Exhibit 99.1
LOGO
 
Second Quarter 2002 Supplemental Financial Report
 
    
Page
  
1
  
2
  
3
  
4
  
5
  
6
  
7
  
8
  
9-11
  
12
  
13
  
14
  
15
  
16
  
17
  
18
  
19
 
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.

KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Financial Highlights
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended June 30,
     
Six Months Ended June 30,
  
    
2002
     
2001
     
% Change
     
2002
     
2001
     
% Change
  
INCOME ITEMS:
                                                  
Revenues
   
$
51,265
 
   
$
58,234
 
   
(12.0
%)
   
$
103,900
 
   
$
108,701
 
   
(4.4
%)
Net Operating Income
   
 
39,254
 
   
 
45,508
 
   
(13.7
%)
   
 
79,670
 
   
 
84,530
 
   
(5.7
%)
Net Income
   
 
4,957
 
   
 
15,097
 
   
(67.2
%)
   
 
18,464
 
   
 
21,523
 
   
(14.2
%)
Funds From Operations
   
 
23,358
 
   
 
28,237
 
   
(17.3
%)
   
 
50,510
 
   
 
50,113
 
   
0.8
%
Funds Available for Distribution
   
 
22,595
 
   
 
24,095
 
   
(6.2
%)
   
 
48,962
 
   
 
43,627
 
   
12.2
%
Net Income per share—diluted
   
$
0.18
 
   
$
0.55
 
   
(67.3
%)
   
$
0.67
 
   
$
0.79
 
   
(15.2
%)
Funds From Operations per share—diluted
   
$
0.73
 
   
$
0.93
 
   
(21.5
%)
   
$
1.61
 
   
$
1.64
 
   
(1.8
%)
Funds Available for Distribution per share—diluted
   
$
0.70
 
   
$
0.79
 
   
(11.4
%)
   
$
1.56
 
   
$
1.43
 
   
9.1
%
Dividend per share
   
$
0.495
 
   
$
0.480
 
   
3.1
%
   
$
0.990
 
   
$
0.960
 
   
3.1
%
RATIOS:
                                                  
Interest Coverage Ratio (1)
   
 
4.1
x
   
 
4.0
x
          
 
4.2
x
   
 
3.7
x
       
Fixed Charge Coverage Ratio (2)
   
 
2.9
x
   
 
3.0
x
          
 
3.1
x
   
 
2.8
x
       
FFO Payout Ratio (3)
   
 
68.0
%
   
 
51.6
%
   
16.4
%
   
 
61.5
%
   
 
58.0
%
   
3.5
%
FAD Payout Ratio (4)
   
 
70.3
%
   
 
60.4
%
   
9.9
%
   
 
63.4
%
   
 
66.7
%
   
(3.3
%)
 
    
June 30, 2002
     
Dec. 31, 2001
       
% Change
  
ASSETS:
                           
Investments in Real Estate before Depreciation
   
$
1,678,839
 
   
$
1,600,994
 
     
4.9
%
Total Assets
   
 
1,510,577
 
   
 
1,457,229
 
     
3.7
%
CAPITALIZATION:
                           
Total Debt
   
$
761,302
 
   
$
714,587
 
     
6.5
%
Total Preferred Stock (5)
   
 
155,000
 
   
 
155,000
 
     
—  
 
Total Market Equity Value (5)
   
 
860,409
 
   
 
800,894
 
     
7.4
%
Total Market Capitalization (5)
   
 
1,776,711
 
   
 
1,670,481
 
     
6.4
%
Total Debt / Total Market Capitalization
   
 
42.8
%
   
 
42.8
%
     
—  
 
Total Debt and Preferred / Total Market Capitalization
   
 
51.6
%
   
 
52.1
%
     
(0.5
%)
(1)
Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense plus loan cost amortization.
(2)
Calculated as income from operations before interest expense and depreciation and amortization divided by interest expense plus loan cost amortization and current year paid and accrued preferred dividends.
(3)
Calculated as current year dividends paid and accrued to common shareholders divided by Funds From Operations.
(4)
Calculated as current year dividends paid and accrued to common shareholders divided by Funds Available for Distribution.
(5)
See “Capital Structure” on page 18.

1

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Consolidated Balance Sheets
(unaudited, $ in thousands)
 
    
June 30,
2002
     
December 31,
2001
  
ASSETS:
                  
Land and improvements
   
$
285,585
 
   
$
269,366
 
Buildings and improvements
   
 
1,220,923
 
   
 
1,140,499
 
Undeveloped land and construction in progress, net
   
 
172,331
 
   
 
191,129
 
    
  
Total investment in real estate
   
 
1,678,839
 
   
 
1,600,994
 
Accumulated depreciation and amortization
   
 
(259,676
)
   
 
(241,665
)
    
  
Investment in real estate, net
   
 
1,419,163
 
   
 
1,359,329
 
Cash and cash equivalents
   
 
12,663
 
   
 
16,487
 
Restricted cash
   
 
5,811
 
   
 
5,413
 
Tenant receivables, net
   
 
29,511
 
   
 
32,151
 
Deferred financing and leasing costs, net
   
 
37,909
 
   
 
37,068
 
Prepaid expenses and other assets
   
 
5,520
 
   
 
6,781
 
    
  
TOTAL ASSETS
   
$
1,510,577
 
   
$
1,457,229
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY:
                  
Liabilities:
                  
Secured debt
   
$
455,302
 
   
$
459,587
 
Unsecured line of credit
   
 
306,000
 
   
 
155,000
 
Unsecured term facility
            
 
100,000
 
Accounts payable, accrued expenses and other liabilities
   
 
39,016
 
   
 
53,879
 
Accrued distributions
   
 
15,891
 
   
 
14,634
 
Rents received in advance and tenant security deposits
   
 
16,737
 
   
 
15,955
 
    
  
Total liabilities
   
 
832,946
 
   
 
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
   
 
72,415
 
   
 
49,176
 
Minority interest in Development LLCs
            
 
15,869
 
    
  
Total minority interests
   
 
224,916
 
   
 
217,546
 
    
  
Stockholders’ Equity:
                  
Common stock
   
 
277
 
   
 
274
 
Additional paid-in capital
   
 
499,196
 
   
 
479,295
 
Distributions in excess of earnings
   
 
(42,079
)
   
 
(33,163
)
Accumulated net other comprehensive loss
   
 
(4,679
)
   
 
(5,778
)
    
  
Total stockholders’ equity
   
 
452,715
 
   
 
440,628
 
    
  
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
   
$
1,510,577
 
   
$
1,457,229
 
    
  

2

KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Consolidated Statements of Operations
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended June 30,
       
Six Months Ended June 30,
  
    
2002
     
2001
     
%
Change
       
2002
     
2001
     
%
Change
  
REVENUES:
                                                    
Rental income
   
$
44,435
 
   
$
46,029
 
   
(3.5
%)
     
