krc-20211027


Q3 2021 Supplemental Financial Report

Table of Contents


			Page
Corporate Data and Financial Highlights
Company Background			1
Executive Summary			2
Financial Highlights			3
Market Capitalization and Common Stock Data			4
Net Income Available to Common Stockholders / FFO Guidance and Outlook			5
Consolidated Balance Sheets			6
Consolidated Statements of Operations			7
Funds From Operations and Funds Available for Distribution			8-9
Net Operating Income			10
Portfolio Data
Same Store Analysis			12
Stabilized Portfolio Occupancy Overview by Region			13-17
Information on Leases Commenced & Leases Executed			18
Stabilized Portfolio Capital Expenditures			19
Stabilized Portfolio Lease Expirations			20-21
Top Fifteen Tenants			22
2021 Operating Property Acquisitions			23
2021 Operating Property Dispositions			24
Consolidated Ventures (Noncontrolling Property Partnerships)			25
Development
Stabilized Office/Life Science Development Projects and Completed Residential Development Projects			27
In-Process Development			28
Committed Redevelopment			29
Future Development Pipeline			30
Debt and Capitalization Data
Capital Structure			32
Debt Analysis			33
Non-GAAP Supplemental Measures			35-37
Definitions & Reconciliations			39-42

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, Texas and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses; 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 annual report on Form 10-K for the year ended December 31, 2020, 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.

Corporate Data and Financial Highlights

–Company Background

–Executive Summary

–Financial Highlights

–Market Capitalization and Common Stock Data

–Net Income Available to Common Stockholders / FFO Guidance and Outlook

–Consolidated Balance Sheets

–Consolidated Statements of Operations

–Funds From Operations and Funds Available for Distribution

–Net Operating Income


Q3 2021 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 a leading U.S. landlord and developer. The Company has over seven decades of experience developing, acquiring and managing office, life science and mixed-use real estate assets. At September 30, 2021, the Company’s stabilized portfolio totaled approximately 15.2 million square feet of primarily office and life science space that was 91.5% occupied and 93.9% leased located in the coastal regions of Los Angeles, San Diego, the San Francisco Bay Area and Greater Seattle and 1,001 residential units in the Los Angeles and San Diego regions. The Company also recently acquired a development project in Austin, Texas.

Board of Directors

Executive and Senior Management Team

Investor Relations

John Kilroy

Chairman

John Kilroy

Chief Executive Officer

12200 W. Olympic Blvd., Suite 200
Los Angeles, CA 90064
(310) 481-8400
Web: www.kilroyrealty.com
E-mail: [email protected]

Edward F. Brennan, PhD

Lead Independent

Tyler H. Rose

President

Jolie Hunt

Robert Paratte

Executive VP, Leasing and Business Development

Scott S. Ingraham

Heidi R. Roth

Executive VP, Chief Administrative Officer

Louisa Ritter

Justin W. Smart

Executive VP, Development and Construction Services

Gary R. Stevenson

Michelle Ngo

Senior VP, Chief Financial Officer and Treasurer

Peter B. Stoneberg

John Osmond

Senior VP, Head of Asset Management

Eliott Trencher

Senior VP, Chief Investment Officer

Merryl Werber

Senior VP, Chief Accounting Officer and Controller

Equity Research Coverage

BofA Securities

Jefferies LLC

James Feldman

(646) 855-5808

Peter Abramowitz

(212) 336-7241

BMO Capital Markets Corp.

J.P. Morgan

John P. Kim

(212) 885-4115

Anthony Paolone

(212) 622-6682

BTIG

KeyBanc Capital Markets

Thomas Catherwood

(212) 738-6140

Craig Mailman

(917) 368-2316

Citigroup Investment Research

RBC Capital Markets

Emmanuel Korchman

(212) 816-1382

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

Wells Fargo

Caitlin Burrows

(212) 902-4736

Blaine Heck

(443) 263-6529

Green Street Advisors

Wolfe Research

Daniel Ismail

(949) 640-8780

Andrew Rosivach

(646) 582-9250

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.


Q3 2021 Supplemental Financial Report

Executive Summary



Quarterly Financial Highlights						Quarterly Operating Highlights

• Net income available to common stockholders per share of $0.40						• Stabilized portfolio was 91.5% occupied and 93.9% leased at quarter-end

• FFO per share of $0.98						• 438,037 square feet of leases commenced in the stabilized portfolio

• Revenues of $232.3 million						• 459,498 square feet of leases executed in the stabilized portfolio

• Same Store NOI increased 3.2% compared to the prior year						◦GAAP rents increased approximately 24.4% from prior levels

• Same Store Cash NOI increased 16.6% compared to the prior year; adjusted for						◦Cash rents increased approximately 8.3% from prior levels
lease termination fees received, of which $17.3 million was received in 2021,
increased 3.7%









Capital Markets Highlights						Strategic Highlights

• In September, increased the regular quarterly cash dividend to common						• In August, added One Paseo - Office Building 2, comprised of 196,444 square feet
stockholders by 4% to $0.52 per share; an annualized rate of $2.08 per share						at our One Paseo mixed-use project in the Del Mar submarket of San Diego to the
						stabilized portfolio. The One Paseo office project is now 100% leased and 87%
• In October, completed a public offering of $450.0 million of 12-year senior						occupied
unsecured green bonds at 2.650% due November 2033
						• In August, commenced construction on 9514 Towne Centre Drive, a 71,000 square
• In October, completed the early redemption of all $300.0 million of 3.800%						foot office property located in the University Towne Center submarket of San Diego.
unsecured senior notes due January 2023 for a price of approximately $313.4						The building is 100% leased
million, including make whole redemption fees and other related costs
						• In September, completed the acquisition of 2001 West 8th Avenue, a 539,226
• As of the date of this report, approximately $1.5 billion of total liquidity comprised						square foot office project in the Denny Regrade submarket of Seattle for $490.0
of $390.0 million of cash and cash equivalents and full availability under the $1.1						million. The building is 100% leased; Amazon occupies approximately 70% of the
billion unsecured revolving credit facility						project

						• In September, added the first of three life science buildings located at Kilroy Oyster
						Point - Phase 1 in South San Francisco to the stabilized portfolio. The 234,892
						square foot building is 100% leased to Cytokinetics and revenue recognition
						commenced on October 1, 2021

						• In September, in connection with the execution of three new life science leases
						totaling 330,000 square feet, committed three buildings in San Diego to our
						redevelopment program: 12340 El Camino Real and 12400 High Bluff Drive in the
						Del Mar submarket and 4690 Executive Drive in the University Towne Center
						submarket, which will be converted in phases from office to life science use

________________________

Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 39-40 “Definitions Included in Supplemental.”


Q3 2021 Supplemental Financial Report

Financial Highlights

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


		Three Months Ended
		9/30/2020 (1)			12/31/2020 (1)			3/31/2021 (1)			6/30/2021			9/30/2021

INCOME ITEMS:

	Lease Termination Fees, net	424			732			53			1,411			1,710

	Capitalized Interest and Debt Costs	19,339			18,280			16,908			18,073			23,447
	Net Income Available to Common Stockholders	49,028			78,642			497,631			35,839			47,028


	Net Income Available to Common Stockholders per common share – diluted (2)	$	0.42		$	0.67		$	4.26		$	0.30		$	0.40
	Funds From Operations per common share – diluted (3)	$	0.99		$	0.95		$	0.98		$	0.88		$	0.98
RATIOS:
	Net Operating Income Margins	71.4		%	71.4		%	72.0		%	71.4		%	71.3		%
	Fixed Charge Coverage Ratio	4.0x			3.8x			4.0x			3.7x			3.8x
	FFO Payout Ratio	49.9		%	52.0		%	50.6		%	56.2		%	52.7		%
	FAD Payout Ratio	66.3		%	79.2		%	75.3		%	76.2		%	54.1		%

______________________________________________________

Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 39-40 “Definitions Included in Supplemental.”

(1)Net Income Available to Common Stockholders, EBITDA, as adjusted, and Fund From Operations include net charges of $1.0 million, $3.6 million, and $1.8 million related to the creditworthiness of tenants as a result of the COVID-19 pandemic for the three months ended March 31, 2021, December 31, 2020, and September 30, 2020, respectively. Net Income Available to Common Stockholders also includes $0.5 million, $457.3 million and $35.5 million of gains on sale of depreciable operating properties for the three months ended June 30, 2021, March 31, 2021 and December 31, 2020.

(2)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.

(3)Please refer to page 8 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 9 for a reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution to common stockholders and unitholders.

