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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

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

For the quarterly period ended September 30, 2023
OR

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

For the transition period from to
Commission File Number: 1-12675 (Kilroy Realty Corporation)
Commission File Number: 000-54005 (Kilroy Realty, L.P.)
KILROY REALTY CORPORATION
KILROY REALTY, L.P.
(Exact name of registrant as specified in its charter)

Kilroy Realty Corporation | Maryland | 95-4598246
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
Kilroy Realty, L.P. | Delaware | 95-4612685
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)

12200 W. Olympic Boulevard, Suite 200, Los Angeles, California, 90064
(Address of principal executive offices) (Zip Code)
(310) 481-8400

(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Registrant | Title of each class | Name of each exchange on which registered | Ticker Symbol
Kilroy Realty Corporation | Common Stock, $.01 par value | New York Stock Exchange | KRC

Securities registered pursuant to Section 12(g) of the Act:
Registrant | Title of each class
Kilroy Realty, L.P. | Common Units Representing Limited Partnership Interests

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Kilroy Realty Corporation Yes ☑ No ☐
Kilroy Realty, L.P. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Kilroy Realty Corporation Yes ☑ No ☐
Kilroy Realty, L.P. Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Kilroy Realty Corporation
Large accelerated filer ☑ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Kilroy Realty, L.P.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☑ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Kilroy Realty Corporation Yes ☐ No ☑
Kilroy Realty, L.P. Yes ☐ No ☑
As of October 20, 2023, 117,239,558 shares of Kilroy Realty Corporation common stock, par value $.01 per share, were outstanding.

EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2023 of Kilroy Realty Corporation and Kilroy Realty, L.P. Unless stated otherwise or the context otherwise requires, references to “Kilroy Realty Corporation” or the “Company,” “we,” “our,” and “us” mean Kilroy Realty Corporation, a Maryland corporation, and its controlled and consolidated subsidiaries, and references to “Kilroy Realty, L.P.” or the “Operating Partnership” mean Kilroy Realty, L.P., a Delaware limited partnership and its controlled and consolidated subsidiaries.
The Company is a real estate investment trust, or REIT, and the general partner of the Operating Partnership. As of September 30, 2023, the Company owned an approximate 99.0% common general partnership interest in the Operating Partnership. The remaining approximate 1.0% common limited partnership interests are owned by non-affiliated investors and certain directors and officers of the Company. As the sole general partner of the Operating Partnership, the Company exercises exclusive and complete discretion over the Operating Partnership’s day-to-day management and control and can cause it to enter into certain major transactions, including acquisitions, dispositions, and refinancings and cause changes in its line of business, capital structure and distribution policies.
There are a few differences between the Company and the Operating Partnership that are reflected in the disclosures in this Form 10-Q. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how the Company and the Operating Partnership operate as an interrelated, consolidated company. The Company is a REIT, the only material asset of which is the partnership interests it holds in the Operating Partnership. As a result, the Company generally does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time and guaranteeing certain debt of the Operating Partnership. The Company itself is not directly obligated under any indebtedness, but generally guarantees all of the debt of the Operating Partnership. The Operating Partnership owns substantially all of the assets of the Company either directly or through its subsidiaries, conducts the operations of the Company’s business and is structured as a limited partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Company, which the Company generally contributes to the Operating Partnership in exchange for units of partnership interest, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness or through the issuance of units of partnership interest.
Noncontrolling interests, stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The common limited partnership interests in the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and, to the extent not held by the Company, as noncontrolling interests in the Company’s financial statements. The differences between stockholders’ equity, partners’ capital and noncontrolling interest result from the differences in the equity issued by the Company and the Operating Partnership.
We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:
•Combined reports better reflect how management and the analyst community view the business as a single operating unit;
•Combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;
•Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and
•Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.
To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:
•consolidated financial statements;
•the following notes to the consolidated financial statements:
◦Note 10, Net Income Available to Common Stockholders Per Share of the Company;
◦Note 11, Net Income Available to Common Unitholders Per Unit of the Operating Partnership;
◦Note 12, Supplemental Cash Flow Information of the Company; and
◦Note 13, Supplemental Cash Flow Information of the Operating Partnership;
i

•“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
◦—Liquidity and Capital Resources of the Company;” and
◦—Liquidity and Capital Resources of the Operating Partnership.”
This report also includes separate sections under “Part I – Financial Information, Item 4. Controls and Procedures” and separate Exhibit 31 and Exhibit 32 certifications for the Company and the Operating Partnership to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.
Available Information
We use our website (www.kilroyrealty.com) as a routine channel of distribution of company information, including press releases, presentations, and supplemental information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website in addition to following press releases, SEC filings, and public conference calls and webcasts. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.
ii

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
QUARTERLY REPORT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
TABLE OF CONTENTS

|  |  | Page
|  | PART I – FINANCIAL INFORMATION |
Item 1. |  | FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY CORPORATION | 1
|  | Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 | 1
|  | Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2023 and 2022 | 2
|  | Consolidated Statements of Equity for the Three and Nine Months ended September 30, 2023 and 2022 | 3
|  | Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2023 and 2022 | 5
Item 1. |  | FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY, L.P. | 6
|  | Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 | 6
|  | Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2023 and 2022 | 7
|  | Consolidated Statements of Capital for the Three and Nine Months ended September 30, 2023 and 2022 | 8
|  | Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2023 and 2022 | 10
|  | Notes to Unaudited Consolidated Financial Statements | 11
Item 2. |  | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 25
Item 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 54
Item 4. |  | CONTROLS AND PROCEDURES (KILROY REALTY CORPORATION AND KILROY REALTY, L.P.) | 54
|  | PART II – OTHER INFORMATION |
Item 1. |  | LEGAL PROCEEDINGS | 55
Item 1A. |  | RISK FACTORS | 55
Item 2. |  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 55
Item 3. |  | DEFAULTS UPON SENIOR SECURITIES | 56
Item 4. |  | MINE SAFETY DISCLOSURES | 56
Item 5. |  | OTHER INFORMATION | 56
Item 6. |  | EXHIBITS | 57
SIGNATURES | 58

PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY CORPORATION
KILROY REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except share data)

| September 30, 2023 |  | December 31, 2022
ASSETS |  |  |
REAL ESTATE ASSETS: |  |  |
Land and improvements | $ | 1,743,170 |  |  | $ | 1,738,242 |
Buildings and improvements | 8,431,499 |  |  | 8,302,081 |
Undeveloped land and construction in progress | 1,950,424 |  |  | 1,691,860 |
Total real estate assets held for investment | 12,125,093 |  |  | 11,732,183 |
Accumulated depreciation and amortization | (2,443,659) |  |  | (2,218,710) |
Total real estate assets held for investment, net | 9,681,434 |  |  | 9,513,473 |
CASH AND CASH EQUIVALENTS | 618,794 |  |  | 347,379 |
MARKETABLE SECURITIES (Notes 2 and 9) | 278,789 |  |  | 23,547 |
CURRENT RECEIVABLES, NET | 11,383 |  |  | 20,583 |
DEFERRED RENT RECEIVABLES, NET | 466,073 |  |  | 452,200 |
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET | 228,742 |  |  | 250,846 |
RIGHT OF USE GROUND LEASE ASSETS | 125,765 |  |  | 126,530 |
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 3) | 60,141 |  |  | 62,429 |
TOTAL ASSETS | $ | 11,471,121 |  |  | $ | 10,796,987 |
LIABILITIES AND EQUITY |  |  |
LIABILITIES: |  |  |
Secured debt, net (Notes 4 and 9) | $ | 604,480 |  |  | $ | 242,938 |
Unsecured debt, net (Notes 4 and 9) | 4,330,326 |  |  | 4,020,058 |
Accounts payable, accrued expenses and other liabilities | 426,662 |  |  | 392,360 |
Ground lease liabilities | 124,517 |  |  | 124,994 |
Accrued dividends and distributions (Note 14) | 64,423 |  |  | 64,285 |
Deferred revenue and acquisition-related intangible liabilities, net | 178,542 |  |  | 195,959 |
Rents received in advance and tenant security deposits | 74,646 |  |  | 81,432 |
Total liabilities | 5,803,596 |  |  | 5,122,026 |
COMMITMENTS AND CONTINGENCIES (Note 8) |  |  |
EQUITY: |  |  |
Stockholders’ Equity: |  |  |
Common stock, $.01 par value, 280,000,000 shares authorized, 117,239,558 and 116,878,031 shares issued and outstanding | 1,173 |  |  | 1,169 |
Additional paid-in capital | 5,195,106 |  |  | 5,170,760 |
Retained earnings | 237,665 |  |  | 265,118 |
Total stockholders’ equity | 5,433,944 |  |  | 5,437,047 |
Noncontrolling Interests (Notes 1 and 5): |  |  |
Common units of the Operating Partnership | 53,328 |  |  | 53,524 |
Noncontrolling interests in consolidated property partnerships | 180,253 |  |  | 184,390 |
Total noncontrolling interests | 233,581 |  |  | 237,914 |
Total equity | 5,667,525 |  |  | 5,674,961 |
TOTAL LIABILITIES AND EQUITY | $ | 11,471,121 |  |  | $ | 10,796,987 |

See accompanying notes to consolidated financial statements.
1

KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except share and per share data)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
REVENUES |  |  |  |  |  |  |
Rental income (Note 7) | $ | 280,681 |  |  | $ | 272,546 |  |  | $ | 852,094 |  |  | $ | 804,330 |
Other property income | 2,913 |  |  | 3,412 |  |  | 8,584 |  |  | 8,313 |
Total revenues | 283,594 |  |  | 275,958 |  |  | 860,678 |  |  | 812,643 |
EXPENSES |  |  |  |  |  |  |
Property expenses | 59,445 |  |  | 52,075 |  |  | 168,233 |  |  | 147,421 |
Real estate taxes | 28,363 |  |  | 27,415 |  |  | 84,868 |  |  | 78,718 |
Ground leases | 2,390 |  |  | 1,771 |  |  | 7,172 |  |  | 5,473 |
General and administrative expenses (Note 6) | 24,761 |  |  | 23,524 |  |  | 71,356 |  |  | 68,425 |
Leasing costs | 1,852 |  |  | 1,015 |  |  | 4,550 |  |  | 3,475 |
Depreciation and amortization | 85,224 |  |  | 81,140 |  |  | 269,262 |  |  | 266,215 |
Total expenses | 202,035 |  |  | 186,940 |  |  | 605,441 |  |  | 569,727 |
OTHER INCOME (EXPENSES) |  |  |  |  |  |  |
Interest and other income, net | 7,015 |  |  | 295 |  |  | 11,896 |  |  | 501 |
Interest expense (Note 4) | (29,837) |  |  | (19,982) |  |  | (81,891) |  |  | (60,728) |
Gain on sale of depreciable operating property | — |  |  | 17,329 |  |  | — |  |  | 17,329 |
Total other expenses | (22,822) |  |  | (2,358) |  |  | (69,995) |  |  | (42,898) |
NET INCOME | 58,737 |  |  | 86,660 |  |  | 185,242 |  |  | 200,018 |
Net income attributable to noncontrolling common units of the Operating Partnership | (515) |  |  | (664) |  |  | (1,612) |  |  | (1,695) |
Net income attributable to noncontrolling interests in consolidated property partnerships | (5,460) |  |  | (6,239) |  |  | (18,673) |  |  | (18,333) |
Total income attributable to noncontrolling interests | (5,975) |  |  | (6,903) |  |  | (20,285) |  |  | (20,028) |
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 52,762 |  |  | $ | 79,757 |  |  | $ | 164,957 |  |  | $ | 179,990 |
Net income available to common stockholders per share – basic (Note 10) | $ | 0.45 |  |  | $ | 0.68 |  |  | $ | 1.40 |  |  | $ | 1.53 |
Net income available to common stockholders per share – diluted (Note 10) | $ | 0.45 |  |  | $ | 0.68 |  |  | $ | 1.40 |  |  | $ | 1.53 |
Weighted average common shares outstanding – basic (Note 10) | 117,184,609 |  |  | 116,872,953 |  |  | 117,133,420 |  |  | 116,782,621 |
Weighted average common shares outstanding – diluted (Note 10) | 117,495,246 |  |  | 117,242,411 |  |  | 117,411,395 |  |  | 117,163,149 |

See accompanying notes to consolidated financial statements.
2

KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in thousands, except share and per share/unit data)

|  |  | Common Stock |  | Total Stock- holders’ Equity |  | Noncontrolling Interests |  | Total Equity
|  |  | Number of Shares |  | Common Stock |  | Additional Paid-in Capital |  | Retained Earnings |
BALANCE AS OF DECEMBER 31, 2022 |  |  | 116,878,031 |  |  | $ | 1,169 |  |  | $ | 5,170,760 |  |  | $ | 265,118 |  |  | $ | 5,437,047 |  |  | $ | 237,914 |  |  | $ | 5,674,961 |
Net income |  |  |  |  |  |  |  |  | 56,608 |  |  | 56,608 |  |  | 8,622 |  |  | 65,230 |
Issuance of share-based compensation awards |  |  |  |  |  |  | 1,365 |  |  |  |  | 1,365 |  |  |  |  | 1,365 |
Non-cash amortization of share-based compensation (Note 6) |  |  |  |  |  |  | 11,566 |  |  |  |  | 11,566 |  |  |  |  | 11,566 |
Settlement of restricted stock units for shares of common stock |  |  | 445,973 |  |  | 4 |  |  | (4) |  |  |  |  | — |  |  |  |  | — |
Repurchase of common stock and restricted stock units |  |  | (203,042) |  |  | (2) |  |  | (8,361) |  |  |  |  | (8,363) |  |  |  |  | (8,363) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  |  |  |  |  |  |  | — |  |  | (7,068) |  |  | (7,068) |
Adjustment for noncontrolling interest |  |  |  |  |  |  | 76 |  |  |  |  | 76 |  |  | (76) |  |  | — |
Dividends declared per common share and common unit ($0.54 per share/unit) |  |  |  |  |  |  |  |  | (64,647) |  |  | (64,647) |  |  | (622) |  |  | (65,269) |
BALANCE AS OF MARCH 31, 2023 |  |  | 117,120,962 |  |  | 1,171 |  |  | 5,175,402 |  |  | 257,079 |  |  | 5,433,652 |  |  | 238,770 |  |  | 5,672,422 |
Net income |  |  |  |  |  |  |  |  | 55,587 |  |  | 55,587 |  |  | 5,688 |  |  | 61,275 |
Issuance of share-based compensation awards |  |  |  |  |  |  | 726 |  |  |  |  | 726 |  |  |  |  | 726 |
Non-cash amortization of share-based compensation (Note 6) |  |  |  |  |  |  | 9,496 |  |  |  |  | 9,496 |  |  |  |  | 9,496 |
Settlement of restricted stock units for shares of common stock |  |  | 103,135 |  |  | 1 |  |  | (1) |  |  |  |  | — |  |  |  |  | — |
Repurchase of common stock, stock options and restricted stock units |  |  | (46,189) |  |  | — |  |  | (1,340) |  |  |  |  | (1,340) |  |  |  |  | (1,340) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  |  |  |  |  |  |  | — |  |  | (10,393) |  |  | (10,393) |
Adjustment for noncontrolling interest |  |  |  |  |  |  | (56) |  |  |  |  | (56) |  |  | 56 |  |  | — |
Dividends declared per common share and common unit ($0.54 per share/unit) |  |  |  |  |  |  |  |  | (63,971) |  |  | (63,971) |  |  | (621) |  |  | (64,592) |
BALANCE AS OF JUNE 30, 2023 |  |  | 117,177,908 |  |  | 1,172 |  |  | 5,184,227 |  |  | 248,695 |  |  | 5,434,094 |  |  | 233,500 |  |  | 5,667,594 |
Net income |  |  |  |  |  |  |  |  | 52,762 |  |  | 52,762 |  |  | 5,975 |  |  | 58,737 |
Issuance of share-based compensation awards |  |  |  |  |  |  | 538 |  |  |  |  | 538 |  |  |  |  | 538 |
Non-cash amortization of share-based compensation (Note 6) |  |  |  |  |  |  | 12,310 |  |  |  |  | 12,310 |  |  |  |  | 12,310 |
Settlement of restricted stock units for shares of common stock |  |  | 115,492 |  |  | 2 |  |  | (2) |  |  |  |  | — |  |  |  |  | — |
Repurchase of common stock, stock options and restricted stock units |  |  | (53,842) |  |  | (1) |  |  | (1,891) |  |  |  |  | (1,892) |  |  |  |  | (1,892) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  |  |  |  |  |  |  | — |  |  | (5,349) |  |  | (5,349) |
Adjustment for noncontrolling interest |  |  |  |  |  |  | (76) |  |  |  |  | (76) |  |  | 76 |  |  | — |
Dividends declared per common share and common unit ($0.54 per share/unit) (Note 14) |  |  |  |  |  |  |  |  | (63,792) |  |  | (63,792) |  |  | (621) |  |  | (64,413) |
BALANCE AS OF SEPTEMBER 30, 2023 |  |  | 117,239,558 |  |  | $ | 1,173 |  |  | $ | 5,195,106 |  |  | $ | 237,665 |  |  | $ | 5,433,944 |  |  | $ | 233,581 |  |  | $ | 5,667,525 |

3

KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY – (Continued)
(Unaudited; in thousands, except share and per share/unit data)

| Common Stock |  | Total Stock- holders’ Equity |  | Noncontrolling Interests |  | Total Equity
| Number of Shares |  | Common Stock |  | Additional Paid-in Capital |  | Retained Earnings
BALANCE AS OF DECEMBER 31, 2021 | 116,464,169 |  |  | $ | 1,165 |  |  | $ | 5,155,232 |  |  | $ | 283,663 |  |  | $ | 5,440,060 |  |  | $ | 249,810 |  |  | $ | 5,689,870 |
Net income |  |  |  |  |  |  | 53,128 |  |  | 53,128 |  |  | 6,255 |  |  | 59,383 |
Issuance of share-based compensation awards |  |  |  |  | 1,942 |  |  |  |  | 1,942 |  |  |  |  | 1,942 |
Non-cash amortization of share-based compensation |  |  |  |  | 6,598 |  |  |  |  | 6,598 |  |  |  |  | 6,598 |
Settlement of restricted stock units for shares of common stock | 459,050 |  |  | 5 |  |  | (5) |  |  |  |  | — |  |  |  |  | — |
Repurchase of common stock and restricted stock units | (207,139) |  |  | (3) |  |  | (13,991) |  |  |  |  | (13,994) |  |  |  |  | (13,994) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  |  |  |  |  | — |  |  | (14,842) |  |  | (14,842) |
Adjustment for noncontrolling interest |  |  |  |  | 192 |  |  |  |  | 192 |  |  | (192) |  |  | — |
Dividends declared per common share and common unit ($0.52 per share/unit) |  |  |  |  |  |  | (62,598) |  |  | (62,598) |  |  | (598) |  |  | (63,196) |
BALANCE AS OF MARCH 31, 2022 | 116,716,080 |  |  | 1,167 |  |  | 5,149,968 |  |  | 274,193 |  |  | 5,425,328 |  |  | 240,433 |  |  | 5,665,761 |
Net income |  |  |  |  |  |  | 47,105 |  |  | 47,105 |  |  | 6,870 |  |  | 53,975 |
Issuance of share-based compensation awards |  |  |  |  | 635 |  |  |  |  | 635 |  |  |  |  | 635 |
Non-cash amortization of share-based compensation |  |  |  |  | 9,665 |  |  |  |  | 9,665 |  |  |  |  | 9,665 |
Settlement of restricted stock units for shares of common stock | 273,382 |  |  | 2 |  |  | (2) |  |  |  |  | — |  |  |  |  | — |
Repurchase of common stock, stock options, and restricted stock units | (118,492) |  |  | — |  |  | (8,660) |  |  |  |  | (8,660) |  |  |  |  | (8,660) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  |  |  |  |  | — |  |  | (6,948) |  |  | (6,948) |
Adjustment for noncontrolling interest |  |  |  |  | 99 |  |  |  |  | 99 |  |  | (99) |  |  | — |
Dividends declared per common share and common unit ($0.52 per share/unit) |  |  |  |  |  |  | (61,278) |  |  | (61,278) |  |  | (599) |  |  | (61,877) |
BALANCE AS OF JUNE 30, 2022 | 116,870,970 |  |  | 1,169 |  |  | 5,151,705 |  |  | 260,020 |  |  | 5,412,894 |  |  | 239,657 |  |  | 5,652,551 |
Net income |  |  |  |  |  |  | 79,757 |  |  | 79,757 |  |  | 6,903 |  |  | 86,660 |
Issuance of share-based compensation awards |  |  |  |  | 505 |  |  |  |  | 505 |  |  |  |  | 505 |
Non-cash amortization of share-based compensation |  |  |  |  | 10,287 |  |  |  |  | 10,287 |  |  |  |  | 10,287 |
Settlement of restricted stock units for shares of common stock | 11,930 |  |  | — |  |  | — |  |  |  |  | — |  |  |  |  | — |
Repurchase and cancellation of common stock, stock options, and restricted stock units | (5,447) |  |  | — |  |  | (267) |  |  |  |  | (267) |  |  |  |  | (267) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  |  |  |  |  | — |  |  | (5,700) |  |  | (5,700) |
Adjustment for noncontrolling interest |  |  |  |  | (142) |  |  |  |  | (142) |  |  | 142 |  |  | — |
Dividends declared per common share and common unit ($0.54 per share/unit) |  |  |  |  |  |  | (63,639) |  |  | (63,639) |  |  | (620) |  |  | (64,259) |
BALANCE AS OF SEPTEMBER 30, 2022 | 116,877,453 |  |  | $ | 1,169 |  |  | $ | 5,162,088 |  |  | $ | 276,138 |  |  | $ | 5,439,395 |  |  | $ | 240,382 |  |  | $ | 5,679,777 |