$
89,730
 
   
$
90,408
 
   
(0.7
%)
Tenant reimbursements
   
 
6,714
 
   
 
6,170
 
   
8.8
%
     
 
12,332
 
   
 
11,690
 
   
5.5
%
Interest income
   
 
86
 
   
 
277
 
   
(69.0
%)
     
 
371
 
   
 
713
 
   
(48.0
%)
Other income
   
 
30
 
   
 
5,758
 
   
(99.5
%)
     
 
1,467
 
   
 
5,890
 
   
(75.1
%)
    
  
           
  
      
Total revenues
   
 
51,265
 
   
 
58,234
 
   
(12.0
%)
     
 
103,900
 
   
 
108,701
 
   
(4.4
%)
    
  
           
  
      
EXPENSES:
                                                    
Property expenses
   
 
7,558
 
   
 
7,330
 
   
3.1
%
     
 
15,230
 
   
 
14,312
 
   
6.4
%
Real estate taxes
   
 
4,063
 
   
 
4,744
 
   
(14.4
%)
     
 
7,913
 
   
 
8,379
 
   
(5.6
%)
General and administrative expenses
   
 
3,129
 
   
 
2,973
 
   
8.2
%
     
 
6,097
 
   
 
6,073
 
   
0.4
%
Ground leases
   
 
333
 
   
 
375
 
   
(11.2
%)
     
 
716
 
   
 
767
 
   
(6.6
%)
Provision for potentially unrecoverable development costs
   
 
519
 
            
100
%
     
 
519
 
   
 
100
 
   
419.0
%
Interest expense
   
 
8,768
 
   
 
10,612
 
   
(17.4
%)
     
 
18,127
 
   
 
21,403
 
   
(15.3
%)
Depreciation and amortization (1)
   
 
18,502
 
   
 
12,695
 
   
45.7
%
     
 
31,368
 
   
 
26,295
 
   
19.3
%
    
  
           
  
      
Total expenses
   
 
42,843
 
   
 
38,729
 
   
10.6
%
     
 
79,970
 
   
 
77,329
 
   
3.4
%
    
  
           
  
      
INCOME FROM OPERATIONS
   
 
8,422
 
   
 
19,505
 
   
(56.8
%)
     
 
23,930
 
   
 
31,372
 
   
(23.7
%)
Net gains on dispositions of operating properties
   
 
896
 
   
 
1,234
 
   
(27.4
%)
     
 
896
 
   
 
1,539
 
   
(41.8
%)
    
  
           
  
      
INCOME BEFORE MINORITY INTERESTS AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
   
 
9,318
 
   
 
20,739
 
   
(55.1
%)
     
 
24,826
 
   
 
32,911
 
   
(24.6
%)
    
  
           
  
      
MINORITY INTERESTS:
                                                    
Distributions on Cumulative Redeemable Preferred units
   
 
(3,375
)
   
 
(3,375
)
   
0.0
%
     
 
(6,750
)
   
 
(6,750
)
   
0.0
%
Minority interest in earnings of Operating Partnership
   
 
(986
)
   
 
(1,796
)
   
(45.1
%)
     
 
(2,496
)
   
 
(2,641
)
   
(5.5
%)
Recognition of previously reserved Development LLC preferred return
                              
 
3,908
 
            
100.0
%
Minority interest in earnings of Development LLCs
            
 
(471
)
   
(100.0
%)
     
 
(1,024
)
   
 
(605
)
   
69.3
%
    
  
           
  
      
Total minority interests
   
 
(4,361
)
   
 
(5,642
)
   
(22.7
%)
     
 
(6,362
)
   
 
(9,996
)
   
(36.4
%)
    
  
           
  
      
NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
   
 
4,957
 
   
 
15,097
 
   
(67.2
%)
     
 
18,464
 
   
 
22,915
 
   
(19.4
%)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
                                       
 
(1,392
)
   
100.0
%
    
  
           
  
      
NET INCOME
   
$
4,957
 
   
$
15,097
 
   
(67.2
%)
     
$
18,464
 
   
$
21,523
 
   
(14.2
%)
    
  
           
  
      
Weighted average shares outstanding—basic
   
 
27,463
 
   
 
27,160
 
            
 
27,360
 
   
 
26,938
 
       
Weighted average shares outstanding—diluted
   
 
27,805
 
   
 
27,380
 
            
 
27,678
 
   
 
27,177
 
       
NET INCOME PER COMMON SHARE:
                                                    
Net income per common share—basic
   
$
0.18
 
   
$
0.56
 
   
(67.9
%)
     
$
0.67
 
   
$
0.80
 
   
(16.3
%)
    
  
           
  
      
Net income per common share—diluted
   
$
0.18
 
   
$
0.55
 
   
(67.3
%)
     
$
0.67
 
   
$
0.79
 
   
(15.2
%)
    
  
           
  
      
 
(1)
Included in depreciation for the three and six months ended June 30, 2002 is a non-cash charge of approximately $5.3 million for previously capitalized leasing costs, including leasing commissions and certain tenant improvements, related to the Company’s leases with Peregrine Systems, Inc.

3

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Funds From Operations and Funds Available for Distribution
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended June 30,
     
Six Months Ended June 30,
  
    
2002
     
2001
     
% Change
     
2002
     
2001
     
% Change
  
FUNDS FROM OPERATIONS:
                                                  
Net Income
   
$
4,957
 
   
$
15,097
 
   
(67.2
%)
   
$
18,464
 
   
$
21,523
 
   
(14.2
%)
Adjustments:
                                                  
Minority interest in earnings of Operating Partnership
   
 
986
 
   
 
1,796
 
   
(45.1
%)
   
 
2,496
 
   
 
2,641
 
   
(5.5
%)
Depreciation and amortization
   
 
18,311
 
   
 
12,030
 
   
52.2
%
   
 
30,446
 
   
 
25,000
 
   
21.8
%
Net gains on dispositions of operating properties
   
 
(896
)
   
 
(1,234
)
   
(27.4
%)
   
 
(896
)
   
 
(1,539
)
   
(41.8
%)
Cumulative effect of change in accounting principle
                                     
 
1,392
 
   
(100.0
%)
Non-cash amortization of restricted stock grants (1)
            
 
548
 
   
(100.0
%)
            
 
1,096
 
   
(100.0
%)
    
  
         
  
      
Funds From Operations
   
$
23,358
 
   
$
28,237
 
   
(17.3
%)
   
$
50,510
 
   
$
50,113
 
   
0.8
%
    
  
         
  
      
Weighted average common shares/units outstanding—basic
   
 
31,827
 
   
 
30,260
 
          
 
31,076
 
   
 
30,243
 
       
Weighted average common shares/units outstanding—diluted
   
 
32,169
 
   
 
30,481
 
          
 
31,394
 
   
 