(4)Please refer to pages 41-42 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.


Q3 2021 Supplemental Financial Report

Market Capitalization and Common Stock Data

(unaudited, $ and shares/units in thousands, except per share amounts)

Market Capitalization (1)


Dividends per common share (2) (3)	$	0.50	$	0.50	$	0.50	$	0.50	$	0.52
Closing common shares (4)	115,247		116,036		116,450		116,454		116,462
Closing common partnership units (4)	1,932		1,151		1,151		1,151		1,151
	117,179		117,187		117,601		117,605		117,613

______________________________________________________

(1)Please refer to page 32 for additional information regarding our capital structure.

(2)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.

(3)In September 2021, the regular quarterly cash dividend was increased to an annualized rate of $2.08 per share, a 4.0% increase from the previous annualized divided level of $2.00 per share.

(4)As of the end of the period.


Q3 2021 Supplemental Financial Report

Net Income Available to Common Stockholders / FFO Guidance and Outlook

(unaudited, $ and shares/units in thousands, except per share amounts)

The Company is providing an updated guidance range of NAREIT-defined FFO per diluted share for its fiscal year 2021 of $3.74 to $3.80 per share with a midpoint of $3.77 per share.


	Full Year 2021 Range
	Low End		High End
Net income available to common stockholders per share - diluted	$	5.30	$	5.36

Weighted average common shares outstanding - diluted (1)	117,650		117,650

Net income available to common stockholders	$	624,000	$	631,000
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership	6,200		6,400
Net income attributable to noncontrolling interests in consolidated property partnerships	23,500		24,500
Depreciation and amortization of real estate assets	285,000		285,000
Gains on sales of depreciable real estate	(458,000)		(458,000)
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships	(36,000)		(37,000)
Funds From Operations (2)	$	444,700	$	451,900

Weighted average common shares and units outstanding - diluted (3)	118,850		118,850

FFO per common share/unit - diluted (3)	$	3.74	$	3.80

Key 2021 assumptions:

•Guidance range includes approximately $13.4 million of costs related to the early redemption of the $300.0 million of $3.800% senior notes

•Same Store Cash NOI growth of 5.0% to 5.5% (2)

•Year-end occupancy of approximately 91.5%

•Total remaining development spending of approximately $100 million to $150 million

________________________

(1)Calculated based on estimated weighted average shares outstanding including non-participating share-based awards.

(2)See pages 36-37 for Management Statements on Funds From Operations and Same Store Cash Net Operating Income.

(3)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. Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.

The Company’s guidance estimates for the full year 2021, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this report, reflect management’s views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this report. Although these guidance estimates reflect the impact on the Company’s operating results of an assumed range of future disposition activity, these guidance estimates do not include any estimates of possible future gains or losses from possible future dispositions because the magnitude of gains or losses on sales of depreciable operating properties, if any, will depend on the sales price and depreciated cost basis of the disposed assets at the time of disposition, information that is not known at the time the Company provides guidance, and the timing of any gain recognition will depend on the closing of the dispositions, information that is also not known at the time the Company provides guidance and may occur after the relevant guidance period. We caution you not to place undue reliance on our assumed range of future disposition activity because any potential future disposition transactions will ultimately depend on the market conditions and other factors, including but not limited to the Company’s capital needs, the particular assets being sold and the Company’s ability to defer some or all of the taxable gain on the sales. These guidance estimates also do not include the impact on operating results from potential future acquisitions, possible capital markets activity, possible future impairment charges or any events outside of the Company’s control. There can be no assurance that the Company’s actual results will not differ materially from these estimates.


Q3 2021 Supplemental Financial Report

Consolidated Balance Sheets

(unaudited, $ in thousands)


	9/30/2021		6/30/2021		3/31/2021		12/31/2020		9/30/2020

ASSETS:
Land and improvements	$	1,702,423	$	1,551,653	$	1,539,542	$	1,628,848	$	1,612,224
Buildings and improvements	7,282,341		6,682,208		6,480,857		6,783,092		6,535,637
Undeveloped land and construction in progress	2,237,742		2,318,215		1,771,762		1,778,106		1,938,923
Total real estate assets held for investment	11,222,506		10,552,076		9,792,161		10,190,046		10,086,784
Accumulated depreciation and amortization	(1,962,730)		(1,900,740)		(1,838,338)		(1,798,646)		(1,744,325)
Total real estate assets held for investment, net	9,259,776		8,651,336		7,953,823		8,391,400		8,342,459

Cash and cash equivalents	348,417		519,307		657,819		731,991		849,009
Restricted cash	13,042		450,457		1,028,759		91,139		16,300
Marketable securities	27,285		25,885		24,089		27,481		25,073
Current receivables, net	11,646		9,773		12,855		12,007		16,083
Deferred rent receivables, net	394,297		384,475		370,470		386,658		375,939
Deferred leasing costs and acquisition-related intangible assets, net	229,334		184,510		190,721		210,949		208,306
Right of use ground lease assets	127,657		141,529		95,312		95,523		95,733
Prepaid expenses and other assets, net	60,063		67,494		50,505		53,560		55,706
TOTAL ASSETS	$	10,471,517	$	10,434,766	$	10,384,353	$	10,000,708	$	9,984,608

LIABILITIES AND EQUITY:
Liabilities:
Secured debt, net	$	249,690	$	251,000	$	252,298	$	253,582	$	254,854
Unsecured debt, net	3,673,183		3,672,152		3,671,094		3,670,099		3,668,976

Accounts payable, accrued expenses and other liabilities	441,357		429,168		408,552		445,100		458,421
Ground lease liabilities	125,676		143,885		97,617		97,778		97,936
Accrued dividends and distributions	61,845		59,455		59,472		59,431		59,416
Deferred revenue and acquisition-related intangible liabilities, net	160,687		122,902		123,794		128,523		131,558
Rents received in advance and tenant security deposits	68,441		62,739		68,634		68,874		61,483

Total liabilities	4,780,879		4,741,301		4,681,461		4,723,387		4,732,644
Equity:
Stockholders’ Equity
Common stock	1,165		1,165		1,165		1,160		1,152
Additional paid-in capital	5,146,049		5,134,320		5,122,584		5,131,916		5,089,926
Retained earnings (distributions in excess of earnings)	297,250		311,458		334,496		(103,133)		(122,936)
Total stockholders’ equity	5,444,464		5,446,943		5,458,245		5,029,943		4,968,142
Noncontrolling Interests
Common units of the Operating Partnership	53,788		53,810		53,930		49,875		83,226
Noncontrolling interests in consolidated property partnerships	192,386		192,712		190,717		197,503		200,596
Total noncontrolling interests	246,174		246,522		244,647		247,378		283,822
Total equity	5,690,638		5,693,465		5,702,892		5,277,321		5,251,964
TOTAL LIABILITIES AND EQUITY	$	10,471,517	$	10,434,766	$	10,384,353	$	10,000,708	$	9,984,608


Q3 2021 Supplemental Financial Report

Consolidated Statements of Operations

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
REVENUES
Rental income (1)	$	230,720	$	227,122	$	689,849	$	664,111
Other property income	1,606		1,192		4,106		4,954
Total revenues	232,326		228,314		693,955		669,065
EXPENSES
Property expenses	40,842		39,236		120,183		116,048
Real estate taxes	24,153		23,868		71,528		67,924

Ground leases	1,708		2,119		5,559		6,766
General and administrative expenses (2)	22,990		18,572		69,482		76,179

Leasing costs	798		986		2,373		3,772
Depreciation and amortization	73,213		71,863		222,734		226,318
Total expenses	163,704		156,644		491,859		497,007
OTHER INCOME (EXPENSES)
Interest income and other net investment gain	976		1,869		3,686		1,579
Interest expense	(16,105)		(19,468)		(59,829)		(49,796)


Gain on sale of depreciable operating property	—		—		457,831		—

Total other (expenses) income	(15,129)		(17,599)		401,688		(48,217)
NET INCOME	53,493		54,071		603,784		123,841
Net income attributable to noncontrolling common units of the Operating Partnership	(460)		(785)		(5,700)		(1,857)
Net income attributable to noncontrolling interests in consolidated property partnerships	(6,005)		(4,258)		(17,586)		(13,521)
Total income attributable to noncontrolling interests	(6,465)		(5,043)		(23,286)		(15,378)




NET INCOME AVAILABLE TO COMMON STOCKHOLDERS (1)	$	47,028	$	49,028	$	580,498	$	108,463
Weighted average common shares outstanding – basic	116,457		115,226		116,418		112,406
Weighted average common shares outstanding – diluted	116,963		115,668		116,894		112,876
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE
Net income available to common stockholders per share – basic	$	0.40	$	0.42	$	4.98	$	0.95
Net income available to common stockholders per share – diluted	$	0.40	$	0.42	$	4.96	$	0.95

________________________

(1)Net income available to common stockholders is presented net of charges related to the creditworthiness of tenants offset by charges attributable to noncontrolling interests in consolidated property partnerships. For the three and nine months ended September 30, 2020, rental income includes $0.6 million and $13.0 million, respectively, of write-offs related to the cumulative impact of transitioning certain tenants to a cash basis of reporting as a result of the COVID-19 pandemic.

