Exhibit 99.1
 
LOGO
 
Third Quarter 2002 Supplemental Financial Report
 
    
    Page    
  
1
  
2
  
3
  
4
  
5
  
6
  
7-10
  
11
  
12
  
13-15
  
16
  
17
  
18
  
19
  
20
  
21
  
22
  
23
  
24-25
 
Some of the enclosed information presented in this supplemental and on the Company’s October 29, 2002 conference call is forward-looking in nature, including information concerning project development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise, except to the extent it is required to do so in connection with its ongoing requirements under Federal securities laws to disclose material information. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “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 and on the Company’s October 29, 2002 conference call might not occur.

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Company Background
 
Kilroy Realty Corporation (NYSE: KRC) owns, develops, and operates office and industrial real estate, primarily in Southern California. The company operates as a self-administered real estate investment trust. As of September 30, 2002, the company’s stabilized portfolio consisted of 91 office buildings and 62 industrial buildings, which encompassed an aggregate of 7.6 million and 5.2 million square feet, respectively, and was 93.1% occupied.
 
Board of Directors
  
Senior Management
  
Investor Relations
John B. Kilroy, Sr.
  
Chairman
  
John B. Kilroy, Jr.
  
President and CEO
  
12200 W. Olympic Blvd, Suite 200
John R. D'Eathe
      
Jeffrey C. Hawken
  
Executive VP and COO
  
Los Angeles, CA 90064
William P. Dickey
      
Richard E. Moran Jr.
  
Executive VP and CFO
  
(310) 481-8400
Matthew J. Hart
      
Kathy M. Delgado
  
Sr. VP Marketing and Leasing
  
(310) 481-6580
John B. Kilroy, Jr.
      
John T. Fucci
  
Sr. VP Asset Management
  
Web: www.kilroyrealty.com
Dale F. Kinsella
      
Tyler H. Rose
  
Sr. VP and Treasurer
  
E-mail: investorrelations@kilroyrealty.com
       
Steve Scott
  
Sr. VP San Diego Development
    
       
Justin Smart
  
Sr. VP Los Angeles Development
    
       
Ann Marie Whitney
  
Sr. VP and Controller
    
 
Equity Research Coverage
 
A.G. Edwards & Sons, Inc.
   
Green Street Advisors
David AuBuchon        
  
(314) 955-5452
   
Jim Bracken  
  
(949) 640-8780
Banc of America Securities LLC
   
McDonald Investments Inc.
Lee Schalop    
  
(212) 847-5677
   
Anatole Pevnev 
  
(216) 263-4783
Credit Suisse First Boston
   
Merrill Lynch & Co., Inc.
Larry Raiman
  
(212) 538-2380
   
Rahul Bhattacharjee 
  
(212) 449-1920
Deutsche Bank Securities Inc.
   
Prudential Securities
Lou Taylor
  
(212) 469-4912
   
Jim Sullivan
  
(212) 778-2515
Friedman, Billings, Ramsey & Co., Inc.
   
UBS Warburg
David Loeb
  
(703) 469-1289
   
Stuart Seeley
  
(212) 713-9771

1

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Financial Highlights
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended
  
    
9/30/2002
     
6/30/2002
     
3/31/2002
     
12/31/2001
     
9/30/2001
  
INCOME ITEMS (Including Discontinued Operations):
                                             
Revenues
   
$
51,111
 
   
$
51,265
 
   
$
52,635
 
   
$
49,598
 
   
$
51,446
 
Net Straight Line Rent
   
 
1,948
 
   
 
(97
)
   
 
1,637
 
   
 
2,271
 
   
 
1,928
 
Lease Termination Fees
   
 
51
 
   
 
0
 
   
 
1,270
 
   
 
9
 
   
 
27
 
Net Operating Income
   
 
38,669
 
   
 
39,254
 
   
 
40,416
 
   
 
38,525
 
   
 
38,880
 
EBITDA
   
 
35,783
 
   
 
35,692
 
   
 
40,617
 
   
 
34,232
 
   
 
34,738
 
Capitalized Interest and Loan Fees
   
 
3,451
 
   
 
3,359
 
   
 
3,837
 
   
 
3,757
 
   
 
3,109
 
Net Income
   
 
7,885
 
   
 
4,957
 
   
 
13,507
 
   
 
7,625
 
   
 
9,283
 
Funds From Operations
   
 
23,170
 
   
 
23,358
 
   
 
27,153
 
   
 
20,933
 
   
 
20,512
 
Funds Available for Distribution
   
 
19,285
 
   
 
22,595
 
   
 
26,368
 
   
 
14,944
 
   
 
16,753
 
Net Income per share—diluted
   
$
0.28
 
   
$
0.18
 
   
$
0.49
 
   
$
0.28
 
   
$
0.34
 
Funds From Operations per share—diluted
   
$
0.72
 
   
$
0.73
 
   
$
0.89
 
   
$
0.68
 
   
$
0.67
 
Funds Available for Distribution per share—diluted
   
$
0.60
 
   
$
0.70
 
   
$
0.86
 
   
$
0.49
 
   
$
0.55
 
Dividend per share
   
$
0.495
 
   
$
0.495
 
   
$
0.495
 
   
$
0.480
 
   
$
0.480
 
RATIOS (Including Discontinued Operations):
                                             
Operating Margins
   
 
75.2
%
   
 
76.2
%
   
 
77.0
%
   
 
77.8
%
   
 
74.8
%
Interest Coverage Ratio(1)
   
 
4.0
x
   
 
4.1
x
   
 
4.3
x
   
 
3.5
x
   
 
3.3
x
Fixed Charge Coverage Ratio(2)
   
 
2.9
x
   
 
2.9
x
   
 
3.2
x
   
 
2.6
x
   
 
2.5
x
FFO Payout Ratio(3)
   
 
68.7
%
   
 
68.0
%
   
 
55.8
%
   
 
69.9
%
   
 
71.3
%
FAD Payout Ratio(4)
   
 
82.6
%
   
 
70.3
%
   
 
57.5
%
   
 
97.9
%
   
 
87.4
%
    
9/30/2002
     
6/30/2002
     
3/31/2002
     
12/31/2001
     
9/30/2001
  
ASSETS:
                                             
Investments in Real Estate before Depreciation
   
$
1,697,580
 
   
$
1,678,839
 
   
$
1,661,622
 
   
$
1,600,994
 
   
$
1,581,637
 
Total Assets
   
 
1,518,313
 
   
 
1,510,577
 
   
 
1,505,929
 
   
 
1,457,229
 
   
 
1,460,722
 
CAPITALIZATION:
                                             
Total Debt
   
$
773,268
 
   
$
761,302
 
   
$
741,186
 
   
$
714,587
 
   
$
722,688
 
Total Preferred Stock(5)
   
 
155,000
 
   
 
155,000
 
   
 
155,000
 
   
 
155,000
 
   
 
155,000
 
Total Market Equity Value(5)
   
 
762,628
 
   
 
860,409
 
   
 
903,565
 
   
 
800,894
 
   
 
760,651
 
Total Market Capitalization(5)
   
 
1,690,896
 
   
 
1,776,711
 
   
 
1,799,751
 
   
 
1,670,481
 
   
 
1,638,339
 
Total Debt / Total Market Capitalization
   
 
45.7
%
   
 
42.8
%
   
 
41.2
%
   
 
42.8
%
   
 
44.1
%
Total Debt and Preferred / Total Market Capitalization
   
 
54.9
%
   
 
51.6
%
   
 
49.8
%
   
 
52.1
%
   
 
53.6
%
(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 23.

2

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Consolidated Balance Sheets
(unaudited, $ in thousands)
 
    
9/30/2002
     
6/30/2002
     
3/31/2002
     
12/31/2001
  
ASSETS:
                                    
Land and improvements
   
$
297,305
 
   
$
285,585
 
   
$
277,842
 
   
$
269,366
 
Buildings and improvements
   
 
1,290,575
 
   
 
1,220,923
 
   
 
1,179,214
 
   
 
1,140,499
 
Undeveloped land and construction in progress, net
   
 
109,700
 
   
 
172,331
 
   
 
204,566
 
   
 
191,129
 
    
  
  
  
Total investment in real estate
   
 
1,697,580
 
   
 
1,678,839
 
   
 
1,661,622
 
   
 
1,600,994
 
Accumulated depreciation and amortization
   
 
(270,951
)
   
 
(259,676
)
   
 
(248,702
)
   
 
(241,665
)
    
  
  
  
Investment in real estate, net
   
 
1,426,629
 
   
 
1,419,163
 
   
 
1,412,920
 
   
 
1,359,329
 
Cash and cash equivalents
   
 
9,878
 
   
 
12,663
 
   
 
10,432
 
   
 
16,487
 
Restricted cash
   
 
7,348
 
   
 
5,811
 
   
 
5,984
 
   
 
5,413
 
Current receivables, net
   
 
2,779
 
   
 
3,041
 
   
 
2,921
 
   
 
4,770
 
Deferred rent receivables, net
   
 
28,422
 
   
 
26,470
 
   
 
26,568
 
   
 
27,381
 
Deferred leasing costs, net
   
 
30,532
 
   
 
30,313
 
   
 
32,972
 
   
 
33,120
 
Deferred financing costs, net
   
 
6,873
 
   
 
7,596
 
   
 
9,236
 
   
 
3,948
 
Prepaid expenses and other assets
   
 
5,852
 
   
 
5,520
 
   
 
4,896
 
   
 
6,781
 
    
  
  
  
TOTAL ASSETS
   
$
1,518,313
 
   
$
1,510,577
 
   
$
1,505,929
 
   
$
1,457,229
 
    
  
  
  
LIABILITIES AND STOCKHOLDERS' EQUITY:
                                    
Liabilities:
                                    