30,482
 
       
FFO per common share/unit—basic
   
$
0.73
 
   
$
0.93
 
   
(21.5
%)
   
$
1.63
 
   
$
1.66
 
   
(1.8
%)
    
  
         
  
      
FFO per common share/unit—diluted
   
$
0.73
 
   
$
0.93
 
   
(21.5
%)
   
$
1.61
 
   
$
1.64
 
   
(1.8
%)
    
  
         
  
      
FUNDS AVAILABLFOR DISTRIBUTION:
                                                  
Funds From Operations
   
$
23,358
 
   
$
28,237
 
   
(17.3
%)
   
$
50,510
 
   
$
50,113
 
   
0.8
%
Adjustments:
                                                  
Amortization of deferred financing costs
   
 
442
 
   
 
399
 
   
10.8
%
   
 
1,220
 
   
 
780
 
   
56.4
%
Tenant improvements, leasing commissions and recurring capital expenditures
   
 
(1,302
)
   
 
(3,668
)
   
(64.5
%)
   
 
(1,637
)
   
 
(4,679
)
   
(65.0
%)
Net effect of straight-line rents (2)
   
 
97
 
   
 
(873
)
   
(111.1
%)
   
 
(1,131
)
   
 
(2,587
)
   
(56.3
%)
    
  
         
  
      
Funds Available for Distribution
   
$
22,595
 
   
$
24,095
 
   
(6.2
%)
   
$
48,962
 
   
$
43,627
 
   
12.2
%
    
  
         
  
      
FAD per common share/unit—basic
   
$
0.71
 
   
$
0.80
 
   
(11.3
%)
   
$
1.58
 
   
$
1.44
 
   
9.7
%
    
  
         
  
      
FAD per common share/unit—diluted
   
$
0.70
 
   
$
0.79
 
   
(11.4
%)
   
$
1.56
 
   
$
1.43
 
   
9.1
%
    
  
         
  
      
(1)
Commencing January 1, 2002, non-cash amortization of restricted stock grants is not added back to calculate Funds From Operations.
(2)
This amount is net of a reserve for bad debts.

4

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Net Operating Income Breakdown
 
      
As of June 30, 2002(1)
% OF TOTAL NOI BY PRODUCT TYPE:
       
Office:
       
Los Angeles
     
34.8%
Orange County
     
 4.4%
San Diego
     
31.8%
Other
     
 5.7%
      
Subtotal
     
76.7%
      
Industrial:
       
Los Angeles
     
 3.4%
Orange County
     
18.7%
Other
     
 1.2%
      
Subtotal
     
23.3%
      
% OF TOTAL NOI BY REGION:
       
Los Angeles
     
38.2%
Orange County
     
23.1%
San Diego
     
31.8%
Other
     
 6.9%
      
Total
     
100.0%
      
(1)
Based on Net Operating Income for the six months ended June 30, 2002.

5

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Same Store Analysis(1)
($ in thousands)
 
    
Three Months Ended June 30,
     
Six Months Ended June 30,
  
    
2002
   
2001
   
$ Change
     
% Change
     
2002
   
2001
   
$ Change
     
% Change
  
TOTAL SAME STORE PORTFOLIO
                                              
Operating Revenues:
                                                            
Rental income
   
$
39,034
   
$
39,827
   
($
793
)
   
(2.0
%)
   
$
79,105
   
$
79,732
   
($
627
)
   
(0.8
%)
Tenant reimbursements
   
 
5,922
   
 
5,676
   
 
246
 
   
4.3
%
   
 
10,807
   
 
10,366
   
 
441
 
   
4.3
%
Other income
   
 
30
   
 
188
   
 
(158
)
   
(84.0
%)
   
 
1,351
   
 
299
   
 
1,052
 
   
351.8
%
    
  
  
         
  
  
      
Total operating revenues
   
 
44,986
   
 
45,691
   
 
(705
)
   
(1.5
%)
   
 
91,263
   
 
90,397
   
 
866
 
   
1.0
%
    
  
  
         
  
  
      
Operating Expenses:
                                                            
Property expenses
   
 
6,387
   
 
6,727
   
 
(340
)
   
(5.1
%)
   
 
12,839
   
 
12,877
   
 
(38
)
   
(0.3
%)
Real estate taxes
   
 
3,523
   
 
3,931
   
 
(408
)
   
(10.4
%)
   
 
6,897
   
 
7,156
   
 
(259
)
   
(3.6
%)
Ground leases
   
 
291
   
 
325
   
 
(34
)
   
(10.5
%)
   
 
624
   
 
657
   
 
(33
)
   
(5.0
%)
    
  
  
         
  
  
      
Total operating expenses
   
 
10,201
   
 
10,983
   
 
(782
)
   
(7.1
%)
   
 
20,360
   
 
20,690
   
 
(330
)
   
(1.6
%)
    
  
  
         
  
  
      
GAAP Net Operating Income
   
$
34,785
   
$
34,708
   
$
77
 
   
0.2
%
   
$
70,903
   
$
69,707
   
$
1,196
 
   
1.7
%
    
  
  
         
  
  
      
 
      
Same Store Analysis (Cash Basis)
  
      
Three Months
% Change
       
Six Months
% Change
  
Operating Revenues
     
2.4
%
     
3.2
%
Operating Expenses
     
(7.1
%)
     
(1.6
%)
      
    
Cash Net Operating Income
     
5.5
%
     
4.7
%
      
    
 
(1)
Same store defined as all stabilized properties owned at January 1, 2001 and still owned at June 30, 2002.

6

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Stabilized and Renovation Portfolio Occupancy Overview
 
    
# of Buildings
   
Square Feet
   
Occupancy at:
  
       
Total
   
Leased
   
Available
   
6/30/02
     
3/31/02
     
12/31/01
  
STABILIZED PORTFOLIO:
                                         
OCCUPANCY BY PRODUCT TYPE:
                                         
Office:
                                         
Los Angeles
   
32
   
3,276,494
   
2,796,367
   
480,127
   
85.3
%
   
83.9
%
   
88.1
%
Orange County
   
12
   
546,850
   
493,545
   
53,305
   
90.3
%
   
89.7
%
   
89.7
%
San Diego
   
41
   
3,037,673
   
3,014,786
   
22,887
   
99.2
%
   
97.6
%
   
100.0
%
Other
   
6
   
709,354
   
693,690
   
15,664
   
97.8
%
   
98.1
%
   
99.0
%
    
  
  
  
                    
Subtotal
   
91
   
7,570,371
   
6,998,388
   
571,983
   
92.4
%
   
91.2
%
   
93.9
%
    
  
  
  
                    
Industrial:
                                         
Los Angeles
   
7
   
554,490
   
553,810
   
680
   
99.9
%
   
99.7
%
   
99.4
%
Orange County
   
52
   
4,236,038
   
4,148,232
   
87,806
   
97.9
%
   
98.3
%
   
98.3
%
Other
   
2
   
295,417
   
295,417
   
—  
   
100.0
%
   
100.0
%
   
100.0
%
    
  
  