(2)Includes $0.1 million and $20.5 million of severance costs for the three and nine months ended September 30, 2020, respectively.


Q3 2021 Supplemental Financial Report

Funds From Operations and Funds Available for Distribution

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

FUNDS FROM OPERATIONS: (1)
Net income available to common stockholders	$	47,028	$	49,028	$	580,498	$	108,463
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership	460		785		5,700		1,857
Net income attributable to noncontrolling interests in consolidated property partnerships	6,005		4,258		17,586		13,521
Depreciation and amortization of real estate assets	71,703		70,422		218,171		218,841
Gain on sale of depreciable real estate	—		—		(457,831)		—
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships	(9,198)		(7,102)		(27,287)		(22,029)
Funds From Operations (1)(2)	$	115,998	$	117,391	$	336,837	$	320,653
Weighted average common shares/units outstanding – basic (3)	118,357		118,306		118,343		115,529
Weighted average common shares/units outstanding – diluted (4)	118,862		118,747		118,820		115,999
FFO per common share/unit – basic (1)	$	0.98	$	0.99	$	2.85	$	2.78
FFO per common share/unit – diluted (1)	$	0.98	$	0.99	$	2.83	$	2.76

FUNDS AVAILABLE FOR DISTRIBUTION: (1)
Funds From Operations (1)(2)	$	115,998	$	117,391	$	336,837	$	320,653
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures	(16,102)		(21,769)		(63,497)		(61,198)
Amortization of deferred revenue related to tenant-funded tenant improvements (2)(5)	(4,084)		(4,403)		(12,999)		(17,424)
Net effect of straight-line rents	(9,823)		(17,423)		(40,721)		(38,400)
Amortization of net below market rents (6)	(1,510)		(1,769)		(3,704)		(6,269)
Amortization of deferred financing costs and net debt discount/premium	642		1,176		2,232		2,252
Non-cash executive compensation expense (7)	9,449		6,364		27,622		25,418


Lease related adjustments, leasing costs and other (8)	16,185		6,435		18,797		11,460
Adjustments attributable to noncontrolling interests in consolidated property partnerships	2,226		2,394		3,681		5,262
Funds Available for Distribution (1)	$	112,981	$	88,396	$	268,248	$	241,754

________________________

(1)See page 37 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 unitholders.

(2)FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $4.1 million and $4.4 million for the three months ended September 30, 2021 and 2020, respectively and $13.0 million and $17.4 million for the nine months ended September 30, 2021 and 2020, respectively. These amounts are adjusted out of FFO in our calculation of FAD.

(3)Calculated based on weighted average shares outstanding including participating share-based awards and assuming the exchange of all common limited partnership units outstanding.

(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.

(5)Represents revenue recognized during the period as a result of the amortization of deferred revenue recorded for tenant-funded tenant improvements.

(6)Represents the non-cash adjustment related to the acquisition of buildings with above and/or below market rents.

(7)Includes non-cash amortization of share-based compensation and accrued potential future executive retirement benefits. Includes $4.3 million of accelerated non-cash amortization of share-based compensation related to severance costs for the nine months ended September 30, 2020.

(8)Includes other cash and non-cash adjustments attributable to lease-related matters including GAAP revenue recognition timing differences, leasing costs and other.


Q3 2021 Supplemental Financial Report

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

(unaudited, $ in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
GAAP Net Cash Provided by Operating Activities	$	191,094	$	139,958	$	407,560	$	363,980
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures	(16,102)		(21,769)		(63,497)		(61,198)



Depreciation of non-real estate furniture, fixtures and equipment	(1,510)		(1,441)		(4,563)		(7,477)

Net changes in operating assets and liabilities (1)	(47,209)		(22,798)		(36,468)		(33,949)
Noncontrolling interests in consolidated property partnerships’ share of FFO and FAD	(6,972)		(4,708)		(23,606)		(16,767)
Cash adjustments related to investing and financing activities	(6,320)		(846)		(11,178)		(2,835)
Funds Available for Distribution(2)	$	112,981	$	88,396	$	268,248	$	241,754

_______________________

(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 37 for a Management Statement on Funds Available for Distribution.


Q3 2021 Supplemental Financial Report

Net Operating Income (1)

(unaudited, $ in thousands)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		% Change		2021		2020		% Change
Operating Revenues:
Rental income (2)(3)	$	199,371	$	195,484	2.0	%	$	600,822	$	571,103	5.2	%
Tenant reimbursements (3)	31,349		31,638		(0.9)	%	89,027		93,008		(4.3)	%
Other property income	1,606		1,192		34.7	%	4,106		4,954		(17.1)	%
Total operating revenues	232,326		228,314		1.8	%	693,955		669,065		3.7	%
Operating Expenses:
Property expenses	40,842		39,236		4.1	%	120,183		116,048		3.6	%
Real estate taxes	24,153		23,868		1.2	%	71,528		67,924		5.3	%

Ground leases	1,708		2,119		(19.4)	%	5,559		6,766		(17.8)	%
Total operating expenses	66,703		65,223		2.3	%	197,270		190,738		3.4	%
Net Operating Income	$	165,623	$	163,091	1.6	%	$	496,685	$	478,327	3.8	%

________________________

(1)Please refer to page 35 for Management Statements on Net Operating Income and page 41 for a reconciliation of GAAP Net Income Available to Common Stockholders to Net Operating Income.

(2)Rental income is presented net of charges related to the creditworthiness of tenants. For the three and nine months ended September 30, 2020, rental income also includes $0.6 million and $13.0 million, respectively, of write-offs related to the cumulative impact of transitioning certain tenants to a cash basis of reporting as a result of the COVID-19 pandemic.

(3)Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations.

Portfolio Data

–Same Store Analysis

–Stabilized Portfolio Occupancy Overview by Region

–Information on Leases Commenced & Leases Executed

–Stabilized Portfolio Capital Expenditures

–Stabilized Portfolio Lease Expirations

–Top Fifteen Tenants

–2021 Operating Property Acquisitions

–2021 Operating Property Dispositions

–Consolidated Ventures (Noncontrolling Property Partnerships)


Q3 2021 Supplemental Financial Report

Same Store Analysis (1)

(unaudited, $ in thousands)



		Three Months Ended September 30,								Nine Months Ended September 30,
		2021			2020			% Change		2021			2020			% Change

	Total Same Store Portfolio
	Office Portfolio
	Number of properties	111			111					111			111
	Square Feet	13,518,871			13,518,871					13,518,871			13,518,871
	Percent of Stabilized Portfolio	88.9		%	94.3		%			88.9		%	94.3		%
	Average Occupancy	91.3		%	91.9		%			91.2		%	92.6		%

	Operating Revenues:
	Rental income (2)(3)	$	174,496		$	170,400		2.4	%	$	519,218		$	508,432		2.1	%
	Tenant reimbursements (2)	27,224			25,144			8.3	%	76,280			74,517			2.4	%
	Other property income	1,262			1,045			20.8	%	3,275			4,228			(22.5)	%
	Total operating revenues	202,982			196,589			3.3	%	598,773			587,177			2.0	%
	Operating Expenses:
	Property expenses	36,095			34,514			4.6	%	105,956			104,790			1.1	%
	Real estate taxes	19,446			18,796			3.5	%	57,195			55,580			2.9	%
	Ground leases	1,746			2,119			(17.6)	%	5,559			6,766			(17.8)	%
	Total operating expenses	57,287			55,429			3.4	%	168,710			167,136			0.9	%
	Net Operating Income	$	145,695		$	141,160		3.2	%	$	430,063		$	420,041		2.4	%


Same Store Analysis (Cash Basis) (4)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2021			2020			% Change		2021			2020			% Change
	Total operating revenues (5)	$	208,689		$	185,284		12.6	%	$	585,938		$	559,440		4.7	%
	Total operating expenses	57,221			55,379			3.3	%	168,543			166,983			0.9	%
	Cash Net Operating Income	$	151,468		$	129,905		16.6	%	$	417,395		$	392,457		6.4	%

________________________

(1)Same Store is defined as all properties owned and included in our stabilized portfolio as of January 1, 2020 and still owned and included in the stabilized portfolio as of September 30, 2021. 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 charges related to the creditworthiness of tenants. For the three and nine months ended September 30, 2020, rental income also includes $0.7 million and $11.5 million, respectively, of write-offs related to the cumulative impact of transitioning certain tenants to a cash basis of reporting, primarily as a result of the COVID-19 pandemic.

