EXHIBIT 99.1
 
KILROY
REALTY
CORPORATION
 
First Quarter 2002 Supplemental Financial Report
 
    
Page
  
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16
 
Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Business Risks” in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2001. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplement information might not occur.

 
KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Financial Highlights
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended March 31,
  
    
2002
     
2001
     
% Change
  
INCOME ITEMS:
                         
Revenues
   
$
52,635
 
   
$
50,367
 
   
4.5
%
Net Operating Income
   
 
40,416
 
   
 
38,922
 
   
3.8
%
Net Income
   
 
13,507
 
   
 
6,426
 
   
110.2
%
Operating Earnings (1)
   
 
15,017
 
   
 
8,358
 
   
79.7
%
Funds From Operations
   
 
27,153
 
   
 
21,876
 
   
24.1
%
Funds Available for Distribution
   
 
26,368
 
   
 
19,532
 
   
35.0
%
Net Income per share—diluted
   
$
0.49
 
   
$
0.24
 
   
104.2
%
Operating Earnings per share—diluted
   
$
0.49
 
   
$
0.27
 
   
81.5
%
Funds From Operations per share—diluted
   
$
0.89
 
   
$
0.72
 
   
23.6
%
Funds Available for Distribution per share—diluted
   
$
0.86
 
   
$
0.64
 
   
34.4
%
Dividend per share
   
$
0.495
 
   
$
0.480
 
   
3.1
%
RATIOS:
                
Interest Coverage Ratio (2)
   
 
  4.3
x
   
 
3.3
x
       
Fixed Charge Coverage Ratio (3)
   
 
      3.2
x
   
 
2.5
x
       
FFO Payout Ratio (4)
   
 
55.8
%
   
 
66.4
%
   
(10.6
%)
FAD Payout Ratio (5)
   
 
57.5
%
   
 
74.4
%
   
(16.9
%)
 
    
Mar. 31, 2002
     
Dec. 31, 2001
     
% Change
  
ASSETS:
                         
Investments in Real Estate before Depreciation
   
$
1,661,622
 
   
$
1,600,994
 
   
3.8
%
Total Assets
   
 
1,506,491
 
   
 
1,457,229
 
   
3.4
%
CAPITALIZATION:
                         
Total Debt
   
$
741,186
 
   
$
714,587
 
   
3.7
%
Total Preferred Stock (6)
   
 
155,000
 
   
 
155,000
 
   
—
 
Total Market Equity Value (6)
   
 
903,565
 
   
 
800,894
 
   
12.8
%
Total Market Capitalization (6)
   
 
1,799,751
 
   
 
1,670,481
 
   
7.7
%
Total Debt/Total Market Capitalization
   
 
41.2
%
   
 
42.8
%
   
(1.6
%)
Total Debt and Preferred/Total Market Capitalization
   
 
49.8
%
   
 
52.1
%
   
(2.3
%)
(1)
 
Excludes effect of 2001 charge for cumulative effect of change in accounting principal of approximately $1.4 million.
(2)
 
Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense.
(3)
 
Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense and current year paid and accrued preferred dividends.
(4)
 
Calculated as current year dividends paid and accrued to common shareholders divided by Funds From Operations.
(5)
 
Calculated as current year dividends paid and accrued to common shareholders divided by Funds Available for Distribution.
(6)
 
See “Capital Structure” on page 15.

1

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Consolidated Balance Sheets
(unaudited, $ in thousands)
 
    
March 31, 2002
       
December 31, 2001
  
ASSETS:
                    
Land and improvements
   
$
277,842
 
     
$
269,366
 
Buildings and improvements
   
 
1,179,214
 
     
 
1,140,499
 
Undeveloped land and construction in progress
   
 
204,566
 
     
 
191,129
 
    
    
Total investment in real estate
   
 
1,661,622
 
     
 
1,600,994
 
Accumulated depreciation and amortization
   
 
(248,702
)
     
 
(241,665
)
    
    
Investment in real estate, net
   
 
1,412,920
 
     
 
1,359,329
 
Cash and cash equivalents
   
 
10,432
 
     
 
16,487
 
Restricted cash
   
 
5,984
 
     
 
5,413
 
Tenant receivables, net
   
 
30,051
 
     
 
32,151
 
Deferred financing and leasing costs, net
   
 
42,208
 
     
 
37,068
 
Prepaid expenses and other assets
   
 
4,896
 
     
 
6,781
 
    
    
TOTAL ASSETS
   
$
1,506,491
 
     
$
1,457,229
 
    
    