  
                    
Subtotal
   
61
   
5,085,945
   
4,997,459
   
88,486
   
98.3
%
   
98.5
%
   
98.5
%
    
  
  
  
                    
OCCUPANCY BY REGION:
                                         
Los Angeles
   
39
   
3,830,984
   
3,350,177
   
480,807
   
87.4
%
   
86.3
%
   
89.8
%
Orange County
   
64
   
4,782,888
   
4,641,777
   
141,111
   
97.0
%
   
97.3
%
   
97.3
%
San Diego
   
41
   
3,037,673
   
3,014,786
   
22,887
   
99.2
%
   
97.6
%
   
100.0
%
Other
   
8
   
1,004,771
   
989,107
   
15,664
   
98.4
%
   
98.6
%
   
99.3
%
    
  
  
  
                    
TOTAL STABILIZED PORTFOLIO
   
152
   
12,656,316
   
11,995,847
   
660,469
   
94.8
%
   
94.2
%
   
95.8
%
 
RENOVATION PORTFOLIO:
                                         
Office:
                                         
Orange County
   
1
   
78,016
   
—  
   
78,016
                     
    
  
  
  
                    
TOTAL PORTFOLIO
   
153
   
12,734,332
   
11,995,847
   
738,485
                     
    
  
  
  
                    
 
AVERAGE OCCUPANCY—STABILIZED
PORTFOLIO
     
AVERAGE OCCUPANCY—SAME STORE
PORTFOLIO
  
    
Office
       
Industrial
     
Total
          
2002
     
2001 Change
     
% Change
  
Quarter-to-Date
   
91.4
%
     
98.3
%
   
94.2
%
   
Quarter-to-Date
   
95.2
%
   
96.2
%
   
(1.0
%)
Year-to-Date
   
91.6
%
     
98.4
%
   
94.4
%
   
Year-to-Date
   
95.4
%
   
96.4
%
   
(1.0
%)
 

7

 
KILROY REALTY CORPORATION
Second 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
   
5
   
9
   
111,798
   
43,509
   
$
7.20
     
$
0.03
   
(1.4
%)
   
(22.0
%)
   
31.3
%
     
86
Industrial
   
2
   
2
   
7,761
   
64,273
   
$
4.19
     
$
0.07
   
16.1
%
   
(1.2
%)
   
76.7
%
     
89
    
  
  
  
  
    
  
  
  
    
Total
   
7
   
11
   
119,559
   
107,782
   
$
5.82
     
$
0.04
   
3.6
%
   
(15.9
%)
   
48.4
%
     
87
    
  
  
  
  
    
  
  
  
    
 
Year-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
   
9
   
22
   
207,679
   
174,488
   
$
7.52
     
$
0.03
     
0.3
%
   
(6.9
%)
   
33.0
%
     
63
Industrial
   
11
   
9
   
129,335
   
158,748
   
$
2.39
     
$
0.07
     
9.9
%
   
(0.1
%)
   
52.9
%
     
73
    
  
  
  
  
    
    
  
  
    
Total
   
20
   
31
   
337,014
   
333,236
   
$
5.31
     
$
0.04
     
2.5
%
   
(5.3
%)
   
40.4
%
     
67
    
  
  
  
  
    
    
  
  
    
(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.

8

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Lease Expiration Summary 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
     
23
   
127,796
 
     
1.9
%
   
$
2,320
   
$
18.15
2003
     
68
   
1,004,131
 
     
14.5
%
   
 
16,177
   
 
16.11
2004
     
63
   
817,059
 
     
11.8
%
   
 
17,975
   
 
22.00
2005
     
54
   
708,224
 
     
10.3
%
   
 
13,042
   
 
18.42
2006
     
45
   
588,493
 
     
8.5
%
   
 
13,215
   
 
22.46
2007
     
28
   
707,143
 
     
10.2
%
   
 
12,005
   
 
16.98
2008
     
12
   
628,211
 
     
9.1
%
   
 
14,431
   
 
22.97
2009
     
11
   
735,917
 
     
10.7
%
   
 
14,721
   
 
20.00
2010
     
8
   
282,263
 
     
4.1
%
   
 
6,225
   
 
22.05
2011 and beyond
     
19
   
1,304,285
 
     
18.9
%
   
 
26,981
   
 
20.69
      
  
    
  
      
Subtotal
     
331
   
6,903,522
 
     
100.0
%
   
$
137,092
   
$
19.86
      
  
    
  
      
INDUSTRIAL:
                                     
Remaining 2002
     
15
   
47,569
 
     
1.0
%
   
$
440
   
$
9.25
2003
     
35
   
540,365
 
     
11.0
%
   
 
3,540
   
 
6.55
2004
     
25
   
550,375
 
     
11.2
%
   
 
4,011
   
 
7.29
2005
     
16
   
709,056
 
     
14.4
%
   
 
5,243
   
 
7.39
2006
     
10
   
590,638
 
     
12.0
%
   
 
4,486
   
 
7.60
2007
     
10
   
398,629
 
     
8.1
%
   
 
2,479
   
 
6.22
2008
     
5
   
752,946
 
     
15.4
%
   
 
5,158
   
 
6.85
2009
     
7
   
505,976
 
     
10.3
%
   
 
3,039
   
 
6.01
2010
     
2
   
70,101
 
     
1.4
%
   
 
481
   
 
6.86
2011 and beyond
     
6
   
745,226
 
     
15.2
%
   
 
5,340
   
 
7.17
      
  
    
  
      
Subtotal
     
131
   
4,910,881
 
     
100.0
%
   
$
34,217
   
$
6.97
      
  
    
  
      
TOTAL PORTFOLIO:
                                     
Remaining 2002
     
38
   
175,365
 
     
1.5
%
   
$
2,760
   
$
15.74
2003
     
103
   
1,544,496
 
     
13.1
%
   
 
19,717
   
 
12.77
2004
     
88
   
1,367,434
 
     
11.6
%
   
 
21,986
   
 
16.08
2005
     
70
   
1,417,280
 
     
12.0
%
   
 
18,285
   
 
12.90
2006
     
55
   
1,179,131
 
     
9.9
%
   
 
17,701
   
 
15.01
2007
     
38
   
1,105,772
 
     
9.4
%
   
 
14,484
   
 
13.10
2008
     
17
   
1,381,157
 
     
11.7
%
   
 
19,589
   
 
14.18
2009
     
18
   
1,241,893
 
     
10.5
%
   
 
17,760
   
 
14.30
2010
     
10
   
352,364
 
     
3.0
%
   
 
6,706
   
 
19.03
2011 and beyond
     
25
   
2,049,511
 
     
17.3
%
   
 
32,321
   
 
15.77
      
  
    
  
      
Total
     
462
   
11,814,403
(1)
     
100.0
%
   
$
171,309
   
$
14.50
      
  
    
  
      
 
(1)
Excludes space leased under month-to-month leases and vacant space at June 30, 2002.