(4)Please refer to page 41 for a reconciliation of GAAP Net Income Available to Common Stockholders to Same Store Net Operating Income and Same Store Cash Net Operating Income.

(5)For the three and nine months ended September 30, 2021, includes $17.3 million of lease termination fees received, primarily comprised of a $17.0 million cash payment received from a tenant at 12400 High Bluff Drive in San Diego, CA, which is committed for redevelopment. Net of lease-related write-offs, $7.0 million will be recognized in GAAP revenues through 2024, of which $0.7 million was recognized in the third quarter. A new lease was executed with Tandem Diabetes, a life science tenant, to occupy the space.


Q3 2021 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	9/30/2021		6/30/2021		9/30/2021

Greater Los Angeles
Culver City	19	1.3	%	1.0	%	151,908	94.3	%	97.9	%	94.3	%
El Segundo	5	4.8	%	7.3	%	1,103,595	94.4	%	94.8	%	94.4	%
Hollywood	10	6.6	%	7.8	%	1,192,451	89.5	%	89.4	%	90.1	%
Long Beach	7	2.3	%	6.2	%	954,836	79.5	%	79.1	%	80.6	%
West Hollywood	4	1.0	%	1.2	%	189,260	68.8	%	75.5	%	72.9	%
West Los Angeles	10	4.8	%	5.6	%	844,151	81.9	%	81.7	%	81.9	%
Total Greater Los Angeles	55	20.8	%	29.1	%	4,436,201	86.4	%	86.7	%	87.0	%
San Diego County
Del Mar	17	12.3	%	11.6	%	1,759,269	90.6	%	88.9	%	97.6	%
I-15 Corridor	5	2.0	%	3.6	%	543,936	94.0	%	94.9	%	95.7	%
Point Loma	1	0.7	%	0.7	%	107,456	100.0	%	100.0	%	100.0	%
University Towne Center	2	1.3	%	1.4	%	208,290	92.4	%	92.4	%	100.0	%
Total San Diego County	25	16.3	%	17.3	%	2,618,951	91.8	%	91.0	%	97.5	%
San Francisco Bay Area
Menlo Park	7	2.3	%	2.5	%	378,358	74.2	%	74.2	%	74.2	%
Mountain View	3	3.4	%	3.0	%	457,066	87.2	%	100.0	%	87.2	%
Palo Alto	2	1.6	%	1.1	%	165,574	100.0	%	100.0	%	100.0	%
Redwood City	2	3.7	%	2.3	%	347,269	100.0	%	100.0	%	100.0	%
San Francisco	10	33.7	%	22.2	%	3,370,465	92.7	%	94.2	%	96.6	%
South San Francisco	4	1.4	%	2.5	%	380,422	100.0	%	100.0	%	100.0	%
Sunnyvale	4	4.9	%	4.4	%	663,460	100.0	%	100.0	%	100.0	%
Total San Francisco Bay Area	32	51.0	%	38.0	%	5,762,614	93.0	%	94.7	%	95.3	%
Greater Seattle
Bellevue	2	5.6	%	6.0	%	919,295	93.5	%	93.3	%	98.8	%
Denny Regrade	1	0.1	%	3.5	%	539,226	100.0	%	100.0	%	100.0	%
Lake Union	6	6.2	%	6.1	%	922,891	99.1	%	99.9	%	99.1	%
Total Greater Seattle	9	11.9	%	15.6	%	2,381,412	97.2	%	96.5	%	99.2	%
TOTAL STABILIZED OFFICE PORTFOLIO	121	100.0	%	100.0	%	15,199,178	91.5	%	91.8	%	93.9	%


Average Office Occupancy
Quarter-to-Date						Year-to-Date
91.7%						91.7%

________________________

(1)Includes stabilized retail space, which contributed approximately 2.4% of YTD NOI.


Q3 2021 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region, continued


	Submarket	Square Feet	Occupied		Leased

Greater Los Angeles, California
3101-3243 La Cienega Boulevard	Culver City	151,908	94.3	%	94.3	%
2240 E. Imperial Highway	El Segundo	122,870	100.0	%	100.0	%
2250 E. Imperial Highway	El Segundo	298,728	100.0	%	100.0	%
2260 E. Imperial Highway	El Segundo	298,728	100.0	%	100.0	%
909 N. Pacific Coast Highway	El Segundo	244,880	88.3	%	88.3	%
999 N. Pacific Coast Highway	El Segundo	138,389	75.9	%	75.9	%
1350 Ivar Avenue	Hollywood	16,448	100.0	%	100.0	%
1355 Vine Street	Hollywood	183,129	100.0	%	100.0	%
1375 Vine Street	Hollywood	159,236	100.0	%	100.0	%
1395 Vine Street	Hollywood	2,575	100.0	%	100.0	%
1500 N. El Centro Avenue (1)	Hollywood	113,447	28.8	%	28.8	%
1525 N. Gower Street	Hollywood	9,610	100.0	%	100.0	%
1575 N. Gower Street	Hollywood	264,430	100.0	%	100.0	%
6115 W. Sunset Boulevard	Hollywood	26,238	73.1	%	100.0	%
6121 W. Sunset Boulevard	Hollywood	93,418	100.0	%	100.0	%
6255 W. Sunset Boulevard	Hollywood	323,920	88.5	%	88.5	%
3750 Kilroy Airport Way	Long Beach	10,718	100.0	%	100.0	%
3760 Kilroy Airport Way	Long Beach	166,761	87.7	%	90.9	%
3780 Kilroy Airport Way	Long Beach	221,452	96.8	%	99.4	%
3800 Kilroy Airport Way	Long Beach	192,476	88.9	%	88.9	%
3840 Kilroy Airport Way (1)	Long Beach	136,026	0.0	%	0.0	%
3880 Kilroy Airport Way	Long Beach	96,468	100.0	%	100.0	%
3900 Kilroy Airport Way	Long Beach	130,935	91.5	%	91.5	%
8560 W. Sunset Boulevard (1)	West Hollywood	76,359	40.6	%	43.0	%
8570 W. Sunset Boulevard	West Hollywood	49,276	92.9	%	92.9	%
8580 W. Sunset Boulevard	West Hollywood	6,875	0.0	%	59.0	%
8590 W. Sunset Boulevard	West Hollywood	56,750	94.0	%	97.4	%
12100 W. Olympic Boulevard	West Los Angeles	152,048	66.0	%	66.0	%
12200 W. Olympic Boulevard	West Los Angeles	150,832	90.2	%	90.2	%
12233 W. Olympic Boulevard	West Los Angeles	151,029	66.5	%	66.5	%
12312 W. Olympic Boulevard	West Los Angeles	76,644	100.0	%	100.0	%
1633 26th Street	West Los Angeles	43,857	69.9	%	69.9	%
2100/2110 Colorado Avenue	West Los Angeles	102,864	100.0	%	100.0	%
3130 Wilshire Boulevard	West Los Angeles	90,074	88.4	%	88.4	%
501 Santa Monica Boulevard	West Los Angeles	76,803	84.7	%	84.7	%
Total Greater Los Angeles		4,436,201	86.4	%	87.0	%

________________________

(1)This property is part of a complex of properties and is analyzed at the complex level.


