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8-K

Kilroy Realty Corp (KRC)

8-K 2020-04-30 For: 2020-04-29
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Added on April 11, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 29, 2020

KILROY REALTY CORPORATION

(Exact name of registrant as specified in its charter)

Maryland 001-12675 95-4598246
(State or other jurisdiction of<br><br>incorporation or organization) (Commission File No.) (I.R.S. Employer<br><br>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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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. ☐

Item 2.02    Results of Operations and Financial Condition.

On April 29, 2020, Kilroy Realty Corporation issued a press release announcing its earnings for the quarter ended March 31, 2020 and distributed certain supplemental financial information. On April 29, 2020, Kilroy Realty Corporation also posted the supplemental information on its website located at www.kilroyrealty.com. The text of the supplemental information and the related press release are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference herein.

Exhibits 99.1 and 99.2 are being furnished pursuant to Item 2.02 and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act regardless of any general incorporation language in such filing.

Item 7.01    Regulation FD Disclosure.

As discussed in Item 2.02 above, Kilroy Realty Corporation issued a press release announcing its earnings for the quarter ended March 31, 2020 and distributed certain supplemental information. On April 29, 2020, Kilroy Realty Corporation also posted the supplemental information on its website located at www.kilroyrealty.com.

The information being furnished pursuant to Item 7.01 shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act regardless of any general incorporation language in such filing.

Item 9.01    Financial Statements and Exhibits.

(a) Financial statements of businesses acquired: None.
(b) Pro forma financial information: None.
(c) Shell company transactions: None.
(d) Exhibits:

The following exhibits are furnished with this Current Report on Form 8-K:

Exhibit No. Description
99.1** Supplemental Operating and Financial Data for the quarter ended March 31, 2020
99.2** Press Release dated April 29, 2020 regarding first quarter 2020 earnings
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

_______________

**    Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Kilroy Realty Corporation
Date: April 29, 2020
By: /s/ Merryl E. Werber
Merryl E. Werber<br><br>Senior Vice President,<br><br>Chief Accounting Officer and Controller 
		Exhibit

Exhibit 99.1

q120supplementalcoverpagea02.jpg

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Table of Contents

Page
Corporate Data and Financial Highlights
Company Background 1
Executive Summary 2
Financial Highlights 3
Common Stock Data 4
Consolidated Balance Sheets 5
Consolidated Statements of Operations 6
Funds From Operations and Funds Available for Distribution 7-8
Net Operating Income 9
Portfolio Data
Same Store Analysis 10
Stabilized Portfolio Occupancy Overview by Region 11-15
Information on Leases Commenced & Leases Executed 16
Stabilized Portfolio Capital Expenditures 17
Stabilized Portfolio Lease Expirations 18-20
Top Fifteen Tenants 21
Consolidated Ventures (Noncontrolling Property Partnerships) 22
Development
Stabilized Office Development Projects & Completed Residential Development Projects 23
In-Process Development 24
Future Development Pipeline 25
Debt and Capitalization Data
Capital Structure 26
Debt Analysis 27-28
Non-GAAP Supplemental Measures 29-31
Definitions & Reconciliations 32-35

This Supplemental Financial Report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, among other things, information concerning lease expirations, debt maturities, potential investments, development and redevelopment activity, projected construction costs, dispositions and other forward-looking financial data. In some instances, forward-looking statements can be identified by the use of forward-looking terminology such as “expect,” “future,” “will,” “would,” “pursue,” or “project” and variations of such words and similar expressions that do not relate to historical matters. Forward-looking statements are based on Kilroy Realty Corporation’s 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 Kilroy Realty Corporation’s 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 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 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; our ability to re-lease property at or above current market rates; 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; 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; our ability to maintain our status as a REIT; and uncertainties regarding the impact of the COVID-19 pandemic, and restrictions intended to prevent its spread, on our business and the economy generally. These factors 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 Kilroy Realty Corporation’s business and financial performance, see the factors included under the caption “Risk Factors” in Kilroy Realty Corporation’s quarterly report on Form 10-Q for the period ending March 31, 2020 to be filed on April 30, 2020 and in its annual report on Form 10-K for the year ended December 31, 2019, and its other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information and speak only as of the dates on which they are made. Kilroy Realty Corporation assumes no obligation to update any forward-looking statement made in this Supplemental Financial Report 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.

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Company Background

Kilroy Realty Corporation (NYSE: KRC), a publicly traded real estate investment trust and member of the S&P MidCap 400 Index, is one of the West Coast’s premier landlords. The Company has over seven decades of experience developing, acquiring and managing office and mixed-use real estate assets. At March 31, 2020, the Company’s stabilized portfolio totaled approximately 14.3 million square feet of primarily office and life science space that was 93.5% occupied and 97.3% leased located in the coastal regions of Los Angeles, San Diego, the San Francisco Bay Area and Greater Seattle and 200 residential units located in the Hollywood submarket of Los Angeles.

Board of Directors Executive Management Team Investor Relations
John Kilroy Chairman John Kilroy President and CEO 12200 W. Olympic Blvd., Suite 200<br><br>Los Angeles, CA 90064<br><br>(310) 481-8400<br><br>Web: www.kilroyrealty.com<br><br>E-mail: investorrelations@kilroyrealty.com
Edward F. Brennan, PhD Lead Independent Jeffrey C. Hawken Executive VP and COO
Jolie Hunt Robert Paratte Executive VP, Leasing and Business Development
Scott S. Ingraham Tyler H. Rose Executive VP and CFO
Gary R. Stevenson Heidi R. Roth Executive VP and Chief Administrative Officer
Peter B. Stoneberg Justin W. Smart Executive VP, Development and Construction Services Equity Research Coverage
--- --- --- ---
BofA Securities J.P. Morgan
James Feldman (646) 855-5808 Anthony Paolone (212) 622-6682
BMO Capital Markets Corp. KeyBanc Capital Markets
John P. Kim (212) 885-4115 Craig Mailman (917) 368-2316
BTIG Mizuho Securities USA LLC
Thomas Catherwood (212) 738-6140 Omotayo Okusanya (646) 949-9672
Citigroup Investment Research RBC Capital Markets
Michael Bilerman (212) 816-1383 Mike Carroll (440) 715-2649
Deutsche Bank Securities, Inc. Robert W. Baird & Co.
Derek Johnston (210) 250-5683 David B. Rodgers (216) 737-7341
Evercore ISI Scotiabank
Steve Sakwa (212) 446-9462 Nicholas Yulico (212) 225-6904
Goldman Sachs & Co. LLC Stifel, Nicolaus & Company
Richard Skidmore (801) 741-5459 John W. Guinee III (443) 224-1307
Green Street Advisors Wells Fargo
Daniel Ismail (949) 640-8780 Blaine Heck (443) 263-6529
Jefferies LLC
Peter Abramowitz (212) 336-7241

Kilroy Realty Corporation is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Kilroy Realty Corporation’s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Kilroy Realty Corporation or its management. Kilroy Realty Corporation does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.

1

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Executive Summary

Quarterly Financial Highlights
• Net income available to common stockholders per share of 0.37
• FFO per share of 1.00
• The per share amounts above include a reduction in revenue of approximately 0.06 per
share related to the cumulative impact of transitioning one co-working tenant and two
retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic
• Revenues of 221.3 million, net of a 6.5 million reduction of revenue as noted above
• Same Store GAAP NOI decreased 0.2% compared to the prior year
• Same Store Cash NOI increased 14.9% compared to the prior year
• Due to the uncertainty resulting from the COVID-19 pandemic, the Company is
withdrawing its previous full year 2020 guidance
Capital Markets Highlights
• In February, completed a public offering of 5,750,000 shares of common stock priced at
86.00 per share structured as a 12-month forward sale. In March, fully physically settled
these shares for net proceeds of approximately 474.9 million
• In March, fully physically settled 3,147,110 shares of common stock in connection with
forward transactions under the ATM program for net proceeds of approximately 247.3
million
• In April, completed a private placement of 350.0 million aggregate principal amount of
ten-year, 4.27% unsecured senior notes due 2031
• As of the date of this report, approximately 1.0 billion of unrestricted cash on hand and
370.0 million of availability under the unsecured revolving credit facility

All values are in US Dollars.

________________________

Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 32-33 “Definitions Included in Supplemental.”

2

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Financial Highlights

(unaudited, $ in thousands, except per share amounts) Three Months Ended
3/31/2020 ^(1)^ 12/31/2019^(1)^ 9/30/2019 6/30/2019^(1)^ 3/31/2019
INCOME ITEMS:
Revenues $ 221,328 $ 220,235 $ 215,525 $ 200,492 $ 201,202
Lease Termination Fees, net 60 — — 1,824 1,888
Net Operating Income ^(2)^ 157,826 154,679 152,170 141,916 142,442
Capitalized Interest and Debt Costs 21,418 20,339 20,585 20,880 19,437
Net Income Available to Common Stockholders 39,817 72,500 43,846 42,194 36,903
EBITDA, as adjusted ^(2) (3)^ 134,232 131,734 129,163 120,025 119,172
Funds From Operations^(3) (4)^ 110,173 109,518 109,243 99,905 99,812
Net Income Available to Common Stockholders per common share – diluted^(5)^ $ 0.37 $ 0.67 $ 0.41 $ 0.41 $ 0.36
Funds From Operations per common share – diluted^(3) (4)^ $ 1.00 $ 1.00 $ 1.01 $ 0.95 $ 0.95
LIQUIDITY ITEMS:
Funds Available for Distribution ^(4)^ $ 84,899 $ 65,443 $ 65,078 $ 52,369 $ 65,934
Dividends per common share ^(5)^ $ 0.485 $ 0.485 $ 0.485 $ 0.485 $ 0.455
RATIOS:
Net Operating Income Margins 71.3 % 70.2 % 70.6 % 70.8 % 70.8 %
Fixed Charge Coverage Ratio 3.9x 4.0x 4.2x 3.9x 4.0x
FFO Payout Ratio 51.5 % 47.8 % 48.0 % 50.0 % 46.9 %
FAD Payout Ratio 66.9 % 80.1 % 80.5 % 95.4 % 71.1 %
ASSETS:
Real Estate Held for Investment before Depreciation $ 9,822,116 $ 9,628,773 $ 8,977,843 $ 8,824,558 $ 8,616,167
Total Assets 9,735,147 8,900,094 8,623,815 8,094,721 7,883,987
CAPITALIZATION: ^(6)^
Total Debt $ 3,713,236 $ 3,579,502 $ 3,334,967 $ 3,210,427 $ 3,020,882
Total Common Equity and Noncontrolling Interests in the Operating Partnership 7,458,583 9,064,520 8,414,862 7,602,085 7,823,144
Total Market Capitalization 11,171,819 12,644,022 11,749,829 10,812,512 10,844,026
Total Debt / Total Market Capitalization 33.2 % 28.3 % 28.4 % 29.7 % 27.9 %

______________________________________________________

Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 32-33 “Definitions Included in Supplemental.”