Secured debt
   
$
473,268
 
   
$
455,302
 
   
$
457,186
 
   
$
459,587
 
Unsecured line of credit
   
 
300,000
 
   
 
306,000
 
   
 
284,000
 
   
 
155,000
 
Unsecured term facility
                              
 
100,000
 
Accounts payable, accrued expenses and other liabilities
   
 
37,766
 
   
 
39,016
 
   
 
49,745
 
   
 
53,879
 
Accrued distributions
   
 
15,922
 
   
 
15,891
 
   
 
15,163
 
   
 
14,634
 
Rents received in advance, tenant security deposits and deferred revenue
   
 
20,143
 
   
 
16,737
 
   
 
14,593
 
   
 
15,955
 
    
  
  
  
Total liabilities
   
 
847,099
 
   
 
832,946
 
   
 
820,687
 
   
 
799,055
 
    
  
  
  
Minority Interests:
                                    
8.075% Series A Cumulative Redeemable Preferred unitholders
   
 
73,716
 
   
 
73,716
 
   
 
73,716
 
   
 
73,716
 
9.375% Series C Cumulative Redeemable Preferred unitholders
   
 
34,464
 
   
 
34,464
 
   
 
34,464
 
   
 
34,464
 
9.250% Series D Cumulative Redeemable Preferred unitholders
   
 
44,321
 
   
 
44,321
 
   
 
44,321
 
   
 
44,321
 
Common unitholders of the Operating Partnership
   
 
68,522
 
   
 
72,415
 
   
 
74,477
 
   
 
49,176
 
Minority interest in Development LLCs
                              
 
15,869
 
    
  
  
  
Total minority interests
   
 
221,023
 
   
 
224,916
 
   
 
226,978
 
   
 
217,546
 
    
  
  
  
Stockholders’ Equity:
                                    
Common stock
   
 
278
 
   
 
277
 
   
 
275
 
   
 
274
 
Additional paid-in capital
   
 
503,184
 
   
 
499,196
 
   
 
494,354
 
   
 
479,295
 
Distributions in excess of earnings
   
 
(48,020
)
   
 
(42,079
)
   
 
(33,305
)
   
 
(33,163
)
Accumulated net other comprehensive loss
   
 
(5,251
)
   
 
(4,679
)
   
 
(3,060
)
   
 
(5,778
)
    
  
  
  
Total stockholders' equity
   
 
450,191
 
   
 
452,715
 
   
 
458,264
 
   
 
440,628
 
    
  
  
  
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
   
$
1,518,313
 
   
$
1,510,577
 
   
$
1,505,929
 
   
$
1,457,229
 
    
  
  
  

3

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Consolidated Statements of Operations
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended September 30,
     
Nine Months Ended September 30,
  
    
2002
     
2001
     
% Change
     
2002
     
2001
     
% Change
  
REVENUES:
                                                  
Rental income
   
$
45,481
 
   
$
44,826
 
   
1.5
%
   
$
134,872
 
   
$
134,902
 
   
(0.0
%)
Tenant reimbursements
   
 
5,280
 
   
 
5,882
 
   
(10.2
%)
   
 
17,576
 
   
 
17,537
 
   
0.2
%
Interest income
   
 
80
 
   
 
170
 
   
(52.9
%)
   
 
451
 
   
 
883
 
   
(48.9
%)
Other income
   
 
211
 
   
 
383
 
   
(44.9
%)
   
 
1,678
 
   
 
6,173
 
   
(72.8
%)
    
  
         
  
      
Total revenues
   
 
51,052
 
   
 
51,261
 
   
(0.4
%)
   
 
154,577
 
   
 
159,495
 
   
(3.1
%)
    
  
         
  
      
EXPENSES:
                                                  
Property expenses
   
 
7,931
 
   
 
7,879
 
   
0.7
%
   
 
23,148
 
   
 
22,193
 
   
4.3
%
Real estate taxes
   
 
4,061
 
   
 
4,087
 
   
(0.6
%)
   
 
11,938
 
   
 
12,425
 
   
(3.9
%)
General and administrative expenses
   
 
2,966
 
   
 
2,796
 
   
6.1
%
   
 
9,582
 
   
 
8,870
 
   
8.0
%
Ground leases
   
 
319
 
   
 
379
 
   
(15.8
%)
   
 
1,035
 
   
 
1,146
 
   
(9.7
%)
Interest expense
   
 
8,966
 
   
 
10,605
 
   
(15.5
%)
   
 
27,025
 
   
 
31,879
 
   
(15.2
%)
Depreciation and amortization(1)
   
 
14,744
 
   
 
12,838
 
   
14.8
%
   
 
46,060
 
   
 
39,079
 
   
17.9
%
    
  
         
  
      
Total expenses
   
 
38,987
 
   
 
38,584
 
   
1.0
%
   
 
118,788
 
   
 
115,592
 
   
2.8
%
    
  
         
  
      
INCOME FROM CONTINUING OPERATIONS BEFORE NET GAINS ON DISPOSITIONS
   
 
12,065
 
   
 
12,677
 
   
(4.8
%)
   
 
35,789
 
   
 
43,903
 
   
(18.5
%)
Net gains on dispositions of operating properties
            
 
2,468
 
   
(100.0
%)
   
 
896
 
   
 
4,007
 
   
(77.6
%)
    
  
         
  
      
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS
   
 
12,065
 
   
 
15,145
 
   
(20.3
%)
   
 
36,685
 
   
 
47,910
 
   
(23.4
%)
    
  
         
  
      
MINORITY INTERESTS:
                                                  
Distributions on Cumulative Redeemable
                                                  
Preferred units
   
 
(3,375
)
   
 
(3,375
)
   
0.0
%
   
 
(10,125
)
   
 
(10,125
)
   
0.0
%
Minority interest attributable to continuing operations
   
 
(1,184
)
   
 
(1,018
)
   
16.3
%
   
 
(3,656
)
   
 
(3,643
)
   
0.4
%
Recognition of previously reserved Development LLC preferred return
                            
 
3,908
 
            
100.0
%
Minority interest in earnings of Development LLCs
            
 
(1,547
)
   
(100.0
%)
   
 
(1,024
)
   
 
(2,152
)
   
(52.4
%)
    
  
         
  
      
Total minority interests
   
 
(4,559
)
   
 
(5,940
)
   
(23.2
%)
   
 
(10,897
)
   
 
(15,920
)
   
(31.6
%)
    
  
         
  
      
INCOME FROM CONTINUING OPERATIONS
   
 
7,506
 
   
 
9,205
 
   
(18.5
%)
   
 
25,788
 
   
 
31,990
 
   
(19.4
%)
DISCONTINUED OPERATIONS:(2)
                                                  
Net (loss) income from discontinued operations
   
 
(36
)
   
 
87
 
   
(141.4
%)
   
 
170
 
   
 
233
 
   
(27.0
%)
Net gain on disposition of discontinued operations
   
 
470
 
            
100.0
%
   
 
470
 
            
100.0
%
Minority interest attributable to discontinued operations
   
 
(55
)
   
 
(9
)
   
511.1
%
   
 
(79
)
   
 
(25
)
   
216.0
%
    
  
         
  
      
Total discontinued operations
   
 
379
 
   
 
78
 
   
385.9
%
   
 
561
 
   
 
208
 
   
169.7
%
    
  
         
  
      
NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
   
 
7,885
 
   
 
9,283
 
   
(15.1
%)
   
 
26,349
 
   
 
32,198
 
   
(18.2
%)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
                                     
 
(1,392
)
   
100.0
%
    
  
         
  
      
NET INCOME
   
$
7,885
 
   
$
9,283
 
   
(15.1
%)
   
$
26,349
 
   
$
30,806
 
   
(14.5
%)
    
  
         
  
      
Weighted average shares outstanding—basic
   
 
27,623
 
   
 
27,359
 
          
 
27,449
 
   
 
27,080
 
       
Weighted average shares outstanding—diluted
   
 
27,839
 
   
 
27,587
 
          
 
27,733
 
   
 
27,315
 
       
NET INCOME PER COMMON SHARE:
                                                  
Net income per common share—basic
   
$
0.29
 
   
$
0.34
 
   
(14.7
%)
   
$
0.96
 
   
$
1.14
 
   
(15.8
%)
    
  
         
  
      
Net income per common share—diluted
   
$
0.28
 
   
$
0.34
 
   
(17.6
%)
   
$
0.95
 
   
$
1.13
 
   
(15.9
%)
    
  
         
  
      
(1)
Included in depreciation for the nine months ended September 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.
(2)
In accordance with SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”, effective for financial statements issued after December 15, 2001, the net income and the net gain on disposition of properties sold subsequent to December 31, 2001 are reflected in the consolidated statement of operations as discontinued operations for all periods presented.