Q3 2021 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region, continued


	Submarket	Square Feet	Occupied		Leased

San Diego County, California
12225 El Camino Real	Del Mar	58,401	100.0	%	100.0	%
12235 El Camino Real	Del Mar	53,751	100.0	%	100.0	%
12340 El Camino Real	Del Mar	89,990	41.6	%	100.0	%
12390 El Camino Real	Del Mar	69,421	55.1	%	100.0	%
12770 El Camino Real	Del Mar	75,035	100.0	%	100.0	%
12780 El Camino Real	Del Mar	140,591	100.0	%	100.0	%
12790 El Camino Real	Del Mar	87,944	100.0	%	100.0	%
12830 El Camino Real	Del Mar	196,444	89.0	%	100.0	%
12860 El Camino Real	Del Mar	92,042	82.4	%	100.0	%
12348 High Bluff Drive	Del Mar	39,193	58.3	%	61.2	%
12400 High Bluff Drive	Del Mar	210,732	100.0	%	100.0	%
3579 Valley Centre Drive	Del Mar	54,960	100.0	%	100.0	%
3611 Valley Centre Drive	Del Mar	132,425	100.0	%	100.0	%
3661 Valley Centre Drive	Del Mar	128,364	82.6	%	82.6	%
3721 Valley Centre Drive	Del Mar	115,193	100.0	%	100.0	%
3811 Valley Centre Drive	Del Mar	118,912	100.0	%	100.0	%
3745 Paseo Place	Del Mar	95,871	95.0	%	95.0	%
13280 Evening Creek Drive South	I-15 Corridor	41,196	100.0	%	100.0	%
13290 Evening Creek Drive South	I-15 Corridor	61,180	100.0	%	100.0	%
13480 Evening Creek Drive North	I-15 Corridor	154,157	100.0	%	100.0	%
13500 Evening Creek Drive North	I-15 Corridor	143,749	92.9	%	92.9	%
13520 Evening Creek Drive North	I-15 Corridor	143,654	84.2	%	90.8	%
2305 Historic Decatur Road	Point Loma	107,456	100.0	%	100.0	%
4690 Executive Drive	University Towne Center	47,846	67.1	%	100.0	%
9455 Towne Centre Drive	University Towne Center	160,444	100.0	%	100.0	%
Total San Diego County		2,618,951	91.8	%	97.5	%


Q3 2021 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region, continued


	Submarket	Square Feet	Occupied		Leased

San Francisco Bay Area, California
4100 Bohannon Drive	Menlo Park	47,379	100.0	%	100.0	%
4200 Bohannon Drive	Menlo Park	45,451	70.8	%	70.8	%
4300 Bohannon Drive (1)	Menlo Park	63,079	48.7	%	48.7	%
4400 Bohannon Drive (1)	Menlo Park	48,146	21.3	%	21.3	%
4500 Bohannon Drive	Menlo Park	63,078	100.0	%	100.0	%
4600 Bohannon Drive	Menlo Park	48,147	70.7	%	70.7	%
4700 Bohannon Drive	Menlo Park	63,078	100.0	%	100.0	%
1290-1300 Terra Bella Avenue	Mountain View	114,175	48.9	%	48.9	%
680 E. Middlefield Road	Mountain View	171,676	100.0	%	100.0	%
690 E. Middlefield Road	Mountain View	171,215	100.0	%	100.0	%
1701 Page Mill Road	Palo Alto	128,688	100.0	%	100.0	%
3150 Porter Drive	Palo Alto	36,886	100.0	%	100.0	%
900 Jefferson Avenue	Redwood City	228,505	100.0	%	100.0	%
900 Middlefield Road	Redwood City	118,764	100.0	%	100.0	%
100 Hooper Street	San Francisco	394,340	100.0	%	100.0	%
100 First Street	San Francisco	480,457	92.3	%	96.4	%
303 Second Street	San Francisco	784,658	84.1	%	92.5	%
201 Third Street	San Francisco	346,538	90.1	%	90.1	%
360 Third Street	San Francisco	429,796	88.8	%	99.6	%
250 Brannan Street	San Francisco	100,850	100.0	%	100.0	%
301 Brannan Street	San Francisco	82,834	100.0	%	100.0	%
333 Brannan Street	San Francisco	185,602	100.0	%	100.0	%
345 Brannan Street	San Francisco	110,050	99.7	%	99.7	%
350 Mission Street	San Francisco	455,340	99.7	%	99.7	%
345 Oyster Point Boulevard	South San Francisco	40,410	100.0	%	100.0	%
347 Oyster Point Boulevard	South San Francisco	39,780	100.0	%	100.0	%
349 Oyster Point Boulevard	South San Francisco	65,340	100.0	%	100.0	%
350 Oyster Point Boulevard	South San Francisco	234,892	100.0	%	100.0	%
505 Mathilda Avenue	Sunnyvale	212,322	100.0	%	100.0	%
555 Mathilda Avenue	Sunnyvale	212,322	100.0	%	100.0	%
599 Mathilda Avenue	Sunnyvale	76,031	100.0	%	100.0	%
605 Mathilda Avenue	Sunnyvale	162,785	100.0	%	100.0	%
Total San Francisco Bay Area		5,762,614	93.0	%	95.3	%

________________________

(1)This property is part of a complex of properties and is analyzed at the complex level.


Q3 2021 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region, continued


	Submarket	Square Feet	Occupied		Leased

Greater Seattle, Washington
601 108th Avenue NE	Bellevue	490,738	88.5	%	98.5	%
10900 NE 4th Street	Bellevue	428,557	99.2	%	99.2	%
2001 West 8th Avenue	Denny Regrade	539,226	100.0	%	100.0	%
701 N. 34th Street	Lake Union	141,860	100.0	%	100.0	%
801 N. 34th Street	Lake Union	173,615	100.0	%	100.0	%
837 N. 34th Street	Lake Union	112,487	100.0	%	100.0	%
320 Westlake Avenue North	Lake Union	184,644	95.5	%	95.5	%
321 Terry Avenue North	Lake Union	135,755	100.0	%	100.0	%
401 Terry Avenue North	Lake Union	174,530	100.0	%	100.0	%
Total Greater Seattle		2,381,412	97.2	%	99.2	%

TOTAL STABILIZED OFFICE PORTFOLIO		15,199,178	91.5	%	93.9	%


			Average Residential Occupancy
COMPLETED RESIDENTIAL PROPERTIES	Submarket	Total No. of Units	Quarter-to-Date	Year-to-Date

Greater Los Angeles
1550 N. El Centro Avenue	Hollywood	200	92.0%	91.6%
6390 De Longpre Avenue	Hollywood	193	27.5%	18.2%
San Diego County
3200 Paseo Village Way	Del Mar	608	92.5%	78.0%
TOTAL COMPLETED RESIDENTIAL PROPERTIES		1,001	79.9%	74.0%


Q3 2021 Supplemental Financial Report

Information on Leases Commenced (1)


	1st & 2nd Generation						2nd Generation
	# of Leases (2)		Square Feet (2)		Retention Rates		TI/LC Per Sq.Ft. (3)		TI/LC Per Sq.Ft. /Year (3)		Changes in GAAP Rents		Changes in Cash Rents		Weighted Average Lease Term (Mo.)
	New	Renewal	New	Renewal
Quarter to Date	11	11	360,877	77,160	25.0	%	$	28.38	$	5.08	53.7	%	32.5	%	67
Year to Date	33	32	955,173	283,431	34.8	%	64.05		9.85		54.1	%	31.8	%	78

Information on Leases Executed (1)


	1st & 2nd Generation				2nd Generation
	# of Leases (4)		Square Feet (4)		TI/LC Per Sq.Ft. (3)		TI/LC Per Sq.Ft. /Year (3)		Changes in GAAP Rents		Changes in Cash Rents		Weighted Average Lease Term (Mo.)
	New	Renewal	New	Renewal
Quarter to Date (5)	14	11	382,338	77,160	$	44.77	$	10.33	24.4	%	8.3	%	52
Year to Date (6)	33	32	580,930	283,431	33.84		7.96		21.2	%	7.1	%	51

________________________

(1)Includes 100% of consolidated property partnerships.

(2)Represents leasing activity for leases that commenced at properties in the stabilized portfolio during the three and nine months ended September 30, 2021, 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 and nine months ended September 30, 2021, including first and second generation space, net of month-to-month leases. Excludes leasing on new construction.

(5)During the three months ended September 30, 2021, 12 new leases totaling 361,010 square feet were signed but not commenced as of September 30, 2021.

(6)During the nine months ended September 30, 2021, 17 new leases totaling 441,407 square feet were signed but not commenced as of September 30, 2021.


Q3 2021 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures

($ in thousands)


	Total 2021		Q3 2021		Q2 2021		Q1 2021

1st Generation (Nonrecurring) Capital Expenditures: (1)
Capital Improvements	$	13,815	$	3,003	$	5,856	$	4,956
Tenant Improvements & Leasing Commissions (2)	986		561		—		425

Total	$	14,801	$	3,564	$	5,856	$	5,381


	Total 2021		Q3 2021		Q2 2021		Q1 2021

2nd Generation (Recurring) Capital Expenditures: (1)
Capital Improvements	$	22,978	$	8,521	$	7,659	$	6,798
Tenant Improvements & Leasing Commissions (2)	40,519		7,581		12,827		20,111

Total	$	63,497	$	16,102	$	20,486	$	26,909

________________________

(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.