See accompanying notes to consolidated financial statements.
4

KILROY REALTY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)

| Nine Months Ended September 30,
| 2023 |  | 2022
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
Net income | $ | 185,242 |  |  | $ | 200,018 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization of real estate assets and leasing costs | 263,662 |  |  | 261,129 |
Depreciation of non-real estate furniture, fixtures and equipment | 5,600 |  |  | 5,086 |
Revenue reversals for doubtful accounts, net (Note 7) | 3,931 |  |  | 191 |
Non-cash amortization of share-based compensation awards | 28,360 |  |  | 21,635 |
Non-cash amortization of deferred financing costs and debt discounts | 3,921 |  |  | 2,442 |
Non-cash amortization of net below market rents | (5,675) |  |  | (8,171) |
Gain on sale of depreciable operating property | — |  |  | (17,329) |
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements | (14,643) |  |  | (14,221) |
Straight-line rents | (16,533) |  |  | (38,239) |
Amortization of right of use ground lease assets | 765 |  |  | 594 |
Net change in other operating assets | 2,042 |  |  | (5,323) |
Net change in other operating liabilities | 35,694 |  |  | 76,418 |
Net cash provided by operating activities | 492,366 |  |  | 484,230 |
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |
Purchases of certificates of deposit (Note 2) | (252,830) |  |  | — |
Expenditures for development and redevelopment properties and undeveloped land | (338,794) |  |  | (334,711) |
Expenditures for operating properties and other capital assets | (68,853) |  |  | (65,526) |
Expenditures for acquisitions of development properties and undeveloped land | — |  |  | (40,033) |
Net proceeds received from disposition | — |  |  | 33,416 |
Net cash used in investing activities | (660,477) |  |  | (406,854) |
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
Repurchase of common stock and restricted stock units | (11,595) |  |  | (22,921) |
Distributions to noncontrolling interests in consolidated property partnerships | (22,818) |  |  | (27,497) |
Dividends and distributions paid to common stockholders and common unitholders | (191,499) |  |  | (183,822) |
Financing costs | (10,962) |  |  | (3,083) |
Principal payments and repayments of secured debt | (4,310) |  |  | (4,146) |
Proceeds from issuance of secured debt (Note 4) | 375,000 |  |  | — |
Borrowings on unsecured debt (Note 4) | 320,000 |  |  | — |
Repurchases of unsecured debt (Note 4) | (14,290) |  |  | — |
Net cash provided by (used in) financing activities | 439,526 |  |  | (241,469) |
Net increase (decrease) in cash and cash equivalents and restricted cash | 271,415 |  |  | (164,093) |
Cash and cash equivalents and restricted cash, beginning of period | 347,379 |  |  | 427,083 |
Cash and cash equivalents and restricted cash, end of period | $ | 618,794 |  |  | $ | 262,990 |

See accompanying notes to consolidated financial statements.
5

ITEM 1: FINANCIAL STATEMENTS (UNAUDITED) OF KILROY REALTY, L.P.
KILROY REALTY, L.P.
CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except unit data)

| September 30, 2023 |  | December 31, 2022
ASSETS |  |  |
REAL ESTATE ASSETS: |  |  |
Land and improvements | $ | 1,743,170 |  |  | $ | 1,738,242 |
Buildings and improvements | 8,431,499 |  |  | 8,302,081 |
Undeveloped land and construction in progress | 1,950,424 |  |  | 1,691,860 |
Total real estate assets held for investment | 12,125,093 |  |  | 11,732,183 |
Accumulated depreciation and amortization | (2,443,659) |  |  | (2,218,710) |
Total real estate assets held for investment, net | 9,681,434 |  |  | 9,513,473 |
CASH AND CASH EQUIVALENTS | 618,794 |  |  | 347,379 |
MARKETABLE SECURITIES (Notes 2 and 9) | 278,789 |  |  | 23,547 |
CURRENT RECEIVABLES, NET | 11,383 |  |  | 20,583 |
DEFERRED RENT RECEIVABLES, NET | 466,073 |  |  | 452,200 |
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET | 228,742 |  |  | 250,846 |
RIGHT OF USE GROUND LEASE ASSETS | 125,765 |  |  | 126,530 |
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 3) | 60,141 |  |  | 62,429 |
TOTAL ASSETS | $ | 11,471,121 |  |  | $ | 10,796,987 |
LIABILITIES AND CAPITAL |  |  |
LIABILITIES: |  |  |
Secured debt, net (Notes 4 and 9) | $ | 604,480 |  |  | $ | 242,938 |
Unsecured debt, net (Notes 4 and 9) | 4,330,326 |  |  | 4,020,058 |
Accounts payable, accrued expenses and other liabilities | 426,662 |  |  | 392,360 |
Ground lease liabilities | 124,517 |  |  | 124,994 |
Accrued distributions (Note 14) | 64,423 |  |  | 64,285 |
Deferred revenue and acquisition-related intangible liabilities, net | 178,542 |  |  | 195,959 |
Rents received in advance and tenant security deposits | 74,646 |  |  | 81,432 |
Total liabilities | 5,803,596 |  |  | 5,122,026 |
COMMITMENTS AND CONTINGENCIES (Note 8) |  |  |
CAPITAL: |  |  |
Common units, 117,239,558 and 116,878,031 held by the general partner and 1,150,574 held by common limited partners issued and outstanding | 5,487,272 |  |  | 5,490,571 |
Noncontrolling interests in consolidated property partnerships (Note 1) | 180,253 |  |  | 184,390 |
Total capital | 5,667,525 |  |  | 5,674,961 |
TOTAL LIABILITIES AND CAPITAL | $ | 11,471,121 |  |  | $ | 10,796,987 |

See accompanying notes to consolidated financial statements.
6

KILROY REALTY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except unit and per unit data)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
REVENUES |  |  |  |  |  |  |
Rental income (Note 7) | $ | 280,681 |  |  | $ | 272,546 |  |  | $ | 852,094 |  |  | $ | 804,330 |
Other property income | 2,913 |  |  | 3,412 |  |  | 8,584 |  |  | 8,313 |
Total revenues | 283,594 |  |  | 275,958 |  |  | 860,678 |  |  | 812,643 |
EXPENSES |  |  |  |  |  |  |
Property expenses | 59,445 |  |  | 52,075 |  |  | 168,233 |  |  | 147,421 |
Real estate taxes | 28,363 |  |  | 27,415 |  |  | 84,868 |  |  | 78,718 |
Ground leases | 2,390 |  |  | 1,771 |  |  | 7,172 |  |  | 5,473 |
General and administrative expenses (Note 6) | 24,761 |  |  | 23,524 |  |  | 71,356 |  |  | 68,425 |
Leasing costs | 1,852 |  |  | 1,015 |  |  | 4,550 |  |  | 3,475 |
Depreciation and amortization | 85,224 |  |  | 81,140 |  |  | 269,262 |  |  | 266,215 |
Total expenses | 202,035 |  |  | 186,940 |  |  | 605,441 |  |  | 569,727 |
OTHER INCOME (EXPENSES) |  |  |  |  |  |  |
Interest and other income, net | 7,015 |  |  | 295 |  |  | 11,896 |  |  | 501 |
Interest expense (Note 4) | (29,837) |  |  | (19,982) |  |  | (81,891) |  |  | (60,728) |
Gain on sale of depreciable operating property | — |  |  | 17,329 |  |  | — |  |  | 17,329 |
Total other expenses | (22,822) |  |  | (2,358) |  |  | (69,995) |  |  | (42,898) |
NET INCOME | 58,737 |  |  | 86,660 |  |  | 185,242 |  |  | 200,018 |
Net income attributable to noncontrolling interests in consolidated property partnerships and subsidiaries | (5,460) |  |  | (6,239) |  |  | (18,673) |  |  | (18,333) |
NET INCOME AVAILABLE TO COMMON UNITHOLDERS | $ | 53,277 |  |  | $ | 80,421 |  |  | $ | 166,569 |  |  | $ | 181,685 |
Net income available to common unitholders per unit – basic (Note 11) | $ | 0.45 |  |  | $ | 0.68 |  |  | $ | 1.40 |  |  | $ | 1.53 |
Net income available to common unitholders per unit – diluted (Note 11) | $ | 0.45 |  |  | $ | 0.68 |  |  | $ | 1.40 |  |  | $ | 1.53 |
Weighted average common units outstanding – basic (Note 11) | 118,335,183 |  |  | 118,023,527 |  |  | 118,283,994 |  |  | 117,933,195 |
Weighted average common units outstanding – diluted (Note 11) | 118,645,820 |  |  | 118,392,985 |  |  | 118,561,969 |  |  | 118,313,723 |

See accompanying notes to consolidated financial statements.
7

KILROY REALTY, L.P.
CONSOLIDATED STATEMENTS OF CAPITAL
(Unaudited; in thousands, except unit and per unit data)

|  |  | Partners’ Capital |  | Noncontrolling Interests in Consolidated Property Partnerships |  |
|  |  | Number of Common Units |  | Common Units |  | Total Capital
BALANCE AS OF DECEMBER 31, 2022 |  |  | 118,028,605 |  |  | $ | 5,490,571 |  |  | $ | 184,390 |  |  | $ | 5,674,961 |
Net income |  |  |  |  | 57,168 |  |  | 8,062 |  |  | 65,230 |
Issuance of share-based compensation awards |  |  |  |  | 1,365 |  |  |  |  | 1,365 |
Non-cash amortization of share-based compensation (Note 6) |  |  |  |  | 11,566 |  |  |  |  | 11,566 |
Settlement of restricted stock units |  |  | 445,973 |  |  | — |  |  |  |  | — |
Repurchase of common units and restricted stock units |  |  | (203,042) |  |  | (8,363) |  |  |  |  | (8,363) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  |  |  | (7,068) |  |  | (7,068) |
Distributions declared per common unit ($0.54 per unit) |  |  |  |  | (65,269) |  |  |  |  | (65,269) |
BALANCE AS OF MARCH 31, 2023 |  |  | 118,271,536 |  |  | 5,487,038 |  |  | 185,384 |  |  | 5,672,422 |
Net income |  |  |  |  | 56,124 |  |  | 5,151 |  |  | 61,275 |
Issuance of share-based compensation awards |  |  |  |  | 726 |  |  |  |  | 726 |
Non-cash amortization of share-based compensation (Note 6) |  |  |  |  | 9,496 |  |  |  |  | 9,496 |
Settlement of restricted stock units |  |  | 103,135 |  |  | — |  |  |  |  | — |
Repurchase of common units, stock options and restricted stock units |  |  | (46,189) |  |  | (1,340) |  |  |  |  | (1,340) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  |  |  | (10,393) |  |  | (10,393) |
Distributions declared per common unit ($0.54 per unit) |  |  |  |  | (64,592) |  |  |  |  | (64,592) |
BALANCE AS OF JUNE 30, 2023 |  |  | 118,328,482 |  |  | 5,487,452 |  |  | 180,142 |  |  | 5,667,594 |
Net income |  |  |  |  | 53,277 |  |  | 5,460 |  |  | 58,737 |
Issuance of share-based compensation awards |  |  |  |  | 538 |  |  |  |  | 538 |
Non-cash amortization of share-based compensation (Note 6) |  |  |  |  | 12,310 |  |  |  |  | 12,310 |
Settlement of restricted stock units |  |  | 115,492 |  |  | — |  |  |  |  | — |
Repurchase of common units, stock options and restricted stock units |  |  | (53,842) |  |  | (1,892) |  |  |  |  | (1,892) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  |  |  | (5,349) |  |  | (5,349) |
Distributions declared per common unit ($0.54 per unit) (Note 14) |  |  |  |  | (64,413) |  |  |  |  | (64,413) |
BALANCE AS OF SEPTEMBER 30, 2023 |  |  | 118,390,132 |  |  | $ | 5,487,272 |  |  | $ | 180,253 |  |  | $ | 5,667,525 |

8

KILROY REALTY, L.P.
CONSOLIDATED STATEMENTS OF CAPITAL – (Continued)
(Unaudited; in thousands, except unit and per unit data)

| Partners’ Capital |  | Noncontrolling Interests in Consolidated Property Partnerships |  |
| Number of Common Units |  | Common Units |  | Total Capital
BALANCE AS OF DECEMBER 31, 2021 | 117,614,743 |  |  | $ | 5,493,806 |  |  | $ | 196,064 |  |  | $ | 5,689,870 |
Net income |  |  | 53,644 |  |  | 5,739 |  |  | 59,383 |
Issuance of share-based compensation awards |  |  | 1,942 |  |  |  |  | 1,942 |
Non-cash amortization of share-based compensation |  |  | 6,598 |  |  |  |  | 6,598 |
Settlement of restricted stock units | 459,050 |  |  | — |  |  |  |  | — |
Repurchase of common units and restricted stock units | (207,139) |  |  | (13,994) |  |  |  |  | (13,994) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  | (14,842) |  |  | (14,842) |
Distributions declared per common unit ($0.52 per unit) |  |  | (63,196) |  |  |  |  | (63,196) |
BALANCE AS OF MARCH 31, 2022 | 117,866,654 |  |  | 5,478,800 |  |  | 186,961 |  |  | 5,665,761 |
Net income |  |  | 47,620 |  |  | 6,355 |  |  | 53,975 |
Issuance of share-based compensation awards |  |  | 635 |  |  |  |  | 635 |
Non-cash amortization of share-based compensation |  |  | 9,665 |  |  |  |  | 9,665 |
Settlement of restricted stock units | 273,382 |  |  | — |  |  |  |  | — |
Repurchase and cancellation of common units, stock options, and restricted stock units | (118,492) |  |  | (8,660) |  |  |  |  | (8,660) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  | (6,948) |  |  | (6,948) |
Distributions declared per common unit ($0.52 per unit) |  |  | (61,877) |  |  |  |  | (61,877) |
BALANCE AS OF JUNE 30, 2022 | 118,021,544 |  |  | 5,466,183 |  |  | 186,368 |  |  | 5,652,551 |
Net income |  |  | 80,421 |  |  | 6,239 |  |  | 86,660 |
Issuance of share-based compensation awards |  |  | 505 |  |  |  |  | 505 |
Non-cash amortization of share-based compensation |  |  | 10,287 |  |  |  |  | 10,287 |
Settlement of restricted stock units | 11,930 |  |  | — |  |  |  |  | — |
Repurchase and cancellation of common units, stock options, and restricted stock units | (5,447) |  |  | (267) |  |  |  |  | (267) |
Distributions to noncontrolling interests in consolidated property partnerships |  |  |  |  | (5,700) |  |  | (5,700) |
Distributions declared per common unit ($0.54 per unit) |  |  | (64,259) |  |  |  |  | (64,259) |
BALANCE AS OF SEPTEMBER 30, 2022 | 118,028,027 |  |  | $ | 5,492,870 |  |  | $ | 186,907 |  |  | $ | 5,679,777 |

See accompanying notes to consolidated financial statements.
9

KILROY REALTY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)

| Nine Months Ended September 30,
| 2023 |  | 2022
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
Net income | $ | 185,242 |  |  | $ | 200,018 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization of real estate assets and leasing costs | 263,662 |  |  | 261,129 |
Depreciation of non-real estate furniture, fixtures and equipment | 5,600 |  |  | 5,086 |
Revenue reversals for doubtful accounts, net (Note 7) | 3,931 |  |  | 191 |
Non-cash amortization of share-based compensation awards | 28,360 |  |  | 21,635 |
Non-cash amortization of deferred financing costs and debt discounts | 3,921 |  |  | 2,442 |
Non-cash amortization of net below market rents | (5,675) |  |  | (8,171) |
Gain on sale of depreciable operating property | — |  |  | (17,329) |
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements | (14,643) |  |  | (14,221) |
Straight-line rents | (16,533) |  |  | (38,239) |
Amortization of right of use ground lease assets | 765 |  |  | 594 |
Net change in other operating assets | 2,042 |  |  | (5,323) |
Net change in other operating liabilities | 35,694 |  |  | 76,418 |
Net cash provided by operating activities | 492,366 |  |  | 484,230 |
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |
Purchases of certificates of deposit (Note 2) | (252,830) |  |  | — |
Expenditures for development and redevelopment properties and undeveloped land | (338,794) |  |  | (334,711) |
Expenditures for operating properties and other capital assets | (68,853) |  |  | (65,526) |
Expenditures for acquisitions of development properties and undeveloped land | — |  |  | (40,033) |
Net proceeds received from disposition | — |  |  | 33,416 |
Net cash used in investing activities | (660,477) |  |  | (406,854) |
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
Repurchase of common units and restricted stock units | (11,595) |  |  | (22,921) |
Distributions to noncontrolling interests in consolidated property partnerships | (22,818) |  |  | (27,497) |
Distributions paid to common unitholders | (191,499) |  |  | (183,822) |
Financing costs | (10,962) |  |  | (3,083) |
Principal payments and repayments of secured debt | (4,310) |  |  | (4,146) |
Proceeds from issuance of secured debt (Note 4) | 375,000 |  |  | — |
Borrowings on unsecured debt (Note 4) | 320,000 |  |  | — |
Repurchases of unsecured debt (Note 4) | (14,290) |  |  | — |
Net cash provided by (used in) financing activities | 439,526 |  |  | (241,469) |
Net increase (decrease) in cash and cash equivalents and restricted cash | 271,415 |  |  | (164,093) |
Cash and cash equivalents and restricted cash, beginning of period | 347,379 |  |  | 427,083 |
Cash and cash equivalents and restricted cash, end of period | $ | 618,794 |  |  | $ | 262,990 |

See accompanying notes to consolidated financial statements.
10

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Ownership and Basis of Presentation
Organization and Ownership
Kilroy Realty Corporation (the “Company”) is a self-administered real estate investment trust (“REIT”) active in premier office, life science and mixed-use submarkets in the United States. We own, develop, acquire and manage real estate assets, consisting primarily of Class A properties in Greater Los Angeles, San Diego County, the San Francisco Bay Area, Greater Seattle and Austin, Texas, which we believe have strategic advantages and strong barriers to entry. Class A real estate encompasses attractive and efficient buildings of high quality that are attractive to tenants, are well-designed and constructed with above-average material, workmanship and finishes and are well-maintained and managed. We qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “KRC.”
We own our interests in all of our real estate assets through Kilroy Realty, L.P. (the “Operating Partnership”). We generally conduct substantially all of our operations through the Operating Partnership. Unless stated otherwise or the context indicates otherwise, the terms “Kilroy Realty Corporation” or the “Company,” “we,” “our,” and “us” refer to Kilroy Realty Corporation and its consolidated subsidiaries and the term “Operating Partnership” refers to Kilroy Realty, L.P. and its consolidated subsidiaries. The descriptions of our business, employees, and properties apply to both the Company and the Operating Partnership.
Our stabilized portfolio of operating properties was comprised of the following properties at September 30, 2023:

| Number of Buildings |  | Rentable Square Feet |  | Number of Tenants |  | Percentage Occupied (1) |  | Percentage Leased
Stabilized Office Properties (2) | 120 |  |  | 16,285,153 |  |  | 401 |  |  | 86.2 | % |  | 87.5 | %

________________________
(1)Represents economic occupancy.
(2)Includes stabilized life science and retail space.

| Number of Projects |  | Number of Units |  | 2023 Average Occupancy
Stabilized Residential Properties | 3 |  |  | 1,001 |  |  | 92.9 | %

Our stabilized portfolio includes all of our properties with the exception of development properties currently committed for construction, under construction, or in the tenant improvement phase, redevelopment properties under construction, undeveloped land and real estate assets held for sale. We define redevelopment properties as those properties for which we expect to spend significant development and construction costs on the existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property. We define properties in the tenant improvement phase as office and life science properties that we are developing or redeveloping where the project has reached cold shell condition and is ready for tenant improvements, which may require additional major base building construction before being placed in service. Projects in the tenant improvement phase are added to our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities. Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets at the historical cost of the property as the projects or phases of projects are placed in service.
During the nine months ended September 30, 2023, we added one development project to our stabilized portfolio consisting of one building totaling 70,616 square feet of office space in San Diego, California. As of September 30, 2023, the following properties were excluded from our stabilized portfolio:

| Number of Properties/Projects |  | Estimated Rentable Square Feet (1)
In-process development projects - tenant improvement | 1 |  | 734,000 |
In-process development projects - under construction | 1 |  | 875,000 |
In-process redevelopment projects - under construction | 2 |  | 100,000 |