4

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Funds From Operations and Funds Available for Distribution
(unaudited, $ in thousands, except per share amounts)
 
    
Three Months Ended September 30,
     
Nine Months Ended September 30,
  
    
2002
     
2001
     
% Change
     
2002
     
2001
     
% Change
  
FUNDS FROM OPERATIONS:
                                                  
Net Income
   
$
7,885
 
   
$
9,283
 
   
(15.1
%)
   
$
26,349
 
   
$
30,806
 
   
(14.5
%)
Adjustments:
                                                  
Minority interest in earnings of Operating Partnership
   
 
1,239
 
   
 
1,027
 
   
20.6
%
   
 
3,735
 
   
 
3,668
 
   
1.8
%
Depreciation and amortization
   
 
14,516
 
   
 
12,123
 
   
19.7
%
   
 
44,962
 
   
 
37,123
 
   
21.1
%
Net gains on dispositions of operating properties
   
 
(470
)
   
 
(2,468
)
   
(81.0
%)
   
 
(1,366
)
   
 
(4,007
)
   
(65.9
%)
Cumulative effect of change in accounting principle
                                     
 
1,392
 
   
(100.0
%)
Non-cash amortization of restricted stock
grants(1)
            
 
547
 
   
(100.0
%)
            
 
1,643
 
   
(100.0
%)
    
  
         
  
      
Funds From Operations
   
$
23,170
 
   
$
20,512
 
   
13.0
%
   
$
73,680
 
   
$
70,625
 
   
4.3
%
    
  
         
  
      
Weighted average common shares/units outstanding—basic
   
 
31,918
 
   
 
30,421
 
          
 
31,360
 
   
 
30,303
 
       
Weighted average common shares/units outstanding—diluted
   
 
32,134
 
   
 
30,648
 
          
 
31,644
 
   
 
30,538
 
       
FFO per common share/unit—basic
   
$
0.73
 
   
$
0.67
 
   
9.0
%
   
$
2.35
 
   
$
2.33
 
   
0.9
%
    
  
         
  
      
FFO per common share/unit—diluted
   
$
0.72
 
   
$
0.67
 
   
7.5
%
   
$
2.33
 
   
$
2.31
 
   
0.9
%
    
  
         
  
      
FUNDS AVAILABLE FOR DISTRIBUTION:
                                                  
Funds From Operations
   
$
23,170
 
   
$
20,512
 
   
13.0
%
   
$
73,680
 
   
$
70,625
 
   
4.3
%
Adjustments:
                                                  
Amortization of deferred financing costs
   
 
457
 
   
 
408
 
   
12.0
%
   
 
1,677
 
   
 
1,188
 
   
41.2
%
Tenant improvements, leasing commissions  and recurring capital expenditures
   
 
(2,394
)
   
 
(2,240
)
   
6.9
%
   
 
(4,031
)
   
 
(6,919
)
   
(41.7
%)
Net effect of straight-line rents(2)
   
 
(1,948
)
   
 
(1,927
)
   
1.1
%
   
 
(3,079
)
   
 
(4,514
)
   
(31.8
%)
    
  
         
  
      
Funds Available for Distribution
   
$
19,285
 
   
$
16,753
 
   
15.1
%
   
$
68,247
 
   
$
60,380
 
   
13.0
%
    
  
         
  
      
FAD per common share/unit—basic
   
$
0.60
 
   
$
0.55
 
   
9.1
%
   
$
2.18
 
   
$
1.99
 
   
9.5
%
    
  
         
  
      
FAD per common share/unit—diluted
   
$
0.60
 
   
$
0.55
 
   
9.1
%
   
$
2.16
 
   
$
1.98
 
   
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 represents the straight-line rent income recognized during the period net of a reserve for bad debts. For the nine months ended September 30, 2002 and 2001, this amount was adjusted to reflect cash received and applied against the deferred rents receivable for the leases that terminated early.

5

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Same Store Analysis(1)
($ in thousands)
 
    
Same Store Analysis (GAAP Basis)
  
    
Three Months Ended September 30,
     
Nine Months Ended September 30,
  
    
2002
     
2001
     
% Change
     
2002
     
2001
     
% Change
  
Total Same Store Portfolio
                                                  
Number of properties
   
 
140
 
   
 
140
 
          
 
140
 
   
 
140
 
       
Square Feet
   
 
11,599,922
 
   
 
11,599,922
 
          
 
11,599,922
 
   
 
11,599,922
 
       
Percent of Stabilized Portfolio
   
 
90.6
%
   
 
93.8
%
          
 
90.6
%
   
 
93.8
%
       
Average Occupancy
   
 
94.4
%
   
 
96.0
%
          
 
95.1
%
   
 
96.3
%
       
Operating Revenues:
                                                  
Rental income
   
$
38,873
 
   
$
39,591
 
   
(1.8
%)
   
$
117,979
 
   
$
119,323
 
   
(1.1
%)
Tenant reimbursements
   
 
4,765
 
   
 
5,447
 
   
(12.5
%)
   
 
15,571
 
   
 
15,814
 
   
(1.5
%)
Other income
   
 
182
 
   
 
34
 
   
435.3
%
   
 
1,533
 
   
 
333
 
   
360.4
%
    
  
         
  
      
Total operating revenues
   
 
43,820
 
   
 
45,072
 
   
(2.8
%)
   
 
135,083
 
   
 
135,470
 
   
(0.3
%)
    
  
         
  
      
Operating Expenses:
                                                  
Property expenses
   
 
6,969
 
   
 
7,063
 
   
(1.3
%)
   
 
19,808
 
   
 
19,941
 
   
(0.7
%)
Real estate taxes
   
 
3,485
 
   
 
3,578
 
   
(2.6
%)
   
 
10,382
 
   
 
10,733
 
   
(3.3
%)
Ground leases
   
 
273
 
   
 
329
 
   
(17.0
%)
   
 
897
 
   
 
986
 
   
(9.0
%)
    
  
         
  
      
Total operating expenses
   
 
10,727
 
   
 
10,970
 
   
(2.2
%)
   
 
31,087
 
   
 
31,660
 
   
(1.8
%)
    
  
         
  
      
GAAP Net Operating Income
   
$
33,093
 
   
$
34,102
 
   
(3.0
%)
   
$
103,996
 
   
$
103,810
 
   
0.2
%
    
  
         
  
      
    
Same Store Analysis (Cash Basis)
  
    
Three Months Ended September 30,
     
Nine Months Ended September 30,
  
    
2002
     
2001
     
% Change
     
2002
     
2001
     
% Change
  
Total operating revenues
   
 
42,788
 
   
 
43,343
 
   
(1.3
%)
   
 
133,044
 
   
 
130,816
 
   
1.7
%
Total operating expenses
   
 
10,727
 
   
 
10,970
 
   
(2.2
%)
   
 
31,087
 
   
 
31,660
 
   
(1.8
%)
    
  
         
  
      
Cash Net Operating Income
   
$
32,061
 
   
$
32,373
 
   
(1.0
%)
   
$
101,957
 
   
$
99,156
 
   
2.8
%
    
  
         
  
      
(1)
Same store defined as all stabilized properties owned at January 1, 2001 and still owned at September 30, 2002.

6

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Stabilized and Renovation Portfolio Occupancy Overview
 
    
# of Buildings
   
Portfolio Breakdown
     
Square Feet
   
Occupancy at:
  
       
NOI
     
Sq. Ft.
     
Total
   
9/30/02
     
6/30/02
     
12/31/01
  
STABILIZED PORTFOLIO:
                                             
OCCUPANCY BY PRODUCT TYPE:
                                             
Office:
                                             
Los Angeles
   
32
   
35.7
%
   
25.5
%
   
3,268,651
   
87.5
%
   
85.3
%
   
88.1
%
Orange County
   
12
   
4.3
%
   
4.3
%
   
546,850
   
89.8
%
   
90.3
%
   
89.7
%
San Diego
   
41
   
31.2
%
   
24.1
%
   
3,081,207
   
93.3
%
   
99.2
%
   
100.0
%
Other
   
6
   
5.7
%
   
5.5
%
   
709,354
   
97.6
%
   
97.8
%
   
99.0
%
    
  
  
  
                    
Subtotal
   
91
   
76.9
%
   
59.4
%
   
7,606,062
   
91.0
%
   
92.4
%
   
93.9
%
    
  
  
  
                    
Industrial:
                                             
Los Angeles
   
7
   
3.0
%
   
4.3
%
   
554,490
   
79.3
%
   
99.9
%
   
99.4
%
Orange County
   
53
   
18.8
%
   
33.9
%
   
4,343,168
   
98.1
%
   
97.9
%
   
98.3
%
Other
   
2
   
1.3
%
   
2.3
%
   
295,417
   
100.0
%
   
100.0
%
   
100.0
%
    
  
  
  
                    
Subtotal
   
62
   
23.1
%
   
40.6
%
   
5,193,075
   
96.2
%
   
98.3
%
   
98.5
%
    
  
  
  
                    
OCCUPANCY BY REGION:
                                             
Los Angeles
   
39
   
38.7
%
   
29.9
%
   
3,823,141
   
86.3
%
   
87.4
%
   
89.8
%
Orange County
   
65
   
23.1
%
   
38.2
%
   
4,890,018
   
97.1
%
   
97.0
%
   
97.3
%
San Diego
   
41
   
31.2
%
   
24.1
%
   
3,081,207
   
93.3
%
   
99.2
%
   
100.0
%
Other
   
8
   
7.0
%
   
7.9
%
   
1,004,771
   
98.3
%
   
98.4
%
   
99.3
%
    
  
  
  
                    
TOTAL STABILIZED PORTFOLIO
   
153
   
100.0
%
   
100.0
%
   
12,799,137
   
93.1
%
   
94.8
%
   
95.8
%
RENOVATION PORTFOLIO:
                                             
Office:
                                             
Orange County
   
1
                 
78,016
                     
    
                
                    
TOTAL PORTFOLIO
   
154
                 
12,877,153
                     
    
                
                    
 
 
AVERAGE OCCUPANCY—STABILIZED PORTFOLIO
 
    
Office
     
Industrial
     
Total
  
Quarter-to-Date
   
92.2
%
   
95.9
%
   
93.7
%
Year-to-Date
   
91.8
%
   
97.6
%
   
94.2
%

7

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Stabilized and Renovation Portfolio Occupancy Overview
 
    
City/Submarket
     
# of Buildings
   
Square Feet
   
Occupancy
  
Office:
                        
Los Angeles, California
                        
23925 Park Sorrento
   
Calabasas
     
1
   
11,789
   
100.0
%
23975 Park Sorrento
   
Calabasas
     
1
   
100,592
   
91.9
%
24025 Park Sorrento
   
Calabasas
     
1
   
102,264
   
100.0
%
26541 Agoura Road
   
Calabasas
     
1
   
90,878
   
100.0
%
5151—5155 Camino Ruiz
   
Camarillo
     
4
   
265,372
   
87.0
%
185 S. Douglas Street
   
El Segundo
     
1
   
62,150
   
3.5
%
909 N. Sepulveda
   
El Segundo
     
1
   
248,148
   
100.0
%
Kilroy Airport Center, El Segundo
   
El Segundo
     
3
   
706,302
   
98.3
%
525 N. Brand Blvd.
   