Q3 2021 Supplemental Financial Report

Stabilized Portfolio Lease Expiration Summary (1)

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


# of Expiring Leases	15		23		15		17		17		78		65		58		47		41		23		21		35		43
% of Total Leased Sq. Ft.	1.0	%	3.1	%	1.1	%	1.2	%	1.4	%	11.3	%	7.5	%	5.7	%	13.3	%	8.3	%	7.0	%	6.5	%	9.9	%	22.7	%
Annualized Base Rent	$6,706		$11,229		$5,824		$7,087		$9,568		$78,272		$48,557		$36,659		$82,946		$44,724		$61,249		$48,922		$74,910		$209,369
% of Total Annualized Base Rent (4)	0.9	%	1.5	%	0.8	%	1.0	%	1.3	%	10.8	%	6.7	%	5.1	%	11.4	%	6.2	%	8.4	%	6.7	%	10.3	%	28.9	%
Annualized Rent per Sq. Ft.	$50.06		$27.17		$37.79		$41.77		$49.42		$50.61		$47.67		$47.39		$45.83		$39.16		$63.89		$55.55		$55.39		$67.58

________________________

(1)For leases that have been renewed early with existing tenants, the expiration date and annualized base rent information presented takes into consideration the renewed lease terms. Excludes leases not commenced as of September 30, 2021, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of September 30, 2021.

(2)Adjusting for leasing transactions executed as of September 30, 2021 but not yet commenced, the 2022 expirations would be reduced by 199,314 square feet.

(3)On April 5, 2021, DIRECTV, LLC’s successor-in-interest (“DIRECTV”) filed suit in Los Angeles Superior Court against a subsidiary of the Company, claiming that DIRECTV properly exercised its contraction rights as to certain space leased by DIRECTV at the property located at 2250 East Imperial Highway, El Segundo, California. The Company strongly disagrees with the contentions made by DIRECTV and will vigorously defend the litigation.

(4)Includes 100% of annualized base rent of consolidated property partnerships.


Q3 2021 Supplemental Financial Report

Stabilized Portfolio Lease Expiration Schedule by Region

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


Year	Region	# of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annualized Base Rent (1)		% of Total Annualized Base Rent		Annualized Rent per Sq. Ft.

2021	Greater Los Angeles	12	65,635	0.5	%	$	2,593	0.4	%	$	39.51
	San Diego	1	6,112	—	%	188		—	%	30.76
	San Francisco Bay Area	1	60,941	0.5	%	3,867		0.5	%	63.45
	Greater Seattle	1	1,272	—	%	58		—	%	45.60
	Total	15	133,960	1.0	%	$	6,706	0.9	%	$	50.06

2022	Greater Los Angeles	50	445,866	3.3	%	$	18,784	2.6	%	$	42.13
	San Diego	12	357,480	2.5	%	9,271		1.3	%	25.93
	San Francisco Bay Area	5	50,108	0.4	%	3,180		0.4	%	63.46
	Greater Seattle	5	77,218	0.6	%	2,473		0.3	%	32.03
	Total	72	930,672	6.8	%	$	33,708	4.6	%	$	36.22

2023	Greater Los Angeles	41	401,878	2.9	%	$	21,539	3.0	%	$	53.60
	San Diego	12	217,689	1.6	%	9,333		1.3	%	42.87
	San Francisco Bay Area	16	437,588	3.2	%	26,785		3.7	%	61.21
	Greater Seattle	9	489,497	3.6	%	20,615		2.8	%	42.11
	Total	78	1,546,652	11.3	%	$	78,272	10.8	%	$	50.61

2024	Greater Los Angeles	36	485,711	3.6	%	$	20,911	2.9	%	$	43.05
	San Diego	7	49,125	0.4	%	2,794		0.4	%	56.88
	San Francisco Bay Area	14	261,416	1.9	%	16,925		2.3	%	64.74
	Greater Seattle	8	222,282	1.6	%	7,927		1.1	%	35.66
	Total	65	1,018,534	7.5	%	$	48,557	6.7	%	$	47.67

2025	Greater Los Angeles	19	192,587	1.4	%	$	8,000	1.1	%	$	41.54
	San Diego	22	229,493	1.7	%	9,627		1.3	%	41.95
	San Francisco Bay Area	7	213,077	1.6	%	13,563		1.9	%	63.65
	Greater Seattle	10	138,462	1.0	%	5,469		0.8	%	39.50
	Total	58	773,619	5.7	%	$	36,659	5.1	%	$	47.39

2026 and Beyond	Greater Los Angeles	55	2,107,337	15.4	%	$	96,600	13.3	%	$	45.84
	San Diego	67	1,527,828	11.2	%	82,780		11.4	%	54.18
	San Francisco Bay Area	51	4,245,686	31.1	%	286,766		39.5	%	67.54
	Greater Seattle	37	1,360,942	10.0	%	55,974		7.7	%	41.13
	Total	210	9,241,793	67.7	%	$	522,120	71.9	%	$	56.50

________________________

(1)Includes 100% of annualized base rent of consolidated property partnerships.


Q3 2021 Supplemental Financial Report

Top Fifteen Tenants (1)

($ in thousands)


Tenant Name	Region	Annualized Base Rental Revenue (2)		Rentable Square Feet	Percentage of Total Annualized Base Rental Revenue		Percentage of Total Rentable Square Feet		Year(s) of Lease Expiration
GM Cruise, LLC	San Francisco Bay Area	$	36,337	374,618	4.9	%	2.4	%	2031
Amazon.com	Greater Seattle	33,800		780,757	4.6	%	5.0	%	2023 / 2029 / 2030
LinkedIn Corporation / Microsoft Corporation	San Francisco Bay Area	29,752		663,460	4.0	%	4.3	%	2024 / 2026
Adobe Systems, Inc.	San Francisco Bay Area / Greater Seattle	27,897		517,314	3.8	%	3.3	%	2027 / 2031
salesforce.com, inc.	San Francisco Bay Area	24,076		451,763	3.3	%	2.9	%	2031 / 2032
DoorDash, Inc.	San Francisco Bay Area	23,842		236,759	3.2	%	1.5	%	2032
DIRECTV, LLC (3)	Greater Los Angeles	23,152		684,411	3.1	%	4.4	%	2027
Fortune 50 Publicly-Traded Company	Greater Seattle / San Diego County	23,059		472,427	3.1	%	3.0	%	2032 / 2033
Okta, Inc.	San Francisco Bay Area	22,387		273,371	3.0	%	1.8	%	2028
Netflix, Inc.	Greater Los Angeles	21,943		362,868	3.0	%	2.3	%	2022 / 2032
Box, Inc.	San Francisco Bay Area	20,390		341,441	2.8	%	2.2	%	2028
Cytokinetics, Inc.	San Francisco Bay Area	19,192		234,892	2.6	%	1.5	%	2033
Synopsys, Inc.	San Francisco Bay Area	15,492		342,891	2.1	%	2.2	%	2030
Riot Games, Inc.	Greater Los Angeles	15,152		243,051	2.1	%	1.6	%	2023 / 2024
Neurocrine Biosciences, Inc.	San Diego County	13,917		254,578	1.9	%	1.6	%	2024 / 2031
Total Top Fifteen Tenants		$	350,388	6,234,601	47.5	%	40.0	%

________________________

(1)The information presented is as of September 30, 2021.

(2)Includes 100% of annualized base rental revenues of consolidated property partnerships.


Q3 2021 Supplemental Financial Report

2021 Operating Property Acquisitions

($ in millions)

COMPLETED OPERATING PROPERTY ACQUISITIONS

Submarket

Month of
Acquisition

Number of Buildings

Rentable Square Feet

Purchase
Price (1)

1st Quarter

None

2nd Quarter

None

3rd Quarter

2001 West 8th Avenue, Seattle, WA

Denny Regrade

September

539,226

490.0

TOTAL

539,226

490.0

________________________

(1)Excludes acquisition-related costs.

COMPLETED LAND ACQUISITIONS

Submarket

Month of
Acquisition

Purchase
Price (1)

1st Quarter

None

2nd Quarter

None

3rd Quarter

601 108th Ave NE, Bellevue, WA (2)

Bellevue

July

47.0

TOTAL

47.0

_______________________

(2)This land was previously subject to a ground lease underlying the 490,738 square foot Key Center office building in Bellevue, Washington. In connection with the acquisition, the net liability position of the ground lease was written-off against the basis of the land.