________________________
(1)Estimated rentable square feet upon completion.
11

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
We did not have any properties held for sale at September 30, 2023. Our stabilized portfolio also excludes our future development pipeline, which as of September 30, 2023 was comprised of eight future development sites, representing approximately 64 gross acres of undeveloped land.
As of September 30, 2023, all of our properties, development projects and redevelopment projects were owned and all of our business was conducted in the state of California with the exception of ten stabilized office properties and one future development project located in the state of Washington, and one development project in the tenant improvement phase and one future development project in Austin, Texas. All of our properties, development projects and redevelopment projects are 100% owned, excluding four office properties owned by three consolidated property partnerships. Two of the three consolidated property partnerships, 100 First Street Member, LLC (“100 First LLC”) and 303 Second Street Member, LLC (“303 Second LLC”), each owned one office property in San Francisco, California through subsidiary REITs. As of September 30, 2023, the Company owned a 56% common equity interest in both 100 First LLC and 303 Second LLC. The third consolidated property partnership, Redwood City Partners, LLC (“Redwood LLC”) owned two office properties in Redwood City, California. As of September 30, 2023, the Company owned an approximate 93% common equity interest in Redwood LLC. The remaining interests in all three property partnerships were owned by unrelated third parties.
Ownership and Basis of Presentation
The consolidated financial statements of the Company include the consolidated financial position and results of operations of the Company, the Operating Partnership, 303 Second LLC, 100 First LLC, Redwood LLC and all of our wholly-owned and controlled subsidiaries. The consolidated financial statements of the Operating Partnership include the consolidated financial position and results of operations of the Operating Partnership, 303 Second LLC, 100 First LLC, Redwood LLC and all of our wholly-owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements.
As of September 30, 2023, the Company owned an approximate 99.0% common general partnership interest in the Operating Partnership. The remaining approximate 1.0% common limited partnership interest in the Operating Partnership as of September 30, 2023 was owned by non-affiliated investors and certain of our executive officers and directors. Both the general and limited common partnership interests in the Operating Partnership are denominated in common units. Generally, the number of common units held by the Company is equivalent to the number of outstanding shares of the Company’s common stock, and the rights of all the common units to quarterly distributions and payments in liquidation mirror those of the Company’s common stockholders. The common limited partners have certain redemption rights as provided in the Operating Partnership’s Seventh Amended and Restated Agreement of Limited Partnership, as amended, the “Partnership Agreement”. With the exception of the Operating Partnership and our consolidated property partnerships, all of our subsidiaries are wholly-owned.
The accompanying interim financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The interim financial statements for the Company and the Operating Partnership should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2022.
12

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Variable Interest Entities
The Operating Partnership is a variable interest entity (“VIE”) that is consolidated by the Company as the primary beneficiary as the Operating Partnership is a limited partnership in which the common limited partners do not have substantive kick-out or participating rights. At September 30, 2023, the consolidated financial statements of the Company included two VIEs in addition to the Operating Partnership: 100 First LLC and 303 Second LLC. At September 30, 2023, the Company and the Operating Partnership were determined to be the primary beneficiaries of these two VIEs since we had the ability to control the activities that most significantly impact each of the VIEs’ economic performance. As of September 30, 2023, the two VIEs’ total assets, liabilities and noncontrolling interests included on our consolidated balance sheet were approximately $423.9 million (of which $353.2 million related to real estate held for investment), approximately $26.9 million and approximately $175.5 million, respectively. Revenues, income and net assets generated by 100 First LLC and 303 Second LLC may only be used to settle their contractual obligations, which primarily consist of operating expenses, capital expenditures and required distributions.
At December 31, 2022, the consolidated financial statements of the Company included two VIEs in addition to the Operating Partnership: 100 First LLC and 303 Second LLC. At December 31, 2022, the Company and the Operating Partnership were determined to be the primary beneficiaries of these two VIEs since we had the ability to control the activities that most significantly impact each of the VIEs’ economic performance. At December 31, 2022, the impact of consolidating the VIEs increased the Company’s total assets, liabilities and noncontrolling interests on our consolidated balance sheet by approximately $438.7 million (of which $362.7 million related to real estate held for investment), approximately $31.5 million and approximately $179.4 million, respectively.
2. Marketable Securities
Marketable securities consisted of the following at September 30, 2023 and December 31, 2022:

| September 30, 2023 |  | December 31, 2022
| (in thousands)
Deferred compensation plan assets | $ | 25,959 |  |  | $ | 23,547 |
Certificates of deposit | 252,830 |  |  | — |
Total marketable securities | $ | 278,789 |  |  | $ | 23,547 |

3. Prepaid Expenses and Other Assets, Net
Prepaid expenses and other assets, net consisted of the following at September 30, 2023 and December 31, 2022:

| September 30, 2023 |  | December 31, 2022
| (in thousands)
Furniture, fixtures and other long-lived assets, net | $ | 37,940 |  |  | $ | 41,538 |
Prepaid expenses and deferred financing costs, net | 17,558 |  |  | 11,364 |
Other assets | 4,643 |  |  | 9,527 |
Total prepaid expenses and other assets, net | $ | 60,141 |  |  | $ | 62,429 |

13

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
4. Secured and Unsecured Debt of the Operating Partnership
Secured Debt
In July 2023, certain of our and the Operating Partnership’s subsidiaries entered into a $375.0 million mortgage loan transaction (the “Loan”) secured by, among other things, a deed of trust, assignment of leases and rents, security agreement and fixture filing encumbering two office buildings, 608 apartment units and over 95,000 square feet of retail at the Company’s One Paseo mixed-use campus in Del Mar, California. The Loan matures on August 10, 2034, bears interest at an annual rate of 5.90% and requires monthly interest payments only, which commenced on September 10, 2023. In addition, the Operating Partnership has entered into a guaranty in favor of the lender in connection with the Loan. The Loan is generally non-recourse to the Operating Partnership, but the lender has recourse to the Operating Partnership for certain recourse exceptions.
Unsecured Debt
The Company generally guarantees all of the Operating Partnership’s unsecured debt obligations including the unsecured revolving credit facility, the unsecured term loan facility and all of the unsecured senior notes.
Partial Repurchase of $425.0 Million Unsecured Senior Note
During the three months ended September 30, 2023, the Company completed open-market repurchases of $14.3 million of the Operating Partnership’s 3.45% $425.0 million unsecured senior notes due December 15, 2024 at a discount, leaving an aggregate remaining principal balance of $410.7 million.
Unsecured Revolving Credit Facility and Term Loan Facility
The following table summarizes the balance and terms of our unsecured revolving credit facility as of September 30, 2023 and December 31, 2022:

| September 30, 2023 |  | December 31, 2022
| (in thousands)
Outstanding borrowings | $ | — |  |  | $ | — |
Remaining borrowing capacity | 1,100,000 |  |  | 1,100,000 |
Total borrowing capacity (1) | $ | 1,100,000 |  |  | $ | 1,100,000 |
Interest rate (2) | 6.31 | % |  | 5.20 | %
Facility fee-annual rate (3) | 0.200%
Maturity date (4) | July 31, 2025

________________________
(1)Total borrowing capacity is reduced by the amount of our outstanding letters of credit which total approximately $5.2 million as of the date of this report. We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $500.0 million under an accordion feature pursuant to the terms of the unsecured revolving credit facility.
(2)Our unsecured revolving credit facility interest rate was calculated using a contractual rate of Secured Overnight Financing Rate (“SOFR”) plus a SOFR adjustment of 0.10% (“Adjusted SOFR”) and a margin of 0.900% based on our credit rating as of September 30, 2023 and December 31, 2022. We may be entitled to a temporary 0.01% reduction in the interest rate provided we meet certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions.
(3)Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of September 30, 2023 and December 31, 2022, $3.7 million and $5.3 million of unamortized deferred financing costs, respectively, which are included in prepaid expenses and other assets, net on our consolidated balance sheets, remained to be amortized through the maturity date of our unsecured revolving credit facility.
(4)The maturity date may be extended by two six-month periods, at the Company’s option.
14

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company intends to borrow under the unsecured revolving credit facility from time to time for general corporate purposes, to finance development and redevelopment expenditures, to fund potential acquisitions and to potentially repay long-term debt and to supplement cash balances given uncertainties and volatility in market conditions.
In January 2023, the Operating Partnership entered into the first amendment to its existing unsecured term loan facility agreement to (i) exercise the accordion feature under the term loan agreement to provide for $100.0 million of additional term loan commitments and (ii) increase the borrowing capacity under the accordion feature to provide additional term loan commitments or add one or more tranches of term loans up to an aggregate amount of $650.0 million. In March 2023, the Operating Partnership further amended the unsecured term loan facility agreement to exercise the accordion feature to provide for $20.0 million of additional term loan commitments, bringing the total borrowing capacity of the unsecured term loan facility to $520.0 million.
The following table summarizes the balance and terms of our unsecured term loan facility as of September 30, 2023 and December 31, 2022:

| September 30, 2023 |  | December 31, 2022
| (in thousands)
Outstanding borrowings | $ | 520,000 |  |  | $ | 200,000 |
Remaining borrowing capacity | — |  |  | 200,000 |
Total borrowing capacity (1) | $ | 520,000 |  |  | $ | 400,000 |
Interest rate (2) | 6.37 | % |  | 5.23 | %
Undrawn facility fee-annual rate (3) | 0.200%
Maturity date (4) | October 3, 2024

____________________
(1)We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $130.0 million and $100.0 million as of September 30, 2023 and December 31, 2022, respectively, under an accordion feature pursuant to the terms of the unsecured term loan facility.
(2)Our unsecured term loan facility interest rate was calculated using a contractual rate of Adjusted SOFR plus a margin of 0.950% based on our credit rating as of September 30, 2023 and December 31, 2022.
(3)Our undrawn facility fee is paid on a quarterly basis and is calculated based on the remaining borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of September 30, 2023 and December 31, 2022, $3.1 million and $4.5 million, respectively, of unamortized deferred financing costs remained to be amortized through the maturity date of our unsecured term loan facility.
(4)The maturity date may be extended by two twelve-month periods, at the Company’s option.
Debt Covenants and Restrictions
The unsecured revolving credit facility, unsecured term loan facility, the unsecured senior notes, including the private placement notes, and certain other secured debt arrangements contain covenants and restrictions requiring us to meet certain financial ratios and reporting requirements. Some of the more restrictive financial covenants include a maximum ratio of total debt to total asset value, a minimum fixed-charge coverage ratio, a maximum ratio of secured debt to total asset value, a minimum unsecured debt ratio and a minimum unencumbered asset pool debt service coverage ratio. Noncompliance with one or more of the covenants and restrictions could result in the full principal balance of the associated debt becoming immediately due and payable. We were in compliance with all of our debt covenants as of September 30, 2023.
15

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Debt Maturities
The following table summarizes the stated debt maturities and scheduled amortization payments for all outstanding debt as of September 30, 2023:

Year | (in thousands)
Remaining 2023 | $ | 1,465 |
2024 (1) | 936,716 |
2025 | 406,246 |
2026 | 401,317 |
2027 | 249,125 |
2028 | 400,000 |
Thereafter | 2,575,000 |
Total aggregate principal value (2) | $ | 4,969,869 |

________________________
(1)Includes the $520.0 million outstanding as of September 30, 2023 on the unsecured term loan facility maturing on October 3, 2024, for which the Company has two twelve-month extension options.
(2)Includes gross principal balance of outstanding debt before the effect of the following at September 30, 2023: $29.5 million of unamortized deferred financing costs for the unsecured term loan facility, unsecured senior notes and secured debt and $5.6 million of unamortized discounts for the unsecured senior notes.
Capitalized Interest and Loan Fees
The following table sets forth gross interest expense, including debt discount and deferred financing cost amortization, net of capitalized interest, for the three and nine months ended September 30, 2023 and 2022. The interest expense capitalized was recorded as a cost of development and redevelopment and increased the carrying value of undeveloped land and construction in progress.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in thousands)
Gross interest expense | $ | 49,893 |  |  | $ | 39,659 |  |  | $ | 139,148 |  |  | $ | 118,995 |
Capitalized interest and deferred financing costs | (20,056) |  |  | (19,677) |  |  | (57,257) |  |  | (58,267) |
Interest expense | $ | 29,837 |  |  | $ | 19,982 |  |  | $ | 81,891 |  |  | $ | 60,728 |

5. Noncontrolling Interests on the Company’s Consolidated Financial Statements
Common Units of the Operating Partnership
The Company owned an approximate 99.0% common general partnership interest in the Operating Partnership as of September 30, 2023, December 31, 2022 and September 30, 2022. The remaining approximate 1.0% common limited partnership interest as of September 30, 2023, December 31, 2022 and September 30, 2022 was owned by non-affiliated investors and certain of our executive officers and directors in the form of noncontrolling common units. There were 1,150,574 common units outstanding held by these investors, executive officers and directors as of September 30, 2023, December 31, 2022 and September 30, 2022.
The noncontrolling common units may be redeemed by unitholders for cash. Except under certain circumstances, we, at our option, may satisfy the cash redemption obligation with shares of the Company’s common stock on a one-for-one basis. If satisfied in cash, the value for each noncontrolling common unit upon redemption is the amount equal to the average of the closing quoted price per share of the Company’s common stock, par value $0.01 per share, as reported on the NYSE for the ten trading days immediately preceding the applicable redemption date. The aggregate value upon redemption of the then-outstanding noncontrolling common units was $37.8 million and $44.7 million as of September 30, 2023 and December 31, 2022, respectively. This redemption value does not necessarily represent the amount that would be distributed with respect to each noncontrolling common unit in the event of our termination or liquidation. In the event of our termination or liquidation, it is expected in most cases that each common unit would be entitled to a liquidating distribution equal to the liquidating distribution payable in respect of each share of the Company’s common stock.
16

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
6. Share-Based Compensation
Stockholder Approved Share-Based Incentive Compensation Plan
As of September 30, 2023, we maintained one share-based incentive compensation plan, the Kilroy Realty 2006 Incentive Award Plan, as amended (the “2006 Plan”). The Company has a currently effective registration statement registering 12.6 million shares of our common stock for possible issuance under our 2006 Plan. As of September 30, 2023, approximately 2.9 million shares were available for grant under the 2006 Plan. The calculation of shares available for grant is presented after taking into account a reserve for a sufficient number of shares to cover the vesting and payment of 2006 Plan awards that were outstanding on that date, including performance-based vesting awards at (i) levels actually achieved for the performance conditions (as defined below) for which the performance period has been completed and (ii) at maximum levels for the other performance and market conditions (as defined below) for awards still in a performance period.
Executive Transitions
On March 30, 2023, our Chief Executive Officer (“CEO”) announced his retirement effective December 31, 2023. Additionally, as previously disclosed, the Company and our former President entered into a separation agreement in 2022 under which he continued to serve as an officer of the Company until the scheduled expiration date of his employment agreement on March 1, 2023.
For our CEO, the vesting of all unvested share-based compensation awards is being accelerated through December 31, 2023 and the final number of any restricted stock units (“RSUs”) subject to market and/or performance-based vesting requirements that vest will be based upon a shortened performance period ending on December 31, 2023. Share-based compensation expense for these awards will be recognized based on our current assumption of the achievement of market and/or performance-based vesting requirements for the shortened performance periods. For our former President, the vesting of all unvested share-based compensation awards was accelerated through March 1, 2023 and the final number of RSUs earned that were subject to market and/or performance-based vesting requirements was based upon the actual achievement of the market and/or performance conditions for a shortened performance period ended on March 1, 2023. For the three and nine months ended September 30, 2023, we recognized $8.0 million and $21.2 million, respectively, of stock compensation expense related to the accelerated vesting of awards for our CEO and former President.
2023 Share-Based Compensation Grants
In February 2023, the Executive Compensation Committee of the Company’s Board of Directors awarded 517,066 restricted stock units to certain officers of the Company under the 2006 Plan, which included 300,007 RSUs (at the target level of performance) that are subject to market and/or performance-based vesting requirements (the “2023 Performance-Based RSUs”) and 217,059 RSUs that are subject to time-based vesting requirements (the “2023 Time-Based RSUs”).
2023 Performance-Based RSU Grant
The 2023 Performance-Based RSUs are scheduled to vest at the end of a three year period (consisting of calendar years 2023-2025), except for our CEO, whose RSUs are scheduled to vest on his announced retirement date of December, 31, 2023. A target number of 2023 Performance-Based RSUs were awarded, and the final number of 2023 Performance-Based RSUs that vest (which may be more or less than the target number) will be based upon (1) during the first calendar year of the three year performance measurement period, the achievement of pre-set FFO per share goals that applies to 100% of the Performance-Based RSUs awarded (the “FFO Performance Condition”) and (2) a performance measure that applies to 50% of the award based upon a measure of the Company’s average debt to EBITDA ratio for the three year performance period (the “Debt to EBITDA Ratio Performance Condition”) and a market measure that applies to the other 50% of the award based upon the relative ranking of the Company’s total stockholder return for the three year performance period compared to the total stockholder returns of an established comparison group of companies over the same period (the “Market Condition”). The 2023 Performance-Based RSUs are also subject to a three year service vesting provision (the “service vesting condition”) and are scheduled to cliff vest on the date the final vesting percentage is determined following the end of the three year performance period under the awards. The number of 2023 Performance-Based RSUs ultimately earned could fluctuate from the target number of 2023 Performance-Based RSUs granted based upon the levels of achievement for the FFO Performance Condition, the Debt to EBITDA Ratio Performance Condition, the Market Condition, and the extent to which the service vesting condition
17

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
is satisfied. The estimate of the number of 2023 Performance-Based RSUs earned is evaluated quarterly during the performance period based on our estimate for each of the performance conditions measured against the applicable goals.
Compensation expense for the 2023 Performance-Based RSU grant is recognized on a straight-line basis over the requisite service period for each participant, which is generally the three year service period, except for our CEO, whose compensation expense is recognized on an accelerated basis through his announced retirement date of December 31, 2023. During the nine months ended September 30, 2023, we recognized $10.2 million of compensation expense for the 2023 Performance-Based RSU grant assuming the 2023 FFO Performance Condition is met at 150% of the target level of achievement (175% for our CEO) and the 2023 Debt to EBITDA Ratio Performance Condition is met at 100% of the target level of achievement (175% for our CEO). In the event we achieve a lower level of performance or fail to meet the FFO performance condition, we would reverse a portion or all of the $10.2 million of compensation expense.
Each 2023 Performance-Based RSU represents the right to receive one share of our common stock in the future, subject to, and as modified by the Company’s level of achievement of the applicable performance and market conditions. The fair value of the portion of the award subject to the Debt to EBITDA Ratio Performance Condition was calculated using the closing price of the Company’s common stock on the valuation date noted below. The fair value of the portion of the award subject to the Market Condition was calculated using a Monte Carlo simulation pricing model based on the assumptions in the table below, which resulted in the following grant date fair value per share.

| Fair Value Assumptions
Valuation date | February 6, 2023
Fair value per share on valuation date (1) | $40.10
Expected share price volatility | 35.0%
Risk-free interest rate | 4.12%

________________________
(1)For one participant, the fair value per share on the valuation date for their 2023 Performance-Based RSUs is $40.43.
The computation of expected volatility was based on a blend of the historical volatility of our shares of common stock over a period of twice the remaining performance period as of the grant date and implied volatility data based on the observed pricing of six month publicly-traded options on shares of our common stock. The risk-free interest rate was based on the yield curve on zero-coupon U.S. Treasury STRIP securities in effect at February 6, 2023.
The fair value of the 2023 Performance-Based RSU grant as of the valuation date noted above, based on a target level of achievement, was $12.0 million. For the three and nine months ended September 30, 2023, we recorded compensation expense based upon the grant date fair value per share for each component multiplied by the estimated number of RSUs to be earned.
2023 Time-Based RSU Grant
The 2023 Time-Based RSUs are scheduled to vest in three equal annual installments beginning on January 5, 2024 through January 5, 2026. Compensation expense for the 2023 Time-Based RSUs is recognized on a straight-line basis over the requisite service period, which is generally the explicit service period except for our CEO, whose compensation expense is recognized on an accelerated basis through his announced retirement date of December 31, 2023. Each 2023 Time-Based RSU represents the right to receive one share of our common stock in the future, subject to continued employment through the applicable vesting date, unless accelerated upon separation of employment, provided certain conditions are met. The total grant date fair value of the 2023 Time-Based RSU awards was $8.6 million, which was based on the $39.65 closing share price of the Company’s common stock on the NYSE on the February 6, 2023 grant date.
2022 and 2021 Performance-Based RSUs
Compensation cost for the 2022 performance-based RSUs for the three and nine months ended September 30, 2023 assumes the 2022 Debt to EBITDA Ratio Performance Condition is met at 150% of the target level of achievement (175% for our CEO). Compensation cost for the 2021 performance-based RSUs for the three and nine months ended September 30, 2023 assumes the 2021 Debt to EBITDA Ratio Performance Condition is met at 150% of the target level of achievement (175% for our CEO).
18

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Share-Based Compensation Cost Recorded During the Period
The total compensation cost for all share-based compensation programs was $12.3 million and $10.3 million for the three months ended September 30, 2023 and 2022, respectively, and $33.4 million and $26.5 million for the nine months ended September 30, 2023 and 2022, respectively. Share-based compensation costs for the three and nine months ended September 30, 2023 include $8.0 million and $21.2 million, respectively, of accelerated share-based compensation costs for our CEO and former President as discussed above. Of the total share-based compensation costs, $1.7 million and $5.0 million was capitalized as part of the real estate assets for the three and nine months ended September 30, 2023, respectively, and $1.9 million and $5.0 million was capitalized as part of the real estate assets for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, there was approximately $28.5 million of total unrecognized compensation cost related to nonvested RSUs granted under share-based compensation arrangements. Such amount is based in part upon the estimated future outcome of the performance metrics as of September 30, 2023, and the actual compensation cost ultimately recognized could increase or decrease from this estimate based upon actual performance results. These costs are expected to be recognized over a weighted-average period of 1.4 years, which includes the shortened vesting period for our CEO due to his announced retirement on December 31, 2023. The remaining compensation cost related to these nonvested RSU awards had been recognized in periods prior to September 30, 2023.
7. Rental Income and Future Minimum Rent
Our rental income is primarily comprised of payments defined under leases and are subject to scheduled fixed increases. Additionally, rental income includes variable payments for tenant reimbursements of property-related expenses and payments based on a percentage of tenant’s sales.
The table below sets forth the allocation of rental income between fixed and variable payments and net collectability reversals or recoveries for the three and nine months ended September 30, 2023 and 2022:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in thousands)
Fixed lease payments | $ | 232,090 |  |  | $ | 231,747 |  |  | $ | 713,254 |  |  | $ | 685,797 |
Variable lease payments | 49,232 |  |  | 42,503 |  |  | 142,771 |  |  | 118,724 |
Net collectability reversals (1) | (641) |  |  | (1,704) |  |  | (3,931) |  |  | (191) |
Total rental income | $ | 280,681 |  |  | $ | 272,546 |  |  | $ | 852,094 |  |  | $ | 804,330 |