(1) Net Income Available to Common Stockholders includes a reduction in revenue of $6.5 million related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic for the three months ended March 31, 2020 and $29.6 million and $7.2 million of gains on sale of depreciable operating properties for the three months ended December 31, 2019 and June 30, 2019, respectively.
(2) Please refer to pages 34-35 for reconciliations of GAAP Net Income Available to Common Stockholders to Net Operating Income and EBITDA, as adjusted. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by NAREIT, as the Company does not have any unconsolidated joint ventures.
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(3) EBITDA, as adjusted, and Funds From Operations include a reduction in revenue of $6.5 million related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic for the three months ended March 31, 2020.
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(4) Please refer to page 7 for reconciliations of GAAP Net Income Available to Common Stockholders to Funds From Operations available to common stockholders and unitholders and Funds Available for Distribution to common stockholders and unitholders and page 8 for a reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution to common stockholders and unitholders.
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(5) Reported amounts are attributable to common stockholders, common unitholders and restricted stock unit holders.
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(6) Please refer to page 26 for additional information regarding our capital structure.
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3

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Common Stock Data (NYSE: KRC)

Three Months Ended
3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
High Price $ 88.28 $ 84.50 $ 80.06 $ 78.36 $ 76.50
Low Price $ 49.01 $ 76.35 $ 74.25 $ 72.87 $ 61.44
Closing Price $ 63.70 $ 83.90 $ 77.89 $ 73.81 $ 75.96
Dividends per share – annualized $ 1.94 $ 1.94 $ 1.94 $ 1.94 $ 1.82
Closing common shares (in 000’s) ^(1)^ 115,068 106,016 106,012 100,972 100,967
Closing common partnership units (in 000’s) ^(1)^ 2,021 2,023 2,023 2,023 2,023
117,089 108,039 108,035 102,995 102,990

________________________

(1) As of the end of the period.

4

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Consolidated Balance Sheets

(unaudited, $ in thousands) 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
ASSETS:
Land and improvements $ 1,506,357 $ 1,466,166 $ 1,315,448 $ 1,284,582 $ 1,184,496
Buildings and improvements 5,997,523 5,866,477 5,770,226 5,712,448 5,300,313
Undeveloped land and construction in progress 2,318,236 2,296,130 1,892,169 1,827,528 2,131,358
Total real estate assets held for investment 9,822,116 9,628,773 8,977,843 8,824,558 8,616,167
Accumulated depreciation and amortization (1,622,369 ) (1,561,361 ) (1,505,785 ) (1,480,766 ) (1,441,506 )
Total real estate assets held for investment, net 8,199,747 8,067,412 7,472,058 7,343,792 7,174,661
Real estate assets and other assets held for sale, net — — 77,751 — —
Cash and cash equivalents 762,134 60,044 297,620 52,415 49,693
Restricted cash 16,300 16,300 6,300 6,300 6,300
Marketable securities 19,984 27,098 26,188 25,203 24,098
Current receivables, net 16,534 26,489 34,116 27,563 28,016
Deferred rent receivables, net 352,352 337,937 314,812 297,358 280,756
Deferred leasing costs and acquisition-related intangible assets, net 204,392 212,805 202,063 203,451 187,309
Right of use ground lease assets 96,145 96,348 83,200 82,647 82,794
Prepaid expenses and other assets, net 67,559 55,661 109,707 55,992 50,360
TOTAL ASSETS $ 9,735,147 $ 8,900,094 $ 8,623,815 $ 8,094,721 $ 7,883,987
LIABILITIES AND EQUITY:
Liabilities:
Secured debt, net $ 257,359 $ 258,593 $ 259,027 $ 259,455 $ 259,878
Unsecured debt, net 3,050,103 3,049,185 3,048,209 2,553,651 2,552,883
Unsecured line of credit 380,000 245,000 — 375,000 185,000
Accounts payable, accrued expenses and other liabilities 417,547 418,848 439,081 385,567 373,691
Ground lease liabilities 98,247 98,400 87,617 87,082 87,247
Accrued dividends and distributions 57,620 53,219 53,205 50,800 47,676
Deferred revenue and acquisition-related intangible liabilities, net 130,843 139,488 134,828 136,266 138,973
Rents received in advance and tenant security deposits 65,913 66,503 57,428 59,997 55,457
Liabilities and deferred revenue of real estate assets held for sale — — 4,911 — —
Total liabilities 4,457,632 4,329,236 4,084,306 3,907,818 3,700,805
Equity:
Stockholders’ Equity
Common stock 1,151 1,060 1,060 1,010 1,010
Additional paid-in capital 5,067,181 4,350,917 4,342,296 3,984,867 3,976,204
Distributions in excess of earnings (76,182 ) (58,467 ) (78,707 ) (70,345 ) (62,690 )
Total stockholders’ equity 4,992,150 4,293,510 4,264,649 3,915,532 3,914,524
Noncontrolling Interests
Common units of the Operating Partnership 87,655 81,917 81,393 78,463 78,413
Noncontrolling interests in consolidated property partnerships 197,710 195,431 193,467 192,908 190,245
Total noncontrolling interests 285,365 277,348 274,860 271,371 268,658
Total equity 5,277,515 4,570,858 4,539,509 4,186,903 4,183,182
TOTAL LIABILITIES AND EQUITY $ 9,735,147 $ 8,900,094 $ 8,623,815 $ 8,094,721 $ 7,883,987

5

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Consolidated Statements of Operations

(unaudited, $ and shares in thousands, except per share amounts) Three Months Ended March 31,
2020 2019
REVENUES
Rental income ^(1)^ $ 218,633 $ 199,382
Other property income 2,695 1,820
Total revenues 221,328 201,202
EXPENSES
Property expenses 38,983 38,149
Real estate taxes 22,202 18,639
Ground leases 2,317 1,972
General and administrative expenses 19,010 23,341
Leasing costs 1,456 1,757
Depreciation and amortization 74,370 66,135
Total expenses 158,338 149,993
OTHER (EXPENSES) INCOME
Interest income and other net investment (loss) gain (3,128 ) 1,828
Interest expense (14,444 ) (11,243 )
Total other (expenses) income (17,572 ) (9,415 )
NET INCOME 45,418 41,794
Net income attributable to noncontrolling common units of the Operating Partnership (705 ) (700 )
Net income attributable to noncontrolling interests in consolidated property partnerships (4,896 ) (4,191 )
Total income attributable to noncontrolling interests (5,601 ) (4,891 )
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 39,817 $ 36,903
Weighted average common shares outstanding – basic 106,875 100,901
Weighted average common shares outstanding – diluted 107,390 101,443
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE
Net income available to common stockholders per share – basic $ 0.37 $ 0.36
Net income available to common stockholders per share – diluted $ 0.37 $ 0.36

________________________

(1) Rental income is presented net of reductions in revenue related to the creditworthiness of tenants. For the three months ended March 31, 2020, rental income includes a reduction in revenue of $6.5 million related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic.

6

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Funds From Operations and Funds Available for Distribution

(unaudited, $ in thousands, except per share amounts)

Three Months Ended March 31,
2020 2019
FUNDS FROM OPERATIONS: ^(1)^
Net income available to common stockholders $ 39,817 $ 36,903
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 705 700
Net income attributable to noncontrolling interests in consolidated property partnerships 4,896 4,191
Depreciation and amortization of real estate assets 72,438 64,971
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (7,683 ) (6,953 )
Funds From Operations ^(1)(2)^ $ 110,173 $ 99,812
Weighted average common shares/units outstanding – basic ^(3)^ 110,031 104,062
Weighted average common shares/units outstanding – diluted ^(4)^ 110,546 104,603
FFO per common share/unit – basic ^(1)^ $ 1.00 $ 0.96
FFO per common share/unit – diluted^(1)^ $ 1.00 $ 0.95
FUNDS AVAILABLE FOR DISTRIBUTION: ^(1)^
Funds From Operations ^(1)(2)^ $ 110,173 $ 99,812
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures (17,063 ) (21,583 )
Amortization of deferred revenue related to tenant-funded tenant improvements ^(2)(5)^ (5,002 ) (3,817 )
Net effect of straight-line rents (14,415 ) (16,511 )
Amortization of net below market rents ^(6)^ (2,586 ) (2,094 )
Amortization of deferred financing costs and net debt discount/premium 505 135
Non-cash executive compensation expense^(7)^ 7,159 7,584
Lease related adjustments, leasing costs and other ^(8)^ 3,461 35
Adjustments attributable to noncontrolling interests in consolidated property partnerships 2,667 2,373
Funds Available for Distribution ^(1)^ $ 84,899 $ 65,934

________________________

(1) See page 31 for Management Statements on Funds From Operations and Funds Available for Distribution. Reported per common share/unit amounts are attributable to common stockholders, common unitholders and restricted stock unit holders.
(2) FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $5.0 million and $3.8 million for the three months ended March 31, 2020 and 2019, respectively. These amounts are adjusted out of FFO in our calculation of FAD.
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(3) Calculated based on weighted average shares outstanding including participating share-based awards and assuming the exchange of all common limited partnership units outstanding.
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(4) Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, and contingently issuable shares and assuming the exchange of all common limited partnership units outstanding.
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(5) Represents revenue recognized during the period as a result of the amortization of deferred revenue recorded for tenant-funded tenant improvements.
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(6) Represents the non-cash adjustment related to the acquisition of buildings with above and/or below market rents.
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(7) Includes non-cash amortization of share-based compensation and accrued potential future executive retirement benefits.
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(8) Includes other cash and non-cash adjustments attributable to lease-related matters including GAAP revenue recognition timing differences, leasing costs and other.
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7

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution

(unaudited, $ in thousands)