Q3 2021 Supplemental Financial Report

2021 Operating Property Dispositions

($ in billions)

COMPLETED OPERATING PROPERTY DISPOSITIONS

Submarket

Month of
Disposition

No. of Buildings

Rentable
Square Feet

Sales
Price (1)

1st Quarter

1800 Owens Street, San Francisco, CA (The Exchange on 16th)

San Francisco

March

750,370

1.08

2nd Quarter

None

3rd Quarter

None

TOTAL DISPOSITIONS

750,370

1.08

____________________

(1)Represents gross sales price before the impact of commissions and closing costs.


Q3 2021 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

480,457

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 41, 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.

Development

–Stabilized Office/Life Science Development Projects and Completed Residential Development Projects

–In-Process Development

–Committed Redevelopment

–Future Development Pipeline


Q3 2021 Supplemental Financial Report

Stabilized Office/Life Science Development Projects and Completed Residential Development Projects

($ in millions)

STABILIZED OFFICE/LIFE SCIENCE DEVELOPMENT PROJECTS

Location

Construction Start Date

Stabilization Date (1)

Total Estimated Investment

Rentable
Square Feet

Total Project % Occupied

1st Quarter

9455 Towne Centre Drive

University Towne Center

1Q 2019

1Q 2021

95.0

160,444

100%

2nd Quarter

12860 El Camino Real (One Paseo - Office Building 1)

Del Mar

4Q 2018

2Q 2021

65.0

92,042

82%

3rd Quarter

12830 El Camino Real (One Paseo - Office Building 2)

Del Mar

4Q 2018

3Q 2021

145.0

196,444

89%

350 Oyster Point Boulevard (Kilroy Oyster Point - Phase 1) (2)

South San Francisco

1Q 2019

3Q 2021

215.0

234,892

100%

TOTAL:

520.0

683,822

94%

COMPLETED RESIDENTIAL DEVELOPMENT PROJECTS

Location

Construction Start Date

Completion Date

Total Estimated Investment

Number of Units

% Leased

1st Quarter

None

2nd Quarter

Jardine

Hollywood

4Q 2018

2Q 2021

185.0

193

63%

3rd Quarter

None

TOTAL:

185.0

193

63%

____________________

(1)Represents the earlier of 95% occupancy date or one year from substantial completion of base building components.

(2)Represents the first of of the three buildings in Phase 1 of the project that is stabilized and fully leased by Cytokinetics.


Q3 2021 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 9/30/2021 (3)		% Leased	Total Project % Occupied
TENANT IMPROVEMENT (1)

Office / Life Science
San Francisco Bay Area
352 and 354 Oyster Point Boulevard (Kilroy Oyster Point - Phase 1) (4)	South San Francisco	1Q 2019	4Q 2021	421,000	$	355.0	$	266.7	100%	—%
San Diego County
2100 Kettner (5)	Little Italy	3Q 2019	3Q 2022	235,000	140.0		107.9		—%	—%
Greater Seattle
333 Dexter	South Lake Union	2Q 2017	3Q 2022	635,000	410.0		374.5		100%	49%
Austin
Indeed Tower	Austin CBD	2Q 2021	4Q 2022	734,000	680.0		555.6		57%	—%

TOTAL:				2,025,000	$	1,585.0	$	1,304.7	73%	15%



UNDER CONSTRUCTION	Location	Construction Start Date	Estimated Stabilization Date (2)	Estimated Rentable Square Feet	Total Estimated Investment		Total Cash Costs Incurred as of 9/30/2021 (3)		Office % Leased

Office / Life Science
San Francisco Bay Area
Kilroy Oyster Point - Phase 2 (6)	South San Francisco	2Q 2021	4Q 2024	875,000	$	940.0	$	172.3	—%
San Diego County
9514 Towne Centre Drive	University Towne Center	3Q 2021	4Q 2023	71,000	60.0		7.9		100%

TOTAL:				946,000	$	1,000.0	$	180.2	8%

________________________

(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. As of the date of this report, all of our in-process development projects were under active construction.

(3)Represents costs incurred as of September 30, 2021, excluding GAAP accrued liabilities and leasing overhead.

(4)Represents two of the three buildings in Phase 1 of the project that are in the tenant improvement phase and fully leased by Stripe, Inc.

(5)Tenant improvement construction activities have not commenced; however, interior improvements for corridors and lobbies are in progress.

(6)Total cash costs incurred for this project assume approval by the city of South San Francisco of a pending lot line adjustment among KOP Phases 2-4.


Q3 2021 Supplemental Financial Report

Committed Redevelopment

($ in millions)

Location

Estimated Construction Period (1)

Rentable Square Feet Leased (2)

Estimated Redevelopment Costs (3)

COMMITTED

Start Date

Completion Date

Life Science

San Diego County

12340 El Camino Real

Del Mar

4Q 2021

3Q 2022

96,000

40.0

12400 High Bluff Drive

Del Mar

1Q 2022

3Q 2022

182,000

50.0

4690 Executive Drive

University Towne Center

2Q 2022

3Q 2023

52,000

25.0

TOTAL:

330,000

115.0

________________________

(1)Redevelopment will occur in phases based on existing lease expiration dates and timing of the tenant improvement build-out.

(2)Represents the total square footage leased.

(3)Includes the existing depreciated basis for the buildings to be redeveloped, except for 12400 High Bluff Drive, which includes 66% of the depreciated basis, representing the 66% of the building that will be redeveloped.


Q3 2021 Supplemental Financial Report

Future Development Pipeline

($ in millions)


FUTURE DEVELOPMENT PIPELINE	Location	Approx. Developable Square Feet (1)	Total Cash Costs Incurred as of 9/30/2021 (2)

San Diego County
Santa Fe Summit – Phases 2 and 3	56 Corridor	600,000 - 650,000	$	85.2
2045 Pacific Highway	Little Italy	275,000	48.1
Kilroy East Village	East Village	TBD	60.5
San Francisco Bay Area
Kilroy Oyster Point - Phases 3 and 4 (3)	South San Francisco	875,000 - 1,000,000	200.3
Flower Mart	SOMA	2,300,000	420.9
Greater Seattle
SIX0 - Office & Residential	Denny Regrade	925,000	144.1

TOTAL:			$	959.1

________________________

(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 September 30, 2021, excluding accrued liabilities recorded in accordance with GAAP.

(3)Total cash costs incurred for this project assume approval by the city of South San Francisco of a pending lot line adjustment among KOP Phases 2-4.

Debt and

Capitalization Data

–Capital Structure

–Debt Analysis


Q3 2021 Supplemental Financial Report

Capital Structure (1)

As of September 30, 2021 ($ in thousands)


Debt Balance (4)		Stated Rate		Maturity Date

Unsecured Debt (5)
$	300,000	3.80	%	1/15/2023
$	425,000	3.45	%	12/15/2024
$	400,000	4.38	%	10/1/2025
$	50,000	4.30	%	7/18/2026
$	200,000	4.35	%	10/18/2026
$	175,000	3.35	%	2/17/2027
$	400,000	4.75	%	12/15/2028
$	75,000	3.45	%	2/17/2029
$	400,000	4.25	%	8/15/2029
$	500,000	3.05	%	2/15/2030
$	350,000	4.27	%	1/31/2031
$	425,000	2.50	%	11/15/2032

Secured Debt
$	164,281	3.57	%	12/1/2026
$	86,097	4.48	%	7/1/2027

________________________

(1)Excludes the $450.0 million of 12-year, 2.65% unsecured senior notes issued in October 2021 and the early redemption of the $300.0 million of 3.80% unsecured senior notes in October 2021.

(2)Value based on closing share price of $66.21 as of September 30, 2021.

(3)Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships.

(4)Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts.

(5)As of September 30, 2021, there was no outstanding balance on the unsecured revolving credit facility.