LIABILITIES AND STOCKHOLDERS’ EQUITY:
                    
Liabilities:
                    
Secured debt
   
$
457,186
 
     
$
459,587
 
Unsecured line of credit
   
 
284,000
 
     
 
155,000
 
Unsecured term facility
              
 
100,000
 
Accounts payable, accrued expenses and other liabilities
   
 
49,745
 
     
 
53,879
 
Accrued distributions
   
 
15,163
 
     
 
14,634
 
Rents received in advance and tenant security deposits
   
 
15,155
 
     
 
15,955
 
    
    
Total liabilities
   
 
821,249
 
     
 
799,055
 
    
    
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
   
 
74,477
 
     
 
49,176
 
Minority interest in Development LLCs
              
 
15,869
 
    
    
Total minority interests
   
 
226,978
 
     
 
217,546
 
    
    
Stockholders’ Equity:
                    
Common stock
   
 
275
 
     
 
274
 
Additional paid-in capital
   
 
494,354
 
     
 
479,295
 
Distributions in excess of earnings
   
 
(33,305
)
     
 
(33,163
)
Accumulated net other comprehensive loss
   
 
(3,060
)
     
 
(5,778
)
    
    
Total stockholders’ equity
   
 
458,264
 
     
 
440,628
 
    
    
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
   
$
1,506,491
 
     
$
1,457,229
 
    
    

2

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Consolidated Statements of Operations
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended March 31,
  
    
2002
     
2001
     
% Change
  
REVENUES:
                         
Rental income
   
$
45,295
 
   
$
44,379
 
   
2.1
%
Tenant reimbursements
   
 
5,618
 
   
 
5,520
 
   
1.8
%
Interest income
   
 
285
 
   
 
436
 
   
(34.6
%)
Other income
   
 
1,437
 
   
 
32
 
   
4390.6
%
    
  
      
Total revenues
   
 
52,635
 
   
 
50,367
 
   
4.5
%
    
  
      
EXPENSES:
                         
Property expenses
   
 
7,701
 
   
 
6,982
 
   
10.3
%
Real estate taxes
   
 
3,850
 
   
 
3,635
 
   
5.9
%
General and administrative expenses
   
 
2,968
 
   
 
3,089
 
   
(3.9
%)
Ground leases
   
 
383
 
   
 
392
 
   
(2.3
%)
Interest expense
   
 
9,359
 
   
 
10,791
 
   
(13.3
%)
Depreciation and amortization
   
 
12,866
 
   
 
13,611
 
   
(5.5
%)
    
  
      
Total expenses
   
 
37,127
 
   
 
38,500
 
   
(3.6
%)
    
  
      
INCOME FROM OPERATIONS
   
 
15,508
 
   
 
11,867
 
   
30.7
%
Net gains on dispositions of operating properties
            
 
305
 
   
(100.0
%)
    
  
      
INCOME BEFORE MINORITY INTERESTS AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
   
 
15,508
 
   
 
12,172
 
   
27.4
%
    
  
      
MINORITY INTERESTS:
                         
Distributions on Cumulative Redeemable Preferred units
   
 
(3,375
)
   
 
(3,375
)
   
0.0
%
Minority interest in earnings of Operating Partnership
   
 
(1,510
)
   
 
(845
)
   
78.7
%
Recognition of previously reserved Development LLC preferred return
   
 
3,908
 
            
100.0
%
Minority interest in earnings of Development LLCs
   
 
(1,024
)
   
 
(134
)
   
664.2
%
    
  
      
Total minority interests
   
 
(2,001
)
   
 
(4,354
)
   
(54.0
%)
    
  
      
NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
   
 
13,507
 
   
 
7,818
 
   
72.8
%
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
            
 
(1,392
)
   
100.0
%
    
  
      
NET INCOME
   
$
13,507
 
   
$
6,426
 
   
110.2
%
    
  
      
Weighted average shares outstanding—basic
   
 
27,256
 
   
 
26,713
 
       
Weighted average shares outstanding—diluted
   
 
27,550
 
   
 
26,971
 
       
NET INCOME PER COMMON SHARE:
                         
Net Income per common share—basic
   
$
0.50
 
   
$
0.24
 
   
108.3
%
    
  
      
Net Income per common share—diluted
   
$
0.49
 
   
$
0.24
 
   
104.2
%
    
  
      
 

3

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Operating Earnings, Funds From Operations and Funds Available for Distribution
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended March 31,
  
    
2002
     
2001
     
% Change
  
OPERATING EARNINGS:
                         