Three Months Ended March 31,
2020 2019
GAAP Net Cash Provided by Operating Activities^^ $ 122,940 $ 99,790
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures (17,063 ) (21,583 )
Depreciation of non-real estate furniture, fixtures and equipment (1,932 ) (1,164 )
Net changes in operating assets and liabilities ^(1)^ (13,582 ) (5,962 )
Noncontrolling interests in consolidated property partnerships’ share of FFO and FAD (5,016 ) (4,580 )
Cash adjustments related to investing and financing activities (448 ) (567 )
Funds Available for Distribution^(2)^ $ 84,899 $ 65,934

_______________________

(1) Primarily includes changes in the following assets and liabilities: marketable securities; current receivables; prepaid expenses and other assets; accounts payable, accrued expenses and other liabilities; and rents received in advance and tenant security deposits.
(2) Please refer to page 31 for a Management Statement on Funds Available for Distribution.
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8

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Net Operating Income ^(1)^

(unaudited, $ in thousands)

Three Months Ended March 31,
2020 2019 % Change
Operating Revenues:
Rental income ^(2)^ $ 187,015 $ 171,882 8.8 %
Tenant reimbursements ^(2)^ 31,618 27,500 15.0 %
Other property income 2,695 1,820 48.1 %
Total operating revenues 221,328 201,202 10.0 %
Operating Expenses:
Property expenses 38,983 38,149 2.2 %
Real estate taxes 22,202 18,639 19.1 %
Ground leases 2,317 1,972 17.5 %
Total operating expenses 63,502 58,760 8.1 %
Net Operating Income $ 157,826 $ 142,442 10.8 %

________________________

(1) Please refer to page 29 for Management Statements on Net Operating Income and page 34 for a reconciliation of GAAP Net Income Available to Common Stockholders to Net Operating Income.
(2) Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations.
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9

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Same Store Analysis ^(1)^

(unaudited, $ in thousands)

Three Months Ended March 31,
2020 2019 % Change
Total Same Store Portfolio
Office Portfolio
Number of properties 92 92
Square Feet 12,931,083 12,931,083
Percent of Stabilized Portfolio 90.3 % 97.7 %
Average Occupancy 93.7 % 93.2 %
Operating Revenues:
Rental income^(2)(3)^ $ 162,951 $ 163,462 (0.3 )%
Tenant reimbursements ^(2)^ 23,463 24,979 (6.1 )%
Other property income 2,179 1,711 27.4 %
Total operating revenues 188,593 190,152 (0.8 )%
Operating Expenses:
Property expenses 34,757 36,295 (4.2 )%
Real estate taxes 17,246 17,110 0.8 %
Ground leases 2,109 1,972 6.9 %
Total operating expenses 54,112 55,377 (2.3 )%
GAAP Net Operating Income $ 134,481 $ 134,775 (0.2 )%
Same Store Analysis (Cash Basis) ^(4)^
Three Months Ended March 31,
2020 2019 % Change
Total operating revenues $ 183,226 $ 167,722 9.2 %
Total operating expenses 54,129 55,381 (2.3 )%
Cash Net Operating Income $ 129,097 $ 112,341 14.9 %

________________________

(1) Same Store is defined as all properties owned and included in our stabilized portfolio as of January 1, 2019 and still owned and included in the stabilized portfolio as of March 31, 2020. Same Store includes 100% of consolidated property partnerships as well as the residential tower at Columbia Square.
(2) Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations.
--- ---
(3) Rental income is presented net of reductions in revenue related to the creditworthiness of tenants. For the three months ended March 31, 2020, rental income includes a reduction in revenue of $5.9 million related to the cumulative impact of transitioning one co-working tenant and one retail tenant to a cash basis of reporting as a result of the COVID-19 pandemic. For the three months ended March 31, 2019, rental income includes a recovery of provision for bad debts of $3.1 million.
--- ---
(4) Please refer to page 34 for a reconciliation of GAAP Net Income Available to Common Stockholders to Same Store GAAP Net Operating Income and Same Store Cash Net Operating Income.
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10

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region

Portfolio Breakdown Occupied at Leased at
STABILIZED OFFICE PORTFOLIO^(1)^ Buildings YTD NOI % SF % Total SF 3/31/2020 12/31/2019 ^(2)^ 3/31/2020
Greater Los Angeles
Culver City 19 1.7 % 1.1 % 151,908 100.0 % 100.0 % 100.0 %
El Segundo 5 4.6 % 7.6 % 1,093,050 97.5 % 97.6 % 97.8 %
Hollywood 6 5.6 % 5.6 % 806,557 98.7 % 98.7 % 99.2 %
Long Beach 7 2.8 % 6.7 % 952,766 92.7 % 93.2 % 96.9 %
West Hollywood 4 1.7 % 1.2 % 178,699 90.5 % 95.4 % 94.0 %
West Los Angeles 10 5.6 % 5.9 % 844,151 86.1 % 90.0 % 88.0 %
Total Greater Los Angeles 51 22.0 % 28.1 % 4,027,131 94.0 % 95.2 % 95.7 %
San Diego County
Del Mar 15 7.7 % 10.1 % 1,448,547 89.6 % 92.2 % 95.1 %
I-15 Corridor 5 1.3 % 3.8 % 540,892 82.5 % 81.3 % 96.4 %
Point Loma 1 0.4 % 0.8 % 107,456 100.0 % 100.0 % 100.0 %
University Towne Center 1 0.1 % 0.3 % 47,846 91.4 % 91.4 % 91.4 %
Total San Diego County 22 9.5 % 15.0 % 2,144,741 88.3 % 89.7 % 95.6 %
San Francisco Bay Area
Menlo Park 7 2.7 % 2.6 % 378,358 79.2 % 87.1 % 80.2 %
Mountain View 4 4.0 % 3.8 % 542,235 100.0 % 100.0 % 100.0 %
Palo Alto 2 1.4 % 1.2 % 165,585 100.0 % 100.0 % 100.0 %
Redwood City 2 3.4 % 2.4 % 347,269 100.0 % 100.0 % 100.0 %
San Francisco 11 39.2 % 28.7 % 4,107,473 93.0 % 93.1 % 99.1 %
South San Francisco 3 1.3 % 1.0 % 145,530 100.0 % 100.0 % 100.0 %
Sunnyvale 4 4.8 % 4.6 % 663,460 100.0 % 100.0 % 100.0 %
Total San Francisco Bay Area 33 56.8 % 44.3 % 6,349,910 94.3 % 95.0 % 98.2 %
Greater Seattle
Bellevue 2 5.4 % 6.4 % 917,027 91.1 % 96.9 % 98.7 %
Lake Union 6 6.3 % 6.2 % 884,763 100.0 % 98.6 % 100.0 %
Total Greater Seattle 8 11.7 % 12.6 % 1,801,790 95.5 % 97.7 % 99.3 %
TOTAL STABILIZED OFFICE PORTFOLIO 114 100.0 % 100.0 % 14,323,572 93.5 % 94.6 % 97.3 %
Total No. of Units Average Residential Occupancy
STABILIZED RESIDENTIAL PROPERTY Submarket Buildings Quarter-to-Date
Greater Los Angeles
1550 N. El Centro Avenue Hollywood 1 200 93.5% Average Office Occupancy
---
Quarter-to-Date
93.7%

________________________

(1) Includes stabilized retail space.
(2) Represents occupancy for properties in the stabilized portfolio as of the date presented, including properties sold subsequent to the date presented.
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11

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Stabilized Office Portfolio Occupancy Overview by Region, continued Submarket Square Feet Occupied
Greater Los Angeles, California
3101-3243 La Cienega Boulevard Culver City 151,908 100.0 %
2240 E. Imperial Highway El Segundo 122,870 100.0 %
2250 E. Imperial Highway El Segundo 298,728 100.0 %
2260 E. Imperial Highway El Segundo 298,728 100.0 %
909 N. Pacific Coast Highway El Segundo 244,136 92.3 %
999 N. Pacific Coast Highway El Segundo 128,588 93.4 %
1500 N. El Centro Avenue Hollywood 104,504 100.0 %
1525 N. Gower Street Hollywood 9,610 100.0 %
1575 N. Gower Street Hollywood 251,245 100.0 %
6115 W. Sunset Boulevard Hollywood 26,105 100.0 %
6121 W. Sunset Boulevard Hollywood 91,173 100.0 %
6255 W. Sunset Boulevard Hollywood 323,920 96.8 %
3750 Kilroy Airport Way Long Beach 10,718 100.0 %
3760 Kilroy Airport Way Long Beach 165,278 92.5 %
3780 Kilroy Airport Way Long Beach 221,452 79.4 %
3800 Kilroy Airport Way Long Beach 192,476 100.0 %
3840 Kilroy Airport Way Long Beach 136,026 100.0 %
3880 Kilroy Airport Way Long Beach 96,923 100.0 %
3900 Kilroy Airport Way Long Beach 129,893 91.4 %
8560 W. Sunset Boulevard West Hollywood 71,875 100.0 %
8570 W. Sunset Boulevard West Hollywood 43,603 95.8 %
8580 W. Sunset Boulevard West Hollywood 7,126 0.0 %
8590 W. Sunset Boulevard West Hollywood 56,095 85.6 %
12100 W. Olympic Boulevard West Los Angeles 152,048 71.6 %
12200 W. Olympic Boulevard West Los Angeles 150,832 90.2 %
12233 W. Olympic Boulevard West Los Angeles 151,029 81.0 %
12312 W. Olympic Boulevard West Los Angeles 76,644 100.0 %
1633 26th Street West Los Angeles 43,857 34.9 %
2100/2110 Colorado Avenue West Los Angeles 102,864 100.0 %
3130 Wilshire Boulevard West Los Angeles 90,074 100.0 %
501 Santa Monica Boulevard West Los Angeles 76,803 97.8 %
Total Greater Los Angeles 4,027,131 94.0 %

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Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Stabilized Office Portfolio Occupancy Overview by Region, continued