9

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Lease Expiration Schedule Detail by Region
($ in thousands)
 
      
Los Angeles County
     
Orange County
Year of Expiration
     
# of Expiring
Leases
   
Total Square Feet (1)
       
% of Total
Regional Sq. Ft.
    
Annual
Base Rent
   
Annual Rent
per Sq. Ft.
     
# of Expiring
Leases
     
            Total            
Square Feet(1)
       
% of Total
Regional Sq. Ft.
    
Annual
Base Rent
   
Annual Rent
per Sq. Ft.
OFFICE:
                                                                          
Remaining 2002
     
  10
   
19,793
 
     
0.8
%
  
$
532
   
$
26.88
     
    7
     
24,798
 
     
5.3
%
  
$
434
   
$
17.50
2003
     
  27
   
575,472
 
     
22.8
%
  
 
10,453
   
 
18.16
     
  24
     
74,127
 
     
15.7
%
  
 
1,281
   
 
17.28
2004
     
  36
   
569,362
 
     
22.5
%
  
 
13,882
   
 
24.38
     
  13
     
122,937
 
     
26.0
%
  
 
1,753
   
 
14.26
2005
     
  22
   
169,589
 
     
6.7
%
  
 
4,774
   
 
28.15
     
    9
     
51,689
 
     
10.9
%
  
 
993
   
 
19.21
2006
     
  17
   
156,810
 
     
6.2
%
  
 
4,507
   
 
28.74
     
    9
     
46,977
 
     
9.9
%
  
 
868
   
 
18.48
2007
     
    3
   
25,328
 
     
1.0
%
  
 
715
   
 
28.23
     
    3
     
22,553
 
     
4.8
%
  
 
268
   
 
11.88
2008
     
    5
   
278,247
 
     
11.0
%
  
 
8,104
   
 
29.13
     
    3
     
116,304
 
     
24.6
%
  
 
2,045
   
 
17.58
2009
     
    6
   
395,569
 
     
15.7
%
  
 
8,558
   
 
21.63
     
  —
     
—  
 
     
—  
 
  
 
—  
   
 
—  
2010
     
    1
   
1,163
 
     
0.0
%
  
 
66
   
 
56.75
     
  —
     
—  
 
     
—  
 
  
 
—  
   
 
—  
2011 and beyond
     
    7
   
334,094
 
     
13.3
%
  
 
5,188
   
 
15.53
     
    1
     
13,193
 
     
2.8
%
  
 
404
   
 
30.62
      
  
    
 
           
    
    
 
      
Subtotal
     
134
   
2,525,427
 
     
100.0
%
  
$
56,779
   
$
22.48
     
  69
     
472,578
 
     
100.0
%
  
$
8,046
   
$
17.03
      
  
    
 
           
    
    
 
      
INDUSTRIAL:
                                                                          
Remaining 2002
     
  11
   
20,553
 
     
3.7
%
  
$
203
   
$
9.88
     
    4
     
27,016
 
     
0.7
%
  
$
237
   
$
8.77
2003
     
  15
   
74,034
 
     
13.4
%
  
 
604
   
 
8.16
     
  20
     
466,331
 
     
11.5
%
  
 
2,936
   
 
6.30
2004
     
    8
   
116,445
 
     
21.0
%
  
 
937
   
 
8.05
     
  17
     
433,930
 
     
10.7
%
  
 
3,073
   
 
7.08
2005
     
    4
   
210,162
 
     
38.0
%
  
 
2,124
   
 
10.11
     
  12
     
498,894
 
     
12.3
%
  
 
3,118
   
 
6.25
2006
     
  —
   
—  
 
     
—  
 
  
 
—  
   
 
—  
     
    9
     
426,098
 
     
10.5
%
  
 
3,262
   
 
7.66
2007
     
    3
   
12,238
 
     
2.2
%
  
 
114
   
 
9.32
     
    7
     
386,391
 
     
9.5
%
  
 
2,365
   
 
6.12
2008
     
  —
   
—  
 
     
—  
 
  
 
—  
   
 
—  
     
    5
     
752,946
 
     
18.5
%
  
 
5,158
   
 
6.85
2009
     
    1
   
6,362
 
     
1.1
%
  
 
95
   
 
14.93
     
    6
     
499,614
 
     
12.3
%
  
 
2,944
   
 
5.89
2010
     
  —
   
—  
 
     
—  
 
  
 
—  
   
 
—  
     
    2
     
70,101
 
     
1.7
%
  
 
481
   
 
6.86
2011 and beyond
     
    1
   
113,820
 
     
20.6
%
  
 
1,161
   
 
10.20
     
    4
     
500,529
 
     
12.3
%
  
 
3,473
   
 
6.94
      
  
    
 
           
    
    
 
      
Subtotal
     
  43
   
553,614
 
     
100.0
%
  
$
5,238
   
$
9.46
     
  86
     
4,061,850
 
     
100.0
%
  
$
27,047
   
$
6.66
      
  
    
 
           
    
    
 
      
TOTAL PORTFOLIO:
                                                                          
Remaining 2002
     
  21
   
40,346
 
     
1.3
%
  
$
735
   
$
18.22
     
  11
     
51,814
 
     
1.2
%
  
$
671
   
$
12.95
2003
     
  42
   
649,506
 
     
21.1
%
  
 
11,057
   
 
17.02
     
  44
     
540,458
 
     
11.9
%
  
 
4,217
   
 
7.80
2004
     
  44
   
685,807
 
     
22.2
%
  
 
14,819
   
 
21.61
     
  30
     
556,867
 
     
12.3
%
  
 
4,826
   
 
8.67
2005
     
  26
   
379,751
 
     
12.3
%
  
 
6,898
   
 
18.16
     
  21
     
550,583
 
     
12.2
%
  
 
4,111
   
 
7.47
2006
     
  17
   
156,810
 
     
5.1
%
  
 
4,507
   
 
28.74
     
  18
     
473,075
 
     
10.4
%
  
 
4,130
   
 
8.73
2007
     
    6
   
37,566
 
     
1.2
%
  
 
829
   
 
22.07
     
  10
     
408,944
 
     
9.0
%
  
 
2,633
   
 
6.44
2008
     
    5
   
278,247
 
     
9.1
%
  
 
8,104
   
 
29.13
     
    8
     
869,250
 
     
19.2
%
  
 
7,203
   
 
8.29
2009
     
    7
   
401,931
 
     
13.1
%
  
 
8,653
   
 
21.53
     
    6
     
499,614
 
     
11.0
%
  
 
2,944
   
 
5.89
2010
     
    1
   
1,163
 
     
0.0
%
  
 
66
   
 
56.75
     
    2
     
70,101
 
     
1.5
%
  
 
481
   
 
6.86
2011 and beyond
     
    8
   
447,914
 
     
14.6
%
  
 
6,349
   
 
14.17
     
    5
     
513,722
 
     
11.3
%
  
 
3,877
   
 
7.55
      
  
    
 
           
    
    
 
      
Total
     
177
   
3,079,041
(1)
     
100.0
%
  
$
62,017
   
$
20.14
     
155
     
4,534,428
(1)
     
100.0
%
  
$
35,093
   
$
7.74
      
  
    
 
           
    
    
 
      
 
(1)
Excludes space leased under month-to-month leases and vacant space at June 30, 2002.