_____________________
(1)Represents adjustments to rental income related to our assessment of the collectability of amounts due under leases with our tenants, including recognition of deferred rent balances associated with tenants restored from a cash basis of revenue recognition to an accrual basis of revenue recognition and allowances for uncollectible receivables and leases deemed not probable of collection.
We have operating leases with tenants that expire at various dates through 2048 and are subject to scheduled fixed increases. Generally, the leases grant tenants renewal options. Leases also provide for additional rents based on certain operating expenses. Future contractual minimum rent under operating leases, which includes amounts contractually due from leases that are on a cash basis of reporting due to creditworthiness considerations, as of September 30, 2023 for future periods is summarized as follows:

Year Ending | (in thousands)
Remaining 2023 | $ | 202,244 |
2024 | 805,187 |
2025 | 797,014 |
2026 | 746,466 |
2027 | 681,760 |
2028 | 636,557 |
Thereafter | 1,924,042 |
Total (1) | $ | 5,793,270 |

_____________________
(1)Excludes residential leases and leases with a term of one year or less.
19

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
8. Commitments and Contingencies
General
As of September 30, 2023, we had commitments of approximately $396.5 million, excluding our ground lease commitments, for contracts and executed leases directly related to our operating, development and redevelopment properties.
Environmental Matters
As of September 30, 2023, we had accrued environmental remediation liabilities of approximately $77.8 million recorded on our consolidated balance sheets in connection with certain of our in-process and future development projects.
9. Fair Value Measurements and Disclosures
Assets and Liabilities Reported at Fair Value
The only assets we record at fair value on our consolidated financial statements are the marketable securities related to our Deferred Compensation Plan. The following table sets forth the fair value of our deferred compensation plan assets as of September 30, 2023 and December 31, 2022:

| Fair Value (Level 1) (1)
| September 30, 2023 |  | December 31, 2022
Description | (in thousands)
Deferred compensation plan assets (2) | $ | 25,959 |  |  | $ | 23,547 |

________________________
(1) Based on quoted prices in active markets for identical securities.
(2) The deferred compensation plan assets are held in a limited rabbi trust.
Financial Instruments Disclosed at Fair Value
The following table sets forth the carrying value and the fair value of our other financial instruments as of September 30, 2023 and December 31, 2022:

| September 30, 2023 |  | December 31, 2022
| Carrying Value |  | Fair Value (1) |  | Carrying Value |  | Fair Value (1)
| (in thousands)
Assets |  |  |  |  |  |  |
Certificates of deposit (2) | $ | 252,830 |  |  | $ | 252,830 |  |  | $ | — |  |  | $ | — |
Liabilities |  |  |  |  |  |  |
Secured debt, net | $ | 604,480 |  |  | $ | 565,256 |  |  | $ | 242,938 |  |  | $ | 225,847 |
Unsecured debt, net | $ | 4,330,326 |  |  | $ | 3,741,167 |  |  | $ | 4,020,058 |  |  | $ | 3,500,420 |

________________________
(1)Fair value calculated using Level 2 inputs, which are based on model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
(2)The carrying value of the certificates of deposit approximate their fair values due to their short-term maturities. The Company intends to hold the certificates of deposit until their maturity dates in January and April 2024.
20

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
10. Net Income Available to Common Stockholders Per Share of the Company
The following table reconciles the numerator and denominator in computing the Company’s basic and diluted per-share computations for net income available to common stockholders for the three and nine months ended September 30, 2023 and 2022:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in thousands, except share and per share amounts)
Numerator: |  |  |  |  |  |  |
Net income available to common stockholders | $ | 52,762 |  |  | $ | 79,757 |  |  | $ | 164,957 |  |  | $ | 179,990 |
Allocation to participating securities (1) | (269) |  |  | (287) |  |  | (959) |  |  | (980) |
Numerator for basic and diluted net income available to common stockholders | $ | 52,493 |  |  | $ | 79,470 |  |  | $ | 163,998 |  |  | $ | 179,010 |
Denominator: |  |  |  |  |  |  |
Basic weighted average vested shares outstanding | 117,184,609 |  |  | 116,872,953 |  |  | 117,133,420 |  |  | 116,782,621 |
Effect of dilutive securities | 310,637 |  |  | 369,458 |  |  | 277,975 |  |  | 380,528 |
Diluted weighted average vested shares and common stock equivalents outstanding | 117,495,246 |  |  | 117,242,411 |  |  | 117,411,395 |  |  | 117,163,149 |
Basic earnings per share: |  |  |  |  |  |  |
Net income available to common stockholders per share | $ | 0.45 |  |  | $ | 0.68 |  |  | $ | 1.40 |  |  | $ | 1.53 |
Diluted earnings per share: |  |  |  |  |  |  |
Net income available to common stockholders per share | $ | 0.45 |  |  | $ | 0.68 |  |  | $ | 1.40 |  |  | $ | 1.53 |

________________________
(1)Participating securities include certain time-based RSUs and vested market measure-based RSUs.
Share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities. The impact of potentially dilutive common shares, including stock options and RSUs are considered in our diluted earnings per share calculation for the three and nine months ended September 30, 2023 and 2022. Certain market measure-based RSUs are not included in dilutive securities for the three and nine months ended September 30, 2023 and 2022, as not all performance metrics had been met by the end of the applicable reporting periods. Additionally, certain unvested time-based RSUs are not included in dilutive securities for the nine months ended September 30, 2023, as they were anti-dilutive. See Note 6 “Share-Based Compensation” for additional information regarding share-based compensation.
21

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
11. Net Income Available to Common Unitholders Per Unit of the Operating Partnership
The following table reconciles the numerator and denominator in computing the Operating Partnership’s basic and diluted per-unit computations for net income available to common unitholders for the three and nine months ended September 30, 2023 and 2022:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in thousands, except unit and per unit amounts)
Numerator: |  |  |  |  |  |  |
Net income available to common unitholders | $ | 53,277 |  |  | $ | 80,421 |  |  | $ | 166,569 |  |  | $ | 181,685 |
Allocation to participating securities (1) | (269) |  |  | (287) |  |  | (959) |  |  | (980) |
Numerator for basic and diluted net income available to common unitholders | $ | 53,008 |  |  | $ | 80,134 |  |  | $ | 165,610 |  |  | $ | 180,705 |
Denominator: |  |  |  |  |  |  |
Basic weighted average vested units outstanding | 118,335,183 |  |  | 118,023,527 |  |  | 118,283,994 |  |  | 117,933,195
Effect of dilutive securities | 310,637 |  |  | 369,458 |  |  | 277,975 |  |  | 380,528 |
Diluted weighted average vested units and common unit equivalents outstanding | 118,645,820 |  |  | 118,392,985 |  |  | 118,561,969 |  |  | 118,313,723 |
Basic earnings per unit: |  |  |  |  |  |  |
Net income available to common unitholders per unit | $ | 0.45 |  |  | $ | 0.68 |  |  | $ | 1.40 |  |  | $ | 1.53 |
Diluted earnings per unit: |  |  |  |  |  |  |
Net income available to common unitholders per unit | $ | 0.45 |  |  | $ | 0.68 |  |  | $ | 1.40 |  |  | $ | 1.53 |

________________________
(1)Participating securities include certain time-based RSUs and vested market measure-based RSUs.
Share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities. The impact of potentially dilutive common units, including stock options and RSU are considered in our diluted earnings per share calculation for the three and nine months ended September 30, 2023 and 2022. Certain market measure-based RSUs are not included in dilutive securities for the three and nine months ended September 30, 2023 and 2022, as not all performance metrics had been met by the end of the applicable reporting periods. Additionally, certain unvested time-based RSUs are not included in dilutive securities for the nine months ended September 30, 2023, as they were anti-dilutive. See Note 6 “Share-Based Compensation” for additional information regarding share-based compensation.
22

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
12. Supplemental Cash Flow Information of the Company
Supplemental cash flow information follows (in thousands):

| Nine Months Ended September 30,
| 2023 |  | 2022
SUPPLEMENTAL CASH FLOWS INFORMATION: |  |  |
Cash paid for interest, net of capitalized interest of $53,637 and $55,080 as of September 30, 2023 and 2022, respectively | $ | 60,528 |  |  | $ | 43,838 |
Cash paid for amounts included in the measurement of ground lease liabilities | $ | 4,939 |  |  | $ | 4,719 |
NON-CASH INVESTING TRANSACTIONS: |  |  |
Accrual for expenditures for operating properties and development and redevelopment properties | $ | 98,631 |  |  | $ | 97,014 |
Tenant improvements funded directly by tenants | $ | 6,026 |  |  | $ | 7,397 |
NON-CASH FINANCING TRANSACTIONS: |  |  |
Accrual of dividends and distributions payable to common stockholders and common unitholders (Note 14) | $ | 64,423 |  |  | $ | 64,271 |

The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the nine months ended September 30, 2023 and 2022.

| Nine Months Ended September 30,
| 2023 |  | 2022
| (in thousands)
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: |  |  |
Cash and cash equivalents at beginning of period | $ | 347,379 |  |  | $ | 414,077 |
Restricted cash at beginning of period | — |  |  | 13,006 |
Cash and cash equivalents and restricted cash at beginning of period | $ | 347,379 |  |  | $ | 427,083 |
Cash and cash equivalents at end of period | $ | 618,794 |  |  | $ | 249,981 |
Restricted cash at end of period | — |  |  | 13,009 |
Cash and cash equivalents and restricted cash at end of period | $ | 618,794 |  |  | $ | 262,990 |

13. Supplemental Cash Flow Information of the Operating Partnership
Supplemental cash flow information follows (in thousands):

| Nine Months Ended September 30,
| 2023 |  | 2022
SUPPLEMENTAL CASH FLOWS INFORMATION: |  |  |
Cash paid for interest, net of capitalized interest of $53,637 and $55,080 as of September 30, 2023 and 2022, respectively | $ | 60,528 |  |  | $ | 43,838 |
Cash paid for amounts included in the measurement of ground lease liabilities | $ | 4,939 |  |  | $ | 4,719 |
NON-CASH INVESTING TRANSACTIONS: |  |  |
Accrual for expenditures for operating properties and development and redevelopment properties | $ | 98,631 |  |  | $ | 97,014 |
Tenant improvements funded directly by tenants | $ | 6,026 |  |  | $ | 7,397 |
NON-CASH FINANCING TRANSACTIONS: |  |  |
Accrual of distributions payable to common unitholders (Note 14) | $ | 64,423 |  |  | $ | 64,271 |

23

KILROY REALTY CORPORATION AND KILROY REALTY, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the nine months ended September 30, 2023 and 2022.

| Nine Months Ended September 30,
| 2023 |  | 2022
| (in thousands)
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: |  |  |
Cash and cash equivalents at beginning of period | $ | 347,379 |  |  | $ | 414,077 |
Restricted cash at beginning of period | — |  |  | 13,006 |
Cash and cash equivalents and restricted cash at beginning of period | $ | 347,379 |  |  | $ | 427,083 |
Cash and cash equivalents at end of period | $ | 618,794 |  |  | $ | 249,981 |
Restricted cash at end of period | — |  |  | 13,009 |
Cash and cash equivalents and restricted cash at end of period | $ | 618,794 |  |  | $ | 262,990 |

14. Subsequent Events
On October 11, 2023, aggregate dividends, distributions and dividend equivalents of $64.4 million were paid to common stockholders, common unitholders and RSU holders of record on September 30, 2023.
24

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion relates to our consolidated financial statements and should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. The results of operations discussion is combined for the Company and the Operating Partnership because there are no material differences in the results of operations between the two reporting entities.
Forward-Looking Statements
Statements contained in this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are not historical facts may be forward-looking statements. Forward-looking statements include, among other things, statements or information concerning our plans, objectives, capital resources, portfolio performance, results of operations, projected future occupancy and rental rates, lease expirations, debt maturities, potential investments, strategies such as capital recycling, development and redevelopment activity, projected construction costs, projected construction commencement and completion dates, projected square footage of space that could be constructed on undeveloped land that we own, projected rentable square footage of or number of units in properties under construction or in the development pipeline, anticipated proceeds from capital recycling activity or other dispositions and anticipated dates of those activities or dispositions, projected increases in the value of properties, dispositions, future executive incentive compensation, pending, potential or proposed acquisitions, plans to grow our Net Operating Income and FFO, our ability to re-lease properties at or above current market rates, anticipated market conditions and demographics and other forward-looking financial data, as well as the discussion in “—Factors That May Influence Future Results of Operations,” “—Liquidity and Capital Resource of the Company,” and “—Liquidity and Capital Resources of the Operating Partnership.” Forward-looking statements can be identified by the use of words such as “believes,” “expects,” “projects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” and the negative of these words and phrases and similar expressions that do not relate to historical matters. Forward-looking statements are based on our current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: global market and general economic conditions, including periods of heightened inflation, and their effect on our liquidity and financial conditions and those of our tenants; adverse economic or real estate conditions generally, and specifically, in the States of California, Texas and Washington; risks associated with our investment in real estate assets, which are illiquid and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses, including bankruptcy, lack of liquidity or lack of funding and the impact labor disruptions or strikes, such as episodic strikes in the entertainment industry, may have on our tenants’ businesses; our ability to re-lease property at or above current market rates; reduced demand for office space, including as a result of remote work and flexible working arrangements that allow work from remote locations other than the employer’s office premises; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; changes in interest rates and the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; and our ability to maintain our status as a REIT. The factors included in this report are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect the Company’s and the Operating Partnership’s business and financial performance, see the discussion below, as well as in “Part I,
25

Item 1A. Risk Factors” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s and the Operating Partnership’s annual report on Form 10-K for the year ended December 31, 2022 and their respective other filings with the SEC. All forward-looking statements are based on information that was available and speak only as of the dates on which they were made. We assume no obligation to update any forward-looking statement that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.
Overview and Background
We are a self-administered REIT active in premier office, life science and mixed-use submarkets in the United States. We own, develop, acquire and manage real estate assets, consisting primarily of Class A properties in Greater Los Angeles, San Diego County, the San Francisco Bay Area, Greater Seattle and Austin, Texas, which we believe have strategic advantages and strong barriers to entry. We own our interests in all of our real properties through the Operating Partnership and generally conduct substantially all of our operations through the Operating Partnership. We owned an approximate 99.0% general partnership interest in the Operating Partnership as of September 30, 2023, December 31, 2022 and September 30, 2022. As of September 30, 2023, all of our properties are held in fee except for the fourteen office buildings that are held subject to long-term ground leases for the land.
Factors That May Influence Future Results of Operations
Development and Redevelopment Programs
We believe that a portion of our long-term future growth will continue to come from the completion of our in-process development and redevelopment projects and, subject to market conditions, executing on our future development pipeline, including expanding entitlements. Over the past several years, we increased our focus on development and redevelopment opportunities and expanded our future development pipeline through targeted acquisitions of development opportunities on the West Coast and in Austin, Texas.
We have a proactive planning process by which we continually evaluate the size, timing, costs and scope of our development and redevelopment programs and, as necessary, scale activity to reflect the economic conditions and the real estate fundamentals that exist in our submarkets. We expect to execute on our development and redevelopment programs with prudence and will be pursuing opportunities with attractive economic returns in strategic locations with proximity to public transportation or transportation access and retail amenities and in markets with strong fundamentals and visible demand. We plan to develop in phases, as appropriate, and we generally favor starting projects with pre-leasing activity.
Stabilized Development Projects
During the nine months ended September 30, 2023, we completed and added the following development project to our stabilized portfolio:
•9514 Towne Centre Drive, University Towne Center, San Diego, California. We commenced construction on this project in September 2021 and completed base building components and moved the project into the tenant improvement phase in April 2023. This project is comprised of 70,616 square feet of office space at a total estimated investment of $60.0 million. We completed construction and added the building to our stabilized portfolio in July 2023. The building is 100% leased to a global technology company.
In-Process Development Projects - Tenant Improvement
As of September 30, 2023, the following project was in the tenant improvement phase:
•Indeed Tower, Austin CBD, Austin, Texas. We acquired this project upon core/shell completion in June 2021. This project encompasses approximately 734,000 square feet of office space at a total estimated investment of $690.0 million and is 74% leased to 14 tenants with 42% of the space leased to Indeed, Inc. through 2034. This project will reach stabilization in the fourth quarter of 2023 upon one year passing since substantial completion.
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In-Process Development Projects - Under Construction
As of September 30, 2023, we had one project in our in-process development pipeline that was under construction:
•Kilroy Oyster Point (Phase 2), South San Francisco, California. In June 2021, we commenced construction on Phase 2 of this 39-acre life science campus situated on the waterfront in South San Francisco. The second phase encompasses approximately 875,000 square feet of office space across three buildings at a total estimated investment of $940.0 million.
In-Process Redevelopment - Under Construction
As of September 30, 2023, we had two redevelopment projects under construction:
•4690 Executive Drive, University Towne Center, San Diego, California. In March 2022, we began the phased redevelopment of this property, comprised of approximately 52,000 square feet for life science use with total estimated redevelopment costs of $25.0 million, inclusive of the depreciated basis of the building.
•4400 Bohannon Drive, Menlo Park, California. In December 2022, we began the redevelopment of this property, comprised of approximately 48,000 square feet, for life science use with total estimated redevelopment costs of $55.0 million, inclusive of the depreciated basis of the building.
Future Development Pipeline
As of September 30, 2023, our future development pipeline included eight future projects located in Greater Los Angeles, San Diego County, the San Francisco Bay Area, Greater Seattle and Austin with an aggregate cost basis of approximately $1.3 billion at which we believe we could develop more than 7.0 million rentable square feet for a total estimated investment of approximately $8.0 billion to $9.0 billion, depending on successfully obtaining entitlements and market conditions.
The following table sets forth information about our future development pipeline:

Future Development Pipeline |  | Location |  | Approx. Developable Square Feet (1) |  | Total Costs as of 9/30/2023 ($ in millions) (2)
Greater Los Angeles |  |  |  |  |  |
1633 26th Street |  | West Los Angeles |  | 190,000 |  | $ | 15.0 |
San Diego County |  |  |  |  |  |
Santa Fe Summit South / North |  | 56 Corridor |  | 600,000 - 650,000 |  | 112.8 |
2045 Pacific Highway |  | Little Italy |  | 275,000 |  | 57.6 |
Kilroy East Village |  | East Village |  | TBD |  | 68.0 |
San Francisco Bay Area |  |  |  |  |  |
Kilroy Oyster Point - Phases 3 and 4 |  | South San Francisco |  | 875,000 - 1,000,000 |  | 227.7 |
Flower Mart |  | SOMA |  | 2,300,000 |  | 600.2 |
Greater Seattle |  |  |  |  |  |
SIX0 |  | Denny Regrade |  | 925,000 |  | 186.7 |
Austin |  |  |  |  |  |
Stadium Tower |  | Stadium District / Domain |  | 493,000 |  | 69.2 |
Total: |  |  |  |  |  | $ | 1,337.2 |