Net income
   
$
13,507
 
   
$
6,426
 
   
110.2
%
Adjustments:
                         
  Minority interest in earnings of Operating Partnership
   
 
1,510
 
   
 
845
 
   
78.7
%
  Net gains on dispositions of operating properties
            
 
(305
)
   
100.0
%
  Cumulative effect of change in accounting principle
            
 
1,392
 
   
(100.0
%)
    
  
      
Operating Earnings
   
$
15,017
 
   
$
8,358
 
   
79.7
%
    
  
      
Weighted average common shares/units outstanding—basic
   
 
30,317
 
   
 
30,225
 
       
Weighted average common shares/units outstanding—diluted
   
 
30,611
 
   
 
30,484
 
       
Operating Earnings per common share/unit—basic
   
$
0.50
 
   
$
0.28
 
   
78.6
%
    
  
      
Operating Earnings per common share/unit—diluted
   
$
0.49
 
   
$
0.27
 
   
81.5
%
    
  
      
FUNDS FROM OPERATIONS:
                         
Operating Earnings
   
$
15,017
 
   
$
8,358
 
   
79.7
%
Adjustments:
                         
  Depreciation and amortization
   
 
12,136
 
   
 
12,970
 
   
(6.4
%)
  Non-cash amortization of restricted stock grants (1)
            
 
548
 
   
(100.0
%)
    
  
      
Funds From Operations
   
$
27,153
 
   
$
21,876
 
   
24.1
%
    
  
      
FFO per common share/unit—basic
   
$
0.90
 
   
$
0.72
 
   
25.0
%
    
  
      
FFO per common share/unit—diluted
   
$
0.89
 
   
$
0.72
 
   
23.6
%
    
  
      
FUNDS AVAILABLE FOR DISTRIBUTION:
                         
Funds From Operations
   
$
27,153
 
   
$
21,876
 
   
24.1
%
Adjustments:
                         
  Amortization of deferred financing costs
   
 
778
 
   
 
381
 
   
104.2
%
  Tenant improvements, leasing commissions and recurring capital expenditures
   
 
(335
)
   
 
(1,011
)
   
(66.9
%)
  Net effect of straight-line rents
   
 
(1,228
)
   
 
(1,714
)
   
(28.4
%)
    
  
      
Funds Available for Distribution
   
$
26,368
 
   
$
19,532
 
   
35.0
%
    
  
      
FAD per common share/unit—basic
   
$
0.87
 
   
$
0.65
 
   
33.8
%
    
  
      
FAD per common share/unit—diluted
   
$
0.86
 
   
$
0.64
 
   
34.4
%
    
  
      
 
(1)
 
Commencing January 1, 2002, non-cash amortization of restricted stock grants is not added back to calculate Funds From Operations.

4

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Financial Results Excluding Impact of Recognition of
Previously Reserved Development LLC Preferred Return
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended March 31,
  
    
2002
     
2001
     
% Change
  
OPERATING EARNINGS:
                         
Operating Earnings as Reported
   
$
15,017
 
   
$
8,358
 
   
79.7
%
Recognition of previously reserved Development LLC preferred return
   
 
(3,908
)
                
    
  
      
Operating Earnings excluding impact of preferred return
   
$
11,109
 
   
$
8,358
 
   
32.9
%
    
  
      
Weighted average common shares/units outstanding—diluted
   
 
30,611
 
   
 
30,484
 
       
Adjusted Operating Earnings per common share/unit—diluted
   
$
0.36
 
   
$
0.27
 
   
33.3
%
    
  
      
FUNDS FROM OPERATIONS:
                         
Funds From Operations As Reported
   
$
27,153
 
   
$
21,876
 
   
24.1
%
Recognition of previously reserved Development LLC preferred return
   
 
(3,908
)
                
    
  
      
FFO excluding impact of preferred return
   
$
23,245
 
   
$
21,876
 
   
6.3
%
    
  
      
Adjusted FFO per common share/unit—diluted
   
$
0.76
 
   
$
0.72
 
   
5.6
%
    
  
      
FUNDS AVAILABLE FOR DISTRIBUTION:
                         
Funds Available for Distribution as Reported
   
$
26,368
 
   
$
19,532
 
   
35.0
%
Recognition of previously reserved Development LLC preferred return
   
 
(3,908
)
                
    
  
      
FAD excluding impact of preferred return
   
$
22,460
 
   
$
19,532
 
   
15.0
%
    
  
      
Adjusted FAD per common share/unit—diluted
   
$
0.73
 
   
$
0.64
 
   
14.1
%
    
  
      