Submarket Square Feet Occupied
San Diego, California
12225 El Camino Real Del Mar 58,401 100.0 %
12235 El Camino Real Del Mar 53,751 88.9 %
12340 El Camino Real Del Mar 89,272 50.1 %
12390 El Camino Real Del Mar 70,140 100.0 %
12348 High Bluff Drive Del Mar 39,193 85.3 %
12770 El Camino Real Del Mar 73,032 66.1 %
12780 El Camino Real Del Mar 140,591 100.0 %
12790 El Camino Real Del Mar 78,836 71.2 %
12400 High Bluff Drive Del Mar 209,220 100.0 %
3579 Valley Centre Drive Del Mar 54,960 31.1 %
3611 Valley Centre Drive Del Mar 129,656 100.0 %
3661 Valley Centre Drive Del Mar 128,364 100.0 %
3721 Valley Centre Drive Del Mar 115,193 100.0 %
3811 Valley Centre Drive Del Mar 112,067 100.0 %
3745 Paseo Place Del Mar 95,871 90.0 %
13280 Evening Creek Drive South I-15 Corridor 41,196 100.0 %
13290 Evening Creek Drive South I-15 Corridor 61,180 100.0 %
13480 Evening Creek Drive North I-15 Corridor 154,157 100.0 %
13500 Evening Creek Drive North I-15 Corridor 137,658 43.0 %
13520 Evening Creek Drive North I-15 Corridor 146,701 89.0 %
2305 Historic Decatur Road Point Loma 107,456 100.0 %
4690 Executive Drive University Towne Center 47,846 91.4 %
Total San Diego County 2,144,741 88.3 %

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First Quarter 2020 Supplemental Financial Report

Stabilized Office Portfolio Occupancy Overview by Region, continued

Submarket Square Feet Occupied
San Francisco Bay Area, California
4100 Bohannon Drive Menlo Park 47,379 100.0 %
4200 Bohannon Drive Menlo Park 45,451 70.8 %
4300 Bohannon Drive Menlo Park 63,079 48.8 %
4400 Bohannon Drive Menlo Park 48,146 31.4 %
4500 Bohannon Drive Menlo Park 63,078 100.0 %
4600 Bohannon Drive Menlo Park 48,147 100.0 %
4700 Bohannon Drive Menlo Park 63,078 100.0 %
1290-1300 Terra Bella Avenue Mountain View 114,175 100.0 %
331 Fairchild Drive Mountain View 87,147 100.0 %
680 E. Middlefield Road Mountain View 170,090 100.0 %
690 E. Middlefield Road Mountain View 170,823 100.0 %
1701 Page Mill Road Palo Alto 128,688 100.0 %
3150 Porter Drive Palo Alto 36,897 100.0 %
900 Jefferson Avenue Redwood City 228,505 100.0 %
900 Middlefield Road Redwood City 118,764 100.0 %
100 Hooper Street San Francisco 394,340 87.6 %
100 First Street San Francisco 467,095 87.2 %
1800 Owens Street San Francisco 750,370 99.6 %
303 Second Street San Francisco 784,658 78.4 %
201 Third Street San Francisco 346,538 99.2 %
360 Third Street San Francisco 429,796 100.0 %
250 Brannan Street San Francisco 100,850 100.0 %
301 Brannan Street San Francisco 82,834 100.0 %
333 Brannan Street San Francisco 185,602 100.0 %
345 Brannan Street San Francisco 110,050 99.7 %
350 Mission Street San Francisco 455,340 99.7 %
345 Oyster Point Boulevard South San Francisco 40,410 100.0 %
347 Oyster Point Boulevard South San Francisco 39,780 100.0 %
349 Oyster Point Boulevard South San Francisco 65,340 100.0 %
505 Mathilda Avenue Sunnyvale 212,322 100.0 %
555 Mathilda Avenue Sunnyvale 212,322 100.0 %
605 Mathilda Avenue Sunnyvale 162,785 100.0 %
599 Mathilda Avenue Sunnyvale 76,031 100.0 %
Total San Francisco Bay Area 6,349,910 94.3 %

14

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First Quarter 2020 Supplemental Financial Report

Stabilized Office Portfolio Occupancy Overview by Region, continued

Submarket Square Feet Occupied
Greater Seattle, Washington
601 108th Avenue NE Bellevue 488,470 98.3 %
10900 NE 4th Street Bellevue 428,557 82.8 %
837 N. 34th Street Lake Union 112,487 100.0 %
701 N. 34th Street Lake Union 141,860 100.0 %
801 N. 34th Street Lake Union 169,412 100.0 %
320 Westlake Avenue North Lake Union 184,644 100.0 %
321 Terry Avenue North Lake Union 135,755 100.0 %
401 Terry Avenue North Lake Union 140,605 100.0 %
Total Greater Seattle 1,801,790 95.5 %
TOTAL 14,323,572 93.5 %

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Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Information on Leases Commenced^^^(1)^

1st & 2nd Generation 2nd Generation
# of Leases^(2)^ Square Feet ^(2)^ Retention<br><br>Rates TI/LC<br><br>Per Sq.Ft. ^(3)^ TI/LC<br><br>Per Sq.Ft. /Year ^(3)^ Changes in<br><br>GAAP Rents Changes in<br><br>Cash Rents Weighted<br><br>Average Lease<br><br>Term (Mo.)
New Renewal New Renewal
Quarter to Date 10 9 47,926 90,067 27.0 % $ 37.57 $ 5.01 31.1 % 21.0 % 90

Information on Leases Executed^^^(1)^

1st & 2nd Generation 2nd Generation
# of Leases^(4)^ Square Feet ^(4)^ TI/LC<br><br>Per Sq.Ft.^(3)^ TI/LC<br><br>Per Sq.Ft. /Year^(3)^ Changes in<br><br>GAAP Rents Changes in<br><br>Cash Rents Weighted<br><br>Average Lease<br><br>Term (Mo.)
New Renewal New Renewal
Quarter to Date ^(5)^ 7 9 131,661 90,067 $ 60.11 $ 8.29 57.5 % 45.3 % 87

________________________

(1) Includes 100% of consolidated property partnerships.
(2) Represents leasing activity for leases that commenced at properties in the stabilized portfolio during the three months ended March 31, 2020, including first and second generation space, net of month-to-month leases.
--- ---
(3) Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs.
--- ---
(4) Represents leasing activity for leases signed at properties in the stabilized portfolio during the three months ended March 31, 2020, including first and second generation space, net of month-to-month leases. Excludes leasing on new construction.
--- ---
(5) During the three months ended March 31, 2020, 6 new leases totaling 125,420 square feet were signed but not commenced as of March 31, 2020.
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Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures

($ in thousands)

Q1 2020
1st Generation (Nonrecurring) Capital Expenditures:^(1)^
Capital Improvements $ 621
Tenant Improvements & Leasing Commissions ^(2)^ 4,307
Total $ 4,928
Q1 2020
2nd Generation (Recurring) Capital Expenditures:^(1)^
Capital Improvements $ 2,976
Tenant Improvements & Leasing Commissions ^(2)^ 14,087
Total $ 17,063

________________________

(1) Includes 100% of capital expenditures of consolidated property partnerships.
(2) Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements.
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Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Stabilized Portfolio Lease Expiration Summary Schedule

($ in thousands, except for annualized rent per sq. ft.)

Year of Expiration # of Expiring<br>Leases Total Square<br>Feet % of Total<br><br>Leased Sq. Ft. Annualized<br>Base Rent (1) % of Total <br>Annualized<br>Base Rent Annualized Rent<br><br>per Sq. Ft.
Remaining 2020^(2)^ 53 677,934 5.3 % $ 29,929 4.3 % $ 44.15
2021^(2)^ 81 842,815 6.4 % 36,455 5.3 % 43.25
2022 62 749,300 5.8 % 32,462 4.6 % 43.32
2023 77 1,233,952 9.4 % 65,432 9.4 % 53.03
2024 60 952,945 7.2 % 46,791 6.7 % 49.10
2025 51 634,142 4.8 % 30,781 4.4 % 48.54
2026 34 1,485,620 11.3 % 65,703 9.4 % 44.23
2027 28 1,227,633 9.3 % 50,287 7.2 % 40.96
2028 21 924,891 7.0 % 57,805 8.3 % 62.50
2029 26 775,552 5.9 % 44,468 6.4 % 57.34
2030 and beyond 47 3,636,258 27.6 % 238,262 34.0 % 65.52
Total ^(3)^ 540 13,141,042 100.0 % $ 698,375 100.0 % $ 53.14

________________________

(1) Includes 100% of annualized base rent of consolidated property partnerships.
(2) Adjusting for leasing transactions executed as of March 31, 2020 but not yet commenced, the 2020 and 2021 expirations would be reduced by 173,477 and 173,267 square feet, respectively.
--- ---
(3) 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 March 31, 2020, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of March 31, 2020.
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Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Stabilized Portfolio Lease Expiration Schedule by Region

($ in thousands, except for annualized rent per sq. ft.)

Year Region # of<br><br>Expiring Leases Total<br><br>Square Feet % of Total<br><br>Leased Sq. Ft. Annualized<br><br>Base Rent ^(1)^ % of Total<br><br>Annualized<br><br>Base Rent Annualized Rent<br><br>per Sq. Ft.
2020 Greater Los Angeles 30 349,319 2.7 % $ 13,724 2.0 % $ 39.29
San Diego 12 151,138 1.2 % 6,345 0.9 % 41.98
San Francisco Bay Area 10 155,043 1.2 % 9,130 1.3 % 58.89
Greater Seattle 1 22,434 0.2 % 730 0.1 % 32.54
Total 53 677,934 5.3 % $ 29,929 4.3 % $ 44.15
2021 Greater Los Angeles 47 285,279 2.2 % $ 11,630 1.7 % $ 40.77
San Diego 14 289,090 2.2 % 11,635 1.7 % 40.25
San Francisco Bay Area 11 239,093 1.8 % 12,245 1.8 % 51.21
Greater Seattle 9 29,353 0.2 % 945 0.1 % 32.19
Total 81 842,815 6.4 % $ 36,455 5.3 % $ 43.25
2022 Greater Los Angeles 43 364,184 2.8 % $ 16,471 2.4 % $ 45.23
San Diego 8 204,237 1.6 % 6,991 1.0 % 34.23
San Francisco Bay Area 6 115,111 0.9 % 6,558 0.9 % 56.97
Greater Seattle 5 65,768 0.5 % 2,442 0.3 % 37.13
Total 62 749,300 5.8 % $ 32,462 4.6 % $ 43.32
2023 Greater Los Angeles 37 356,052 2.7 % $ 18,874 2.7 % $ 53.01
San Diego 13 195,866 1.5 % 8,163 1.2 % 41.68
San Francisco Bay Area 21 588,422 4.5 % 35,145 5.0 % 59.73
Greater Seattle 6 93,612 0.7 % 3,250 0.5 % 34.72
Total 77 1,233,952 9.4 % $ 65,432 9.4 % $ 53.03
2024 Greater Los Angeles 31 439,031 3.3 % $ 19,711 2.8 % $ 44.90
San Diego 10 68,501 0.5 % 3,522 0.5 % 51.42
San Francisco Bay Area 11 239,751 1.8 % 15,807 2.3 % 65.93
Greater Seattle 8 205,662 1.6 % 7,751 1.1 % 37.69
Total 60 952,945 7.2 % $ 46,791 6.7 % $ 49.10
2025<br>and<br>Beyond Greater Los Angeles 56 1,831,601 13.9 % $ 80,073 11.4 % $ 43.72
San Diego 63 957,224 7.3 % 46,355 6.6 % 48.43
San Francisco Bay Area 53 4,602,672 34.9 % 308,393 44.2 % 67.00
Greater Seattle 35 1,292,599 9.8 % 52,485 7.5 % 40.60
Total 207 8,684,096 65.9 % $ 487,306 69.7 % $ 56.11 ________________________
(1) Includes 100% of annualized base rent of consolidated property partnerships.