________________________
(1)Represents developable office/life science square feet. The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes or project design.
(2)Represents cash paid and costs incurred, including accrued liabilities in accordance with GAAP, as of September 30, 2023.
Fluctuations in our development activities could cause fluctuations in the average development asset balances qualifying for interest and other carrying cost and internal cost capitalization in future periods. During the three and nine months ended September 30, 2023, we capitalized interest on in-process development projects and future development pipeline projects with an average aggregate cost basis of approximately $1.9 billion, as it was determined these projects qualified for interest and other carrying cost capitalization under GAAP. In the event of an extended cessation of development activities, such projects may
27

potentially no longer qualify for capitalization of interest or other carrying costs. For the three and nine months ended September 30, 2023, we capitalized $20.1 million and $57.3 million, respectively, of interest to our qualifying development and redevelopment projects. For the three and nine months ended September 30, 2023, we capitalized $3.7 million and $12.2 million, respectively, of internal costs to our qualifying development and redevelopment projects.
Capital Recycling Program. We continuously evaluate opportunities for the potential disposition of non-core properties and undeveloped land in our portfolio or the formation of strategic ventures with the intent of recycling the proceeds generated into capital used to fund new operating and development acquisitions, to finance development and redevelopment expenditures, to repay long-term debt and for other general corporate purposes. As part of this strategy, we attempt to enter into transactions intended to qualify as like-kind exchanges pursuant to Section 1031 of the Code (“Section 1031 Exchanges”) and other tax deferred transaction structures, when possible, to defer some or all of the taxable gains on the sales, if any, for federal and state income tax purposes. See the “Liquidity and Capital Resources of the Operating Partnership – Liquidity Sources” section for further discussion of our capital recycling activities.
The timing of any potential future disposition or strategic venture transactions will depend on market conditions and other factors including, but not limited to, our capital needs, the availability of financing for potential buyers (which has been and may continue to be constrained for some potential buyers due to the current economic and market conditions), and our ability to defer some or all of the taxable gains on the sales. We cannot assure that we will dispose of any additional properties, enter into any additional strategic ventures, or that we will be able to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange or be able to use other tax deferred structures in connection with our strategy. See the “Liquidity and Capital Resources of the Operating Partnership – Liquidity Sources” section for further information.
Acquisitions. As part of our growth strategy, which is highly dependent on market conditions and business cycles, among other factors, we continue to evaluate strategic opportunities and remain a disciplined buyer of development and redevelopment opportunities as well as value-add and strategic operating properties and land. We focus on growth opportunities primarily in markets populated by knowledge and creative-based tenants in a variety of industries, including technology, media, healthcare, life sciences, entertainment and professional services. Against the backdrop of market volatility, we expect to manage a strong balance sheet and selectively evaluate opportunities that we believe have the potential to either add immediate Net Operating Income to our portfolio or play a strategic role in our future growth.
In connection with our growth strategy, we often have one or more potential acquisitions of properties and/or undeveloped land under consideration that are in varying stages of negotiation and due diligence review, or under contract, at any point in time. However, we cannot provide assurance that we will enter into any agreements to acquire properties or undeveloped land, or that the potential acquisitions contemplated by any agreements we may enter into in the future will be completed. In addition, acquisitions are subject to various risks and uncertainties and we may be unable to complete an acquisition after making a nonrefundable deposit or incurring acquisition-related costs.
Incentive Compensation. Our Executive Compensation Committee determines compensation, including cash bonuses and equity incentives, for our executive officers, as defined in Rule 16 under the Exchange Act. For 2023, the annual cash bonus program was structured to allow the Executive Compensation Committee to evaluate a variety of key quantitative and qualitative metrics at the end of the year and make a determination based on the Company’s and management’s overall performance. Our Executive Compensation Committee also grants equity incentive awards from time to time that include performance-based and/or market-measure based vesting requirements and time-based vesting requirements. As a result, accrued incentive compensation and compensation expense for future awards may be affected by our operating and development performance, financial results, stock price, performance against applicable performance-based vesting goals, market conditions, liquidity measures and other factors. Consequently, we cannot predict the amounts that will be recorded in future periods related to such incentive compensation.
As of September 30, 2023, there was approximately $28.5 million of total unrecognized compensation cost related to outstanding nonvested RSUs granted under share-based compensation arrangements. Such amount is based in part upon the estimated future outcome of the performance metrics as of September 30, 2023, and the actual compensation cost ultimately recognized could increase or decrease from this estimate based upon actual performance results. The costs are expected to be recognized over a weighted-average period of 1.4 years, which includes the shortened vesting period for our Chief Executive Officer due to his announced retirement on December 31, 2023. The $28.5 million of unrecognized compensation cost does not reflect the future compensation cost for any potential share-based awards that may be issued subsequent to September 30, 2023. Share-based compensation expense for potential future awards could be affected by our operating and development performance, financial results, stock price, performance against applicable performance-based vesting goals, market conditions
28

and other factors. For additional information regarding our equity incentive awards, see Note 6 “Share-Based Compensation” to our consolidated financial statements included in this report.
Information on Leases Commenced and Executed
Leasing Activity and Changes in Rental Rates. The amount of net rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, newly developed or redeveloped properties, newly acquired properties with vacant space, and space available from unscheduled lease terminations. The amount of rental income we generate also depends on our ability to maintain or increase rental rates in our submarkets. Negative trends in one or more of these factors could adversely affect our rental income in future periods. The following tables set forth certain information regarding leasing activity during the three and nine months ended September 30, 2023.
For Leases Commenced (1)

Quarter to Date | Number of Leases (2) |  | Rentable Square Feet (2) |  | Weighted Average Lease Term (in months) |  | TI/LC per Sq. Ft. (3) |  | TI/LC per Sq. Ft. / Year (3) |  | Changes in Rents (4) |  | Changes in Cash Rents (5)
| New |  | Renewal |  | New |  | Renewal |
2nd Generation (6) | 12 |  | 13 |  | 178,282 |  | 148,599 |  | 81 |  | $ | 49.43 |  |  | $ | 7.32 |  |  | 6.9 | % |  | (6.2) | %
Development Leasing (7) | 2 |  | — |  | 98,561 |  | — |  | 149 |  | $ | 121.74 |  |  | $ | 9.80 |  |  |  |  |
Total | 14 |  | 13 |  | 276,843 |  | 148,599 |  |  |  |  |  |  |  |  |  |

Year to Date | Number of Leases (2) |  | Rentable Square Feet (2) |  | Weighted Average Lease Term (in months) |  | TI/LC per Sq. Ft. (3) |  | TI/LC per Sq. Ft. / Year (3) |  | Changes in Rents (4) |  | Changes in Cash Rents (5)
| New |  | Renewal |  | New |  | Renewal |
2nd Generation (6) | 33 |  | 38 |  | 359,620 |  | 387,517 |  | 73 |  | $ | 52.33 |  |  | $ | 8.60 |  |  | 13.4 | % |  | (0.5) | %
Development Leasing (7) | 3 |  | — |  | 104,016 |  | — |  | 146 |  | $ | 121.73 |  |  | $ | 10.01 |  |  |  |  |
Total | 36 |  | 38 |  | 463,636 |  | 387,517 |  |  |  |  |  |  |  |  |  |

For Leases Executed (1)(8)

Quarter to Date | Number of Leases (2) |  | Rentable Square Feet (2) |  | Weighted Average Lease Term (in months) |  | TI/LC per Sq. Ft. (3) |  | TI/LC per Sq. Ft. / Year (3) |  | Changes in Rents (4) |  | Changes in Cash Rents (5) |  | Retention Rates (9)
| New |  | Renewal |  | New |  | Renewal |  |
2nd Generation (6) | 9 |  | 13 |  | 30,867 |  | 148,599 |  | 72 |  | $ | 30.63 |  |  | $ | 5.10 |  |  | 16.1 | % |  | (0.1) | % |  | 41.0 | %
Development Leasing (7) | 2 |  | — |  | 8,302 |  | — |  | 101 |  | $ | 126.44 |  |  | $ | 15.02 |  |  |  |  |  |  |
Total | 11 |  | 13 |  | 39,169 |  | 148,599 |  |  |  |  |  |  |  |  |  |  |  |

Year to Date | Number of Leases (2) |  | Rentable Square Feet (2) |  | Weighted Average Lease Term (in months) |  | TI/LC per Sq. Ft. (3) |  | TI/LC per Sq. Ft. / Year (3) |  | Changes in Rents (4) |  | Changes in Cash Rents (5) |  | Retention Rates (9)
| New |  | Renewal |  | New |  | Renewal |  |
2nd Generation (6) | 35 |  | 38 |  | 341,976 |  | 387,517 |  | 65 |  | $ | 54.62 |  |  | $ | 10.08 |  |  | 10.8 | % |  | (0.9) | % |  | 24.7 | %
Development Leasing (7) | 4 |  | — |  | 29,452 |  | — |  | 134 |  | $ | 168.60 |  |  | $ | 15.10 |  |  |  |  |  |  |
Total | 39 |  | 38 |  | 371,428 |  | 387,517 |  |  |  |  |  |  |  |  |  |  |  |

________________________
(1)Includes 100% of consolidated property partnerships.
(2)Represents leasing activity for leases that commenced or were signed during the period in the stabilized and development portfolios, net of month-to-month leases.
(3)Tenant improvements and leasing commissions per square foot exclude tenant-funded tenant improvements.
(4)Calculated as the change between GAAP rents for new/renewed leases and the expiring GAAP rents for the same space. Space that was vacant when the property was acquired is excluded from our change in rents calculations to provide a more meaningful market comparison.
(5)Calculated as the change between stated rents for new/renewed leases and the expiring stated rents for the same space. Space that was vacant when the property was acquired is excluded from our change in rents calculations to provide a more meaningful market comparison.
(6)Second generation leasing includes space where we have made capital expenditures to maintain the current market revenue stream.
(7)Represents leases commenced or executed on new construction added to the stabilized portfolio and leasing activity for leases signed in our development and redevelopment portfolios.
(8)During the three months ended September 30, 2023, 9 new leases totaling 35,726 rentable square feet were signed but not commenced. During the nine months ended September 30, 2023, 20 new leases totaling 227,282 rentable square feet were signed but not commenced.
(9)Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.
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As of September 30, 2023, we believe that the weighted average cash rental rates for our total stabilized portfolio are approximately 5% below the current average market rental rates. Individual properties within any particular submarket presently may be leased either above, below, or at the current market rates within that submarket, and the average rental rates for individual submarkets may be above, below, or at the average cash rental rate or our portfolio.
Our rental rates and occupancy are impacted by general economic conditions, including the pace of regional economic growth and access to capital. Therefore, we cannot give any assurance that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates.
During the nine months ended September 30, 2023, we saw an increase in physical occupancy at our properties and commitments by large corporations to in-office work by mandating a minimum number of days employees must work in the office. However, we believe that economic uncertainty and hybrid/remote working arrangements have impacted the timing and volume of leasing and will likely continue to do so in the future. Additionally, decreased demand (including as a result of remote work), increased competition (including sublease space available from our tenants) and other negative trends or unforeseeable events that impair our ability to timely renew or re-lease space could have negative effects on our future financial condition, results of operations, and cash flows.
Scheduled Lease Expirations. The following tables set forth certain information regarding our lease expirations for our stabilized portfolio for the remainder of 2023 and the next five years and by region for the remainder of 2023 and in 2024.
Lease Expirations (1)

Year of Lease Expiration |  | Number of Expiring Leases |  | Total Square Feet |  | % of Total Leased Sq. Ft. |  | Annualized Base Rent (2)(3) |  | % of Total Annualized Base Rent (2) |  | Annualized Base Rent per Sq. Ft. (2)
|  |  |  |  |  |  |  | (in thousands) |  |  |  |
Remainder of 2023 (4) |  | 13 |  |  | 264,668 |  |  | 1.9 | % |  | $ | 15,076 |  |  | 1.9 | % |  | $ | 56.96 |
2024 (4) |  | 68 |  |  | 1,008,828 |  |  | 7.3 | % |  | 48,700 |  |  | 6.1 | % |  | 48.27 |
2025 |  | 67 |  |  | 692,950 |  |  | 5.0 | % |  | 34,152 |  |  | 4.3 | % |  | 49.28 |
2026 |  | 59 |  |  | 1,916,944 |  |  | 13.9 | % |  | 90,492 |  |  | 11.4 | % |  | 47.21 |
2027 |  | 69 |  |  | 1,138,106 |  |  | 8.2 | % |  | 47,283 |  |  | 6.0 | % |  | 41.55 |
2028 |  | 48 |  |  | 1,132,416 |  |  | 8.2 | % |  | 71,245 |  |  | 9.0 | % |  | 62.91 |
Total |  | 324 |  |  | 6,153,912 |  |  | 44.5 | % |  | $ | 306,948 |  |  | 38.7 | % |  | $ | 49.88 |

Year |  | Region |  | Number of Expiring Leases |  | Total Square Feet |  | % of Total Leased Sq. Ft. |  | Annualized Base Rent (2)(3) |  | % of Total Annualized Base Rent (2) |  | Annualized Rent per Sq. Ft. (2)
|  |  |  |  |  |  |  |  |  | (in thousands) |  |  |  |
2023 (4) |  | Greater Los Angeles |  | 8 |  |  | 214,689 |  |  | 1.5 | % |  | $ | 12,969 |  |  | 1.6 | % |  | $ | 60.41 |
| San Diego County |  | 3 |  |  | 38,552 |  |  | 0.3 | % |  | 1,367 |  |  | 0.2 | % |  | 35.46 |
| San Francisco Bay Area |  | 1 |  |  | 7,141 |  |  | 0.1 | % |  | 547 |  |  | 0.1 | % |  | 76.60 |
| Greater Seattle |  | 1 |  |  | 4,286 |  |  | — | % |  | 193 |  |  | — | % |  | 45.03 |
| Total |  | 13 |  |  | 264,668 |  |  | 1.9 | % |  | $ | 15,076 |  |  | 1.9 | % |  | $ | 56.96 |
2024 (4) |  | Greater Los Angeles |  | 42 |  |  | 482,259 |  |  | 3.5 | % |  | $ | 21,087 |  |  | 2.7 | % |  | $ | 43.73 |
| San Diego County |  | 6 |  |  | 45,597 |  |  | 0.3 | % |  | 1,759 |  |  | 0.2 | % |  | 38.58 |
| San Francisco Bay Area |  | 11 |  |  | 267,887 |  |  | 1.9 | % |  | 17,958 |  |  | 2.2 | % |  | 67.04 |
| Greater Seattle |  | 9 |  |  | 213,085 |  |  | 1.6 | % |  | 7,896 |  |  | 1.0 | % |  | 37.06 |
| Total |  | 68 |  |  | 1,008,828 |  |  | 7.3 | % |  | $ | 48,700 |  |  | 6.1 | % |  | $ | 48.27 |

________________________
(1)For leases that have been renewed early with existing tenants, the expiration date and annualized base rent information presented takes into consideration the renewed lease terms. Excludes leases not commenced as of September 30, 2023, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of September 30, 2023.
(2)Annualized base rent includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures, including full service gross, modified gross and triple net. Percentages represent percentage of total portfolio annualized contractual base rental revenue. For additional information on tenant improvement and leasing commission costs incurred by the Company for the current reporting period, please see further discussion under the caption “Information on Leases Commenced and Executed.”
(3)Includes 100% of annualized base rent of consolidated property partnerships.
(4)Adjusting for leases executed as of September 30, 2023 but not yet commenced, the 2023 and 2024 expirations would be reduced by 15,973 and 13,325 square feet, respectively.
30

In addition to the 2.2 million rentable square feet, or 13.8%, of currently available space in our stabilized portfolio, leases representing approximately 1.9% and 7.3% of the occupied square footage of our stabilized portfolio are scheduled to expire during the remainder of 2023 and in 2024, respectively. The leases scheduled to expire during the remainder of 2023 and in 2024 represent approximately 1.3 million rentable square feet or 8.0% of our total annualized base rental revenue. Adjusting for leases executed as of September 30, 2023 but not yet commenced, the remaining 2023 and 2024 expirations would be 248,695 and 995,503 square feet, respectively.
Sublease Space. Of our leased space as of September 30, 2023, approximately 1.5 million rentable square feet, or 9.0% of the square footage in our stabilized portfolio, was available for sublease, primarily in the San Francisco Bay Area region. Of the 9.0% of available sublease space in our stabilized portfolio as of September 30, 2023, approximately 7.3% was vacant space, and the remaining 1.7% was occupied. Of the approximately 1.5 million rentable square feet available for sublease as of September 30, 2023, no leases are scheduled to expire in 2023 and approximately 223,003 rentable square feet representing six leases are scheduled to expire in 2024.
31

Stabilized Portfolio Information
As of September 30, 2023, our stabilized portfolio was comprised of 120 office and life science properties encompassing an aggregate of approximately 16.3 million rentable square feet and 1,001 residential units. Our stabilized portfolio includes all of our properties with the exception of development properties currently committed for construction, under construction or in the tenant improvement phase, redevelopment projects under construction, undeveloped land and real estate assets held for sale. We define redevelopment properties as those properties for which we expect to spend significant development and construction costs on the existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property. We define properties in the tenant improvement phase as office and life science properties that we are developing or redeveloping where the project has reached cold shell condition and is ready for tenant improvements, which may require additional major base building construction before being placed in service. Projects in the tenant improvement phase are added to our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities. Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets at the historical cost of the property as the projects or phases of projects are placed in service.
We did not have any properties held for sale at September 30, 2023. During the nine months ended September 30, 2023, we added one development project to our stabilized portfolio consisting of one building totaling 70,616 square feet of office space in San Diego, California. Our stabilized portfolio also excludes our future development pipeline, which as of September 30, 2023 was comprised of eight potential development sites, representing approximately 64 gross acres of undeveloped land on which we believe we have the potential to develop more than 7.0 million rentable square feet, depending upon economic conditions.
As of September 30, 2023, the following properties were excluded from our stabilized portfolio:

| Number of Properties/Projects |  | Estimated Rentable Square Feet (1)
In-process development projects - tenant improvement | 1 |  | 734,000 |
In-process development projects - under construction | 1 |  | 875,000 |
In-process redevelopment projects - under construction | 2 |  | 100,000 |

________________________
(1)Estimated rentable square feet upon completion.
The following table reconciles the changes in the rentable square feet in our stabilized office portfolio of operating properties from September 30, 2022 to September 30, 2023:

| Number of Buildings |  | Rentable Square Feet
Total as of September 30, 2022 | 120 |  |  | 16,248,802 |
Completed development properties placed in-service | 1 |  |  | 70,616 |
Properties transferred to redevelopment | (1) |  |  | (48,146) |
Remeasurement | — |  |  | 13,881 |
Total as of September 30, 2023 (1) | 120 |  |  | 16,285,153 |

________________________
(1)Includes four properties owned by consolidated property partnerships (see Note 1 “Organization, Ownership and Basis of Presentation” to our consolidated financial statements included in this report for additional information).
Occupancy Information
The following table sets forth certain information regarding our stabilized portfolio:

Region |  | Number of Buildings |  | Rentable Square Feet |  | Occupancy at (1)
| 9/30/2023 |  | 6/30/2023 |  | 3/31/2023
Greater Los Angeles |  | 53 |  |  | 4,344,573 |  |  | 81.2 | % |  | 81.5 | % |  | 80.8 | %
San Diego County |  | 24 |  |  | 2,770,380 |  |  | 86.1 | % |  | 85.4 | % |  | 85.9 | %
San Francisco Bay Area |  | 33 |  |  | 6,170,022 |  |  | 91.1 | % |  | 92.3 | % |  | 94.7 | %
Greater Seattle |  | 10 |  |  | 3,000,178 |  |  | 83.5 | % |  | 83.4 | % |  | 95.3 | %
Total Stabilized Portfolio |  | 120 |  |  | 16,285,153 |  |  | 86.2 | % |  | 86.6 | % |  | 89.6 | %

32

| Average Occupancy
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Stabilized Portfolio (1) | 86.1 | % |  | 91.1 | % |  | 87.8 | % |  | 91.3 | %
Same Store Portfolio (2) | 86.4 | % |  | 91.7 | % |  | 88.2 | % |  | 91.6 | %
Residential Portfolio (3) | 92.7 | % |  | 93.5 | % |  | 92.9 | % |  | 93.6 | %

________________________
(1)Occupancy percentages reported are based on our stabilized office portfolio as of the end of the period presented and exclude occupancy percentages of properties held for sale. Represents economic occupancy.
(2)Occupancy percentages reported are based on office properties owned and stabilized as of January 1, 2022 and still owned and stabilized as of September 30, 2023 and exclude our residential portfolio. See discussion under “Results of Operations” for additional information.
(3)Our residential portfolio consists of our 200-unit residential tower and 193-unit Jardine project in Hollywood, California and 608 residential units at our One Paseo mixed-use project in Del Mar, California.
Significant Tenants
The following table sets forth information about our 15 largest tenants based upon annualized base rental revenues, as defined below, as of September 30, 2023.