10

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Lease Expiration Schedule Detail by Region
($ in thousands)
 
    
San Diego County
   
Other
Year of Expiration
   
# of Expiring
Leases
     
Total
Square Feet(1)
       
% of Total Regional Sq. Ft.
     
Annual
Base Rent
     
Annual Rent
per Sq. Ft.
   
# of Expiring
Leases
   
Total Square Feet(1)
     
% of Total
Regional Sq. Ft.
     
Annual
Base Rent
     
Annual Rent
per Sq. Ft.
OFFICE:
                                                                          
Remaining 2002
   
1                
     
45,634
 
     
1.5
%
   
$
712
     
$
15.60
   
5                
   
37,571
 
   
4.2
%
   
$
641
     
$
17.06
2003
   
2                
     
107,128
 
     
3.5
%
   
 
1,527
     
 
14.25
   
15                
   
247,404
 
   
27.8
%
   
 
2,952
     
 
11.93
2004
   
1                
     
50,929
 
     
1.7
%
   
 
960
     
 
18.85
   
13                
   
73,831
 
   
8.3
%
   
 
1,344
     
 
18.20
2005
   
5                
     
356,994
 
     
11.8
%
   
 
4,548
     
 
12.74
   
18                
   
129,952
 
   
14.6
%
   
 
2,727
     
 
20.98
2006
   
3                
     
190,209
 
     
6.3
%
   
 
3,162
     
 
16.62
   
16                
   
194,497
 
   
21.8
%
   
 
4,678
     
 
24.05
2007
   
7                
     
548,878
 
     
18.2
%
   
 
8,627
     
 
15.72
   
15                
   
110,384
 
   
12.4
%
   
 
2,395
     
 
21.70
2008
   
4                
     
233,660
 
     
7.8
%
   
 
4,282
     
 
18.33
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2009
   
3                
     
305,378
 
     
10.1
%
   
 
5,149
     
 
16.86
   
2                
   
34,970
 
   
3.9
%
   
 
1,014
     
 
29.00
2010
   
4                
     
230,767
 
     
7.7
%
   
 
4,744
     
 
20.56
   
3                
   
50,333
 
   
5.7
%
   
 
1,415
     
 
28.11
2011 and beyond
   
10                
     
945,209
 
     
31.4
%
   
 
21,022
     
 
22.24
   
1                
   
11,789
 
   
1.3
%
   
 
368
     
 
31.22
    
    
    
  
           
  
  
  
        
Subtotal
   
40                
     
3,014,786
 
     
100.0
%
   
$
54,733
     
$
18.15
   
88                
   
890,731
 
   
100.0
%
   
$
17,534
     
$
19.68
    
    
    
  
           
  
  
  
        
INDUSTRIAL:
                                                                          
Remaining 2002
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2003
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2004
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2005
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2006
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
1                
   
164,540
 
   
55.7
%
   
 
1,224
     
 
7.44
2007
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2008
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2009
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2010
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2011 and beyond
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
1                
   
130,877
 
   
44.3
%
   
 
708
     
 
5.41
    
    
    
  
           
  
  
  
        
Subtotal
   
—                
     
—  
 
     
—  
 
   
 
—  
     
 
—  
   
2                
   
295,417
 
   
100.0
%
   
$
1,932
     
$
6.54
    
    
    
  
           
  
  
  
        
TOTAL PORTFOLIO:
                                                                          
Remaining 2002
   
1                
     
45,634
 
     
1.5
%
   
$
712
     
$
15.60
   
5                
   
37,571
 
   
3.2
%
   
$
641
     
$
17.06
2003
   
2                
     
107,128
 
     
3.5
%
   
 
1,527
     
 
14.25
   
15                
   
247,404
 
   
20.9
%
   
 
2,952
     
 
11.93
2004
   
1                
     
50,929
 
     
1.7
%
   
 
960
     
 
18.85
   
13                
   
73,831
 
   
6.2
%
   
 
1,344
     
 
18.20
2005
   
5                
     
356,994
 
     
11.8
%
   
 
4,548
     
 
12.74
   
18                
   
129,952
 
   
11.0
%
   
 
2,727
     
 
20.98
2006
   
3                
     
190,209
 
     
6.3
%
   
 
3,162
     
 
16.62
   
17                
   
359,037
 
   
30.3
%
   
 
5,902
     
 
16.44
2007
   
7                
     
548,878
 
     
18.2
%
   
 
8,627
     
 
15.72
   
15                
   
110,384
 
   
9.3
%
   
 
2,395
     
 
21.70
2008
   
4                
     
233,660
 
     
7.8
%
   
 
4,282
     
 
18.33
   
—                
   
—  
 
   
—  
 
   
 
—  
     
 
—  
2009
   
3                
     
305,378
 
     
10.1
%
   
 
5,149
     
 
16.86
   
2                
   
34,970
 
   
2.9
%
   
 
1,014
     
 
29.00
2010
   
4                
     
230,767
 
     
7.7
%
   
 
4,744
     
 
20.56
   
3                
   
50,333
 
   
4.2
%
   
 
1,415
     
 
28.11
2011 and beyond
   
10                
     
945,209
 
     
31.4
%
   
 
21,022
     
 
22.24
   
2                
   
142,666
 
   
12.0
%
   
 
1,076
     
 
7.54
    
    
    
  
           
  
  
  
        
Total
   
40                
     
3,014,786
(1)
     
100.0
%
   
$
54,733
     
$
18.15
   
90                
   
1,186,148
(1)
   
100.0
%
   
$
19,466
     
$
16.41
    
    
    
  
           
  
  
  
        
 
(1)
Excludes space leased under month-to-month leases and vacant space at June 30, 2002.

11

KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Top Ten Office and Top Ten Industrial Tenants
($ in thousands)
 
Tenant Name
   
Rentable
Square
Feet
   
Annual Base
Rental
Revenues(1)
     
Percentage of
Total Annual Base
Rental Revenues
Office Properties:
                   
The Boeing Company
   
1,080,662
   
$
17,920
     
10.3%
Peregrine Systems, Inc.(2)
   
423,874
   
 
13,794
     
7.9%
DirecTV, Inc.
   
182,463
   
 
5,286
     
3.0%
Diversa Corporation
   
136,908
   
 
4,715
     
2.7%
Epson America, Inc.
   