19

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Stabilized Portfolio Quarterly Lease Expirations for 2020 and 2021

($ in thousands, except for annualized rent per sq. ft.)

# of Expiring<br><br>Leases Total Square<br><br>Feet % of Total<br><br>Leased Sq. Ft. Annualized<br><br>Base Rent ^(1)^ % of Total<br>Annualized<br>Base Rent Annualized Rent<br><br>per Sq. Ft.
2020:
Q2 2020 12 147,536 1.1 % $ 7,029 1.0 % $ 47.64
Q3 2020 18 176,222 1.4 % 6,129 0.9 % 34.78
Q4 2020 23 354,176 2.8 % 16,771 2.4 % 47.35
Total 2020 ^(2)^ 53 677,934 5.3 % $ 29,929 4.3 % $ 44.15
2021:
Q1 2021 19 176,993 1.3 % $ 7,052 1.0 % $ 39.84
Q2 2021 20 107,172 0.8 % 4,038 0.7 % 37.68
Q3 2021 21 388,069 3.0 % 18,950 2.7 % 48.83
Q4 2021 21 170,581 1.3 % 6,415 0.9 % 37.61
Total 2021 ^(2)^ 81 842,815 6.4 % $ 36,455 5.3 % $ 43.25

________________________

(1) Includes 100% of annualized base rent of consolidated property partnerships.
(2) Adjusting for leasing transactions executed as of March 31, 2020 but not yet commenced, the 2020 and 2021 expirations would be reduced by 173,477 and 173,267 square feet, respectively.
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Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Top Fifteen Tenants^^^(1)^

($ in thousands)

Tenant Name Region Annualized Base Rental Revenue^(2)^ Rentable<br><br>Square Feet Percentage of<br><br>Total Annualized Base Rental Revenue Percentage of<br><br>Total Rentable<br><br>Square Feet
Dropbox, Inc. San Francisco Bay Area $ 55,998 738,081 8.0 % 5.2 %
GM Cruise, LLC San Francisco Bay Area 36,337 374,618 5.2 % 2.6 %
LinkedIn Corporation / Microsoft Corporation San Francisco Bay Area 29,752 663,460 4.3 % 4.6 %
Adobe Systems, Inc. San Francisco Bay Area / Greater Seattle 27,897 513,111 4.0 % 3.6 %
salesforce.com, inc. San Francisco Bay Area 24,076 451,763 3.5 % 3.2 %
DIRECTV, LLC Greater Los Angeles 23,152 684,411 3.3 % 4.8 %
Box, Inc. San Francisco Bay Area 22,441 371,792 3.2 % 2.6 %
Okta, Inc. San Francisco Bay Area 17,122 207,066 2.5 % 1.4 %
Riot Games, Inc. Greater Los Angeles 15,514 251,509 2.2 % 1.8 %
Synopsys, Inc. San Francisco Bay Area 15,492 340,913 2.2 % 2.4 %
Viacom International, Inc. Greater Los Angeles 13,718 211,343 2.0 % 1.5 %
DoorDash, Inc. San Francisco Bay Area 13,531 135,137 1.9 % 0.9 %
Amazon.com Greater Seattle 12,397 277,399 1.8 % 1.9 %
Nektar Therapeutics, Inc. San Francisco Bay Area 12,297 135,350 1.8 % 0.9 %
Concur Technologies Greater Seattle 10,643 288,322 1.5 % 2.0 %
Total Top Fifteen Tenants $ 330,367 5,644,275 47.4 % 39.4 %

________________________

(1) The information presented is as of March 31, 2020.
(2) Includes 100% of annualized base rental revenues of consolidated property partnerships.
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21

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Consolidated Ventures (Noncontrolling Property Partnerships)

Property ^(1)^ Venture Partner Submarket Rentable Square Feet KRC Ownership %
100 First Street, San Francisco, CA Norges Bank Real Estate Management San Francisco 467,095 56%
303 Second Street, San Francisco, CA Norges Bank Real Estate Management San Francisco 784,658 56%
900 Jefferson Avenue and 900 Middlefield Road, Redwood City, CA^(2)^ Local developer Redwood City 347,269 93%

____________________

(1) For breakout of Net Operating Income by partnership, refer to page 34, Reconciliation of Net Income Available to Common Stockholders to Same Store Net Operating Income.
(2) Reflects the KRC ownership percentage at time of agreement. Actual percentage may vary depending on cash flows or promote structure.
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First Quarter 2020 Supplemental Financial Report

Stabilized Office Development Projects and Completed Residential Development Projects

($ in millions)

STABILIZED OFFICE AND RETAIL DEVELOPMENT PROJECTS^(1)^ Location Start Date Stabilization Date^(2)^ Total Estimated Investment Rentable <br>Square Feet Total Project % Occupied
1st Quarter
The Exchange on 16th San Francisco 2Q 2015 1Q 2020 $ 585.0 750,370 100%
One Paseo - Retail Del Mar 4Q 2016 1Q 2020 100.0 95,871 90%
TOTAL: $ 685.0 846,241 98%
COMPLETED RESIDENTIAL DEVELOPMENT PROJECTS NOT YET STABILIZED Location Start Date Completion<br><br>Date Total Estimated Investment Number of Units % Leased
--- --- --- --- --- --- --- ---
One Paseo - Residential Phase I Del Mar 4Q 2016 3Q 2019 $ 145.0 237 70%
One Paseo - Residential Phase II Del Mar 4Q 2016 1Q 2020 145.0 225 17%
TOTAL: $ 290.0 462 44%

____________________

(1) Our stabilized office portfolio includes stabilized retail space.
(2) For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components.
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First Quarter 2020 Supplemental Financial Report

In-Process Development

($ in millions)

Location Construction Start Date Estimated Stabilization Date ^(2)^ Estimated Rentable Square Feet Total Estimated Investment Total Cash Costs Incurred as of<br><br>3/31/2020 ^(3)^ % Leased
TENANT IMPROVEMENT ^(1)^
Office
San Diego County
One Paseo - Office Del Mar 4Q 2018 2Q 2021 285,000 $ 205.0 $ 164.4 91%
Greater Seattle
333 Dexter South Lake Union 2Q 2017 3Q 2022 635,000 410.0 285.1 100%
Greater Los Angeles
Netflix // On Vine - Office Hollywood 1Q 2018 1Q 2021 355,000 300.0 210.8 100%
TOTAL: 1,275,000 $ 915.0 $ 660.3 98% UNDER CONSTRUCTION Location Construction Start Date Estimated Stabilization Date ^(2)^ Estimated Rentable Square Feet Total Estimated Investment Total Cash Costs Incurred as of<br><br>3/31/2020 ^(3)^ Office % Leased
--- --- --- --- --- --- --- --- --- ---
Office / Life Science
San Francisco Bay Area
Kilroy Oyster Point - Phase I South San Francisco 1Q 2019 4Q 2021 656,000 $ 570.0 $ 198.7 100%
San Diego County
2100 Kettner Little Italy 3Q 2019 1Q 2022 200,000 140.0 48.9 —%
9455 Towne Centre Drive University Towne Center 1Q 2019 1Q 2021 160,000 110.0 63.3 100%
Residential
Greater Los Angeles
Living // On Vine - Residential Hollywood 4Q 2018 1Q 2021 193 Resi Units 195.0 141.1 N/A
San Diego County
One Paseo - Residential Phase III Del Mar 4Q 2016 2Q 2020 146 Resi Units 95.0 93.1 N/A
TOTAL: $ 1,110.0 $ 545.1 80%

________________________

(1) 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.
(2) For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components. For multi-phase projects, interest and carry cost capitalization may cease and recommence driven by various factors, including tenant improvement construction and other tenant related timing or project scope. The timing of completion of our projects may be impacted by factors outside of our control, including government restrictions and/or social distancing requirements on construction projects due to the COVID-19 pandemic.
--- ---
(3) Represents costs incurred as of March 31, 2020, excluding accrued liabilities recorded in accordance with GAAP. Upon adoption of ASC 842 “Leases” effective January 1, 2019, also excludes leasing overhead.
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First Quarter 2020 Supplemental Financial Report

Future Development Pipeline

($ in millions)

FUTURE DEVELOPMENT PIPELINE Location Approx. Developable<br><br>Square Feet ^(1)^ Total Cash Costs Incurred as of 3/31/2020^(2)^
San Diego County
Santa Fe Summit – Phases II and III 56 Corridor 600,000 - 650,000 $ 79.4
1335 Broadway & 901 Park Boulevard East Village TBD 45.7
San Francisco Bay Area
Kilroy Oyster Point - Phases II - IV South San Francisco 1,750,000 - 1,900,000 320.0
Flower Mart SOMA 2,300,000 376.3
Greater Seattle
Seattle CBD Project Seattle CBD TBD 131.4
TOTAL: $ 952.8

________________________

(1) 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 costs incurred as of March 31, 2020, excluding accrued liabilities recorded in accordance with GAAP.
--- ---

25

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Capital Structure

As of March 31, 2020

($ in thousands)

Shares/Units<br><br>March 31, 2020 Aggregate PrincipalAmount or Value Equivalent % of Total<br><br>Market<br><br>Capitalization
DEBT: ^(1)^
Unsecured Line of Credit 3.4 %
Unsecured Term Loan Facility 150,000 1.3 %
Unsecured Senior Notes due 2023 300,000 2.7 %
Unsecured Senior Notes due 2024 425,000 3.8 %
Unsecured Senior Notes due 2025 400,000 3.6 %
Unsecured Senior Notes Series A & B due 2026 250,000 2.2 %
Unsecured Senior Notes due 2028 400,000 3.6 %
Unsecured Senior Notes due 2029 400,000 3.6 %
Unsecured Senior Notes Series A & B due 2027 & 2029 250,000 2.2 %
Unsecured Senior Notes due 2030 500,000 4.5 %
Secured Debt 258,236 2.3 %
Total Debt 33.2 %
EQUITY AND NONCONTROLLING INTEREST IN THE OPERATING PARTNERSHIP: ^(2)^
Common limited partnership units outstanding ^(3)^ 2,021,287 1.2 %
Shares of common stock outstanding 115,067,924 7,329,827 65.6 %
Total Equity and Noncontrolling Interests in the Operating Partnership 66.8 %
TOTAL MARKET CAPITALIZATION 100.0 %

All values are in US Dollars.

