)
 
      
Three Months
Ended December 31, 2001
       
Three Months
Ended December 31, 2000
       
Year
Ended December 31, 2001
       
Year
Ended December 31, 2000
  
Funds From Operations
     
$
20,933
 
     
$
21,572
 
     
$
91,558
 
     
$
83,471
 
Adjustments:
                                    
Amortization of deferred financing costs
     
 
532
 
     
 
369
 
     
 
1,720
 
     
 
1,488
 
Tenant improvements, leasing commissions and recurring capital expenditures
     
 
(4,249
)
     
 
(3,237
)
     
 
(11,168
)
     
 
(8,430
)
Net effect of straight-line rents
     
 
(2,272
)
     
 
(2,000
)
     
 
(6,786
)
     
 
(7,668
)
      
      
      
      
 
Funds Available for Distribution
     
$
14,944
 
     
$
16,704
 
     
$
75,324
 
     
$
68,861
 
      
      
      
      
 
Funds Available for Distribution per common share/unit—basic
     
$
0.49
 
     
$
0.55
 
     
$
2.48
 
     
$
2.27
 
      
      
      
      
 
Funds Available for Distribution per common share/unit—diluted
     
$
0.49
 
     
$
0.55
 
     
$
2.47
 
     
$
2.25
 
      
      
      
      
 

7