Tenant Name (1) |  | Region |  | Annualized Base Rental Revenue (2) (3) |  | Rentable Square Feet |  | Percentage of Total Annualized Base Rental Revenue |  | Percentage of Total Rentable Square Feet |  | Year(s) of Significant Lease Expiration (4)
|  |  |  | (in thousands) |  |  |  |  |  |  |  |
Global technology company |  | Greater Seattle / San Diego County |  | $ | 44,851 |  |  | 849,826 |  |  | 5.7 | % |  | 5.2 | % |  | 2032 - 2033 / 2037
Cruise LLC |  | San Francisco Bay Area |  | 35,449 |  |  | 374,618 |  |  | 4.5 | % |  | 2.3 | % |  | 2031
Stripe, Inc. |  | San Francisco Bay Area |  | 33,110 |  |  | 425,687 |  |  | 4.2 | % |  | 2.6 | % |  | 2034
Salesforce, Inc. |  | San Francisco Bay Area / Greater Seattle |  | 30,100 |  |  | 613,497 |  |  | 3.8 | % |  | 3.8 | % |  | 2024 / 2029 - 2030 / 2032
LinkedIn Corporation / Microsoft Corporation |  | San Francisco Bay Area |  | 29,752 |  |  | 663,460 |  |  | 3.8 | % |  | 4.1 | % |  | 2024 / 2026
Adobe Systems, Inc. |  | San Francisco Bay Area / Greater Seattle |  | 27,897 |  |  | 522,879 |  |  | 3.5 | % |  | 3.2 | % |  | 2027 / 2031
Okta, Inc. |  | San Francisco Bay Area |  | 24,206 |  |  | 293,001 |  |  | 3.1 | % |  | 1.8 | % |  | 2028
DoorDash, Inc. |  | San Francisco Bay Area |  | 23,842 |  |  | 236,759 |  |  | 3.0 | % |  | 1.5 | % |  | 2032
Riot Games, Inc. (5) |  | Greater Los Angeles |  | 22,918 |  |  | 340,584 |  |  | 2.9 | % |  | 2.1 | % |  | 2023 - 2024 / 2031
Netflix, Inc. |  | Greater Los Angeles |  | 21,854 |  |  | 361,388 |  |  | 2.8 | % |  | 2.2 | % |  | 2032
Box, Inc. |  | San Francisco Bay Area |  | 20,390 |  |  | 341,441 |  |  | 2.6 | % |  | 2.1 | % |  | 2028
Cytokinetics, Inc. |  | San Francisco Bay Area |  | 18,167 |  |  | 234,892 |  |  | 2.3 | % |  | 1.4 | % |  | 2033
DIRECTV, LLC |  | Greater Los Angeles |  | 16,085 |  |  | 532,956 |  |  | 2.0 | % |  | 3.3 | % |  | 2026 - 2027
Synopsys, Inc. |  | San Francisco Bay Area |  | 15,492 |  |  | 342,891 |  |  | 2.0 | % |  | 2.1 | % |  | 2030
Amazon.com |  | Greater Seattle |  | 14,989 |  |  | 340,705 |  |  | 1.9 | % |  | 2.1 | % |  | 2029 - 2030
Total |  |  |  | $ | 379,102 |  |  | 6,474,584 |  |  | 48.1 | % |  | 39.8 | % |  |

________________________
(1)Includes subsidiaries of tenant listed.
(2)Annualized base rental revenue includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Excludes month-to-month leases and vacant space as of September 30, 2023.
(3)Includes 100% of the annualized base rental revenues of consolidated property partnerships.
(4)We define significant lease expirations as those with space expiring greater than 25,000 rentable square feet.
(5)The 2023 lease expiration represents 158,371 rentable square feet expiring on November 30, 2023.
33

Results of Operations
Net Operating Income
Management internally evaluates the operating performance and financial results of our stabilized portfolio based on Net Operating Income. We define “Net Operating Income” as consolidated operating revenues (rental income and other property income) less consolidated operating expenses (property expenses, real estate taxes and ground leases).
Net Operating Income is considered by management to be an important and appropriate supplemental performance measure to net income because we believe it helps both investors and management to understand the core operations of our properties excluding corporate and financing-related costs and non-cash depreciation and amortization. Net Operating Income is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. This measure thereby provides an operating perspective not immediately apparent from GAAP income from operations or net income. In addition, Net Operating Income is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. Other real estate companies may use different methodologies for calculating Net Operating Income, and accordingly, our presentation of Net Operating Income may not be comparable to other real estate companies. Because of the exclusion of the items shown in the reconciliation below, Net Operating Income should only be used as a supplemental measure of our financial performance and not as an alternative to GAAP income from operations or net income.
Management further evaluates Net Operating Income by evaluating the performance from the following property groups:
•Same Store Properties – includes the consolidated results of all of the office properties that were owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1, 2022 and still owned and included in the stabilized portfolio as of September 30, 2023, including our three residential properties in Hollywood and Del Mar, California;
•Development Properties – includes the results generated by certain of our in-process development and redevelopment projects, expenses for certain of our future development projects and the results generated by the following stabilized development properties:
◦One office building that was added to the stabilized portfolio in the second quarter of 2022;
◦Three office buildings that were added to the stabilized portfolio in the third quarter of 2022; and
◦One office building that was added to the stabilized portfolio in the third quarter of 2023; and
•Disposition Properties – includes the results of one property disposed of in the third quarter of 2022.
The following table sets forth certain information regarding the property groups within our stabilized office portfolio as of September 30, 2023:

Group |  | # of Buildings |  | Rentable Square Feet
Same Store Properties |  | 115 |  | 15,063,419 |
Stabilized Development and Redevelopment Properties (1) |  | 5 |  |  | 1,221,734 |
Total Stabilized Portfolio |  | 120 |  | 16,285,153 |

________________________
(1)Excludes development projects in the tenant improvement phase, our in-process development and redevelopment projects and future development projects.
34

Comparison of the Three Months Ended September 30, 2023 to the Three Months Ended September 30, 2022
The following table summarizes our Net Operating Income, as defined, for our total portfolio for the three months ended September 30, 2023 and 2022.

| Three Months Ended September 30, |  | Dollar Change |  | Percentage Change
| 2023 |  | 2022 |
| ($ in thousands)
Reconciliation of Net Income Available to Common Stockholders to Net Operating Income, as defined: |  |  |  |  |  |  |
Net Income Available to Common Stockholders | $ | 52,762 |  |  | $ | 79,757 |  |  | $ | (26,995) |  |  | (33.8) | %
Net income attributable to noncontrolling common units of the Operating Partnership | 515 |  |  | 664 |  |  | (149) |  |  | (22.4) | %
Net income attributable to noncontrolling interests in consolidated property partnerships | 5,460 |  |  | 6,239 |  |  | (779) |  |  | (12.5) | %
Net income | $ | 58,737 |  |  | $ | 86,660 |  |  | $ | (27,923) |  |  | (32.2) | %
Unallocated expense (income): |  |  |  |  |  |  |
General and administrative expenses | 24,761 |  |  | 23,524 |  |  | 1,237 |  |  | 5.3 | %
Leasing costs | 1,852 |  |  | 1,015 |  |  | 837 |  |  | 82.5 | %
Depreciation and amortization | 85,224 |  |  | 81,140 |  |  | 4,084 |  |  | 5.0 | %
Interest and other income, net | (7,015) |  |  | (295) |  |  | (6,720) |  |  | NM*
Interest expense | 29,837 |  |  | 19,982 |  |  | 9,855 |  |  | 49.3 | %
Gain on sale of depreciable operating property | — |  |  | (17,329) |  |  | 17,329 |  |  | (100.0) | %
Net Operating Income, as defined | $ | 193,396 |  |  | $ | 194,697 |  |  | $ | (1,301) |  |  | (0.7) | %

________________________
* Percentage not meaningful.
The following tables summarize our Net Operating Income, as defined, for our total portfolio for the three months ended September 30, 2023 and 2022.

| Three Months Ended September 30,
| 2023 |  | 2022
| Same Store |  | Development |  |  |  | Disposition |  | Total |  | Same Store |  | Development |  |  |  | Disposition |  | Total
| (in thousands)
Operating revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income | $ | 252,173 |  |  | $ | 28,508 |  |  |  |  | $ | — |  |  | $ | 280,681 |  |  | $ | 255,606 |  |  | $ | 16,832 |  |  |  |  | $ | 108 |  |  | $ | 272,546 |
Other property income | 2,729 |  |  | 184 |  |  |  |  | — |  |  | 2,913 |  |  | 3,126 |  |  | 323 |  |  |  |  | (37) |  |  | 3,412 |
Total | 254,902 |  |  | 28,692 |  |  |  |  | — |  |  | 283,594 |  |  | 258,732 |  |  | 17,155 |  |  |  |  | 71 |  |  | 275,958 |
Property and related expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property expenses | 55,539 |  |  | 3,906 |  |  |  |  | — |  |  | 59,445 |  |  | 50,020 |  |  | 1,750 |  |  |  |  | 305 |  |  | 52,075 |
Real estate taxes | 25,124 |  |  | 3,239 |  |  |  |  | — |  |  | 28,363 |  |  | 25,596 |  |  | 1,773 |  |  |  |  | 46 |  |  | 27,415 |
Ground leases | 1,895 |  |  | 495 |  |  |  |  | — |  |  | 2,390 |  |  | 1,754 |  |  | 17 |  |  |  |  | — |  |  | 1,771 |
Total | 82,558 |  |  | 7,640 |  |  |  |  | — |  |  | 90,198 |  |  | 77,370 |  |  | 3,540 |  |  |  |  | 351 |  |  | 81,261 |
Net Operating Income, as defined | $ | 172,344 |  |  | $ | 21,052 |  |  |  |  | $ | — |  |  | $ | 193,396 |  |  | $ | 181,362 |  |  | $ | 13,615 |  |  |  |  | $ | (280) |  |  | $ | 194,697 |

35

| Three Months Ended September 30, 2023 as compared to the Three Months Ended September 30, 2022
| Same Store |  | Development |  |  |  | Disposition |  | Total
| Dollar Change |  | Percent Change |  | Dollar Change |  | Percent Change |  |  |  |  |  | Dollar Change |  | Percent Change |  | Dollar Change |  | Percent Change
| ($ in thousands)
Operating revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income | $ | (3,433) |  |  | (1.3) | % |  | $ | 11,676 |  |  | 69.4 | % |  |  |  |  |  | $ | (108) |  |  | (100.0) | % |  | $ | 8,135 |  |  | 3.0 | %
Other property income | (397) |  |  | (12.7) | % |  | (139) |  |  | (43.0) | % |  |  |  |  |  | 37 |  |  | (100.0) | % |  | (499) |  |  | (14.6) | %
Total | (3,830) |  |  | (1.5) | % |  | 11,537 |  |  | 67.3 | % |  |  |  |  |  | (71) |  |  | (100.0) | % |  | 7,636 |  |  | 2.8 | %
Property and related expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property expenses | 5,519 |  |  | 11.0 | % |  | 2,156 |  |  | 123.2 | % |  |  |  |  |  | (305) |  |  | (100.0) | % |  | 7,370 |  |  | 14.2 | %
Real estate taxes | (472) |  |  | (1.8) | % |  | 1,466 |  |  | 82.7 | % |  |  |  |  |  | (46) |  |  | (100.0) | % |  | 948 |  |  | 3.5 | %
Ground leases | 141 |  |  | 8.0 | % |  | 478 |  |  | NM* |  |  |  |  |  | — |  |  | — | % |  | 619 |  |  | 35.0 | %
Total | 5,188 |  |  | 6.7 | % |  | 4,100 |  |  | 115.8 | % |  |  |  |  |  | (351) |  |  | (100.0) | % |  | 8,937 |  |  | 11.0 | %
Net Operating Income, as defined | $ | (9,018) |  |  | (5.0) | % |  | $ | 7,437 |  |  | 54.6 | % |  |  |  |  |  | $ | 280 |  |  | (100.0) | % |  | $ | (1,301) |  |  | (0.7) | %

________________________
* Percentage not meaningful.
Net Operating Income decreased $1.3 million, or 0.7%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 resulting from:
•A decrease in Net Operating Income of $9.0 million attributable to the Same Store Properties, which was driven by the following activity:
•A decrease in total operating revenues of $3.8 million primarily due to:
•$9.4 million net decrease comprised of a $12.7 million decrease from lease expirations, net of a $3.3 million increase from new leases and renewals at higher rates; partially offset by
•$3.8 million increase in the tenant reimbursement component of rental income primarily due to higher reimbursable operating expenses; and
•$1.8 million increase in non-recurring revenue related to tenant restoration fees and revenue adjustments for tenant creditworthiness considerations; and
•An increase in property and related expenses of $5.2 million primarily due to an overall increase in physical occupancy from our tenants’ continued return to the office as well as an increase in insurance premiums;
•An increase in Net Operating Income of $7.4 million attributable to the Development Properties, of which $5.2 million was contributed by Indeed Tower due to revenue recognition on the space leased to Indeed, Inc., which commenced in the fourth quarter of 2022; and
•An increase in Net Operating Income of $0.3 million attributable to the Disposition Properties.
Other Expenses and Income
General and Administrative Expenses
General and administrative expenses increased $1.2 million, or 5.3%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 due to an increase in share-based compensation expense of $2.1 million, which was driven by the accelerated vesting of awards for our CEO’s previously announced retirement, partially offset by a decrease from corporate cost-cutting measures.
36

Leasing Costs
Leasing costs increased $0.8 million, or 82.5%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily due to an increase in leasing overhead and deal costs during the three months ended September 30, 2023.
Depreciation and Amortization
Depreciation and amortization increased $4.1 million, or 5.0%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily due to the following:
•An increase of $11.8 million attributable to the Development Properties; partially offset by
•A decrease of $7.5 million attributable to the Same Store Properties primarily due to an in-place lease intangible asset becoming fully amortized in the second quarter of 2023; and
•A decrease of $0.2 million attributable to the Disposition Properties.
Interest Expense
The following table sets forth our gross interest expense, including debt discounts and deferred financing cost amortization, and capitalized interest, including capitalized debt discounts and deferred financing cost amortization, for the three months ended September 30, 2023 and 2022:

| Three Months Ended September 30, |  |  |  |
| 2023 |  | 2022 |  | Dollar Change |  | Percentage Change
| (in thousands) |  |  |  |
Gross interest expense | $ | 49,893 |  |  | $ | 39,659 |  |  | $ | 10,234 |  |  | 25.8 | %
Capitalized interest and deferred financing costs | (20,056) |  |  | (19,677) |  |  | (379) |  |  | 1.9 | %
Interest expense | $ | 29,837 |  |  | $ | 19,982 |  |  | $ | 9,855 |  |  | 49.3 | %

Gross interest expense, before the effect of capitalized interest and deferred financing costs, increased $10.2 million, or 25.8%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, due to an increase in the average outstanding debt balance and an increase in the weighted average interest rate for the three months ended September 30, 2023. The weighted average interest rates were 4.16% and 3.87% for the three months ended September 30, 2023 and 2022, respectively.
Capitalized interest and deferred financing costs remained generally consistent for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. During the three months ended September 30, 2023 and 2022, we capitalized interest on in-process development and redevelopment projects and future development pipeline projects with an average aggregate cost basis of approximately $1.9 billion and $2.0 billion, respectively. In the event of an extended cessation of development or redevelopment activities to get any of these projects ready for its intended use, such projects could potentially no longer qualify for capitalization of interest or other carrying costs.
Net Income Attributable to Noncontrolling Interests in Consolidated Property Partnerships
Net income attributable to noncontrolling interests in consolidated property partnerships decreased $0.8 million or 12.5% for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to lower rental income resulting from a lease termination during the first quarter of 2023 partially offset by termination fee income recognized in the third quarter of 2023 at properties held in consolidated property partnerships. The amounts reported for the three months ended September 30, 2023 and 2022 are comprised of the noncontrolling interest’s share of net income for 100 First Street Member, LLC (“100 First LLC”) and 303 Second Street Member, LLC (“303 Second LLC”) and the noncontrolling interest’s share of net income for Redwood City Partners, LLC (“Redwood LLC”).
37

Comparison of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022
The following table summarizes our Net Operating Income, as defined, for our total portfolio for the nine months ended September 30, 2023 and 2022.

| Nine Months Ended September 30, |  | Dollar Change |  | Percentage Change
| 2023 |  | 2022 |
| ($ in thousands)
Reconciliation of Net Income Available to Common Stockholders to Net Operating Income, as defined: |  |  |  |  |  |  |
Net Income Available to Common Stockholders | $ | 164,957 |  |  | $ | 179,990 |  |  | $ | (15,033) |  |  | (8.4) | %
Net income attributable to noncontrolling common units of the Operating Partnership | 1,612 |  |  | 1,695 |  |  | (83) |  |  | (4.9) | %
Net income attributable to noncontrolling interests in consolidated property partnerships | 18,673 |  |  | 18,333 |  |  | 340 |  |  | 1.9 | %
Net income | $ | 185,242 |  |  | $ | 200,018 |  |  | $ | (14,776) |  |  | (7.4) | %
Unallocated expense (income): |  |  |  |  |  |  |
General and administrative expenses | 71,356 |  |  | 68,425 |  |  | 2,931 |  |  | 4.3 | %
Leasing costs | 4,550 |  |  | 3,475 |  |  | 1,075 |  |  | 30.9 | %
Depreciation and amortization | 269,262 |  |  | 266,215 |  |  | 3,047 |  |  | 1.1 | %
Interest and other income, net | (11,896) |  |  | (501) |  |  | (11,395) |  |  | NM*
Interest expense | 81,891 |  |  | 60,728 |  |  | 21,163 |  |  | 34.8 | %
Gain on sale of depreciable operating property | — |  |  | (17,329) |  |  | 17,329 |  |  | (100.0) | %
Net Operating Income, as defined | $ | 600,405 |  |  | $ | 581,031 |  |  | $ | 19,374 |  |  | 3.3 | %

________________________
* Percentage not meaningful.
The following tables summarize our Net Operating Income, as defined, for our total portfolio for the nine months ended September 30, 2023 and 2022.

| Nine Months Ended September 30,
| 2023 |  | 2022
| Same Store |  | Development |  |  |  | Disposition |  | Total |  | Same Store |  | Development |  |  |  | Disposition |  | Total
| (in thousands)
Operating revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income | $ | 768,187 |  |  | $ | 83,907 |  |  |  |  | $ | — |  |  | $ | 852,094 |  |  | $ | 758,294 |  |  | $ | 43,884 |  |  |  |  | $ | 2,152 |  |  | $ | 804,330 |
Other property income | 7,790 |  |  | 794 |  |  |  |  | — |  |  | 8,584 |  |  | 7,355 |  |  | 909 |  |  |  |  | 49 |  |  | 8,313 |
Total | 775,977 |  |  | 84,701 |  |  |  |  | — |  |  | 860,678 |  |  | 765,649 |  |  | 44,793 |  |  |  |  | 2,201 |  |  | 812,643 |
Property and related expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property expenses | 157,669 |  |  | 10,564 |  |  |  |  | — |  |  | 168,233 |  |  | 141,529 |  |  | 4,811 |  |  |  |  | 1,081 |  |  | 147,421 |
Real estate taxes | 74,318 |  |  | 10,550 |  |  |  |  | — |  |  | 84,868 |  |  | 73,837 |  |  | 4,705 |  |  |  |  | 176 |  |  | 78,718 |
Ground leases | 5,673 |  |  | 1,499 |  |  |  |  | — |  |  | 7,172 |  |  | 5,264 |  |  | 209 |  |  |  |  | — |  |  | 5,473 |
Total | 237,660 |  |  | 22,613 |  |  |  |  | — |  |  | 260,273 |  |  | 220,630 |  |  | 9,725 |  |  |  |  | 1,257 |  |  | 231,612 |
Net Operating Income, as defined | $ | 538,317 |  |  | $ | 62,088 |  |  |  |  | $ | — |  |  | $ | 600,405 |  |  | $ | 545,019 |  |  | $ | 35,068 |  |  |  |  | $ | 944 |  |  | $ | 581,031 |

38

| Nine Months Ended September 30, 2023 as compared to the Nine Months Ended September 30, 2022
| Same Store |  | Development |  |  |  | Disposition |  | Total
| Dollar Change |  | Percent Change |  | Dollar Change |  | Percent Change |  |  |  |  |  | Dollar Change |  | Percent Change |  | Dollar Change |  | Percent Change
| ($ in thousands)
Operating revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income | $ | 9,893 |  |  | 1.3 | % |  | $ | 40,023 |  |  | 91.2 | % |  |  |  |  |  | $ | (2,152) |  |  | (100.0) | % |  | $ | 47,764 |  |  | 5.9 | %
Other property income | 435 |  |  | 5.9 | % |  | (115) |  |  | (12.7) | % |  |  |  |  |  | (49) |  |  | (100.0) | % |  | 271 |  |  | 3.3 | %
Total | 10,328 |  |  | 1.3 | % |  | 39,908 |  |  | 89.1 | % |  |  |  |  |  | (2,201) |  |  | (100.0) | % |  | 48,035 |  |  | 5.9 | %
Property and related expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property expenses | 16,140 |  |  | 11.4 | % |  | 5,753 |  |  | 119.6 | % |  |  |  |  |  | (1,081) |  |  | (100.0) | % |  | 20,812 |  |  | 14.1 | %
Real estate taxes | 481 |  |  | 0.7 | % |  | 5,845 |  |  | 124.2 | % |  |  |  |  |  | (176) |  |  | (100.0) | % |  | 6,150 |  |  | 7.8 | %
Ground leases | 409 |  |  | 7.8 | % |  | 1,290 |  |  | 617.2 | % |  |  |  |  |  | — |  |  | — | % |  | 1,699 |  |  | 31.0 | %
Total | 17,030 |  |  | 7.7 | % |  | 12,888 |  |  | 132.5 | % |  |  |  |  |  | (1,257) |  |  | (100.0) | % |  | 28,661 |  |  | 12.4 | %
Net Operating Income, as defined | $ | (6,702) |  |  | (1.2) | % |  | $ | 27,020 |  |  | 77.1 | % |  |  |  |  |  | $ | (944) |  |  | (100.0) | % |  | $ | 19,374 |  |  | 3.3 | %

Net Operating Income increased $19.4 million, or 3.3%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 primarily resulting from:
•A decrease of $6.7 million attributable to the Same Store Properties primarily resulting from:
•An increase in property and related expenses of $17.0 million primarily due to an overall increase in physical occupancy from our tenants’ continued return to the office as well as an increase in insurance premiums; partially offset by
•An increase in total operating revenues of $10.3 million primarily due to:
•$14.5 million increase in the tenant reimbursements component of rental income primarily due to higher reimbursable operating expenses; and
•$8.1 million net increase in non-recurring revenue related to $10.8 million of tenant restoration fees net of $2.7 million of revenue adjustments for tenant creditworthiness considerations; partially offset by
•$12.7 million net decrease comprised of $22.0 million decrease from lease expirations net of $9.3 million increase from new leases and renewals at higher rates; and
•A decrease of $0.9 million attributable to the Disposition Properties; partially offset by
•An increase of $27.0 million attributable to the Development Properties, of which $16.1 million was contributed by Indeed Tower due to revenue recognition on the space leased to Indeed, Inc., which commenced in the fourth quarter of 2022.
Other Expenses and Income
General and Administrative Expenses
General and administrative expenses increased $2.9 million, or 4.3%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily due to an increase in share-based compensation expense of $6.4 million, which was driven by the accelerated vesting of awards for our CEO’s previously announced retirement, partially offset by a decrease from corporate cost-cutting measures.
Leasing Costs
Leasing costs increased $1.1 million, or 30.9%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to an increase in leasing overhead during the nine months ended September 30, 2023.
39