________________________

(1) Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts. Excludes $350.0 million of 4.27% unsecured senior notes due 2031 the Operating Partnership issued on April 28, 2020 in connection with a private placement offering.
(2) Value based on closing share price of $63.70 as of March 31, 2020.
--- ---
(3) Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships.
--- ---

26

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Debt Analysis

As of March 31, 2020

TOTAL DEBT COMPOSITION
Percent of<br><br>Total Debt Weighted Average
Interest Rate Years to Maturity
Secured vs. Unsecured Debt
Unsecured Debt 93.0% 3.6% 6.4
Secured Debt 7.0% 3.9% 6.9
Floating vs. Fixed-Rate Debt
Floating-Rate Debt 14.3% 1.9% 2.3
Fixed-Rate Debt 85.7% 3.9% 7.1
Stated Interest Rate 3.6% 6.4
GAAP Effective Rate 3.6%
GAAP Effective Rate Including Debt Issuance Costs 3.8%
KEY DEBT COVENANTS
--- --- ---
Covenant Actual Performance<br><br>as of March 31, 2020
Unsecured Credit and Term Loan Facility and Private Placement Notes (as defined in the Credit Agreements):
Total debt to total asset value less than 60% 29%
Fixed charge coverage ratio greater than 1.5x 3.4x
Unsecured debt ratio greater than 1.67x 3.48x
Unencumbered asset pool debt service coverage greater than 1.75x 4.02x
Unsecured Senior Notes due 2023, 2024, 2025, 2028, 2029 and 2030 (as defined in the Indentures):^^
Total debt to total asset value less than 60% 34%
Interest coverage greater than 1.5x 10.4x
Secured debt to total asset value less than 40% 2%
Unencumbered asset pool value to unsecured debt greater than 150% 304%

27

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Debt Analysis

($ in thousands)

DEBT MATURITY SCHEDULE
Floating/<br><br>Fixed Rate Stated<br><br>Rate Maturity<br><br>Date 2020 2021 2022 2023 2024 After 2024 Total ^(1)^
Unsecured Debt:
Floating 1.85% 7/31/2022 $ 380,000 $ 380,000
Floating 2.03% 7/31/2022 150,000 150,000
Fixed^^ 3.80% 1/15/2023 300,000 300,000
Fixed 3.45% 12/15/2024 425,000 425,000
Fixed 4.38% 10/1/2025 400,000 400,000
Fixed 4.30% 7/18/2026 50,000 50,000
Fixed 4.35% 10/18/2026 200,000 200,000
Fixed 3.35% 2/17/2027 175,000 175,000
Fixed 4.75% 12/15/2028 400,000 400,000
Fixed 3.45% 2/17/2029 75,000 75,000
Fixed 4.25% 8/15/2029 400,000 400,000
Fixed 3.05% 2/15/2030 500,000 500,000
Total unsecured debt 3.59% — — 530,000 300,000 425,000 2,200,000 3,455,000
Secured Debt:
Fixed 3.57% 12/1/2026 2,428 3,341 3,462 3,587 3,718 152,668 169,204
Fixed 4.48% 7/1/2027 1,443 2,001 2,092 2,188 2,288 79,020 89,032
Total secured debt 3.88% 3,871 5,342 5,554 5,775 6,006 231,688 258,236
Total 3.61% $ 3,871 $ 5,342 $ 535,554 $ 305,775 $ 431,006 $ 2,431,688 $ 3,713,236

________________________

(1) Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts. Excludes $350.0 million of 4.27% unsecured senior notes due 2031 the Operating Partnership issued on April 28, 2020 in connection with a private placement offering.

28

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures

Included in this section are management’s statements regarding certain non-GAAP financial measures provided in this supplemental financial report and, with respect to Funds From Operations available to common stockholders and common unitholders (“FFO”), in the Company’s earnings release on April 29, 2020 and the reasons why management believes that these measures provide useful information to investors about the Company’s financial condition and results of operations.

Net Operating Income:

Management believes that Net Operating Income (“NOI”) is a useful supplemental measure of the Company’s operating performance. The Company defines NOI as follows: consolidated operating revenues (rental income and other property income) less consolidated property and related expenses (property expenses, real estate taxes and ground leases). Other real estate investment trusts (“REITs”) may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to other REITs.

Because NOI excludes leasing costs, general and administrative expenses, interest expense, depreciation and amortization, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the consolidated revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. The Company uses NOI to evaluate its operating performance on a portfolio basis since NOI allows the Company to evaluate the impact that factors such as occupancy levels, lease structure, rental rates, and tenant base have on the Company’s results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company’s financial and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of performance in the real estate industry.

However, NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect general and administrative expenses, leasing costs, interest expense, depreciation and amortization costs, other nonproperty income and losses and the level of capital expenditures necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.

Same Store Net Operating Income:

Management believes that Same Store NOI is a useful supplemental measure of the Company’s operating performance. Same Store NOI represents the consolidated NOI for all of the properties that were owned and included in the Company's stabilized portfolio for two comparable reporting periods. Because Same Store NOI excludes the change in NOI from developed, redeveloped, acquired and disposed of and held for sale properties, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating Same Store NOI, and accordingly, the Company’s Same Store NOI may not be comparable to other REITs.

However, Same Store NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect the operations of the Company’s entire portfolio, nor does it reflect the impact of general and administrative expenses, leasing costs, interest expense, depreciation and amortization costs, other nonproperty income and losses and the level of capital expenditures necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.

29

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures, continued

Same Store Cash Net Operating Income:

Management believes that Same Store Cash NOI is a useful supplemental measure of the Company’s operating performance. Same Store Cash NOI represents the consolidated NOI for all of the properties that were owned and included in the Company’s stabilized portfolio for two comparable reporting periods, adjusted for the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles, and the provision for bad debts. Because Same Store Cash NOI excludes the change in NOI from developed, redeveloped, acquired and disposed of and held for sale properties, it highlights operating trends on a cash basis such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating Same Store Cash NOI, and accordingly, our Same Store Cash NOI may not be comparable to other REITs.

However, Same Store Cash NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect the operations of the Company's entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company's results from operations.

EBITDA, as adjusted:

Management believes that consolidated earnings before interest expense, depreciation and amortization, gain/loss on early extinguishment of debt, gains and losses on depreciable real estate, net income attributable to noncontrolling interests, preferred dividends and distributions, original issuance costs of redeemed preferred stock and preferred units, and impairment losses (“EBITDA, as adjusted”) is a useful supplemental measure of the Company’s operating performance. When considered with other GAAP measures and FFO, management believes EBITDA, as adjusted, gives the investment community a more complete understanding of the Company’s consolidated operating results, including the impact of general and administrative expenses and acquisition-related expenses, before the impact of investing and financing transactions and facilitates comparisons with competitors. Management also believes it is appropriate to present EBITDA, as adjusted, as it is used in several of the Company’s financial covenants for both its secured and unsecured debt. However, EBITDA, as adjusted, should not be viewed as an alternative measure of the Company’s operating performance since it excludes financing costs as well as depreciation and amortization costs which are significant economic costs that could materially impact the Company’s results of operations and liquidity. Other REITs may use different methodologies for calculating EBITDA, as adjusted, and, accordingly, the Company’s EBITDA, as adjusted, may not be comparable to other REITs. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by NAREIT, as the Company does not have any unconsolidated joint ventures.

30

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures, continued

Funds From Operations:

The Company calculates Funds From Operations available to common stockholders and common unitholders (“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.

Management believes that FFO is a useful supplemental measure of the Company’s 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 the Company’s 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, the Company’s 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, management believes that FFO along with the required GAAP presentations provides a more complete measurement of the Company’s performance relative to its 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 the Company’s operating performance since 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 the Company’s properties, which are significant economic costs and could materially impact the Company’s results from operations.

Funds Available for Distribution:

Management believes that Funds Available for Distribution available to common stockholders and common unitholders (“FAD”) is a useful supplemental measure of the Company’s liquidity. The Company computes FAD by adding to FFO the non-cash amortization of deferred financing costs, debt discounts and premiums and share-based compensation awards, amortization of above (below) market rents for acquisition properties and non-cash executive compensation expense then subtracting recurring tenant improvements, leasing commissions and capital expenditures and eliminating the net effect of straight-line rents, amortization of deferred revenue related to tenant improvements, adjusting for other lease related items and after adjustment for amounts attributable to noncontrolling interests in consolidated property partnerships. FAD provides an additional perspective on the Company’s ability to fund cash needs and make distributions to stockholders by adjusting FFO for the impact of certain cash and non-cash items, as well as adjusting FFO for recurring capital expenditures and leasing costs. Management also believes that FAD provides useful information to the investment community about the Company’s financial position as compared to other REITs since FAD is a liquidity measure used by other REITs. However, other REITs may use different methodologies for calculating FAD and, accordingly, the Company’s FAD may not be comparable to other REITs.

31

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Definitions Included in Supplemental

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 to 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. Amounts represent percentage of total portfolio annualized contractual base rental revenue.