Glendale
     
1
   
43,647
   
27.5
%
Kilroy Airport Center, Long Beach
   
Long Beach
     
7
   
949,198
   
84.8
%
12200 W. Olympic Blvd.
   
Los Angeles
     
1
   
151,000
   
41.0
%
12312 W. Olympic Blvd.
   
Los Angeles
     
1
   
78,000
   
100.0
%
1633 26th Street
   
Santa Monica
     
1
   
44,915
   
100.0
%
2100 Colorado Avenue
   
Santa Monica
     
3
   
94,844
   
100.0
%
3130 Wilshire Blvd.
   
Santa Monica
     
1
   
88,338
   
90.4
%
501 Santa Monica Blvd.
   
Santa Monica
     
1
   
70,089
   
88.0
%
2829 Townsgate Road
   
Thousand Oaks
     
1
   
81,158
   
95.6
%
23600—23610 Telo Avenue
   
Torrance
     
2
   
79,967
   
87.2
%
           
  
  
Total Los Angeles Office
          
32
   
3,268,651
   
87.5
%
Orange County, California
                        
1240—1250 Lakeview Avenue
   
Anaheim
     
2
   
78,903
   
98.0
%
4175 E. La Palma Avenue
   
Anaheim
     
1
   
42,790
   
50.0
%
8101 Kaiser Blvd.
   
Anaheim
     
1
   
60,177
   
85.7
%
Anaheim Corp. Center
   
Anaheim
     
4
   
157,758
   
92.0
%
601 Valencia
   
Brea
     
1
   
60,891
   
100.0
%
9451 Toledo Way
   
Irvine
     
1
   
27,200
   
100.0
%
111 Pacifica
   
Irvine Spectrum
     
1
   
67,381
   
82.0
%
2501 Pullman
   
Santa Ana
     
1
   
51,750
   
100.0
%
           
  
  
Total Orange County Office
          
12
   
546,850
   
89.8
%

8

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Stabilized and Renovation Portfolio Occupancy Overview
 
    
City/ Submarket
     
# of
Buildings
   
Square Feet
   
Occupancy
  
Office:
                        
San Diego, California
                        
5770 Armada Drive
   
Carlsbad
     
1
   
81,712
   
100.0
%
12340 El Camino Real
   
Del Mar
     
1
   
89,168
   
100.0
%
12348 High Bluff Drive
   
Del Mar
     
1
   
40,274
   
100.0
%
12390 El Camino Real
   
Del Mar
     
1
   
72,332
   
100.0
%
3579 / 3611 / 3661 / 3811 Valley Centre Drive (Peregrine)
   
Del Mar
     
4
   
423,874
   
57.0
%
12225 / 12235 El Camino Real
   
Del Mar
     
2
   
115,513
   
100.0
%
6215 / 6220 Greenwich Drive
   
Governor Park
     
2
   
212,214
   
100.0
%
15051 Ave of Science
   
Rancho Bernardo
     
1
   
70,617
   
100.0
%
15073 Ave of Science
   
Rancho Bernardo
     
1
   
46,759
   
51.1
%
15378 Ave of the Science
   
Rancho Bernardo
     
1
   
68,910
   
100.0
%
15435 / 15445 Innovation Drive
   
Rancho Bernardo
     
2
   
103,000
   
100.0
%
4939 / 4955 Directors Place
   
Sorrento Mesa
     
2
   
136,908
   
100.0
%
5005 / 5010 Wateridge Vista Drive
   
Sorrento Mesa
     
2
   
172,778
   
100.0
%
10243 Genetic Center
   
Sorrento Mesa
     
1
   
102,875
   
100.0
%
10390 Pacific Center Court
   
Sorrento Mesa
     
1
   
68,400
   
100.0
%
5717 Pacific Center
   
Sorrento Mesa
     
1
   
67,995
   
100.0
%
6055 Lusk Avenue
   
Sorrento Mesa
     
1
   
93,000
   
100.0
%
6260 Sequence Drive
   
Sorrento Mesa
     
1
   
130,000
   
100.0
%
6290 Sequence Drive
   
Sorrento Mesa
     
2
   
152,415
   
100.0
%
6340 / 6350 Sequence Drive
   
Sorrento Mesa
     
2
   
199,000
   
100.0
%
Pacific Corporate Center
   
Sorrento Mesa
     
7
   
411,339
   
100.0
%
4690 Executive Drive
   
University Towne Center
     
1
   
50,929
   
100.0
%
9455 Towne Center Drive
   
University Towne Center
     
1
   
45,195
   
100.0
%
9785 / 9791 Towne Center Drive
   
University Towne Center
     
2
   
126,000
   
100.0
%
           
  
  
Total San Diego Office
          
41
   
3,081,207
   
93.3
%
Other
                        
3750 University Avenue
   
Riverside, CA
     
1
   
124,986
   
97.3
%
4351 Latham Avenue
   
Riverside, CA
     
1
   
21,357
   
100.0
%
4361 Latham Avenue
   
Riverside, CA
     
1
   
30,581
   
100.0
%
Kilroy Airport Center, Sea-Tac
   
Seattle, WA
     
3
   
532,430
   
97.4
%
           
  
  
Total Other Office
          
6
   
709,354
   
97.6
%
Total Office
          
91
   
7,606,062
   
91.0
%

9

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Stabilized and Renovation Portfolio Occupancy Overview
 
    
City/ Submarket
     
# of Buildings
   
Square Feet
   
Occupancy
  
Industrial
                        
Los Angeles, California
                        
Walnut Park Bus. Center
   
Diamond Bar
     
3
   
165,685
   
99.0
%
2031 E. Mariposa Avenue
   
El Segundo
     
1
   
192,053
   
100.0
%
2260 E. El Segundo Blvd.
   
El Segundo
     
1
   
113,820
   
0.0
%
2265 E. El Segundo Blvd.
   
El Segundo
     
1
   
76,570
   
100.0
%
2270 E. El Segundo Blvd.
   
El Segundo
     
1
   
6,362
   
100.0
%
           
  
  
Total Los Angeles Industrial
          
7
   
554,490
   
79.3
%
Orange County, California
                        
1000 E. Ball Road
   
Anaheim
     
1
   
100,000
   
100.0
%
1230 S. Lewis Road
   
Anaheim
     
1
   
57,730
   
100.0
%
1250 N. Tustin Avenue
   
Anaheim
     
1
   
84,185
   
100.0
%
3125 E. Coronado Street
   
Anaheim
     
1
   
144,000
   
100.0
%
3130—3150 Miraloma
   
Anaheim
     
1
   
144,000
   
100.0
%
3250 E. Carpenter
   
Anaheim
     
1
   
41,225
   
100.0
%
3340 E. La Palma Avenue
   
Anaheim
     
1
   
153,320
   
100.0
%
5115 E. La Palma Avenue
   
Anaheim
     
1
   
286,139
   
100.0
%
5325 E. Hunter Avenue
   
Anaheim
     
1
   
109,449
   
100.0
%
Anaheim Tech Center
   
Anaheim
     
5
   
593,992
   
100.0
%
La Palma Business Center
   
Anaheim
     
2
   
144,090
   
100.0
%
Brea Industrial Complex
   
Brea
     
7
   
276,278
   
100.0
%
Brea Industrial-Lambert Road
   
Brea
     
2
   
178,811
   
100.0
%
1675 MacArthur
   
Costa Mesa
     
1
   
50,842
   
100.0
%
25202 Towne Center Drive
   
Foothill Ranch
     
1
   
303,533
   
100.0
%
12400 Industry Street
   
Garden Grove
     
1
   
64,200
   
100.0
%
12681 / 12691 Pala Drive
   
Garden Grove
     
1
   
84,700
   
100.0
%
12752-12822 Monarch Street
   
Garden Grove
     
1
   
277,037
   
100.0
%
7421 Orangewood Avenue
   
Garden Grove
     
1
   
82,602
   
100.0
%
Garden Grove Industrial Complex
   
Garden Grove
     
6
   
275,971
   
96.4
%
13645—13885 Alton Parkway
   
Irvine
     
9
   
143,117
   
86.4
%
17150 Von Karman
   
Irvine
     
1
   
157,458
   
100.0
%
2055 S.E. Main Street
   
Irvine
     
1
   
47,583
   
100.0
%
9401 Toledo Way
   
Irvine
     
1
   
244,800
   
100.0
%
1951 E. Carnegie Avenue
   
Santa Ana
     
1
   
100,000
   
100.0
%
2525 Pullman
   
Santa Ana
     
1
   
107,130
   
100.0
%
14831 Franklin Avenue
   
Tustin
     
1
   
36,256
   
100.0
%
2911 Dow Avenue
   
Tustin
     
1
   
54,720
   
0.0
%
           
  
  
Total Orange County Industrial
          
53
   
4,343,168
   
98.1
%
Other
                        
5115 N. 27th Avenue
   
Phoenix, AZ
     
1
   
130,877
   
100.0
%
3735 Imperial Highway
   
Stockton, CA
     
1
   
164,540
   
100.0
%
           
  
  
Total Other Industrial
          
2
   
295,417
   
100.0
%
Total Industrial
          
62
   
5,193,075
   
96.2
%

10

KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Leasing Activity
 
Quarter-to-Date
 
                        
2nd Generation(6)
              
Weighted Average LeaseTerm (Mo.)
    