Depreciation and Amortization
Depreciation and amortization increased $3.0 million, or 1.1%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily due to the following:
•An increase of $14.0 million attributable to the Development Properties; partially offset by
•A decrease of $10.2 million attributable to the Same Store Properties primarily due to an in-place lease intangible asset becoming fully amortized in the second quarter of 2023; and
•A decrease of $0.8 million attributable to the Disposition Properties.
Interest Expense
The following table sets forth our gross interest expense, including debt discounts and deferred financing cost amortization, and capitalized interest, including capitalized debt discounts and deferred financing cost amortization for the nine months ended September 30, 2023 and 2022:

| Nine Months Ended September 30, |  |  |  |
| 2023 |  | 2022 |  | Dollar Change |  | Percentage Change
| (in thousands) |  |  |  |
Gross interest expense | $ | 139,148 |  |  | $ | 118,995 |  |  | $ | 20,153 |  |  | 16.9 | %
Capitalized interest and deferred financing costs | (57,257) |  |  | (58,267) |  |  | 1,010 |  |  | (1.7) | %
Interest expense | $ | 81,891 |  |  | $ | 60,728 |  |  | $ | 21,163 |  |  | 34.8 | %

Gross interest expense, before the effect of capitalized interest and deferred financing costs, increased $20.2 million, or 16.9%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, due to an increase in the average outstanding debt balance and an increase in the weighted average interest rate for the nine months ended September 30, 2023. The weighted average interest rates were 4.10% and 3.87% for the nine months ended September 30, 2023 and 2022, respectively.
Capitalized interest and deferred financing costs decreased $1.0 million, or 1.7%, compared to the nine months ended September 30, 2022, primarily due to a decrease in the average development asset balances qualifying for interest capitalization during the nine months ended September 30, 2023. During the nine months ended September 30, 2023 and 2022, we capitalized interest on in-process development projects and future development pipeline projects with an average aggregate cost basis of approximately $1.9 billion and $2.0 billion, respectively. In the event of an extended cessation of development or redevelopment activities to get any of these projects ready for its intended use, such projects could potentially no longer qualify for capitalization of interest or other carrying costs. Refer to “Part I, Item IA. Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2022 for additional information about the potential impact of inflation on our interest expense and construction costs and the impact on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations.
Net Income Attributable to Noncontrolling Interests in Consolidated Property Partnerships
Net income attributable to noncontrolling interests in consolidated property partnerships remained generally consistent for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The amounts reported for the nine months ended September 30, 2023 and 2022 are comprised of the noncontrolling interest’s share of net income for 100 First Street Member, LLC (“100 First LLC”) and 303 Second Street Member, LLC (“303 Second LLC”) and the noncontrolling interest’s share of net income for Redwood City Partners, LLC (“Redwood LLC”).
40

Liquidity and Capital Resources of the Company
In this “Liquidity and Capital Resources of the Company” section, the term the “Company” refers only to Kilroy Realty Corporation on an unconsolidated basis and excludes the Operating Partnership and all other subsidiaries.
The Company’s business is operated primarily through the Operating Partnership. Distributions from the Operating Partnership are the Company’s primary source of capital. The Company believes the Operating Partnership’s sources of working capital, specifically its cash flow from operations and borrowings available under its unsecured revolving credit facility and unsecured term loan facility and funds from its capital recycling program, including strategic ventures, are adequate for it to make its distribution payments to the Company and, in turn, for the Company to make its dividend payments to its common stockholders for the next twelve months. Cash flows from operating activities generated by the Operating Partnership for the nine months ended September 30, 2023 were sufficient to cover the Company’s payment of cash dividends to its stockholders. However, there can be no assurance that the Operating Partnership’s sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including its ability to make distributions to the Company. The unavailability of capital could adversely affect the Operating Partnership’s ability to make distributions to the Company, which would in turn, adversely affect the Company’s ability to pay cash dividends to its stockholders.
The Company is a well-known seasoned issuer and the Company and the Operating Partnership have an effective shelf registration statement that provides for the public offering and sale from time to time by the Company of its preferred stock, common stock, depositary shares, warrants and guarantees of debt securities and by the Operating Partnership of its debt securities, in each case in unlimited amounts. The Company evaluates the capital markets on an ongoing basis for opportunities to raise capital, and, as circumstances warrant, the Company and the Operating Partnership may issue securities of all of these types in one or more offerings at any time and from time to time on an opportunistic basis, depending upon, among other things, market conditions, available pricing and capital needs. When the Company receives proceeds from the sales of its preferred or common stock, it generally contributes the net proceeds from those sales to the Operating Partnership in exchange for corresponding preferred or common partnership units of the Operating Partnership. The Operating Partnership may use these proceeds and proceeds from the sale of its debt securities to repay debt, including borrowings under its unsecured revolving credit facility and unsecured term loan facility, to develop new or redevelop existing properties, to make acquisitions of properties or portfolios of properties, or for general corporate purposes.
As the sole general partner with control of the Operating Partnership, the Company consolidates the Operating Partnership for financial reporting purposes, and the Company does not have significant assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities and the revenues and expenses of the Company and the Operating Partnership are substantially the same on their respective financial statements. The section entitled “Liquidity and Capital Resources of the Operating Partnership” should be read in conjunction with this section to understand the liquidity and capital resources of the Company on a consolidated basis and how the Company is operated as a whole.
Liquidity Highlights
As of September 30, 2023, we had approximately $618.8 million in cash and cash equivalents as well as $252.8 million in short-term certificates of deposit. In March 2023, we increased the total borrowing capacity of the unsecured term loan facility to $520.0 million and the full amount was outstanding as of September 30, 2023. In August and September, we repurchased $14.3 million of the Operating Partnership’s 3.45% $425.0 million unsecured senior notes due December 15, 2024 at a discount. As of the date of this report, we had approximately $1.1 billion available under our unsecured revolving credit facility. Excluding our unsecured term loan facility, for which we have two twelve-month extension options, our next debt maturity occurs in December 2024. We believe that our available liquidity demonstrates a strong balance sheet and makes us well positioned to navigate any additional future uncertainties. In addition, the Company is a well-known seasoned issuer and has historically been able to raise capital on a timely basis in the public markets, as well as the private markets. Any future financings, however, will depend on market conditions for both capital raises and the investment of such proceeds, and there can be no assurances that we will successfully obtain such financings.
41

Distribution Requirements
The Company is required to distribute 90% of its taxable income (subject to certain adjustments and excluding net capital gains) on an annual basis to maintain qualification as a REIT for federal income tax purposes and is required to pay income tax at regular corporate rates to the extent it distributes less than 100% of its taxable income (including capital gains). As a result of these distribution requirements, the Operating Partnership cannot rely on retained earnings to fund its on-going operations to the same extent as other companies whose parent companies are not REITs. In addition, the Company may be required to use borrowings under the Operating Partnership’s revolving credit facility, if necessary, to meet REIT distribution requirements and maintain its REIT status. The Company may also need to continue to raise capital in the equity markets to fund the Operating Partnership’s working capital needs, as well as potential developments of new or existing properties or acquisitions.
The Company intends to continue to make, but has not committed to make, regular quarterly cash distributions to common stockholders, and through the Operating Partnership, to common unitholders from the Operating Partnership’s cash flow from operating activities. All such distributions are at the discretion of the Board of Directors. As the Company intends to maintain distributions at a level sufficient to meet the REIT distribution requirements and minimize its obligation to pay income and excise taxes, it will continue to evaluate whether the current levels of distribution are appropriate to do so throughout 2023. In addition, in the event the Company is unable to successfully complete Section 1031 Exchanges to defer some or all of the taxable gains related to property dispositions (or in the event additional legislation is enacted that further modifies or repeals laws with respect to Section 1031 Exchanges), the Company may be required to distribute a special dividend to its common stockholders and common unitholders in order to minimize or eliminate income taxes on such gains. The Company considers market factors and its performance in addition to REIT requirements in determining its distribution levels. Amounts accumulated for distribution to stockholders are invested primarily in interest-bearing accounts and short-term interest-bearing securities, which is consistent with the Company’s intention to maintain its qualification as a REIT. Such investments may include, for example, obligations of the Government National Mortgage Association, other governmental agency securities, certificates of deposit, and interest-bearing bank deposits.
On September 12, 2023, the Board of Directors declared a regular quarterly cash dividend of $0.54 per share. The regular quarterly cash dividend is payable to stockholders of record on September 30, 2023 and a corresponding cash distribution of $0.54 per Operating Partnership unit is payable to holders of the Operating Partnership’s common limited partnership interests of record on September 30, 2023, including those owned by the Company. The total cash quarterly dividends and distributions paid on October 11, 2023 were $63.9 million.
Debt Covenants
The covenants contained within certain of our unsecured debt obligations generally prohibit the Company from paying dividends during an event of default in excess of an amount which results in distributions to us in an amount sufficient to permit us to pay dividends to our stockholders that we reasonably believe are necessary to (a) maintain our qualification as a REIT for federal and state income tax purposes and (b) avoid the payment of federal or state income or excise tax.
42

Capitalization
As of September 30, 2023, our total debt as a percentage of total market capitalization was 57.1%, which was calculated based on the closing price per share of the Company’s common stock of $31.61 on September 30, 2023 as shown in the following table:

| Shares/Units at September 30, 2023 |  | Aggregate Principal Amount or $ Value Equivalent |  | % of Total Market Capitalization
| ($ in thousands)
Debt: (1)(2) |  |  |  |  |
Unsecured Term Loan Facility |  |  | $ | 520,000 |  |  | 6.0 | %
Unsecured Senior Notes due 2024 |  |  | 410,710 |  |  | 4.7 | %
Unsecured Senior Notes due 2025 |  |  | 400,000 |  |  | 4.6 | %
Unsecured Senior Notes Series A & B due 2026 |  |  | 250,000 |  |  | 2.9 | %
Unsecured Senior Notes due 2028 |  |  | 400,000 |  |  | 4.6 | %
Unsecured Senior Notes due 2029 |  |  | 400,000 |  |  | 4.6 | %
Unsecured Senior Notes Series A & B due 2027 & 2029 |  |  | 250,000 |  |  | 2.9 | %
Unsecured Senior Notes due 2030 |  |  | 500,000 |  |  | 5.7 | %
Unsecured Senior Notes due 2031 |  |  | 350,000 |  |  | 4.0 | %
Unsecured Senior Notes due 2032 |  |  | 425,000 |  |  | 4.9 | %
Unsecured Senior Notes due 2033 |  |  | 450,000 |  |  | 5.2 | %
Secured debt |  |  | 614,159 |  |  | 7.0 | %
Total debt |  |  | $ | 4,969,869 |  |  | 57.1 | %
Equity and Noncontrolling Interests in the Operating Partnership: (3) |  |  |  |  |
Common limited partnership units outstanding (4) | 1,150,574 |  | $ | 36,370 |  |  | 0.4 | %
Shares of common stock outstanding | 117,239,558 |  | 3,705,942 |  |  | 42.5 | %
Total Equity and Noncontrolling Interests in the Operating Partnership |  |  | $ | 3,742,312 |  |  | 42.9 | %
Total Market Capitalization |  |  | $ | 8,712,181 |  |  | 100.0 | %

________________________
(1) Represents gross aggregate principal amount due at maturity before the effect of the following at September 30, 2023: $29.5 million of unamortized deferred financing costs on the unsecured term loan facility, unsecured senior notes and secured debt and $5.6 million of unamortized discounts for the unsecured senior notes.
(2) As of September 30, 2023, there was no outstanding balance on the unsecured revolving credit facility.
(3) Value based on closing price per share of our common stock of $31.61 as of September 30, 2023.
(4) Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships.
43

Liquidity and Capital Resources of the Operating Partnership
In this “Liquidity and Capital Resources of the Operating Partnership” section, the terms “we,” “our,” and “us” refer to the Operating Partnership or the Operating Partnership and the Company together, as the context requires.
General
Our primary liquidity sources and uses are as follows:
Liquidity Sources
•Net cash flow from operations;
•Borrowings under the Operating Partnership’s unsecured revolving credit facility and unsecured term loan facility;
•Proceeds from our capital recycling program, including the disposition of assets and the formation of strategic ventures;
•Proceeds from additional secured or unsecured debt financings; and
•Proceeds from public or private issuance of debt, equity or preferred equity securities.
Liquidity Uses
•Property operating and corporate expenses;
•Capital expenditures, tenant improvement and leasing costs;
•Development and redevelopment costs;
•Operating property or undeveloped land acquisitions;
•Debt service and principal payments, including debt maturities;
•Distributions to common security holders;
•Repurchases and redemptions of outstanding common stock of the Company; and
•Outstanding debt repurchases, redemptions and repayments.
General Strategy
Our general strategy is to maintain a conservative balance sheet with a strong credit profile and to maintain a capital structure that allows for financial flexibility and diversification of capital resources. We manage our capital structure to reflect a long-term investment approach and utilize multiple sources of capital to meet our long-term capital requirements. We believe that our current projected liquidity requirements for the next twelve-month period, as set forth above under the caption “—Liquidity Uses,” will be satisfied using a combination of the liquidity sources listed above, although there can be no assurance in this regard. We believe our conservative leverage and staggered debt maturities provide us with financial flexibility and enhance our ability to obtain additional sources of liquidity if necessary, and, therefore, we are well-positioned to refinance or repay maturing debt and to pursue our strategy of seeking attractive acquisition opportunities, which we may finance, as necessary, with future public and private issuances of debt and equity securities, although there can be no assurance in this regard.
44

Liquidity Sources
Unsecured Revolving Credit Facility and Term Loan Facility
The following table summarizes the balance and terms of our unsecured revolving credit facility as of September 30, 2023 and December 31, 2022:

| September 30, 2023 |  | December 31, 2022
| (in thousands)
Outstanding borrowings | $ | — |  |  | $ | — |
Remaining borrowing capacity | 1,100,000 |  |  | 1,100,000 |
Total borrowing capacity (1) | $ | 1,100,000 |  |  | $ | 1,100,000 |
Interest rate (2) | 6.31 | % |  | 5.20 | %
Facility fee-annual rate (3) | 0.200%
Maturity date (4) | July 31, 2025

________________________
(1)Total borrowing capacity is reduced by the amount of our outstanding letters of credit which total $5.2 million as of the date of this report. We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $500.0 million under an accordion feature pursuant to the terms of the unsecured revolving credit facility.
(2)Our unsecured revolving credit facility interest rate was calculated using a contractual rate of Secured Overnight Financing Rate (“SOFR”) plus a SOFR adjustment of 0.10% (“Adjusted SOFR”) and a margin of 0.900% based on our credit rating as of September 30, 2023 and December 31, 2022. We may be entitled to a temporary 0.01% reduction in the interest rate provided we meet certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions.
(3)Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of September 30, 2023 and December 31, 2022, $3.7 million and $5.3 million of unamortized deferred financing costs, respectively, which are included in prepaid expenses and other assets, net on our consolidated balance sheets, remained to be amortized through the maturity date of our unsecured revolving credit facility.
(4)The maturity date may be extended by two six-month periods, at the Company’s option.
We intend to borrow under the unsecured revolving credit facility as necessary for general corporate purposes, to finance development and redevelopment expenditures, to fund potential acquisitions and to potentially repay long-term debt to supplement cash balances given uncertainties and volatility in market conditions.
In January 2023, the Operating Partnership entered into the first amendment to its existing unsecured term loan facility agreement to (i) exercise the accordion feature under the term loan agreement to provide for $100.0 million of additional term loan commitments and (ii) increase the borrowing capacity under the accordion feature to provide additional term loan commitments or add one or more tranches of term loans up to an aggregate amount of $650.0 million. In March 2023, the Operating Partnership further amended the unsecured term loan facility agreement to exercise the accordion feature to provide for $20.0 million of additional term loan commitments, bringing the total borrowing capacity of the unsecured term loan facility to $520.0 million.
The following table summarizes the balance and terms of our unsecured term loan facility as of September 30, 2023 and December 31, 2022:

| September 30, 2023 |  | December 31, 2022
| (in thousands)
Outstanding borrowings | $ | 520,000 |  |  | $ | 200,000 |
Remaining borrowing capacity | — |  |  | 200,000 |
Total borrowing capacity (1) | $ | 520,000 |  |  | $ | 400,000 |
Interest rate (2) | 6.37 | % |  | 5.23 | %
Undrawn facility fee-annual rate (3) | 0.200%
Maturity date (4) | October 3, 2024

____________________
(1)We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $130.0 million and $100.0 million as of September 30, 2023 and December 31, 2022, respectively, under an accordion feature pursuant to the terms of the unsecured term loan facility
(2)Our unsecured term loan facility interest rate was calculated using a contractual rate of Adjusted SOFR plus a margin of 0.950% based on our credit rating as of September 30, 2023 and December 31, 2022.
(3)Our undrawn facility fee is paid on a quarterly basis and is calculated based on the remaining borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of September 30, 2023 and December 31, 2022, $3.1 million and $4.5 million, respectively, of unamortized deferred financing costs remained to be amortized through the maturity date of our unsecured term loan facility.
(4)The maturity date may be extended by two twelve-month periods, at the Company’s option.
45

Capital Recycling Program
As discussed in the section “Factors That May Influence Future Results of Operations - Capital Recycling Program,” we continuously evaluate opportunities for the potential disposition of properties and undeveloped land in our portfolio or the formation of strategic ventures with the intent of recycling the proceeds generated from the disposition of less strategic or core assets into capital used to finance development and redevelopment expenditures, to fund new acquisitions, to repay long-term debt and for other general corporate purposes. As part of this strategy, we attempt to enter into Section 1031 Exchanges, when possible, to defer some or all of the taxable gains on the sales, if any, for federal and state income tax purposes.
Any potential future disposition transactions and the timing of any potential future capital recycling transactions will depend on market conditions and other factors, including but not limited to our capital needs, the availability of financing for potential buyers (which has been and may continue to be constrained for some potential buyers due to current economic and market conditions), and our ability to defer some or all of the taxable gains on the sales. In addition, we cannot assure you that we will dispose of any additional properties, or that we will be able to identify and complete the acquisitions of suitable replacement properties to effect Section 1031 Exchanges to defer some or all of the taxable gains related to our capital recycling program. In the event we are unable to complete dispositions as planned, we may raise capital through other sources of liquidity including our available unsecured revolving credit facility, our unsecured term loan facility or the public or private issuance of unsecured debt.
Shelf Registration Statement
The Company is a well-known seasoned issuer and the Company and the Operating Partnership have an effective shelf registration statement that provides for the public offering and sale from time to time by the Company of its preferred stock, common stock, depository shares and guarantees of debt securities and by the Operating Partnership of its debt securities, in each case in unlimited amounts. The Company evaluates the capital markets on an ongoing basis for opportunities to raise capital, and, as circumstances warrant, the Company and the Operating Partnership may issue securities of all of these types in one or more offerings at any time and from time to time on an opportunistic basis, depending upon, among other things, market conditions, available pricing and capital needs. Capital raising could be more challenging under current market conditions as uncertainty related to interest rates, inflation rates, economic outlook, geopolitical events (including the military conflicts between Russia and Ukraine as well as Israel and Gaza) and other factors have contributed and may continue to contribute to significant volatility and negative pressures in financial markets. When the Company receives proceeds from the sales of its preferred or common stock, it generally contributes the net proceeds from those sales to the Operating Partnership in exchange for corresponding preferred or common partnership units of the Operating Partnership. The Operating Partnership may use these proceeds and proceeds from the sale of its debt securities to repay debt, including borrowings under its unsecured revolving credit facility and unsecured term loan facility, to develop new or redevelop existing properties, to make acquisitions of properties or portfolios of properties, or for general corporate purposes.
46

Unsecured and Secured Debt
The aggregate principal amount of the unsecured and secured debt of the Operating Partnership outstanding as of September 30, 2023 was as follows:

| Aggregate Principal Amount Outstanding
| (in thousands)
Unsecured Term Loan Facility | $ | 520,000 |
Unsecured Senior Notes due 2024 | 410,710 |
Unsecured Senior Notes due 2025 | 400,000 |
Unsecured Senior Notes Series A & B due 2026 | 250,000 |
Unsecured Senior Notes due 2028 | 400,000 |
Unsecured Senior Notes due 2029 | 400,000 |
Unsecured Senior Notes Series A & B due 2027 & 2029 | 250,000 |
Unsecured Senior Notes due 2030 | 500,000 |
Unsecured Senior Notes due 2031 | 350,000 |
Unsecured Senior Notes due 2032 | 425,000 |
Unsecured Senior Notes due 2033 | 450,000 |
Secured Debt | 614,159 |
Total Unsecured and Secured Debt (1) | 4,969,869 |
Less: Unamortized Net Discounts and Deferred Financing Costs (2) | (35,063) |
Total Debt, Net | $ | 4,934,806 |

________________________
(1)As of September 30, 2023, there was no outstanding balance on the unsecured revolving credit facility.
(2)Includes $29.5 million of unamortized deferred financing costs on the unsecured term loan facility, unsecured senior notes and secured debt and $5.6 million of unamortized discounts for the unsecured senior notes. Excludes unamortized deferred financing costs on the unsecured revolving credit facility, which are included in prepaid expenses and other assets, net on our consolidated balance sheets.
In July 2023, certain of our and the Operating Partnership’s subsidiaries entered into a $375.0 million mortgage loan transaction (the “Loan”) secured by, among other things, a deed of trust, assignment of leases and rents, security agreement and fixture filing encumbering two office buildings, 608 apartment units and over 95,000 square feet of retail at the Company’s One Paseo mixed-use campus in Del Mar, California. The Loan matures on August 10, 2034, bears interest at an annual rate of 5.90% and requires monthly interest payments only, commencing on September 10, 2023. In addition, the Operating Partnership has entered into a guaranty in favor of the lender in connection with the Loan. The Loan is generally non-recourse to the Operating Partnership, but the lender has recourse to the Operating Partnership for certain recourse exceptions.
Debt Composition
The composition of the Operating Partnership’s aggregate debt balances between secured and unsecured and fixed-rate and variable-rate debt as of September 30, 2023 and December 31, 2022 was as follows:

| Percentage of Total Debt (1) |  | Weighted Average Interest Rate (1)
| September 30, 2023 (2) |  | December 31, 2022 |  | September 30, 2023 (2) |  | December 31, 2022
Secured vs. unsecured: |  |  |  |  |  |  |
Unsecured | 87.6 | % |  | 94.3 | % |  | 4.0 | % |  | 3.7 | %
Secured | 12.4 | % |  | 5.7 | % |  | 5.1 | % |  | 3.9 | %
Variable-rate vs. fixed-rate: |  |  |  |  |  |  |
Variable-rate | 10.5 | % |  | 4.7 | % |  | 6.4 | % |  | 5.2 | %
Fixed-rate (3) | 89.5 | % |  | 95.3 | % |  | 3.8 | % |  | 3.7 | %
Stated rate (3) |  |  |  |  | 4.1 | % |  | 3.7 | %
GAAP effective rate (4) |  |  |  |  | 4.1 | % |  | 3.8 | %
GAAP effective rate including debt issuance costs |  |  |  |  | 4.3 | % |  | 4.0 | %