Change in GAAP/Cash Rents (Leases Commenced):

Calculated as the change between GAAP/cash rents for new/renewed leases and the expiring GAAP/cash rents for the same space. Excludes leases for which the space was vacant longer than one year, or vacant when the property was acquired by the Company.

Change in GAAP/Cash Rents (Leases Executed):

Calculated as the change between GAAP/cash rents for signed leases and the expiring GAAP/cash rents for the same space. Excludes leases for which the space was vacant longer than one year, or vacant when the property was acquired by the Company.

Estimated Stabilization Date (Development):

Management’s estimation of the earlier of stabilized occupancy (95%) or one year from the date of the cessation of major base building construction activities for office and retail properties and upon substantial completion for residential properties.

FAD Payout Ratio:

Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by FAD.

First Generation Capital Expenditures:

Capital expenditures for newly acquired space, newly developed, redeveloped, or repositioned space. These costs are not subtracted in our calculation of FAD.

Fixed Charge Coverage Ratio:

Calculated as EBITDA, as adjusted, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums) and current year accrued preferred dividends.

FFO Payout Ratio:

Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by FFO attributable to common stockholders and unitholders.

32

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Definitions Included in Supplemental, continued

GAAP Effective Rate:

The rate at which interest expense is recorded for financial reporting purposes, which reflects the amortization of any discounts/premiums, excluding debt issuance costs.

Interest Coverage Ratio:

Calculated as EBITDA, as adjusted, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums).

Net Effect of Straight-Line Rents:

Represents the straight-line rent income recognized during the period offset by cash received during the period that was applied to deferred rents receivable balances for terminated leases and the provision for bad debts recorded for deferred rent receivable balances.

Net Operating Income Margins:

Calculated as Net Operating Income divided by total revenues.

Retention Rates (Leases Commenced):

Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.

Same Store Portfolio:

Our Same Store portfolio includes all of our properties 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, 2019 and still owned and included in the stabilized portfolio as of March 31, 2020. It does not include undeveloped land, development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, completed residential developments not yet stabilized and properties held-for-sale. We define redevelopment properties as those projects for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property.

Stated Interest Rate:

The rate at which interest expense is recorded per the respective loan documents, excluding the impact of the amortization of any debt discounts/premiums.

Tenant Improvement Phase:

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.

33

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Reconciliation of Net Income Available to Common Stockholders to Same Store Net Operating Income

(unaudited, $ in thousands)

Three Months Ended March 31,
2020 2019
Net Income Available to Common Stockholders $ 39,817 $ 36,903
Net income attributable to noncontrolling common units of the Operating Partnership 705 700
Net income attributable to noncontrolling interests in consolidated property partnerships 4,896 4,191
Net Income 45,418 41,794
Adjustments:
General and administrative expenses 19,010 23,341
Leasing costs 1,456 1,757
Depreciation and amortization 74,370 66,135
Interest income and other net investment loss (gain) 3,128 (1,828 )
Interest expense 14,444 11,243
Net Operating Income, as defined ^(1)^ 157,826 142,442
Wholly-Owned Properties 136,316 122,834
Consolidated property partnerships:^(2)^
100 First Street ^(3)^ 5,460 6,015
303 Second Street ^(3)^ 10,261 7,798
Crossing/900 ^(4)^ 5,789 5,795
Net Operating Income, as defined ^(1)^ 157,826 142,442
Non-Same Store GAAP Net Operating Income ^(5)^ (23,345 ) (7,667 )
Same Store GAAP Net Operating Income 134,481 134,775
GAAP to Cash Adjustments:
GAAP Operating Revenues Adjustments, net ^(6)^ (5,367 ) (22,430 )
GAAP Operating Expenses Adjustments, net ^(7)^ (17 ) (4 )
Same Store Cash Net Operating Income $ 129,097 $ 112,341

________________________

(1) Please refer to pages 29-30 for Management Statements on Net Operating Income, Same Store Net Operating Income and Same Store Cash Net Operating Income.
(2) Reflects GAAP Net Operating Income for all periods presented.
--- ---
(3) For all periods presented, an unrelated third party entity owned approximately 44% common equity interests in two properties located at 100 First Street and 303 Second Street in San Francisco, CA.
--- ---
(4) For all periods presented, an unrelated third party entity owned an approximate 7% common equity interest in two properties located at 900 Jefferson Avenue and 900 Middlefield Road in Redwood City, CA.
--- ---
(5) Includes the results of one office property disposed of during the second quarter of 2019, one property disposed of during the fourth quarter or 2019, one office property we acquired in the third quarter of 2019, our completed residential development that is not yet stabilized and our in-process and future development projects.
--- ---
(6) Includes the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements and amortization of above and below market lease intangibles.
--- ---
(7) Includes the amortization of above and below market lease intangibles for ground leases and the provision for bad debts.
--- ---

34

Kilroy Realty Corporation

First Quarter 2020 Supplemental Financial Report

Reconciliation of Net Income Available to Common Stockholders to EBITDA, as Adjusted

(unaudited, $ in thousands)

Three Months Ended March 31,
2020 2019
Net Income Available to Common Stockholders $ 39,817 $ 36,903
Interest expense 14,444 11,243
Depreciation and amortization 74,370 66,135
Net income attributable to noncontrolling common units of the Operating Partnership 705 700
Net income attributable to noncontrolling interests in consolidated property partnerships 4,896 4,191
EBITDA, as adjusted^(1)^ $ 134,232 $ 119,172

________________________

(1) Please refer to page 30 for a Management Statement on EBITDA, as adjusted. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by NAREIT, as the Company does not have any unconsolidated joint ventures.

35

		Exhibit

Exhibit 99.2

krcletterheada01.jpg

Contact: FOR RELEASE:
Tyler H. Rose April 29, 2020
Executive Vice President
and Chief Financial Officer
(310) 481-8484<br><br>or
Michelle Ngo
Senior Vice President
and Treasurer
(310) 481-8581

KILROY REALTY CORPORATION REPORTS

FIRST QUARTER FINANCIAL RESULTS

LOS ANGELES, April 29, 2020 - Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its first quarter ended March 31, 2020.

COVID-19 Pandemic Key Business Update

Balance Sheet / Liquidity Highlights

• As of the date of this release, the company has approximately $1.0 billion of cash and cash equivalents on hand
• In March, fully physically settled equity forward sale agreements in connection with the February 2020 common stock offering and ATM transactions executed throughout 2019, resulting in the issuance of an aggregate of 8,897,110 shares of common stock for aggregate net proceeds of $722.2 million
--- ---
• In April, completed a private placement of $350.0 million aggregate principal amount of ten-year, 4.27% unsecured senior notes
--- ---
• Current availability under the company’s revolving credit facility totals $370.0 million
--- ---
• No material debt maturities until 2023, excluding the company’s revolving credit facility and term loan facility, which mature in the third quarter of 2022
--- ---
• Weighted average debt maturity of approximately seven years
--- ---

Operations

• All stabilized properties remain open and operational, with essential staff and key procedures in place to manage through the COVID-19 pandemic
• As of the date of this release, across all property types, collected approximately 96% of our April 2020 contractual rent billings, excluding a rent relief program with certain retail tenants.  Adjusted for the retail rent relief program, collected 93% of contractual rent billings
--- ---
• Limited lease expirations in 2020 and 2021, with only one expiration greater than 125,000 square feet in the fourth quarter of 2020
--- ---

1

Development

• $2.0 billion of projects under development
◦ Remaining spending to complete the projects of approximately $725.0 million
--- ---
◦ Projects fully funded with the liquidity reported under “Balance Sheet/Liquidity Highlights”
--- ---
◦ Projects 90% leased across office and life science space
--- ---
◦ As of the date of this release, all the projects are under active construction
--- ---

First Quarter Highlights

Financial Results

• Net income available to common stockholders per share of $0.37
• Funds from operations available to common stockholders and unitholders (“FFO”) per share of $1.00
--- ---
• Net income and FFO per share include a reduction in revenue of approximately $0.06 per share related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic
--- ---
• Revenues of $221.3 million
--- ---

Stabilized Portfolio

• Stabilized portfolio was 93.5% occupied and 97.3% leased at March 31, 2020
• Signed approximately 222,000 square feet of new or renewing leases
--- ---
◦ Rents were up 57.5% on a GAAP basis and 45.3% on a cash basis
--- ---

Development

• In January, transferred 333 Dexter, a 635,000 square foot office development project located in the South Lake Union submarket of Seattle from the under construction phase to the tenant improvement phase. The project is 100% leased to a Fortune 50 publicly-traded company
• In January, transferred Netflix // On Vine, a 355,000 square foot office development project located in the Hollywood submarket of Los Angeles, from the under construction phase to the tenant improvement phase. The project is 100% leased to Netflix, Inc.
--- ---
• In February, completed construction on 225 residential units, the second of three phases of the residential development at our One Paseo mixed-use project in the Del Mar submarket of San Diego. Together, Phases I and II were 44% leased and are in lease-up
--- ---
• In March, added The Exchange on 16th, a $585.0 million, 750,000 square foot development project located in San Francisco’s Mission Bay district, to the stabilized portfolio. The office component of the project is 100% leased to Dropbox
--- ---
• In March, added One Paseo Retail, a 96,000 square foot retail development project, part of the One Paseo mixed-use project located in San Diego’s Del Mar submarket, to the stabilized portfolio
--- ---
• In March, transferred One Paseo Office, a 285,000 square foot development project located in the Del Mar submarket of San Diego from the under construction phase to the tenant improvement phase
--- ---

Results for the Quarter Ended March 31, 2020

For the first quarter ended March 31, 2020, KRC reported net income available to common stockholders of $39.8 million, or $0.37 per share, compared to $36.9 million, or $0.36 per share, in the first quarter of 2019. FFO in the first quarter of 2020 was $110.2 million, or $1.00 per share, compared to $99.8 million, or $0.95 per share, in the first quarter of 2019. Current period net income available to common stockholders and FFO per share included a reduction in revenue of $0.06 per share primarily related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic.

2

All per share amounts in this report are presented on a diluted basis.

Net Income Available to Common Stockholders / FFO Guidance and Outlook

Due to the uncertainty resulting from the COVID-19 pandemic, the company is withdrawing its previous full year 2020 guidance.