RATIOS:
                         
Interest Coverage Ratio
   
 
3.9x
 
   
 
3.3x
 
       
Fixed Charge Coverage Ratio
   
 
2.9x
 
   
 
2.5x
 
       
FFO Payout Ratio
   
 
65.2
%
   
 
66.4
%
   
(1.2
%)
FAD Payout Ratio
   
 
67.5
%
   
 
74.4
%
   
(6.9
%)

5

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Net Operating Income Breakdown
 
      
As of March 31, 2002(1)
% OF TOTAL NOI BY PRODUCT TYPE:
       
Office:
       
Los Angeles
     
  33.1%
Orange County
     
    4.1%
San Diego
     
  35.2%
Other
     
    5.5%
      
Subtotal
     
  77.9%
      
Industrial:
       
Los Angeles
     
    3.1%
Orange County
     
  17.8%
Other
     
    1.2%
      
Subtotal
     
  22.1%
      
% OF TOTAL NOI BY REGION:
       
Los Angeles
     
  36.2%
Orange County
     
  21.9%
San Diego
     
  35.2%
Other
     
    6.7%
      
Total
     
100.0%
      
 
(1)
 
Based on Net Operating Income for the quarter ended March 31, 2002.

6

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Same Store Analysis(1)
($ in thousands)
 
    
Three Months Ended March 31,
  
    
2002
   
2001
   
$ Change
   
% Change
  
TOTAL SAME STORE PORTFOLIO
                            
Operating Revenues:
                            
Rental income
   
$
40,071
   
$
39,905
   
$
166
   
0.4
%
Tenant reimbursements
   
 
4,885
   
 
4,690
   
 
195
   
4.2
%
Other income
   
 
1,321
   
 
111
   
 
1,210
   
1090.1
%
    
  
  
      
Total operating revenues
   
 
46,277
   
 
44,706
   
 
1,571
   
3.5
%
    
  
  
      
Operating Expenses:
                            
Property expenses
   
 
6,452
   
 
6,150
   
 
302
   
4.9
%
Real estate taxes
   
 
3,374
   
 
3,225
   
 
149
   
4.6
%
Ground leases
   
 
333
   
 
332
   
 
1
   
0.3
%
    
  
  
      
Total operating expenses
   
 
10,159
   
 
9,707
   
 
452
   
4.7
%
    
  
  
      
Net Operating Income
   
$
36,118
   
$
34,999
   
$
1,119
   
3.2
%
    
  
  
      
 
(1)
 
Same store defined as all stabilized properties owned at January 1, 2001 and still owned at March 31, 2002.

7

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Stabilized and Renovation Portfolio and Occupancy Overview
    
# of Buildings
  
Square Feet
   
Occupancy at:
  
      
Total
  
Leased
  
Available
   
3/31/2002
     
12/31/2001
     
12/31/2000
  
STABILIZED PORTFOLIO:
                                      
OCCUPANCY BY PRODUCT TYPE:
                                 
Office:
                                      
Los Angeles
   
31
  
3,177,788
  
2,666,511
  
511,277
   
83.9
%
   
88.1
%
   
97.3
%
Orange County
   
12
  
546,850
  
490,345
  
56,505
   
89.7
%
   
89.7
%
   
73.6
%
San Diego
   
39
  
2,922,514
  
2,853,604
  
68,910
   
97.6
%
   
100.0
%
   
100.0
%
Other
   
6
  
709,575
  
695,996
  
13,579
   
98.1
%
   
99.0
%
   
98.2
%
    
 
 
 
                    
Subtotal
   
88
  
7,356,727
  
6,706,456
  
650,271
   
91.2
%
   
93.9
%
   
96.2
%
    
 
 
 
                    
Industrial:
                                      
Los Angeles
   
7
  
554,490
  
553,068
  
1,422
   
99.7
%
   
99.4
%
   
99.8
%
Orange County
   
52
  
4,236,038
  
4,161,940
  
74,098
   
98.3
%
   
98.3
%
   
97.1
%
Other
   
2
  
295,417
  
295,417
  
—  
   
100.0
%
   
100.0
%
   
100.0
%
    
 
 
 
                    
Subtotal
   
61
  
5,085,945
  
5,010,425
  
75,520
   
98.5
%
   
98.5
%
   
97.8
%
    
 
 
 
                    
OCCUPANCY BY REGION:
                                      