________________________
(1) As of the end of the period presented.
(2) As of September 30, 2023, there was no outstanding balance on the unsecured revolving credit facility.
(3) Excludes the impact of the amortization of any debt discounts/premiums and deferred financing costs.
(4) Includes the impact of amortization of any debt discounts/premiums, excluding deferred financing costs.
47

Liquidity Uses
Contractual Obligations
Refer to our 2022 Annual Report on Form 10-K for a discussion of our contractual obligations. There have been no material changes outside of the ordinary course of business to these contractual obligations during the nine months ended September 30, 2023 other than the mortgage loan discussed under “Liquidity Sources – Unsecured and Secured Debt.”
Other Liquidity Uses
Development
The following table summarizes our development spending directly related to our operating, development and redevelopment properties as of September 30, 2023:

Development Phase |  | Number of Projects |  | Total Estimated Investment (1) |  | Total Costs Incurred |  | Remaining Investment (2) |  | Remaining Costs to be Spent in 2023
|  |  |  | (in millions)
Stabilized |  | 2 |  | $ | 200 |  |  | $ | 178 |  |  | $ | 22 |  |  | $5 | to | $10
Tenant Improvement (3) |  | 1 |  | 690 |  |  | 653 |  |  | 37 |  |  | 5 | to | 10
Under Construction |  | 3 |  | 994 |  |  | 564 |  |  | 430 |  |  | 51 | to | 105
Total: |  | 6 |  | $ | 1,884 |  |  | $ | 1,395 |  |  | $ | 489 |  |  | $61 | to | $125

________________________
(1) For redevelopment projects, represents the incremental cost of redevelopment and excludes the existing depreciated basis of the buildings under redevelopment.
(2) Includes costs related to estimated tenant improvements.
(3) Represents projects that have reached cold shell condition and are ready for tenant improvements, which may require additional major base building construction before being placed in service.
The ultimate timing of these expenditures may fluctuate given construction progress and leasing status of the projects, or as a result of events outside our control, such as delays or increased costs as a result of heightened inflation and market conditions. We expect that any material additional development activities will be funded with borrowings under the unsecured revolving credit facility, the unsecured term loan facility, the public or private issuance of debt or equity securities, the disposition of assets under our capital recycling program, or strategic venture opportunities. We cannot provide assurance that development projects will be completed on the terms, for the amounts or on the timelines currently contemplated, or at all.
Debt Maturities
We believe our conservative leverage, staggered debt maturities, unsecured term loan facility and our unsecured revolving credit facility provide us with financial flexibility and enhance our ability to obtain additional sources of liquidity if necessary, and, therefore, we believe we are well-positioned to refinance or repay maturing debt and to pursue our strategy of seeking attractive acquisition opportunities, which we may finance, as necessary, with future public and private issuances of debt and equity securities. However, we can provide no assurance that we will have access to the public or private debt or equity markets in the future on favorable terms or at all. Excluding our unsecured term loan facility maturing in October 2024, for which we have two twelve-month extension options, our next debt maturity occurs in December 2024. We may, however, repurchase our outstanding debt (including our unsecured senior notes) from time to time prior to maturity (depending on prevailing market conditions, our liquidity, contractual restrictions and other factors) through cash purchases, open-market purchases, privately negotiated transactions, tender offers or otherwise.
In August 2023, the Company completed open-market repurchases of $14.3 million of the Operating Partnership’s 3.45% $425.0 million unsecured senior notes due December 15, 2024 at a discount, leaving an aggregate remaining principal balance of $410.7 million.
48

Potential Future Acquisitions
As discussed in the section “Factors That May Influence Future Results of Operations - Acquisitions,” we continue to evaluate strategic opportunities and remain a disciplined buyer of development and redevelopment opportunities as well as value-add and strategic operating properties, dependent on market conditions and business cycles, among other factors. We focus on growth opportunities primarily in markets populated by knowledge and creative based tenants in a variety of industries, including technology, media, healthcare, life sciences, entertainment and professional services. We expect that any material acquisitions will be funded with borrowings under the unsecured revolving credit facility and unsecured term loan facility, the public or private issuance of debt or equity securities, the disposition of assets under our capital recycling program, the formation of strategic ventures or through the assumption of existing debt, although there can be no assurance in this regard.
We cannot provide assurance that we will enter into any agreements to acquire properties or undeveloped land, or that potential acquisitions contemplated by any agreements we may enter into in the future will be completed.
Share Repurchases
As of September 30, 2023, 4,935,826 shares remained eligible for repurchase under a share repurchase program approved by the Company’s Board of Directors in 2016. Under this program, repurchases may be made in open market transactions at prevailing prices or through privately negotiated transactions. We may elect to repurchase shares of our common stock under this program in the future depending upon various factors, including market conditions, the trading price of our common stock and our other uses of capital. This program does not have a termination date and repurchases may be discontinued at any time. We intend to fund repurchases, if any, primarily with the proceeds from property dispositions.
Potential Future Leasing Costs and Capital Improvements
The amounts we incur for tenant improvements and leasing costs depend on leasing activity in each period. Tenant improvements and leasing costs generally fluctuate in any given period depending on factors such as the type and condition of the property, the term of the lease, the type of the lease, the involvement of external leasing agents, and overall market conditions, including the level of inflation. Capital expenditures may fluctuate in any given period subject to the nature, extent and timing of improvements required to maintain our properties and may be impacted by inflationary pressures on the cost of construction materials. Additionally, due to the uncertainty around current economic market conditions and companies utilizing hybrid/remote work arrangements, there may be a continued lower level of leasing activity as compared to historical trends.
49

Factors That May Influence Future Sources of Capital and Liquidity of the Company and the Operating Partnership
We continue to evaluate sources of financing for our business activities, including borrowings under the unsecured revolving credit facility, the unsecured term loan facility, issuance of public and private equity securities, unsecured debt and fixed-rate secured mortgage financing, proceeds from the disposition of selective assets through our capital recycling program, and the formation of strategic ventures. However, our ability to obtain new financing or refinance existing borrowings on favorable terms could be impacted by various factors, including the state of the macro economy, the state of the credit and equity markets, significant tenant defaults, a decline in the demand for office properties, a decrease in market rental rates or market values of real estate assets in our submarkets, the amount of our future borrowings and uncertainty related to interest rates, inflation rates, geopolitical events (including the military conflicts between Russia and Ukraine as well as Israel and Gaza) and other factors (refer to “Part I, Item IA. Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2022 for additional information). These events could result in the following:
•Decreases in our cash flows from operations, which could create further dependence on the unsecured revolving credit facility;
•An increase in the proportion of variable-rate debt, which could increase our sensitivity to interest rate fluctuations in the future; and
•A decrease in the value of our properties, which could have an adverse effect on the Operating Partnership’s ability to incur additional debt, refinance existing debt at competitive rates, or comply with its existing debt obligations.
In addition to the factors noted above, the Operating Partnership’s credit ratings are subject to ongoing evaluation by credit rating agencies and may be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. In the event that the Operating Partnership’s credit ratings are downgraded, we may incur higher borrowing costs and may experience difficulty in obtaining additional financing or refinancing existing indebtedness.
Debt Covenants
The unsecured revolving credit facility, unsecured term loan facility, unsecured senior notes, and certain other secured debt arrangements contain covenants and restrictions requiring us to meet certain financial ratios and reporting requirements. Key existing financial covenants and their covenant levels include:

Unsecured Revolving Credit Facility, Unsecured Term Loan Facility and Private Placement Notes (as defined in the applicable Credit Agreements): |  | Covenant Level |  | Actual Performance as of September 30, 2023
Total debt to total asset value |  | less than 60% |  | 28%
Fixed charge coverage ratio |  | greater than 1.5x |  | 3.7x
Unsecured debt ratio |  | greater than 1.67x |  | 3.56x
Unencumbered asset pool debt service coverage |  | greater than 1.75x |  | 4.11x
Unsecured Senior Notes due 2024, 2025, 2028, 2029, 2030, 2032 and 2033 (as defined in the applicable Indentures): |  |  |  |
Total debt to total asset value |  | less than 60% |  | 39%
Interest coverage |  | greater than 1.5x |  | 7.1x
Secured debt to total asset value |  | less than 40% |  | 5%
Unencumbered asset pool value to unsecured debt |  | greater than 150% |  | 268%

The Operating Partnership was in compliance with all of its debt covenants as of September 30, 2023. Our current expectation is that the Operating Partnership will continue to meet the requirements of its debt covenants in both the short and long term. However, in the event of an economic slowdown or continued volatility in the credit markets, there is no certainty that the Operating Partnership will be able to continue to satisfy all the covenant requirements.
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Consolidated Historical Cash Flow Summary
The following summary discussion of our consolidated historical cash flow is based on the consolidated statements of cash flows in Item 1. “Financial Statements” and is not meant to be an all-inclusive discussion of the changes in our cash flow for the periods presented below. Changes in our cash flow include changes in cash and cash equivalents and restricted cash. Our historical cash flow activity for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 is as follows:

| Nine Months Ended September 30,
| 2023 |  | 2022 |  | Dollar Change |  | Percentage Change
| ($ in thousands) |  |
Net cash provided by operating activities | $ | 492,366 |  |  | $ | 484,230 |  |  | $ | 8,136 |  |  | 1.7 | %
Net cash used in investing activities | (660,477) |  |  | (406,854) |  |  | (253,623) |  |  | 62.3 | %
Net cash provided by (used in) financing activities | 439,526 |  |  | (241,469) |  |  | 680,995 |  |  | (282.0) | %
Net increase (decrease) in cash and cash equivalents | $ | 271,415 |  |  | $ | (164,093) |  |  | $ | 435,508 |  |  | (265.4) | %

Operating Activities
Our cash flows from operating activities depends on numerous factors including the occupancy level of our portfolio, the rental rates achieved on our leases, the collectability of rent and recoveries from our tenants, the level of operating expenses, the impact of property acquisitions, completed development projects and related financing activities, and other general and administrative costs. Our net cash provided by operating activities increased by $8.1 million, or 1.7%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily as result of an increase in cash Net Operating Income generated from stabilized development properties in our Development Portfolio and cash rents received during the nine months ended September 30, 2023 from tenants who had free rent and beneficial occupancy periods during the nine months ended September 30, 2022, partially offset by net changes in other operating liabilities related to the timing of expenditures. See additional information under the caption “—Results of Operations.”
Investing Activities
Our cash flows from investing activities is generally used to fund development and operating property acquisitions, expenditures for development and redevelopment projects, and recurring and nonrecurring capital expenditures for our operating properties, net of proceeds received from dispositions of real estate assets. During the nine months ended September 30, 2023, our net cash used in investing activities increased by $253.6 million or 62.3% compared the nine months ended September 30, 2022 primarily due to purchases of certificates of deposit during the nine months ended September 30, 2023.
Financing Activities
Our cash flows from financing activities is principally impacted by our capital raising activities, net of dividends and distributions paid to common stockholders and common unitholders. During the nine months ended September 30, 2023, we had net cash provided by financing activities of $439.5 million compared to net cash used in financing activities of $241.5 million during the nine months ended September 30, 2022 primarily as a result of borrowing $320.0 million on the unsecured term loan facility and entering into the $375.0 million mortgage loan during the nine months ended September 30, 2023. We did not draw on any debt facilities or complete any significant debt transactions during the nine months ended September 30, 2022.
51

Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting periods. We base our estimates on historical experience, current market conditions, and various other assumptions that are believed to be reasonable under the circumstances. Actual results could materially differ from these estimates.
In our Annual Report on Form 10-K for the year ended December 31, 2022, we identified certain critical accounting policies that affect certain of our more significant estimates and assumptions used in preparing our consolidated financial statements. We have not made any material changes to our critical accounting policies and estimates during the period covered by this report.
Non-GAAP Supplemental Financial Measure: Funds From Operations (“FFO”)
We calculate FFO in accordance with the 2018 Restated White Paper on FFO approved by the Board of Governors of Nareit. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders.
We believe that FFO is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.
Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide.
However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.
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The following table presents our FFO for the three and nine months ended September 30, 2023 and 2022:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in thousands)
Net income available to common stockholders | $ | 52,762 |  |  | $ | 79,757 |  |  | $ | 164,957 |  |  | $ | 179,990 |
Adjustments: |  |  |  |  |  |  |
Net income attributable to noncontrolling common units of the Operating Partnership | 515 |  |  | 664 |  |  | 1,612 |  |  | 1,695 |
Net income attributable to noncontrolling interests in consolidated property partnerships | 5,460 |  |  | 6,239 |  |  | 18,673 |  |  | 18,333 |
Depreciation and amortization of real estate assets | 83,518 |  |  | 79,410 |  |  | 263,662 |  |  | 261,129 |
Gain on sale of depreciable real estate | — |  |  | (17,329) |  |  | — |  |  | (17,329) |
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (8,208) |  |  | (9,084) |  |  | (27,045) |  |  | (27,042) |
Funds From Operations (1)(2) | $ | 134,047 |  |  | $ | 139,657 |  |  | $ | 421,859 |  |  | $ | 416,776 |

________________________
(1) Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(2) FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $4.9 million and $5.0 million for the three months ended September 30, 2023 and 2022, respectively, and $15.0 million and $14.2 million for the nine months ended September 30, 2023 and 2022, respectively.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information about our market risk is disclosed in “Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and is incorporated herein by reference. There have been no material changes for the nine months ended September 30, 2023, to the information provided in “Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
ITEM 4. CONTROLS AND PROCEDURES
Kilroy Realty Corporation
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures as of September 30, 2023, the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded, as of that time, the disclosure controls and procedures were effective at the reasonable assurance level.
There have been no changes that occurred during the period covered by this report in the Company’s internal control over financial reporting identified in connection with the evaluation referenced above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Kilroy Realty, L.P.
The Operating Partnership maintains disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the Operating Partnership’s reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer of its general partner, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), the Operating Partnership carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer of its general partner, of the effectiveness of the design and operation of the disclosure controls and procedures as of September 30, 2023, the end of the period covered by this report. Based on the foregoing, the Chief Executive Officer and Chief Financial Officer of its general partner concluded, as of that time, the disclosure controls and procedures were effective at the reasonable assurance level.
There have been no changes that occurred during the period covered by this report in the Operating Partnership’s internal control over financial reporting identified in connection with the evaluation referenced above that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We and our properties are subject to routine litigation incidental to our business. These matters are generally covered by insurance. As of September 30, 2023, we are not a defendant in, and our properties are not subject to, any legal proceedings that we believe, if determined adversely to us, would have a material adverse effect upon our financial condition, results of operations or cash flows.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors included in the Company’s and the Operating Partnership’s annual report on Form 10-K for the year ended December 31, 2022, other than as set forth below, which supplements the risk factors included in the Company’s and the Operating Partnership’s annual report on Form 10-K for the year ended December 31, 2022.
We could be adversely affected by labor disputes, strikes or other union job actions. If workers providing services at our properties were to engage in a strike or other work stoppage or interruption, our business, results of operations, financial condition and liquidity could be materially adversely affected. Although we believe that our relations with our service providers are good, if disputes with our service providers arise or if workers providing services at our properties engage in a strike or other work stoppage or interruption, we could experience a significant disruption of, or inefficiencies in, our operations or at our properties or incur higher labor costs, which could have a material adverse effect on our business, results of operations,
financial condition and liquidity.
Some of our tenants employ the services of writers, directors, actors and other talent as well as trade employees and others who are subject to collective bargaining agreements in the entertainment industry. If expiring collective bargaining agreements cannot be renewed, then it is possible that the affected unions could take action in the form of strikes or work stoppages. Such actions, including episodic strikes in the entertainment industry, as well as higher costs or operating complexities in connection with these collective bargaining agreements or a significant labor dispute, could have an adverse effect on our tenants’ businesses by causing delays in production, added costs or by reducing profit margins, which in turn could adversely affect our ability to collect rent from those tenants and potentially the markets in which our properties are located.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) Recent Sales of Unregistered Securities: None.
(b) Use of Proceeds from Registered Securities: None.
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers:
The table below reflects our purchases of common stock during each of the three months in the three-month period ended
September 30, 2023.

Period |  | Total Number of Shares of Stock Purchased (1) |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Maximum Number (or Approximate Dollar Value) that May Yet be Purchased Under the Plans or Programs
July 1, 2023 - July 31, 2023 |  | — |  |  | $ | — |  |  | — |  |  | — |
August 1, 2023 - August 31, 2023 |  | — |  |  | — |  |  | — |  |  | — |
September 1, 2023 - September 30, 2023 |  | 53,842 |  |  | 35.13 |  |  | — |  |  | — |
Total |  | 53,842 |  |  | $ | 35.13 |  |  | — |  |  | — |

________________________
(1)Represents shares of common stock remitted to the Company to satisfy tax withholding obligations in connection with the distribution of, or the vesting and distribution of, restricted stock units or restricted stock in shares of common stock. The value of such shares of common stock remitted to the Company was based on the closing price of the Company’s common stock on the applicable withholding date.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
(a).None
(b).None
(c).During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each such term is defined in Item 408(a) of Regulation S-K.
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ITEM 6. EXHIBITS

Exhibit Number |  | Description
3.(i)1 |  | Articles of Amendment and Restatement of Kilroy Realty Corporation (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May 21, 2020)
3.(i)2 |  | Certificate of Limited Partnership of Kilroy Realty, L.P. (previously filed by Kilroy Realty, L.P., as an exhibit to the General Form for Registration of Securities on Form 10 as filed with the Securities and Exchange Commission on August 18, 2010)
3.(i)3 |  | Amendment to the Certificate of Limited Partnership of Kilroy Realty, L.P. (previously filed by Kilroy Realty, L.P., as an exhibit to the General Form for Registration of Securities on Form 10 as filed with the Securities and Exchange Commission on August 18, 2010)
3.(i)4 |  | Articles Supplementary reclassifying shares of the Series G Preferred Stock of the Company (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on August 23, 2017)
3.(i)5 |  | Articles Supplementary reclassifying shares of the Series H Preferred Stock of the Company (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on August 23, 2017)
3.(ii)1 |  | Seventh Amended and Restated Bylaws of Kilroy Realty Corporation (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May 20, 2021)
3.(ii)2 |  | Seventh Amended and Restated Agreement of Limited Partnership of Kilroy Realty, L.P. dated as of August 15, 2012, as amended (previously filed by Kilroy Realty Corporation on Form 10-Q for the quarter ended June 30, 2014)
10.1* |  | Promissory Note dated as of July 20, 2023
10.2* |  | Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of July 20, 2023
10.3* |  | Guaranty dated as of July 20, 2023
10.4* |  | Multipurpose Side Letter dated as of July 20, 2023
31.1* |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty Corporation
31.2* |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty Corporation
31.3* |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty, L.P.
31.4* |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty, L.P.
32.1* |  | Section 1350 Certification of Chief Executive Officer of Kilroy Realty Corporation
32.2* |  | Section 1350 Certification of Chief Financial Officer of Kilroy Realty Corporation
32.3* |  | Section 1350 Certification of Chief Executive Officer of Kilroy Realty, L.P.
32.4* |  | Section 1350 Certification of Chief Financial Officer of Kilroy Realty, L.P.
101.1 |  | The following Kilroy Realty Corporation and Kilroy Realty, L.P. financial information for the quarter ended September 30, 2023, formatted in inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Equity (unaudited), (iv) Consolidated Statements of Capital (unaudited), (v) Consolidated Statements of Cash Flows (unaudited) and (vi) Notes to the Consolidated Financial Statements (unaudited).(1)
104.1* |  | Cover Page Interactive Data File - The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

_______________

* | Filed herewith.
† | Management contract or compensatory plan or arrangement.
(1) | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on October 26, 2023.

KILROY REALTY CORPORATION
| By: | /s/ John Kilroy
|  | John Kilroy Chief Executive Officer (Principal Executive Officer)
| By: | /s/ Eliott Trencher
|  | Eliott Trencher Executive Vice President, Chief Financial Officer and Chief Investment Officer (Principal Financial Officer)
| By: | /s/ Merryl E. Werber
|  | Merryl E. Werber Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)

58

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on October 26, 2023.

KILROY REALTY, L.P.
BY: | KILROY REALTY CORPORATION
| Its general partner
| By: | /s/ John Kilroy
|  | John Kilroy Chief Executive Officer (Principal Executive Officer)
| By: | /s/ Eliott Trencher
|  | Eliott Trencher Executive Vice President, Chief Financial Officer and Chief Investment Officer (Principal Financial Officer)
| By: | /s/ Merryl E. Werber
|  | Merryl E. Werber Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)

59