166,575
   
 
4,251
     
2.5%
Epicor Software Corporation
   
172,778
   
 
3,477
     
2.0%
Newgen Results Corporation
   
102,875
   
 
3,445
     
2.0%
Scan Health Plan
   
119,219
   
 
3,429
     
2.0%
Intuit, Inc.
   
212,214
   
 
3,150
     
1.8%
Sony Music Entertainment, Inc.
   
94,844
   
 
2,791
     
1.6%
    
  
    
Total Office Properties
   
2,692,412
   
$
62,258
     
35.8%
    
  
    
Industrial Properties:(3)
                   
Celestica California, Inc.
   
303,533
   
$
2,493
     
1.4%
Qwest Communications Corporation
   
244,800
   
 
2,422
     
1.4%
Mattel, Inc.
   
192,053
   
 
2,023
     
1.2%
Packard Hughes Interconnect
   
157,458
   
 
1,700
     
1.0%
Targus, Inc.
   
266,093
   
 
1,481
     
0.9%
NBTY Manufacturing, LLC
   
286,139
   
 
1,461
     
0.8%
Southern Plastic Mold, Inc.
   
188,000
   
 
1,201
     
0.7%
Kraft Foods, Inc.
   
164,540
   
 
1,185
     
0.7%
Extron Electronics
   
157,730
   
 
949
     
0.5%
Ricoh Electronics
   
100,000
   
 
809
     
0.5%
    
  
    
Total Industrial Properties
   
2,060,346
   
$
15,724
     
9.1%
    
  
    
 
(1)
Reflects annualized rent calculated on a straight-line basis.
 
(2)
Includes 64,946 rentable square feet of executed subleases with annual base rental revenue of approximately $2.1 million.
 
(3)
In July 2002, a lease with Abovenet Communications, Inc. was terminated prior to expiration. The lease for 113,820 square feet would have represented approximately $1.5 million, or 0.8% of the Company’s annual base rental revenues at June 30, 2002.

12

KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Summary of Tenants Representing 5.0% or Greater of Annual Base Rental Revenue
($ in thousands)
 
The Boeing Company
   
Rentable
Square
Feet
   
Annual Base
Rental
Revenues(1)
   
Lease
Expiration
Date
Boeing Satellite Systems
                 
2260 E. Imperial Highway, El Segundo
   
293,261
   
$
7,448
   
July 2004
909 N. Sepulveda, El Segundo
   
248,148
   
 
2,978
   
February 2003
1231 N. Miller Street, Anaheim
   
113,242
   
 
684
   
March 2009
2240 E. Imperial Highway, El Segundo
   
101,564
   
 
1,729
   
January 2004
2250 E. Imperial Highway, El Segundo
   
7,791
   
 
271
   
November 2004
    
  
    
    
764,006
   
 
13,110
     
    
  
    
Boeing MTA (Military Transport Aircraft)
                 
3760 Kilroy Airport Way, Long Beach
   
24,536
   
 
686
   
January 2003
3760 Kilroy Airport Way, Long Beach
   
26,620
   
 
831
   
January 2003
    
  
    
    
51,156
   
 
1,517
     
    
  
    
Boeing Airplane-on-Ground Division
                 
17930 Pacific Highway, Seattle
   
211,139
   
 
1,769
   
December 2002
    
  
    
Boeing Capital Corporation
                 
3780 Kilroy Airport Way, Long Beach
   
43,636
   
 
1,223
   
September 2005
    
  
    
Boeing Realty Corporation
                 
3760 Kilroy Airport Way, Long Beach
   
10,725
   
 
301
   
August 2005
    
  
    
Total
   
1,080,662
   
$
17,920
     
    
  
    
                  
                  
Peregrine Systems, Inc.(2)
               
Building 1
   
52,375
   
$
1,682
   
September 2010
Building 2
  
129,680
   
 
4,245
   
April 2012
Building 3
   
129,752
   
 
4,308
   
April 2013
Building 5(3)
   
112,067
   
 
3,559
   
July 2011
    
  
    
Total
   
423,874
   
$
13,794
     
    
  
    
(1)
Reflects annualized rent calculated on a straight-line basis.
(2)
Excludes Building 4 which is currently under construction and was previously committed to Peregrine Systems, Inc. Peregrine surrendered Building 4 back to the Company in June 2002.
(3)
Includes 64,946 rentable square feet of executed subleases with annual base rental revenues of approximately $2.1 million.

13

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
2002 Dispositions
($ in thousands)
 
Project
     
Location
   
Type
     
Month of
Disposition
     
Square
Feet
   
Sales
Price
1st QUARTER:
                               
NONE
                               
2nd QUARTER:
                               
NONE
                               
                                
                                
                                
                                
                                
                                
TOTAL YEAR-TO-DATE DISPOSITIONS
                               

14

 
KILROY REALTY CORPORATION
Second 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
   
$
15,232
     
100
%
Sorrento Gateway—Lot 4
  
San Diego, CA
  
Office
  
2Q 2001
   
1Q 2002
   
60,662
   
 
16,749
     
100
%
                     
  
        
Subtotal
                    
131,279
   
 
31,981
     
100
%
                     
  
        
2nd QUARTER:
                                      
Calabasas Park Centre Ph II
  
Calabasas, CA
  
Office
  
2Q 2000
   
2Q 2001
   
98,706
   
 
22,256
     
91
%
Innovation Corporate Center Lot 8
  
San Diego, CA
  
Office
  
2Q 2000
   
2Q 2001
   
46,759
   
 
9,378
     
51
%
Pacific Corporate Center—Lots 25 & 27
  
San Diego, CA
  
Office
  
2Q 2001
   
4Q 2001
   
68,400
   
 
17,798
     
100
%
                     
  
        
                     
213,865
   
 
49,432
     
85
%
                     
  
        
TOTAL YEAR-TO-DATE STABILIZED DEVELOPMENT
                    
345,144
   
$
81,413
     
91
%
                     
  
        
 
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 supplemental information might not occur.