Los Angeles
   
38
  
3,732,278
  
3,219,579
  
512,699
   
86.3
%
   
89.8
%
   
97.7
%
Orange County
   
64
  
4,782,888
  
4,652,285
  
130,603
   
97.3
%
   
97.3
%
   
94.2
%
San Diego
   
39
  
2,922,514
  
2,853,604
  
68,910
   
97.6
%
   
100.0
%
   
100.0
%
Other
   
8
  
1,004,992
  
991,413
  
13,579
   
98.6
%
   
99.3
%
   
99.1
%
    
 
 
 
                    
TOTAL STABILIZED PORTFOLIO
   
149
  
12,442,672
  
11,716,881
  
725,791
   
94.2
%
   
95.8
%
   
97.0
%
RENOVATION PORTFOLIO:
                                      
Office:
                                      
Orange County
   
1
  
78,016
  
—  
  
78,016
                     
    
 
 
 
                    
TOTAL PORTFOLIO
   
150
  
12,520,688
  
11,716,881
  
803,807
                     
    
 
 
 
                    
 
AVERAGE OCCUPANCY—STABILIZED
PORTFOLIO (1)
       
AVERAGE OCCUPANCY—SAME STORE
PORTFOLIO
  
    
Three Months Ended March 31,
                
Three Months Ended March 31,
  
    
2002
     
2001
       
% Change
                
2002
     
2001
       
% Change
  
Office
   
91.8
%
   
96.0
%
     
(4.2
%)
         
Office
   
93.3
%
   
95.8
%
     
(2.5
%)
Industrial
   
98.5
%
   
97.8
%
     
0.7
%
         
Industrial
   
98.5
%
   
97.8
%
     
0.7
%
    
  
                      
  
        
Total
   
94.6
%
   
96.8
%
     
(2.2
%)
         
Total
   
95.6
%
   
96.7
%
     
(1.1
%)
    
  
    
             
  
    
(1)
 
Represents the average occupancy for the properties in the stabilized portfolio for each period, respectively.

8

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Leasing Activity
 
Quarter-to-Date
 
              
2nd Generation
                
    
# of Leases(1)
   
Square Feet(1)
   
TI/LC Per Sq. Ft.
     
Maintenance Capex Per Sq. Ft. (2)
     
Changes in Rents (3)
     
Changes in Cash Rents (4)
     
Retention Rates (5)
       
Weighted Average Lease Term (Mo.)
    
New
     
Renewal
   
New
   
Renewal
                        
Office
   
4
     
13
   
95,881
   
130,979
   
$
7.64
     
$
0.00
     
(1.2
%)
   
1.1
%
   
30.4
%
     
46
Industrial
   
9
     
7
   
121,574
   
94,475
   
$
1.55
     
$
0.00
     
0.5
%
   
6.3
%
   
43.9
%
     
67
    
    
  
  
  
    
    
  
  
    
Total
   
13
     
20
   
217,455
   
225,454
   
$
5.09
     
$
0.00
     
(0.8
%)
   
2.2
%
   
34.9
%
     
56
    
    
  
  
  
    
    
  
  
    
 
(1)
 
Includes first and second generation space, net of month-to-month leases. Excludes leasing on new construction. First generation space is defined as the space first leased by the Company.
(2)
 
Calculated over entire stabilized portfolio.
(3)
 
Calculated as the change between GAAP rents for new/renewed leases and the expiring GAAP rents for the same space.
(4)
 
Calculated as the change between stated rents for new/renewed leases and the expiring stated rents for the same space.
(5)
 
Calculated as the percentage of space either renewed or expanded into by existing tenants at lease expiration.

9

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Lease Expiration Schedule
($ in thousands)
 
Year of Expiration
     
# of Expiring Leases
   
Total Square Feet(1)
       
% of Total Leased Sq. Ft.
     
Annual Base Rent
   
Annual Rent per Sq. Ft.
OFFICE:
                                     
Remaining 2002
     
37
   
183,950
 
     
2.8
%
   
$
3,141
   
$
17.08
2003
     
62
   
774,070
 
     
11.7
%
   
 
12,922
   
 
16.69
2004
     
62
   
809,357
 
     
12.2
%
   
 
18,106
   
 
22.37
2005
     
53
   
916,424
 
     
13.8
%
   
 
16,312
   
 
17.80
2006
     
42
   
567,181
 
     
8.5
%
   
 
13,715
   
 
24.18
2007
     
20
   
664,318
 
     
10.0
%
   
 
12,166
   
 
18.31
2008
     
12
   
602,020
 
     
9.1
%
   
 
17,469
   
 
29.02
2009
     
9
   
682,104
 
     
10.3
%
   
 
16,154
   
 
23.68
2010
     
8
   
282,263
 
     
4.3
%
   
 
8,184
   
 
28.99
2011 and beyond
     
16
   
1,145,408
 
     
17.3
%
   
 
36,208
   
 
31.61
      
  
    