# 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)
       
    
New
   
Renewal
   
New
   
Renewal
                        
Office
   
15
   
11
   
121,838
   
38,539
   
$
14.41
     
$
0.03
     
10.9
%
   
11.4
%
   
82.2
%
     
50
Industrial
   
6
   
3
   
122,273
   
7,707
   
$
1.95
     
$
0.04
     
(0.5
%)
   
(4.3
%)
   
41.1
%
     
54
    
  
  
  
  
    
    
  
  
    
Total
   
21
   
14
   
244,111
   
46,246
   
$
7.26
     
$
0.04
     
7.8
%
   
7.0
%
   
70.5
%
     
52
    
  
  
  
  
    
    
  
  
    
 
Year-to-Date
 
                        
2nd Generation(6)
              
Weighted Average LeaseTerm (Mo.)
    
# 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)
       
    
New
   
Renewal
   
New
   
Renewal
                        
Office
   
24
   
33
   
329,517
   
213,027
   
$
9.47
     
$
0.06
     
2.7
%
   
(2.8
%)
   
48.4
%
     
59
Industrial
   
17
   
12
   
251,608
   
166,455
   
$
2.24
     
$
0.11
     
6.8
%
   
(1.4
%)
   
65.8
%
     
67
    
  
  
  
  
    
    
  
  
    
Total
   
41
   
45
   
581,125
   
379,482
   
$
6.04
     
$
0.08
     
3.7
%
   
(2.4
%)
   
55.5
%
     
62
    
  
  
  
  
    
    
  
  
    
(1)
Represents leasing activity for leases commencing during the current quarter and year-to date, respectively. 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.
(6)
Second generation calculations based on leases commencing during the current quarter and year-to date, respectively.

11

KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Recurring Capital Expenditures
($ in thousands)
 
    
Q3 2002
   
Q2 2002
   
Q1 2002
     
YTD 2002
Capital Improvements
                              
Office
   
$
248
   
$
157
   
$
33
 
   
$
438
Industrial
   
 
190
   
 
338
   
 
16
 
   
 
544
    
  
  
  
    
 
438
   
 
495
   
 
49
 
   
 
982
Tenant Improvements & Leasing Commissions(1)
                              
Office
   
 
1,814
   
 
599
   
 
289
 
   
 
2,702
Industrial
   
 
142
   
 
208
   
 
(3
)
   
 
347
    
  
  
  
    
 
1,956
   
 
807
   
 
286
 
   
 
3,049
Total
                              
Office
   
 
2,062
   
 
756
   
 
322
 
   
 
3,140
Industrial
   
 
332
   
 
546
   
 
13
 
   
 
891
    
  
  
  
    
$
2,394
   
$
1,302
   
$
335
 
   
$
4,031
    
  
  
  
(1)
Represents cash paid and leasing costs incurred for leases commencing during the period shown.

12

 
KILROY REALTY CORPORATION
Third 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.(2)
OFFICE:
                                 
Remaining 2002
   
  10
   
100,889
     
1.5
%
   
$
1,483
   
$
14.70
2003
   
  73
   
994,218
     
14.5
%
   
 
13,580
   
 
13.66
2004
   
  62
   
813,477
     
11.9
%
   
 
17,576
   
 
21.61
2005
   
  62
   
699,895
     
10.2
%
   
 
15,496
   
 
22.14
2006
   
  47
   
601,048
     
8.8
%
   
 
13,840
   
 
23.03
2007
   
  34
   
789,778
     
11.5
%
   
 
14,100
   
 
17.85
2008
   
  12
   
628,165
     
9.2
%
   
 
14,793
   
 
23.35
2009
   
  11
   
735,917
     
10.7
%
   
 
15,937
   
 
21.66
2010
   
    8
   
232,501
     
3.4
%
   
 
5,328
   
 
22.92
2011 and beyond
   
  19
   
1,252,800
     
18.3
%
   
 
33,866
   
 
27.03
    
  
    
  
      
Subtotal
   
338
   
6,848,688
     
100.0
%
   
$
145,999
   
$
21.32
    
  
    
  
      
INDUSTRIAL:
                                 
Remaining 2002
   
  10
   
36,812
     
0.8
%
   
$
146
   
$
3.97
2003
   
  36
   
541,497
     
11.0
%
   
 
3,554
   
 
6.56
2004
   
  27
   
549,248
     
11.2
%
   
 
3,923
   
 
7.14
2005
   
  16
   
712,203
     
14.5
%
   
 
5,289
   
 
7.43
2006
   
  11
   
602,980
     
12.3
%
   
 
4,531
   
 
7.51
2007
   
  12
   
504,069
     
10.3
%
   
 
3,487
   
 
6.92
2008
   
    5
   
752,946
     
15.3
%
   
 
5,203
   
 
6.91
2009
   
    7
   
505,976
     
10.3
%
   
 
3,183
   
 
6.29
2010
   
    2
   
70,101
     
1.4
%
   
 
512
   
 
7.30
2011 and beyond
   
    5
   
631,406
     
12.9
%
   
 
4,733
   
 
7.50
    
  
    
  
      
Subtotal
   
131
   
4,907,238
     
100.0
%
   
$
34,561
   
$
7.04
    
  
    
  
      
TOTAL PORTFOLIO:
                                 
Remaining 2002
   
  20
   
137,701
     
1.2
%
   
$
1,629
   
$
11.83
2003
   
109
   
1,535,715
     
13.1
%
   
 
17,234
   
 
11.16
2004
   
  89
   
1,362,725
     
11.6
%
   
 
21,499
   
 
15.78
2005
   
  78
   
1,412,098
     
12.0
%
   
 
20,785
   
 
14.72
2006
   
  58
   
1,204,028
     
10.2
%
   
 
18,371
   
 
15.26
2007
   
  46
   
1,293,847
     
11.0
%
   
 
17,587
   
 
13.59
2008
   
  17
   
1,381,111
     
11.7
%
   
 
19,996
   
 
14.48
2009
   
  18
   
1,241,893
     
10.6
%
   
 
19,120
   
 
15.40
2010
   
  10
   
302,602
     
2.6
%
   
 
5,840
   
 
19.30
2011 and beyond
   
  24
   
1,884,206
     
16.0
%
   
 
38,599
   
 
20.49
    
  
    
  
      
Total
   
469
   
11,755,926
     
100.0
%
   
$
180,560
   
$
15.36
    
  
    
  
      
(1)
Excludes space leased under month-to-month leases and vacant space at September 30, 2002.
(2)
Reflects annualized rent calculated on a straight-line basis.
 

13

 
KILROY REALTY CORPORATION
Third 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.(2)
     
# of Expiring Leases
  
Total Square Feet(1)
     
% of Total
Regional Sq. Ft.
     
Annual Base Rent
   
Annual Rent per Sq. Ft.(2)
OFFICE:
                                                                    
Remaining 2002
     
    4
  
7,581
     
0.3
%
   
$
186
   
$
24.54
     
  2
  
12,540
     
2.6
%
   
$
204
   
$
16.27
2003
     
  28
  
560,916
     
20.0
%
   
 
10,235
   
 
18.25
     
28
  
78,770
     
16.4
%
   
 
1,183
   
 
15.02
2004
     
  34
  
563,174
     
20.1
%
   
 
13,578
   
 
24.11
     
14
  
125,543
     
26.0
%
   
 
1,700
   
 
13.54
2005
     
  28
  
205,909
     
7.3
%
   
 
5,628
   
 
27.33
     
13
  
63,914
     
13.2
%
   
 
1,272
   
 
19.90
2006
     
  27
  
241,375
     
8.6
%
   
 
7,277
   
 
30.15
     
  9
  
46,977
     
9.7
%
   
 
898
   
 
19.12
2007
     
  14
  
133,149
     
4.8
%
   
 
3,307
   
 
24.84
     
  4
  
25,552
     
5.3
%
   
 
352
   
 
13.78
2008
     
    5
  
278,247
     
9.9
%
   
 
8,177
   
 
29.39
     
  3
  
116,258
     
24.1
%
   
 
2,065
   
 
17.76
2009
     
    7
  
425,076
     
15.2
%
   
 
10,272
   
 
24.02
     
—  
  
—  
     
—  
 
   
 
—  
   
 
—  
2010
     
    5
  
54,109
     
1.9
%
   
 
1,684
   
 
31.12
     
—  
  
—  
     
—  
 
   
 
—  
   
 
—  
2011 and beyond
     
    8
  
334,962
     
11.9
%
   
 
6,462
   
 
19.29
     
  1
  
13,213
     
2.7
%
   
 
453
   
 
34.28
      
 
    
  
           
 
    
  
      
Subtotal
     
160
  
2,804,498
     
100.0
%
   
$
66,806
   
$
23.82
     
74
  
482,767
     
100.0
%
   
$
8,127
   
$
16.83
      
 
    
  
           
 
    
  
      
INDUSTRIAL:
                                                                    
Remaining 2002
     
    6
  
11,812
     
2.7
%
   
$
112
   
$
9.48
     
  4
  
25,000
     
0.6
%
   
$
34
   
$
1.36
2003
     
  17
  
77,367
     
17.6
%
   
 
652
   
 
8.43
     
19
  
464,130
     
11.1
%
   
 
2,902
   
 
6.25
2004
     
  10
  
121,318
     
27.6
%
   
 
935
   
 
7.71
     
17
  
433,930
     
10.4
%
   
 
2,988
   
 
6.89
2005
     
    3
  
209,493
     
47.8
%
   
 
2,155
   
 
10.29
     
13
  
502,710
     
12.0
%
   
 
3,134
   
 
6.23
2006
     
—  
  
—  
     
—  
 
   
 
—  
   
 
—  
     
10
  
432,440
     
10.4
%
   
 
3,351
   
 
7.75
2007
     
    3
  
12,238
     
2.8
%
   
 
122
   
 
9.97
     
  9
  
491,831
     
11.8
%
   
 
3,365
   
 
6.84
2008
     
—  
  
—  
     
—  
 
   
 