Conference Call and Audio Webcast

KRC management will discuss first quarter results and the current business environment during the company’s April 30, 2020 earnings conference call. The call will begin at 10:00 a.m. Pacific Time and last approximately one hour. Those interested in listening via the Internet can access the conference call at https://services.choruscall.com/links/krc200430.html. 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 (866) 312-7299. International callers should dial (412) 317-1070. In order to bypass speaking to the operator on the day of the call, please pre-register anytime at http://dpregister.com/10136122. A replay of the conference call will be available via telephone on April 30, 2020 through May 7, 2020 by dialing (877) 344-7529 and entering passcode 10136122. International callers should dial (412) 317-0088 and enter the same passcode. The replay will also be available on our website at http://investors.kilroyrealty.com/CustomPage/Index?KeyGenPage=1073743647.

About Kilroy Realty Corporation

Kilroy Realty Corporation (NYSE: KRC, the “company”, “KRC”) is a leading West Coast landlord and developer, with a major presence in San Diego, Greater Los Angeles, the San Francisco Bay Area, and the Pacific Northwest. The company has earned global recognition for sustainability, building operations, innovation and design. As pioneers and innovators in the creation of a more sustainable real estate industry, the company’s approach to modern business environments helps drive creativity, productivity and employee retention for some of the world’s leading technology, entertainment, life science and business services companies.

KRC is a publicly traded real estate investment trust (“REIT”) and member of the S&P MidCap 400 Index with more than seven decades of experience developing, acquiring and managing office and mixed-use projects.

As of March 31, 2020, KRC’s stabilized portfolio totaled approximately 14.3 million square feet of primarily office and life science space that was 93.5% occupied and 97.3% leased. The company also had 200 residential units in Hollywood that had a quarterly average occupancy of 93.5% and another 462 residential units in San Diego that were in lease-up. In addition, KRC had eight in-process development projects with an estimated total investment of $2.0 billion, totaling approximately 2.3 million square feet of office and life science space, and 339 residential units. The office and life science space was 90% leased.

A Leader in Sustainability and Commitment to Corporate Social Responsibility

KRC is listed on the Dow Jones Sustainability World Index and has been recognized by industry organizations around the world. KRC’s stabilized portfolio was 65% LEED-certified with 70% of eligible properties ENERGY STAR-certified as of March 31, 2020.

The company has been recognized by GRESB, the Global Real Estate Sustainability Benchmark, as the sustainability leader in the Americas for six consecutive years. Other honors have included the National Association of Real Estate Investment Trust’s (NAREIT) Leader in the Light award for six consecutive years and ENERGY STAR Partner of the Year for seven years as well as ENERGY STAR’s highest honor of Sustained Excellence, for the past five years.

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A big part of the company’s foundation is its commitment to enhancing employee growth, satisfaction and wellness while maintaining a diverse and thriving culture. The company was recently named to Bloomberg’s 2020 Gender Equality Index—recognizing companies committed to supporting gender equality through policy development, representation, and transparency.

More information is available at http://www.kilroyrealty.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 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 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; our ability to re-lease property at or above current market rates; 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; 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; our ability to maintain our status as a REIT; and uncertainties regarding the impact of the COVID-19 pandemic, and restrictions intended to prevent its spread, on our business and the economy generally. These factors 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 our business and financial performance, see the factors included under the caption “Risk Factors” in our quarterly report on Form 10-Q for the period ending March 31, 2020 to be filed on April 30, 2020 and in our annual report on Form 10-K for the year ended December 31, 2019 and our other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information and speak only as of the dates on which they are made. We assume no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent

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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.

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KILROY REALTY CORPORATION

SUMMARY OF QUARTERLY RESULTS

(unaudited; in thousands, except per share data)

Three Months Ended March 31,
2020 2019
Revenues $ 221,328 $ 201,202
Net income available to common stockholders $ 39,817 $ 36,903
Weighted average common shares outstanding – basic 106,875 100,901
Weighted average common shares outstanding – diluted 107,390 101,443
Net income available to common stockholders per share – basic $ 0.37 $ 0.36
Net income available to common stockholders per share – diluted $ 0.37 $ 0.36
Funds From Operations ^(1)(2)^ $ 110,173 $ 99,812
Weighted average common shares/units outstanding – basic^(3)^ 110,031 104,062
Weighted average common shares/units outstanding – diluted^(4)^ 110,546 104,603
Funds From Operations per common share/unit – basic ^(2)^ $ 1.00 $ 0.96
Funds From Operations per common share/unit – diluted ^(2)^ $ 1.00 $ 0.95
Common shares outstanding at end of period 115,068 100,967
Common partnership units outstanding at end of period 2,021 2,023
Total common shares and units outstanding at end of period 117,089 102,990
March 31, 2020 March 31, 2019
Stabilized office portfolio occupancy rates: ^(5)^
Greater Los Angeles 94.0 % 95.6 %
Orange County N/A 90.3 %
San Diego County 88.3 % 90.2 %
San Francisco Bay Area 94.3 % 92.5 %
Greater Seattle 95.5 % 88.8 %
Weighted average total 93.5 % 92.5 %
Total square feet of stabilized office properties owned at end of period: ^(5)^
Greater Los Angeles 4,027 3,956
Orange County N/A 272
San Diego County 2,145 2,046
San Francisco Bay Area 6,350 5,160
Greater Seattle 1,802 1,802
Total 14,324 13,236

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(1) Reconciliation of Net income available to common stockholders to Funds From Operations available to common stockholders and unitholders and management statement on Funds From Operations are included after the Consolidated Statements of Operations.
(2) Reported amounts are attributable to common stockholders, common unitholders, and restricted stock unitholders.
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(3) Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding.
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(4) Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, and contingently issuable shares and assuming the exchange of all common limited partnership units outstanding.
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(5) Occupancy percentages and total square feet reported are based on the company’s stabilized office portfolio for the periods presented. Occupancy percentages and total square feet shown for March 31, 2019 include the office properties that were sold subsequent to March 31, 2019.
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KILROY REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited; in thousands)

March 31, 2020 December 31, 2019
ASSETS
REAL ESTATE ASSETS:
Land and improvements $ 1,506,357 $ 1,466,166
Buildings and improvements 5,997,523 5,866,477
Undeveloped land and construction in progress 2,318,236 2,296,130
Total real estate assets held for investment 9,822,116 9,628,773
Accumulated depreciation and amortization (1,622,369 ) (1,561,361 )
Total real estate assets held for investment, net 8,199,747 8,067,412
Cash and cash equivalents 762,134 60,044
Restricted cash 16,300 16,300
Marketable securities 19,984 27,098
Current receivables, net 16,534 26,489
Deferred rent receivables, net 352,352 337,937
Deferred leasing costs and acquisition-related intangible assets, net 204,392 212,805
Right of use ground lease assets 96,145 96,348
Prepaid expenses and other assets, net 67,559 55,661
TOTAL ASSETS $ 9,735,147 $ 8,900,094
LIABILITIES AND EQUITY
LIABILITIES:
Secured debt, net $ 257,359 $ 258,593
Unsecured debt, net 3,050,103 3,049,185
Unsecured line of credit 380,000 245,000
Accounts payable, accrued expenses and other liabilities 417,547 418,848
Ground lease liabilities 98,247 98,400
Accrued dividends and distributions 57,620 53,219
Deferred revenue and acquisition-related intangible liabilities, net 130,843 139,488
Rents received in advance and tenant security deposits 65,913 66,503
Total liabilities 4,457,632 4,329,236
EQUITY:
Stockholders’ Equity
Common stock 1,151 1,060
Additional paid-in capital 5,067,181 4,350,917
Distributions in excess of earnings (76,182 ) (58,467 )
Total stockholders’ equity 4,992,150 4,293,510
Noncontrolling Interests
Common units of the Operating Partnership 87,655 81,917
Noncontrolling interests in consolidated property partnerships 197,710 195,431
Total noncontrolling interests 285,365 277,348
Total equity 5,277,515 4,570,858
TOTAL LIABILITIES AND EQUITY $ 9,735,147 $ 8,900,094

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KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share data)

Three Months Ended March 31,
2020 2019
REVENUES
Rental income $ 218,633 $ 199,382
Other property income 2,695 1,820
Total revenues 221,328 201,202
EXPENSES
Property expenses 38,983 38,149
Real estate taxes 22,202 18,639
Ground leases 2,317 1,972
General and administrative expenses 19,010 23,341
Leasing costs 1,456 1,757
Depreciation and amortization 74,370 66,135
Total expenses 158,338 149,993
OTHER (EXPENSES) INCOME
Interest income and other net investment (loss) gain (3,128 ) 1,828
Interest expense (14,444 ) (11,243 )
Total other (expenses) income (17,572 ) (9,415 )
NET INCOME 45,418 41,794
Net income attributable to noncontrolling common units of the Operating Partnership (705 ) (700 )
Net income attributable to noncontrolling interests in consolidated property partnerships (4,896 ) (4,191 )
Total income attributable to noncontrolling interests (5,601 ) (4,891 )
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 39,817 $ 36,903
Weighted average common shares outstanding – basic 106,875 100,901
Weighted average common shares outstanding – diluted 107,390 101,443
Net income available to common stockholders per share – basic $ 0.37 $ 0.36
Net income available to common stockholders per share – diluted $ 0.37 $ 0.36

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KILROY REALTY CORPORATION

FUNDS FROM OPERATIONS

(unaudited; in thousands, except per share data)

Three Months Ended March 31,
2020 2019
Net income available to common stockholders $ 39,817 $ 36,903
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 705 700
Net income attributable to noncontrolling interests in consolidated property partnerships 4,896 4,191
Depreciation and amortization of real estate assets 72,438 64,971
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (7,683 ) (6,953 )
Funds From Operations^(1)(2)(3)^ $ 110,173 $ 99,812
Weighted average common shares/units outstanding – basic ^(4)^ 110,031 104,062
Weighted average common shares/units outstanding – diluted ^(5)^ 110,546 104,603
Funds From Operations per common share/unit – basic ^(2)^ $ 1.00 $ 0.96
Funds From Operations per common share/unit – diluted ^(2)^ $ 1.00 $ 0.95

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(1) We calculate Funds From Operations available to common stockholders and common unitholders (“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.

(2) Reported amounts are attributable to common stockholders, common unitholders, and restricted stock unitholders.
(3) FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $5.0 million and $3.8 million for the three months ended March 31, 2020 and 2019, respectively.
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(4) Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding.
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(5) Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, and contingently issuable shares and assuming the exchange of all common limited partnership units outstanding.
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