  
      
Subtotal
     
321
   
6,627,095
 
     
100.0
%
   
$
154,377
   
$
23.29
      
  
    
  
      
INDUSTRIAL:
                                     
Remaining 2002
     
19
   
75,080
 
     
1.5
%
   
$
666
   
$
8.87
2003
     
32
   
526,844
 
     
10.7
%
   
 
3,449
   
 
6.55
2004
     
25
   
550,375
 
     
11.2
%
   
 
4,103
   
 
7.45
2005
     
17
   
766,832
 
     
15.6
%
   
 
5,849
   
 
7.63
2006
     
10
   
590,638
 
     
12.0
%
   
 
4,775
   
 
8.08
2007
     
8
   
337,006
 
     
6.9
%
   
 
2,820
   
 
8.37
2008
     
5
   
752,946
 
     
15.3
%
   
 
6,066
   
 
8.06
2009
     
7
   
505,976
 
     
10.3
%
   
 
3,654
   
 
7.22
2010
     
2
   
70,101
 
     
1.4
%
   
 
596
   
 
8.50
2011 and beyond
     
6
   
745,226
 
     
15.1
%
   
 
7,875
   
 
10.57
      
  
    
  
      
Subtotal
     
131
   
4,921,024
 
     
100.0
%
   
$
39,853
   
$
8.10
      
  
    
  
      
TOTAL PORTFOLIO:
                                     
Remaining 2002
     
56
   
259,030
 
     
2.2
%
   
$
3,807
   
$
14.70
2003
     
94
   
1,300,914
 
     
11.3
%
   
 
16,371
   
 
12.58
2004
     
87
   
1,359,732
 
     
11.8
%
   
 
22,209
   
 
16.33
2005
     
70
   
1,683,256
 
     
14.6
%
   
 
22,161
   
 
13.17
2006
     
52
   
1,157,819
 
     
10.0
%
   
 
18,490
   
 
15.97
2007
     
28
   
1,001,324
 
     
8.7
%
   
 
14,986
   
 
14.97
2008
     
17
   
1,354,966
 
     
11.7
%
   
 
23,535
   
 
17.37
2009
     
16
   
1,188,080
 
     
10.3
%
   
 
19,808
   
 
16.67
2010
     
10
   
352,364
 
     
3.0
%
   
 
8,780
   
 
24.92
2011 and beyond
     
22
   
1,890,634
 
     
16.4
%
   
 
44,083
   
 
23.32
      
  
    
  
      
Total
     
452
   
11,548,119
(1)
     
100.0
%
   
$
194,230
   
$
16.82
      
  
    
  
      
 
(1)
 
Excludes space leased under month-to-month leases and vacant space at March 31, 2002.

10

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
2002 Dispositions
($ in thousands)
 
Project
     
Location
   
Type
     
Month of Disposition
     
Square Feet
   
Sales Price
1st QUARTER:
                               
NONE
                               
                                
                                
                                
                                
                                
                                
TOTAL YEAR-TO-DATE DISPOSITIONS
                               

11

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Stabilized Development
($ in thousands)
 
Project
   
Location
   
Type
   
Start Date
   
Completion Date
   
Rentable Square Feet
   
Total Est. Investment
   
% Occupied
  
1st QUARTER:
                                       
Innovation Corporate Center— Lot 12
   
San Diego, CA
   
Office
   
2Q 2000
   
2Q 2001
   
70,617
   
$
15,625
   
100
%
Sorrento Gateway—
Lot 4
   
San Diego, CA
   
Office
   
2Q 2001
   
1Q 2002
   
60,662
   
 
16,667
   
100
%
                        
  
      
Subtotal
                       
131,279
   
 
32,292
   
100
%
                        
  
      
TOTAL YEAR-TO-DATE DISPOSITIONS
   
131,279
   
$
32,292
   
100
%
                        
  
      
 
Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption”Business Risks” in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2001. In light of these risks, uncertainties and assumptions, the forward-looking events contained contained in this supplement information might not occur.