—  
   
 
—  
     
  5
  
752,946
     
18.0
%
   
 
5,203
   
 
6.91
2009
     
    1
  
6,362
     
1.5
%
   
 
101
   
 
15.88
     
  6
  
499,614
     
12.0
%
   
 
3,082
   
 
6.17
2010
     
—  
  
—  
     
—  
 
   
 
—  
   
 
—  
     
  2
  
70,101
     
1.7
%
   
 
512
   
 
7.30
2011 and beyond
     
—  
  
—  
     
—  
 
   
 
—  
   
 
—  
     
  4
  
500,529
     
12.0
%
   
 
3,941
   
 
7.87
      
 
    
  
           
 
    
  
      
Subtotal
     
  40
  
438,590
     
100.0
%
   
$
4,077
   
$
9.30
     
89
  
4,173,231
     
100.0
%
   
$
28,512
   
$
6.83
      
 
    
  
           
 
    
  
      
TOTAL PORTFOLIO:
                                                                    
Remaining 2002
     
  10
  
19,393
     
0.6
%
   
$
298
   
$
15.37
     
  6
  
37,540
     
0.8
%
   
$
238
   
$
6.34
2003
     
  45
  
638,283
     
19.7
%
   
 
10,887
   
 
17.06
     
47
  
542,900
     
11.7
%
   
 
4,085
   
 
7.52
2004
     
  44
  
684,492
     
21.1
%
   
 
14,513
   
 
21.20
     
31
  
559,473
     
12.0
%
   
 
4,688
   
 
8.38
2005
     
  31
  
415,402
     
12.8
%
   
 
7,783
   
 
18.74
     
26
  
566,624
     
12.2
%
   
 
4,406
   
 
7.78
2006
     
  27
  
241,375
     
7.4
%
   
 
7,277
   
 
30.15
     
19
  
479,417
     
10.3
%
   
 
4,249
   
 
8.86
2007
     
  17
  
145,387
     
4.5
%
   
 
3,429
   
 
23.59
     
13
  
517,383
     
11.1
%
   
 
3,717
   
 
7.18
2008
     
    5
  
278,247
     
8.6
%
   
 
8,177
   
 
29.39
     
  8
  
869,204
     
18.7
%
   
 
7,268
   
 
8.36
2009
     
    8
  
431,438
     
13.3
%
   
 
10,373
   
 
24.04
     
  6
  
499,614
     
10.7
%
   
 
3,082
   
 
6.17
2010
     
    5
  
54,109
     
1.7
%
   
 
1,684
   
 
31.12
     
  2
  
70,101
     
1.5
%
   
 
512
   
 
7.30
2011 and beyond
     
    8
  
334,962
     
10.3
%
   
 
6,462
   
 
19.29
     
  5
  
513,742
     
11.0
%
   
 
4,394
   
 
8.55
      
 
    
  
           
 
    
  
      
Total
     
200
  
3,243,088
     
100.0
%
   
$
70,883
   
$
21.86
     
163
  
4,655,998
     
100.0
%
   
$
36,639
   
$
7.87
      
 
    
  
           
 
    
  
      
(1)
Excludes space leased under month-to-month leases and vacant space at September 30, 2002.
(2)
Reflects annualized base rent calculated on a straight-line basis.

14

 
KILROY REALTY CORPORATION
Third 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.(2)
     
# of Expiring Leases
   
Total Square Feet(1)
   
% of Total Regional Sq. Ft.
    
Annual Base Rent
   
Annual Rent per Sq. Ft.(2)
OFFICE:
                                                                  
Remaining 2002
     
  1
   
52,540
     
1.8
%
  
$
654
   
$
12.45
     
  3
   
28,228
   
4.1
%
  
$
439
   
$
15.55
2003
     
  2
   
107,128
     
3.7
%
  
 
1,437
   
 
13.41
     
15
   
247,404
   
36.1
%
  
 
725
   
 
2.93
2004
     
  1
   
50,929
     
1.8
%
  
 
960
   
 
18.85
     
13
   
73,831
   
10.8
%
  
 
1,338
   
 
18.12
2005
     
  4
   
304,454
     
10.6
%
  
 
3,824
   
 
12.56
     
17
   
125,618
   
18.3
%
  
 
4,772
   
 
37.79
2006
     
  3
   
190,209
     
6.6
%
  
 
3,147
   
 
16.54
     
  8
   
122,487
   
17.9
%
  
 
2,518
   
 
20.56
2007
     
  7
   
548,878
     
19.1
%
  
 
8,753
   
 
15.95
     
  9
   
82,199
   
12.0
%
  
 
1,688
   
 
20.54
2008
     
  4
   
233,660
     
8.1
%
  
 
4,551
   
 
19.48
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2009
     
  3
   
305,378
     
10.6
%
  
 
5,530
   
 
18.11
     
  1
   
5,463
   
0.8
%
  
 
135
   
 
24.71
2010
     
  3
   
178,392
     
6.2
%
  
 
3,644
   
 
20.43
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2011 and beyond
     
10
   
904,625
     
31.5
%
  
 
26,951
   
 
29.79
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
      
  
    
 
  
    
  
  
 
  
Subtotal
     
38
   
2,876,193
     
100.0
%
  
$
59,451
   
$
20.67
     
66
   
685,230
   
100.0
%
  
 $
11,615
   
$
16.95
      
  
    
 
  
    
  
  
 
  
INDUSTRIAL:
                                                                  
Remaining 2002
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2003
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2004
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2005
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2006
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
  1
   
164,540
   
55.7
%
  
 
1,180
   
 
7.17
2007
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2008
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2009
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2010
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2011 and beyond
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
  1
   
130,877
   
44.3
%
  
 
792
   
 
6.05
      
  
    
 
           
  
  
 
      
Subtotal
     
—  
   
—  
     
—  
 
  
 
—  
   
 
—  
     
  2
   
295,417
   
100.0
%
  
$
1,972
   
$
6.68
      
  
    
 
           
  
  
 
      
TOTAL PORTFOLIO:
                                                           
Remaining 2002
     
  1
   
52,540
     
1.8
%
  
$
654
   
$
12.45
     
  3
   
28,228
   
2.9
%
  
$
439
   
$
15.55
2003
     
  2
   
107,128
     
3.7
%
  
 
1,437
   
 
13.41
     
15
   
247,404
   
25.2
%
  
 
725
   
 
2.93
2004
     
  1
   
50,929
     
1.8
%
  
 
960
   
 
18.85
     
13
   
73,831
   
7.5
%
  
 
1,338
   
 
18.12
2005
     
  4
   
304,454
     
10.6
%
  
 
3,824
   
 
12.56
     
17
   
125,618
   
12.8
%
  
 
4,772
   
 
37.99
2006
     
  3
   
190,209
     
6.6
%
  
 
3,147
   
 
16.54
     
  9
   
287,027
   
29.3
%
  
 
3,698
   
 
12.88
2007
     
  7
   
548,878
     
19.1
%
  
 
8,753
   
 
15.95
     
  9
   
82,199
   
8.4
%
  
 
1,688
   
 
20.54
2008
     
  4
   
233,660
     
8.1
%
  
 
4,551
   
 
19.48
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2009
     
  3
   
305,378
     
10.6
%
  
 
5,530
   
 
18.11
     
  1
   
5,463
   
0.6
%
  
 
135
   
 
24.71
2010
     
  3
   
178,392
     
6.2
%
  
 
3,644
   
 
20.43
     
—  
   
—  
   
—  
 
  
 
—  
   
 
—  
2011 and beyond
     
10
   
904,625
     
31.5
%
  
 
26,951
   
 
29.79
     
  1
   
130,877
   
13.3
%
  
 
792
   
 
6.05
      
  
    
 
           
  
  
 
      
Total
     
38
   
2,876,193
     
100.0
%
  
$
59,451
   
$
20.67
     
68
   
980,647
   
100.0
%
  
$
13,587
   
$
13.86
      
  
    
 
           
  
  
 
      
(1)
Excludes space leased under month-to-month leases and vacant space at September 30, 2002.
(2)
Reflects annualized rent calculated on a straight-line basis.

15

KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Top Ten Office and Top Ten Industrial Tenants
($ in thousands)
 
Tenant Name        
   
Annual Base Rental Revenues(1)
   
Rentable Square
Feet
     
Percentage of Total Annual Base Rental Revenues
     
Percentage of Total Rentable
Square Feet
Office Properties:
                          
The Boeing Company
   
$
17,971
   
1,080,662
     
9.8%
     
8.4%
Peregrine Systems, Inc.(2)
   
 
7,044
   
241,747
     
3.8%
     
1.9%
DirecTV, Inc.
   
 
6,663
   
182,463
     
3.6%
     
1.4%
Diversa Corporation
   
 
4,686
   
136,908
     
2.6%
     
1.1%
Epson America, Inc.
   
 
4,251
   
166,575
     
2.3%
     
1.3%
Brobeck, Phleger & Harrison
   
 
4,223
   
161,500
     
2.3%
     
1.3%
Newgen Results Corporation
   
 
3,445
   
102,875
     
1.9%
     
0.8%
Scan Health Plan
   
 
3,429
   
119,219
     
1.9%
     
0.9%
Epicor Software Corporation
   
 
3,417
   
172,778
     
1.9%
     
1.3%
Intuit, Inc.
   
 
3,150
   
212,214
     
1.7%
     
1.7%
    
  
    
    
Total Office Properties
   
$
58,279
   
2,576,941
     
31.8%
     
20.1%
    
  
    
    
Industrial Properties:
                          
Celestica California, Inc.
   
