Kilroy Realty Corporation Reports First Quarter Financial Results

Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its first quarter ended March 31, 2009 with net income available to common stockholders of $7.6 million, or $0.23 per share, compared to $8.8 million, or $.27 per share, in the first quarter of 2008. Revenues in the first quarter totaled $72.5 million, up from $70.8 million in the prior year's first quarter. Funds from operations (FFO) for the period totaled $29.0 million, or $0.82 per share, compared to $29.0 million, or $0.83 per share, in the year-earlier period.

All per-share amounts in this report are presented on a diluted basis. Financial information for the prior period has been adjusted for the retroactive application of the following new accounting guidance adopted by the company effective January 1, 2009: FASB Staff Position APB 14-1 "Accounting for Convertible Debt That May be Settled Upon Conversion (Including Partial Cash Settlement)”; Statement of Financial Accounting Standard No. 160 "Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51”; and FASB Staff Position EITF 03-6-1 "Determining Whether Instruments Granted in Share Based Payment Transactions are Participating Securities.”

"With many companies dealing with difficult credit markets and recessionary business conditions, leasing continues to be challenging,” said John B. Kilroy, Jr., the company's president and chief executive officer. "While these conditions prevail, we remain carefully focused at KRC on preserving our financial strength and aggressively competing for new lease opportunities, using our high quality and well located properties to their best competitive advantage.”

KRC’s stabilized portfolio totaled 12.4 million square feet and was 87.6% occupied at the end of the first quarter.

On April 1, 2009, the company executed a one-year extension of a $74.8 million secured mortgage loan with the existing lender at the existing interest rate of 7.2%. The company paid down the principal amount $10 million to $64.8 million.

KRC currently has one completed development project in lease-up, a 51,000 square-foot medical office building located in the company’s Sorrento Gateway development in coastal San Diego County. The property represents a total investment of just over $22 million, of which about $16 million has been spent to date.

KRC management will discuss updated earnings guidance for fiscal 2009 during the company's April 28, 2009 earnings conference call. The call will begin at 11:00 a.m. Pacific time and last approximately one hour. Those interested in listening via the Internet can access the conference call at www.kilroyrealty.com. Please go to the website 15 minutes before the call and register. It may be necessary to download audio software to hear the conference call. Those interested in listening via telephone can access the conference call at (888) 679-8040, reservation #39866884. A replay of the conference call will be available via phone through May 12, 2009 at (888) 286-8010, reservation #76273510, or via the Internet at the company's website.

Some of the information presented in this release is forward looking in nature within the meaning of the Private Securities Litigation Reform Act of 1995. Although Kilroy Realty Corporation believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that its expectations will be achieved. Certain factors that could cause actual results to differ materially from Kilroy Realty's expectations are set forth as risk factors in the company's Securities and Exchange Commission reports and filings. Included among these factors are changes in general economic conditions, including changes in the economic conditions affecting industries in which its principal tenants compete; Kilroy Realty's ability to timely lease or re-lease space at current or anticipated rents; changes in interest rates; changes in operating costs, including utility costs; future demand for its debt and equity securities; its ability to refinance its debt on reasonable terms at maturity; its ability to complete current and future development projects on schedule and on budget; the demand for office space in markets in which Kilroy Realty has a presence; and risks detailed from time to time in the company's SEC reports, including quarterly reports on Form 10-Q, current reports on Form 8-K and annual reports on Form 10-K. Many of these factors are beyond Kilroy Realty's ability to control or predict. Forward-looking statements are not guarantees of performance. For forward-looking statements herein, Kilroy Realty claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Kilroy Realty Corporation, a member of the S&P Small Cap 600 Index, is a Southern California-based real estate investment trust active in the office and industrial property sectors. For over 60 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of Los Angeles, Orange and San Diego counties. At March 31, 2009, the company owned 8.6 million rentable square feet of commercial office space and 3.7 million rentable square feet of industrial space. More information is available at www.kilroyrealty.com.