12

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
In-Process and Committed Development Projects
($ in thousands)
 
Project
  
Location
  
Type
  
Estimated
Construction Period
   
Est.
Stabilization
Date(1)
  
Rentable
Square
Feet
  
Total Estimated
Investment
  
%
Leased
    
%
LOI
     
%
Committed
(2)
  
     
Start
Date
  
Compl.
Date
              
PROJECTS IN LEASE-UP:
                                              
Calabasas Park Centre— Phase II(3)
  
Calabasas, CA
  
Office
  
2Q 2000
  
2Q 2001
   
2Q 2002
  
98,706
  
$
22,026
  
89
%
  
7
%
   
96
%
Innovation Corporate Center—Lot 8
  
San Diego, CA
  
Office
  
2Q 2000
  
2Q 2001
   
2Q 2002
  
46,759
  
 
9,401
  
51
%
  
0
%
   
51
%
Pacific Corporate Center—Lots 25 & 27(4)
  
San Diego, CA
  
Office
  
2Q 2001
  
4Q 2001
   
2Q 2002
  
68,400
  
 
18,005
  
100
%
  
0
%
   
100
%
                        
 
                  
Subtotal
                       
213,865
  
$
49,432
  
85
%
  
3
%
   
88
%
                        
 
                  
PROJECTS UNDER CONSTRUCTION:
                                          
Brobeck, Phleger & Harrison Expansion
  
Del Mar, CA
  
Office
  
3Q 2001
  
3Q 2002
   
3Q 2002
  
89,168
  
$
22,490
  
100
%
  
0
%
   
100
%
Imperial & Sepulveda
  
El Segundo, CA
  
Office
  
1Q 2001
  
3Q 2002
   
2Q 2003
  
133,678
  
 
40,471
  
0
%
  
0
%
   
0
%
Peregrine Systems Corporate Ctr-Bld 4
  
Del Mar, CA
  
Office
  
3Q 2001
  
3Q 2002
   
2Q 2003
  
114,780
  
 
28,324
  
100
%
  
0
%
   
100
%
Westside Media Center—Phase III
  
West LA, CA
  
Office
  
4Q 2000
  
2Q 2002
   
2Q 2003
  
151,000
  
 
56,404
  
0
%
  
0
%
   
0
%
                        
 
                  
Subtotal
                       
488,626
  
$
147,689
  
42
%
  
0
%
   
42
%
                        
 
                  
TOTAL PROJECTS IN LEASE UP AND UNDER CONSTRUCTION
  
702,491
  
$
197,121
  
55
%
  
1
%
   
56
%
                        
 
                  
COMMITTED DEVELOPMENT:
                                              
San Diego Corporate Center
  
Del Mar, CA
  
Office
  
2Q 2002
  
3Q 2003
   
3Q 2004
  
208,961
  
 
65,456
  
84
%
  
0
%
   
84
%
                        
 
                  
Subtotal
                       
207,842
  
$
65,456
  
87
%
  
0
%
   
87
%
                        
 
                  
TOTAL IN-PROCESS AND COMMITTED DEVELOPMENT PROJECTS:
  
911,452
  
$
262,577
  
61
%
  
1
%
   
62
%
                        
 
                  
(1)
 
Based on management’s estimation of the earlier of stabilized occupancy (95%) or one year from the date of substantial completion.
(2)
 
Includes executed leases and signed letters of intent, calculated on a square footage basis.
(3)
 
This project was added to the Company’s stabilized portfolio in April 2002.
(4)
 
This project is 100% leased to one tenant. It is expected that the tenant will take occupancy of 100% of the space in the second quarter of 2002.
 
Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Business Risks” in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2001. In light of these risks, uncertainties and assumptions the forward-looking events contained in this supplemental information might not occur.

13

 
KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Future Development Pipeline
($ in thousands)
 
Project
   
Location
   
Type
   
Rentable Square Feet
   
Total Estimated Investment
SAN DIEGO COUNTY:
                      