$
2,493
   
303,533
     
1.4%
     
2.4%
Qwest Communications Corporation
   
 
2,422
   
244,800
     
1.3%
     
1.9%
Mattel, Inc.
   
 
2,023
   
192,053
     
1.1%
     
1.5%
Packard Hughes Interconnect
   
 
1,700
   
157,458
     
0.9%
     
1.2%
Targus, Inc.
   
 
1,481
   
266,093
     
0.8%
     
2.1%
NBTY Manufacturing, LLC
   
 
1,461
   
286,139
     
0.8%
     
2.2%
Southern Plastic Mold, Inc. 
   
 
1,210
   
188,000
     
0.7%
     
1.5%
Kraft Foods, Inc.
   
 
1,185
   
164,540
     
0.7%
     
1.3%
Extron Electronics
   
 
960
   
157,730
     
0.5%
     
1.2%
Ricoh Electronics
   
 
809
   
100,000
     
0.4%
     
0.8%
    
  
    
    
Total Industrial Properties
   
$
15,744
   
2,060,346
     
8.6%
     
16.1%
    
  
    
    
(1)
Reflects annualized rent calculated on a straight-line basis.
(2)
In September 2002, Peregrine Systems, Inc. filed for bankruptcy. As part of the bankruptcy filing, Peregrine filed a motion to reject two leases it has with the Company encompassing 52,375 and 129,752 rentable square feet. Peregrine continues to lease two buildings encompassing 241,747 rentable square feet, of which 64,946 rentable square feet are subleased to other tenants. Of the annual base rental revenues of $7.0 million, the Peregrine leases contribute approximately $4.9 million and the executed subleases contribute approximately $2.1 million.

16

KILROY REALTY CORPORATION
Third 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
   
$
7,499
   
July 31, 2004
909 N. Sepulveda, El Segundo
   
248,148
   
 
2,978
   
February 28, 2003(2)
1231 N. Miller Street, Anaheim
   
113,242
   
 
684
   
March 31, 2009
2240 E. Imperial Highway, El Segundo
   
101,564
   
 
1,729
   
January 31, 2004
2250 E. Imperial Highway, El Segundo
   
7,791
   
 
271
   
November 30, 2004
    
  
    
    
764,006
   
 
13,161
     
    
  
    
Boeing MTA (Military Transport Aircraft)
                 
3760 Kilroy Airport Way, Long Beach
   
24,536
   
 
686
   
December 31, 2002(2)
3760 Kilroy Airport Way, Long Beach
   
26,620
   
 
831
   
December 31, 2002(2)
    
  
    
    
51,156
   
 
1,517
     
    
  
    
Boeing Airplane-on-Ground Division
                 
17930 Pacific Highway, Seattle
   
211,139
   
 
1,769
   
December 31, 2002
    
  
    
Boeing Capital Corporation
                 
3780 Kilroy Airport Way, Long Beach
   
43,636
   
 
1,223
   
September 30, 2005
    
  
    
Boeing Realty Corporation
                 
3760 Kilroy Airport Way, Long Beach
   
10,725
   
 
301
   
August 31, 2005
    
  
    
Total
   
1,080,662
   
$
17,971
     
    
  
    
(1)
Reflects annualized rent calculated on a straight-line basis.
(2)
Boeing has informed the Company that it intends to vacate the space upon lease expiration.

17

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Summary of Peregrine Systems, Inc. Leases
($ in thousands)
 
    
Rentable
   
Annual Base
   
Lease
    
Square
   
Rental
   
Expiration
Peregrine Systems, Inc.
   
Feet
   
Revenues (1)
   
Date
                  
Motion Filed to Reject(4)
                 
                  
Building 1—3579 Valley Centre Drive
   
52,375
   
$
1,682
     
Building 3—3661 Valley Centre Drive
   
129,752
   
 
4,308
     
Building 4—3721 Valley Centre Drive(2)
   
114,780
   
 
—  
     
    
  
    
    
296,907
   
 
5,990
     
    
  
    
Leases Not Rejected(4)
                 
                  
Building 2—3611 Valley Centre Drive
   
129,680
   
 
3,779
   
April 30, 2012
Building 5—3811 Valley Centre Drive(3)
   
112,067
   
 
3,265
   
July 31, 2011
    
  
    
    
241,747
   
 
7,044
     
    
  
    
Total
   
538,654
   
$
13,034
     
    
  
    
(1)
Reflects annualized rent calculated on a straight-line basis.
(2)
Building 4 was under construction when Peregrine previously surrendered it back to KRC. The Building has been 100% released to a third-party tenant.
(3)
Includes 64,496 rentable square feet of executed subleases with annual base rental revenues of approximately $2.1 million.
(4)
In September 2002 Peregrine filed for bankruptcy. As part of the bankruptcy filing, Peregrine filed a motion to reject three leases it has with the Company. Peregrine did not file to reject the remaining two leases.

18

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
2002 Acquisitions and Dispositions
($ in thousands)
 
ACQUISITIONS:
                           
Project
   
Location
   
Type
   
Month of
Acquisition
   
Square
Feet
     
Purchase
Price(1)
1st QUARTER:
                           
NONE
                           
2nd QUARTER:
                           
NONE
                           
3rd QUARTER:
                           
2525 Pullman
   
Santa Ana
   
Industrial
   
August
   
107,130
     
$8,083
                   
    
TOTAL YEAR-TO-DATE ACQUISITIONS
                  
107,130
     
$8,083
                   
    
DISPOSITIONS:
                           
                            
Project
   
Location
   
Type
   
Month of
Disposition
   
Square
Feet
     
Sales
Price
1st QUARTER:
                           
NONE
                           
2nd QUARTER:
                           
NONE
                           
3rd QUARTER:
                           
3990 Ruffin Road
   
San Diego
   
Office
   
September
   
45,634
     
$6,492
                   
    
TOTAL YEAR-TO-DATE DISPOSITIONS
                  
45,634
     
$6,492
                   
    
(1)
Includes all closing costs at September 30, 2002.

19

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Stabilized Development
($ in thousands)
 
Project
  
Location
  
Type
  
Start Date
  
Completion Date
  
Rentable Square Feet
  
Total Est. Investment
   
% Occupied
    
% Leased
  
1st QUARTER:
                                       
15051 Ave of Science (ICC Lot 12)
  
Rancho Bernardo, CA
  
Office
  
2Q 2000
  
2Q 2001
  
70,617
  
$
15,179
   
100
%
  
100
%
4939 Directors Place (Gateway Lot 4)
  
Sorrento Mesa, CA
  
Office
  
2Q 2001
  
1Q 2002
  
60,662
  
 
16,764
   
100
%
  
100
%
                   
 
            
Subtotal
                  
131,279
  
 
31,943
   
100
%
  
100
%
                   
 
            
2nd QUARTER:
                                       
23975 Park Sorrento (Calabasas Ph II)
  
Calabasas, CA
  
Office
  
2Q 2000
  
2Q 2001
  
100,592
  
 
22,412
   
92
%
  
97
%
15073 Ave of Science (ICC Lot 8)
  
Rancho Bernardo, CA
  
Office
  
2Q 2000
  
2Q 2001
  
46,759
  
 
9,377
   
51
%
  
100
%
10390 Pacific Center Court (PCC Lots 25&27)
  
Sorrento Mesa, CA
  
Office
  
2Q 2001
  
4Q 2001
  
68,400
  
 
17,823
   
100
%
  
100
%
                   
 
            
                   
215,751
  
 
49,612
   
86
%
  
99
%
                   
 
            
3rd QUARTER:
                                       
12340 El Camino Real (Brobeck Expansion)
  
Del Mar, CA
  
Office
  
3Q 2001
  
3Q 2002
  
89,168
  
 
24,347
   
100
%
  
100
%
                   
 
            
                   
89,168
  
 
24,347
   
100
%
  
100
%
                   
 
            
TOTAL YEAR-TO-DATE STABILIZED DEVELOPMENT
                  
436,198
  
$
105,902
   
93
%
  
99
%
                   
 
            
Some of the enclosed information presented in this supplemental and on the Company’s October 29, 2002 conference call is forward-looking in nature, including information concerning project development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise, except to the extent it is required to do so in connection with its ongoing requirements under Federal securities laws to disclose material information. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “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 and on the Company’s October 29, 2002 conference call might not occur.

20

 
KILROY REALTY CORPORATION
Third 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
  
Total Costs as of 9/30/2002
  
% Leased
  
     
Start Date
  
Compl. Date
          
PROJECTS IN LEASE-UP:
                                          
12100 W. Olympic Blvd. (WMC III)
  
West LA, CA
  
Office
  
4Q 2000
  
2Q 2002
  
2Q 2003
  
151,000
  
$
60,515
  
$
45,020
  
23
%(2)
999 Sepulveda (Imperial & Sepulveda)
  
El Segundo, CA
  
Office
  
1Q 2001
  
3Q 2002
  
3Q 2003
  
133,678
  
 
44,406
  
 
35,409
  
0
%
3721 Valley Centre Drive (Peregrine Bldg 4)(3)
  
Del Mar, CA
  
Office
  
3Q 2001
  
3Q 2002
  
3Q 2003
  
114,780
  
 
31,330
  
 
23,392
  
100
%
                       
 
 
     
Subtotal
                      
399,458
  
 
136,251
  
 
103,821
  
37
%
                       
 
 
     
PROJECTS UNDER CONSTRUCTION:
                                          
12400 High Bluff (San Diego Corporate Center)
  
Del Mar, CA
  
Office
  
2Q 2002
  
3Q 2003
  
3Q 2004
  
208,961
  
 
62,406
  
 
28,757
  
84
%
                       
 
 
     
Subtotal
                      
208,961
  
 
62,406
  
 
28,757
  
84
%
                       
 
 
     
TOTAL PROJECTS IN LEASE UP AND
UNDER CONSTRUCTION
                  
608,419
  
 
198,657
  
 
132,578
  
53
%
                       
 
 
     
COMMITTED DEVELOPMENT:
                                          
None
                                          
TOTAL IN-PROCESS AND COMMITTED DEVELOPMENT PROJECTS:
                  
608,419
  
$
198,657
  
$
132,578
  
53
%
                       
 
 
     
(1)
Based on management’s estimation of the earlier of stabilized occupancy (95%) or one year from the date of substantial completion.
(2)
Certain aspects of this lease are subject to governmental approval.
(3)
3721 Valley Centre Drive was previously committed to Peregrine Systems, Inc. Peregrine surrendered the building back to the Company in June 2002. The building has been 100% released to an unaffiliated third party tenant.
 