15

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
In-Process and Committed Development Projects
($ in thousands)
 
              
Estimated Construction Period
   
Est. Stabilization
Date(1)
   
Rentable Square
Feet
   
Total
Estimated Investment
   
Total
Costs to
Date(3)
   
% Leased
     
% LOI
       
Total
%
Committed(2)
Project
   
Location
   
Type
   
Start Date
   
Compl. Date
                       
PROJECTS IN LEASE-UP:
                                                                 
Westside Media Center—Phase III
   
West LA, CA
   
Office
   
4Q 2000
   
2Q 2002
   
2Q 2003
   
151,000
   
$
58,045
   
$
43,461
   
0
%
   
20
%
     
    20%
                             
  
  
                    
Subtotal
                            
151,000
   
 
58,045
   
 
43,461
   
0
%
   
20
%
     
    20%
                             
  
  
                    
PROJECTS UNDER CONSTRUCTION:
                                                                 
Brobeck, Phleger & Harrison Expansion
   
Del Mar, CA
   
Office
   
3Q 2001
   
3Q 2002
   
3Q 2002
   
89,168
   
 
24,863
   
 
17,804
   
100
%
   
0
%
     
100%
Imperial & Sepulveda
   
El Segundo, CA
   
Office
   
1Q 2001
   
3Q 2002
   
3Q 2003
   
133,678
   
 
44,130
   
 
31,730
   
0
%
   
0
%
     
    0%
Peregrine Systems Corporate
                                                                
Ctr—Bldg 4(4)
   
Del Mar, CA
   
Office
   
3Q 2001
   
4Q 2002
   
4Q 2003
   
114,780
   
 
30,464
   
 
22,577
   
0
%
   
0
%
     
    0%
San Diego Corporate Center
   
Del Mar, CA
   
Office
   
2Q 2002
   
3Q 2003
   
3Q 2004
   
208,961
   
 
62,999
   
 
21,955
   
84
%
   
0
%
     
  84%
                             
  
  
                    
Subtotal
                            
546,587
   
 
162,456
   
 
94,066
   
48
%
   
0
%
     
  48%
                             
  
  
                    
TOTAL PROJECTS IN LEASE UP AND UNDER CONSTRUCTION
   
697,587
   
 
220,501
   
 
137,527
   
38
%
   
4
%
     
  42%
                             
  
  
                    
COMMITTED DEVELOPMENT:
                                                                 
None
                                                                 
                                                                  
TOTAL IN-PROCESS AND COMMITTED DEVELOPMENT PROJECTS:
             
697,587
   
$
220,501
   
$
137,527
   
38
%
   
4
%
     
  42%
                             
  
  
                    
(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)
Costs to date as of June 30, 2002.
(4)
Building 4 was previously committed to Peregrine Systems Inc. Peregrine surrendered Building 4 back to the Company in June 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.

16

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Future Development Pipeline
($ in thousands)
 
Project
   
Location
   
Type
   
Total Site Acreage
   
Estimated Rentable Square Feet
   
Total Estimated Investment
   
Total Costs to Date(1)
SAN DIEGO COUNTY:
                                  
Innovation Corporate Center—Lot 2
   
San Diego, CA
   
Office
   
3.0
   
51,187
   
$
10,043
   
$
2,775
Innovation Corporate Center—Lot 4
   
San Diego, CA
   
Office
   
3.4
   
75,000
   
 
13,620
   
 
3,340
Innovation Corporate Center—Lot 9
   
San Diego, CA
   
Office
   
3.2
   
65,867
   
 
12,343
   
 
3,325
Innovation Corporate Center—Lot 10
   
San Diego, CA
   
Office
   
2.2
   
37,405
   
 
7,841
   
 
2,280
Pacific Corporate Center—Lots 3, 4 & 6
   
San Diego, CA
   
Office
   
10.9
   
225,000
   
 
47,170
   
 
12,887
Pacific Corporate Center—Lot 8
   
San Diego, CA
   
Office
   
5.0
   
95,000
   
 
25,621
   
 
6,452
Santa Fe Summit—Phase I
   
San Diego, CA
   
Office
   
7.6
   
150,000
   
 
33,438
   
 
6,445
Santa Fe Summit—Phase II
   
San Diego, CA
   
Office
   
7.6
   
150,000
   
 
34,003
   
 
6,445
Sorrento Gateway—Lot 1
   
San Diego, CA
   
Office
   
3.4
   
61,000
   
 
17,052
   
 
3,677
Sorrento Gateway—Lot 2
   
San Diego, CA
   
Office
   
4.4
   
80,000
   
 
23,816
   
 
6,813
Sorrento Gateway—Lot 3
   
San Diego, CA
   
Office
   
3.4
   
60,000
   
 
18,337
   
 
4,783
Sorrento Gateway—Lot 7
   
San Diego, CA
   
Office
   
4.1
   
57,000
   
 
18,675
   
 
6,090
              
  
  
  
TOTAL FUTURE DEVELOPMENT PIPELINE
             
58.2
   
1,107,459
   
$
261,959
   
$
65,312
              
  
  
  
 
(1)
Costs to date as of June 30, 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.

17

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Capital Structure
At June 30, 2002
($ in thousands)
 
    
Shares/Units at June 30, 2002
   
Aggregate Principal Amount or
$ Value
Equivalent
     
% of Total
Market
Capitalization
  
DEBT:
                     
Secured Debt
        
$
455,302
     
25.6
%
Unsecured Line of Credit
        
 
306,000
     
17.2
%
         
    
Total Debt
        
$
761,302
     
42.8
%
         
    
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
     
2.0
%
9.250% Series D Cumulative Redeemable Preferred Units (1)
   
900,000
   
 
45,000
     
2.6
%
Common Units Outstanding (2)
   
4,421,195
   
 
118,267
     
6.6
%
Common Shares Outstanding (2)
   
27,743,637
   
 
742,142
     
41.8
%
         
    
Total Equity
        
$
1,015,409
     
57.2
%
         
    
TOTAL MARKET CAPITALIZATION
        
$
1,776,711
     
100.0
%
         
    
(1)
Value based on $50.00 per share liquidation preference.
(2)
Valued based on closing share price of $26.75 at June 30, 2002.

18

 
KILROY REALTY CORPORATION
Second Quarter 2002 Supplemental Financial Report
Debt Analysis
At June 30, 2002
($ in thousands)
 
SECURED DEBT PRINCIPAL REPAYMENT SCHEDULE
 
2002
  
2003
  
2004
  
2005
  
2006
  
Thereafter
  
Total
$3,732
  
$95,241
  
$28,418
  
$88,933
  
$37,084
  
$201,894
  
$455,302
 
TOTAL DEBT COMPOSITION
 
      
% of
Total Debt
       
Weighted Average
           
Interest Rate
     
Maturity
Secured vs. Unsecured Debt:
                       
Secured Debt
     
59.8
%
     
6.5
%
   
5.8
Unsecured Debt
     
40.2
%
     
5.1
%
   
2.7
Floating vs. Fixed Rate Debt:
                       
Fixed Rate Debt (1),(2),(4)
     
68.7
%
     
7.1
%
   
5.4
Floating Rate Debt (3)
     
31.3
%
     
3.4
%
   
2.6
               
  
Total Debt
              
6.0
%
   
4.5
               
  
Total Debt Including Loan Fees
              
6.3
%
     
               
    
 
UNSECURED LINE OF CREDIT
 
Total Line
  
Outstanding Balance
   
Expiration Date
$425,000
  
$306,000
   
March 2005
 
CAPITALIZED INTEREST & LOAN FEES
 
Quarter-to-Date
   
Year-to-Date
$3.4
   
$7.2
 
(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 millionof 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 81.8% of its total outstanding debt at June 30, 2002.

19