  Innovation Corporate Center—Lot 2
   
San Diego, CA
   
Office
   
51,187
   
$
10,101
  Innovation Corporate Center—Lot 4
   
San Diego, CA
   
Office
   
75,000
   
 
13,701
  Innovation Corporate Center—Lot 9
   
San Diego, CA
   
Office
   
65,867
   
 
12,408
  Innovation Corporate Center—Lot 10
   
San Diego, CA
   
Office
   
37,405
   
 
7,882
  Pacific Corporate Center—Lots 3, 4 & 6
   
San Diego, CA
   
Office
   
225,000
   
 
47,722
  Pacific Corporate Center—Lot 8
   
San Diego, CA
   
Office
   
116,157
   
 
25,006
  Santa Fe Summit—Phase I
   
San Diego, CA
   
Office
   
150,000
   
 
33,817
  Santa Fe Summit—Phase II
   
San Diego, CA
   
Office
   
150,000
   
 
34,360
  Sorrento Gateway—Lot 1
   
San Diego, CA
   
Office
   
61,000
   
 
17,089
  Sorrento Gateway—Lot 2
   
San Diego, CA
   
Office
   
80,000
   
 
24,006
  Sorrento Gateway—Lot 3
   
San Diego, CA
   
Office
   
60,000
   
 
18,497
  Sorrento Gateway—Lot 7
   
San Diego, CA
   
Office
   
57,000
   
 
18,605
              
  
Subtotal
             
1,128,616
   
$
263,194
              
  
TOTAL FUTURE DEVELOPMENT PIPELINE
             
1,128,616
   
$
263,194
              
  
 
Some of the enclosed information presented is forward-looking in nature, including information concerning development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Kilroy Realty Corporation’s business and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Business Risks” in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2001. In light of these risks, uncertainties and assumptions, the forward-looking events contained in this supplement information might not occur.

14

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Capital Structure
At March 31, 2002
($ in thousands)
 
    
Shares/Units at March 31, 2002
   
Aggregate Principal Amount or $ Value Equivalent
     
% of Total Market Capitalization
  
DEBT:
                     
Secured Debt
        
$
457,186
     
25.4
%
Unsecured Line of Credit
        
 
284,000
     
15.8
%
         
    
Total Debt
        
$
741,186
     
41.2
%
         
    
EQUITY:
                     
8.075% Series A Cumulative Redeemable Preferred Units (1)
   
1,500,000
   
$
75,000
     
4.2
%
9.375% Series C Cumulative Redeemable Preferred Units (1)
   
700,000
   
 
35,000
     
1.9
%
9.250% Series D Cumulative Redeemable Preferred Units (1)
   
900,000
   
 
45,000
     
2.5
%
Common Units Outstanding (2)
   
4,458,022
   
 
125,760
     
7.0
%
Common Shares Outstanding (2)
   
27,571,948
   
 
777,805
     
43.2
%
         
    
Total Equity
        
$
1,058,565
     
58.8
%
         
    
TOTAL MARKET CAPITALIZATION
        
$
1,799,751
     
100.0
%
         
    
(1)
 
Value based on $50.00 per share liquidation preference.
(2)
 
Valued based on closing share price of $28.21 at March 31, 2002.

15

KILROY REALTY CORPORATION
First Quarter 2002 Supplemental Financial Report
Debt Analysis
At March 31, 2002
($ in thousands)
 
SECURED DEBT PRINCIPAL REPAYMENT SCHEDULE
 
2002
     
2003
     
2004
     
2005
     
2006
     
Thereafter
     
Total
$5,305
     
$95,335
     
$28,636
     
$88,933
     
$37,084
     
$201,893
     
$457,186
 
TOTAL DEBT COMPOSITION
 
    
% of Total Debt
       
Weighted Average
         
Interest Rate
     
Maturity
Secured vs. Unsecured Debt:
                     
Secured Debt
   
61.7
%
     
6.5
%
   
6.0
Unsecured Debt
   
38.3
%
     
5.3
%
   
3.0
Floating vs. Fixed Rate Debt:
                     
Fixed Rate Debt (1),(2),(4)
   
70.8
%
     
7.1
%
   
5.7
Floating Rate Debt (3)
   
29.2
%
     
3.5
%
   
2.8
             
  
Total Debt
            
6.1
%
   
4.9
             
  
 
UNSECURED LINE OF CREDIT
 
Total Line
  
Outstanding Balance
   
Expiration Date
$425,000
  
$284,000
   
March 2005
 
CAPITALIZED INTEREST
 
Quarter-to-Date
   
Year-to-Date
$3.8
   
$3.8
 
(1)
 
The Company currently has an interest-rate swap agreement, which expires in November 2002, to fix LIBOR on $150 million of its floating rate debt at 5.48%.
(2)
 
The Company currently has an interest-rate swap agreement, which expires in January 2005, to fix LIBOR on $50 million of its floating rate debt at 4.46%.
(3)
 
The Company currently has interest-rate cap agreements, which expire in January 2005, to cap LIBOR on $100 million of its floating rate debt at 4.25%.
(4)
 
The percentage of fixed rate debt to total debt does not take into consideration the portion of floating rate debt capped by the Company’s interest-rate cap agreements. Including the effects of the interest-rate cap agreements, the Company had fixed or capped approximately 84.3% of its total outstanding debt at March 31, 2002.

16