Some of the enclosed information presented in this supplemental and on the Company’s October 29, 2002 conference call is forward-looking in nature, including information concerning project development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise, except to the extent it is required to do so in connection with its ongoing requirements under Federal securities laws to disclose material information. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “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 and on the Company’s October 29, 2002 conference call might not occur.
 
 
 
 

21

 
KILROY REALTY CORPORATION
Third 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 as of 9/30/2002
SAN DIEGO COUNTY:
                             
Innovation Corporate Center—Lot 2
  
Rancho Bernardo, CA
  
Office
   
3.0
  
51,187
  
$
10,672
  
$
2,834
Innovation Corporate Center—Lot 4
  
Rancho Bernardo, CA
  
Office
   
3.4
  
75,000
  
 
14,220
  
 
3,410
Innovation Corporate Center—Lot 9
  
Rancho Bernardo, CA
  
Office
   
3.2
  
65,867
  
 
13,082
  
 
3,392
Innovation Corporate Center—Lot 10
  
Rancho Bernardo, CA
  
Office
   
2.2
  
37,405
  
 
8,345
  
 
2,326
Pacific Corporate Center—Lots 3, 4 & 6
  
Sorrento Mesa, CA
  
Office
   
10.9
  
225,000
  
 
49,911
  
 
13,142
Pacific Corporate Center—Lot 8
  
Sorrento Mesa, CA
  
Office
   
5.0
  
95,000
  
 
26,396
  
 
6,656
Santa Fe Summit—Phase I
  
56-Corridor, CA
  
Office
   
7.6
  
150,000
  
 
34,825
  
 
6,586
Santa Fe Summit—Phase II
  
56-Corridor, CA
  
Office
   
7.6
  
150,000
  
 
34,257
  
 
6,585
Sorrento Gateway—Lot 1
  
Sorrento Mesa, CA
  
Office
   
3.4
  
61,000
  
 
16,830
  
 
3,756
Sorrento Gateway—Lot 2
  
Sorrento Mesa, CA
  
Office
   
4.4
  
80,000
  
 
24,358
  
 
6,943
Sorrento Gateway—Lot 3
  
Sorrento Mesa, CA
  
Office
   
3.4
  
60,000
  
 
19,482
  
 
4,875
Sorrento Gateway—Lot 7
  
Sorrento Mesa, CA
  
Office
   
4.1
  
57,000
  
 
19,644
  
 
6,214
            
 
 
 
TOTAL FUTURE DEVELOPMENT PIPELINE
           
58.2
  
1,107,459
  
$
272,022
  
$
66,719
            
 
 
 
Some of the enclosed information presented in this supplemental and on the Company’s October 29, 2002 conference call is forward-looking in nature, including information concerning project development timing and investment amounts. Although the information is based on Kilroy Realty Corporation’s current expectations, actual results could vary from expectations stated here. Numerous factors will affect Kilroy Realty Corporation’s actual results, some of which are beyond its control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. Kilroy Realty Corporation assumes no obligation to update publicly any forward-looking information, whether as a result of new information, future events or otherwise, except to the extent it is required to do so in connection with its ongoing requirements under Federal securities laws to disclose material information. For a discussion of important risks related to Kilroy Realty Corporation’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “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 and on the Company’s October 29, 2002 conference call might not occur.

22

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Capital Structure
At September 30, 2002
($ in thousands)
 
    
Shares/Units at September 30, 2002
   
Aggregate Principal Amount or $ Value Equivalent
     
% of Total Market Capitalization
  
DEBT:
                     
Secured Debt
        
 
473,268
     
28.0
%
Unsecured Line of Credit
        
 
300,000
     
17.7
%
         
    
Total Debt
        
$
773,268
     
45.7
%
         
    
EQUITY:
                     
8.075% Series A Cumulative Redeemable Preferred Units(1)
   
1,500,000
   
$
750,000
     
4.4
%
9.375% Series C Cumulative Redeemable Preferred Units(1)
   
700,000
   
 
35,000
     
2.1
%
9.250% Series D Cumulative Redeemable Preferred Units(1)
   
900,000
   
 
45,000
     
2.8
%
Common Units Outstanding(2)
   
4,236,752
   
 
100,453
     
5.8
%
Common Shares Outstanding(2)
   
27,928,080
   
 
662,175
     
39.2
%
         
    
Total Equity
        
$
917,628
     
54.3
%
         
    
TOTAL MARKET CAPITALIZATION
        
$
1,690,896
     
100.0
%
         
    
(1)
Value based on $50.00 per share liquidation preference.
(2)
Valued based on closing share price of $23.71 at September 30, 2002.

23

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Debt Analysis
At September 30, 2002
($ in thousands)
 
TOTAL DEBT COMPOSITION
 
    
% of Total Debt
       
Weighted Average
         
Interest Rate
     
Maturity
Secured vs. Unsecured Debt:
                     
Secured Debt
   
61.2
%
     
6.6
%
   
5.5
Unsecured Debt
   
38.8
%
     
5.2
%
   
2.5
Floating vs. Fixed Rate Debt:
                     
Fixed Rate Debt(1),(2),(4)
   
69.3
%
     
7.2
%
   
5.2
Floating Rate Debt(3)
   
30.7
%
     
3.4
%
   
2.3
             
  
Total Debt
            
6.0
%
   
4.3
             
  
Total Debt Including Loan Fees
            
6.4
%
     
             
    
 
UNSECURED LINE OF CREDIT
 
Total Line
  
Outstanding Balance
  
Expiration Date
$425,000
  
$300,000
  
March 2005
 
CAPITALIZED INTEREST & LOAN FEES
 
Quarter-to-Date
  
Year-to-Date
$3.5
  
$10.6
(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 82.2% of its total outstanding debt at September 30, 2002.

24

 
KILROY REALTY CORPORATION
Third Quarter 2002 Supplemental Financial Report
Debt Analysis
At September 30, 2002
($ in thousands)
 
DEBT MATURITY SCHEDULE
Floating/
Fixed Rate
   
Effective Rate
     
Maturity Date
   
2002
   
2003
   
2004
   
2005
   
2006
   
After 2006
   
Total
Unsecured Debt:
                                                             
Floating
   
3.34
%
   
3/15/2005
                        
$
300,000
                 
$
300,000
Secured Debt:
                                                             
Floating
   
3.63
%
   
10/29/2003
          
 
75,671
                               
 
75,671
Floating
   
3.57
%
   
6/29/2004
   
 
83
   
 
347
   
 
20,631
                        
 
21,061
Floating
   
3.67
%
   
9/29/2004
                 
 
9,532
                        
 
9,532
Fixed
   
8.35
%
   
1/31/2005
   
 
400
   
 
1,690
   
 
1,837
   
 
72,983
                 
 
76,910
Fixed
   
8.45
%
   
12/1/2005
   
 
183
   
 
578
   
 
629
   
 
10,295
                 
 
11,685
Floating
   
3.57
%
   
1/1/2006
                               
 
31,000
          
 
31,000
Fixed
   
6.51
%
   
8/12/2007
   
 
66
   
 
205
   
 
219
   
 
234
   
 
249
   
 
17,027
   
 
18,000
Fixed
   
7.21
%
   
8/12/2007
   
 
46
   
 
144
   
 
155
   
 
166
   
 
179
   
 
4,310
   
 
5,000
Fixed
   
7.20
%
   
4/1/2009
   
 
435
   
 
1,834
   
 
1,970
   
 
2,117
   
 
2,274
   
 
80,435
   
 
89,065
Fixed
   
6.70
%
   
1/10/2012
   
 
218
   
 
911
   
 
973
   
 
1,040
   
 
1,112
   
 
75,251
   
 
79,505
Fixed
   
8.21
%
   
10/1/2013
   
 
122
   
 
386
   
 
419
   
 
455
   
 
494
   
 
4,632
   
 
6,508
Fixed
   
8.26
%
   
11/1/2014
   
 
179
   
 
651
   
 
708
   
 
770
   
 
837
   
 
19,271
   
 
22,416
Fixed
   
7.15
%
   
5/1/2017
   
 
351
   
 
1,104
   
 
1,185
   
 
1,273
   
 
1,367
   
 
21,635
   
 
26,915
    
       
  
  
  
  
  
  
    
5.17
%
        
 
2,083
   
 
83,521
   
 
38,258
   
 
89,333
   
 
37,512
   
 
222,561
   
 
473,268
    
       
  
  
  
  
  
  
Effect of SWAPS
   
0.87
%
                                                      
    
       
  
  
  
  
  
  
Total
   
6.04
%
        
$
2,083
   
$
83,521
   
$
38,258
   
$
389,333
   
$
37,512
   
$
222,561
   
$
773,268
    
       
  
  
  
  
  
  
 
HEDGING INSTRUMENTS
Notional Amount
   
Instrument
     
Rate
     
Maturity
$150,000
   
Swap
     
5.48%
     
11/2002
   50,000
   
Cap
     
4.25%
     
01/2005
   50,000
   
Cap
     
4.25%
     
01/2005
   50,000
   
Swap
     
4.46%
     
01/2005
                  
$300,000
                   

25