Q3 2021 Supplemental Financial Report

Debt Analysis

As of September 30, 2021



TOTAL DEBT COMPOSITION (1)
	Weighted Average
	Interest Rate	Years to Maturity
Secured vs. Unsecured Debt
Unsecured Debt	3.8%	6.6
Secured Debt	3.9%	5.4
Floating vs. Fixed-Rate Debt
Floating-Rate Debt	—%	—
Fixed-Rate Debt	3.8%	6.5

Stated Interest Rate	3.8%	6.5

GAAP Effective Rate	3.8%

GAAP Effective Rate Including Debt Issuance Costs	4.0%

KEY DEBT COVENANTS

Covenant

Actual Performance
as of September 30, 2021

Unsecured Credit 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

3.3x

Unsecured debt ratio

greater than 1.67x

3.19x

Unencumbered asset pool debt service coverage

greater than 1.75x

3.75x

Unsecured Senior Notes due 2023, 2024, 2025, 2028, 2029, 2030 and 2032 (as defined in the Indentures):

Total debt to total asset value

less than 60%

35%

Interest coverage

greater than 1.5x

7.5x

Secured debt to total asset value

less than 40%

Unencumbered asset pool value to unsecured debt

greater than 150%

322%

________________________

(1)As of September 30, 2021, there was no outstanding balance on the unsecured revolving credit facility.

Non-GAAP Supplemental

Measures


Q3 2021 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 October 27, 2021 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.


Q3 2021 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.


Q3 2021 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 amounts of gain or loss on marketable securities related to the Company’s executive deferred compensation plan that are capitalized as development costs, 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.

Definitions and Reconciliations


Q3 2021 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.


Q3 2021 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, 2020 and still owned and included in the stabilized portfolio as of September 30, 2021. 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.


Q3 2021 Supplemental Financial Report

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

(unaudited, $ in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net Income Available to Common Stockholders	$	47,028	$	49,028	$	580,498	$	108,463
Net income attributable to noncontrolling common units of the Operating Partnership	460		785		5,700		1,857
Net income attributable to noncontrolling interests in consolidated property partnerships	6,005		4,258		17,586		13,521

Net Income	53,493		54,071		603,784		123,841
Adjustments:
General and administrative expenses	22,990		18,572		69,482		76,179

Leasing costs	798		986		2,373		3,772
Depreciation and amortization	73,213		71,863		222,734		226,318
Interest income and other net investment (gain) loss	(976)		(1,869)		(3,686)		(1,579)
Interest expense	16,105		19,468		59,829		49,796


Gain on sale of depreciable operating property	—		—		(457,831)		—
Net Operating Income, as defined (1)	165,623		163,091		496,685		478,327
Wholly-Owned Properties	140,512		142,523		421,839		416,007
Consolidated property partnerships: (2)
100 First Street (3)	6,123		5,470		18,700		15,858
303 Second Street (3)	12,978		9,338		38,234		29,220
Crossing/900 (4)	6,010		5,760		17,912		17,242
Net Operating Income, as defined (1)	165,623		163,091		496,685		478,327
Non-Same Store Net Operating Income (5)	(19,928)		(21,931)		(66,622)		(58,286)
Same Store Net Operating Income	145,695		141,160		430,063		420,041
GAAP to Cash Adjustments:
GAAP Operating Revenues Adjustments, net (6)	5,707		(11,305)		(12,835)		(27,737)
GAAP Operating Expenses Adjustments, net (7)	66		50		167		153
Same Store Cash Net Operating Income	$	151,468	$	129,905	$	417,395	$	392,457

________________________

(1)Please refer to pages 35-36 for Management Statements on Net Operating Income, Same Store Net Operating Income and Same Store Cash Net Operating Income.

(2)Reflects 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 fourth quarter 2020, one office property disposed of during the first quarter 2021, our 608-unit residential development, one retail development project added to the stabilized portfolio in the first quarter of 2020, one office development project added to the stabilized portfolio in the fourth quarter of 2020, one office development project added to the stabilized portfolio in the first quarter of 2021, one office development building added to the stabilized portfolio in the second quarter of 2021, two office development buildings added to the stabilized portfolio in the third quarter of 2021, our 193-unit residential project added to the stabilized portfolio in the second quarter of 2021, one operating property acquired during the third quarter of 2021 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, amortization of above and below market lease intangibles and revenue reversals (recoveries) related to tenant creditworthiness.

(7)Includes the amortization of above and below market lease intangibles for ground leases.


Q3 2021 Supplemental Financial Report

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

(unaudited, $ in thousands)


	Three Months Ended September 30,
	2021		2020
Net Income Available to Common Stockholders	$	47,028	$	49,028
Interest expense	16,105		19,468
Depreciation and amortization	73,213		71,863

Net income attributable to noncontrolling common units of the Operating Partnership	460		785
Net income attributable to noncontrolling interests in consolidated property partnerships	6,005		4,258




EBITDA, as adjusted (1)	$	142,811	$	145,402

________________________

(1)Please refer to page 36 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.

Exhibit 99.2


Contact:			FOR RELEASE:
Tyler H. Rose			October 27, 2021
President
(310) 481-8484 Or
Michelle Ngo
Senior Vice President,
Chief Financial Officer and Treasurer
(310) 481-8581

KILROY REALTY CORPORATION REPORTS

THIRD QUARTER FINANCIAL RESULTS

---------------

LOS ANGELES, October 27, 2021 - Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its third quarter ended September 30, 2021.

Third Quarter Highlights

Financial Results

•Net income available to common stockholders per share of $0.40

•Funds from operations available to common stockholders and unitholders (“FFO”) per share of $0.98

•Revenues of $232.3 million

•Increased the regular quarterly cash dividend to common stockholders by 4% to $0.52 per share; an annualized rate of $2.08 per share

Stabilized Portfolio

•Stabilized portfolio was 91.5% occupied and 93.9% leased at September 30, 2021

•Signed approximately 459,000 square feet of new and renewing leases

◦GAAP and cash rents increased approximately 24.4% and 8.3%, respectively, from prior levels

•In September, the Company received a $17.0 million cash lease termination payment from a tenant at 12400 High Bluff Drive in San Diego, CA, which is committed for redevelopment. Net of lease-related write-offs, $7.0 million will be recognized in GAAP revenues through 2024, of which $0.7 million was recognized in the third quarter. A new lease was executed with Tandem Diabetes, a life science tenant, to occupy the space

•Limited lease expiration exposure with an average of approximately 7.2% of total rentable square feet expiring per year through 2025

Acquisitions

•In September, completed the acquisition of 2001 West 8th Avenue, an approximately 539,000 square foot office project in the Denny Regrade submarket of Seattle for $490.0 million. The building is 100% leased; Amazon occupies approximately 70% of the project

Development

•In August, added One Paseo - Office Building 2, comprised of approximately 196,000 square feet at the company’s One Paseo mixed-use project in the Del Mar submarket of San Diego to the stabilized portfolio. The One Paseo office project is now 100% leased and 87% occupied

•In August, commenced construction on 9514 Towne Centre Drive, a 71,000 square foot office property located in the University Towne Center submarket of San Diego. The building is 100% leased

•In September, added the first of three life science buildings located at Kilroy Oyster Point - Phase 1 in South San Francisco to the stabilized portfolio. The approximately 235,000 square foot building is 100% leased to Cytokinetics and revenue recognition commenced on October 1, 2021

•In September, in connection with the execution of three new life science leases totaling 330,000 square feet, committed three buildings in San Diego to our redevelopment program: 12340 El Camino Real and 12400 High Bluff Drive in the Del Mar submarket and 4690 Executive Drive in the University Towne Center submarket, which will be converted in phases from office to life science use

Balance Sheet / Liquidity Highlights

•As of the date of this release, the company had approximately $1.5 billion of total liquidity comprised of approximately $390.0 million of cash and cash equivalents and full availability under the $1.1 billion unsecured revolving credit facility

•No significant debt maturities until December 2024

Recent Development

•In October, completed a public offering of $450.0 million of 12-year senior unsecured green bonds at 2.650% due November 2033

•In October, completed the early redemption of all $300.0 million of 3.800% unsecured senior notes due January 2023 for a price of approximately $313.4 million, including make whole redemption fees and other related costs

Results for the Quarter Ended September 30, 2021

For the third quarter ended September 30, 2021, the company reported net income available to common stockholders of $47.0 million, or $0.40 per share, compared to $49.0 million, or $0.42 per share, in the third quarter of 2020. FFO in the third quarter of 2021 was $116.0 million, or $0.98 per share, compared to $117.4 million, or $0.99 per share, in the third quarter of 2020. Prior period net income available to common stockholders and FFO per share included a reversal of revenue of $0.02 per share charge against rental income due to tenant creditworthiness considerations as a result of the COVID-19 pandemic.

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

Net Income Available to Common Stockholders / FFO Guidance and Outlook

The company is providing an updated guidance range of NAREIT-defined FFO per diluted share for the full year 2021 of $3.74 to $3.80 per share, with a midpoint of $3.77 per share.



	Full Year 2021 Range
	Low End		High End
Net income available to common stockholders per share - diluted	$	5.30	$	5.36

Weighted average common shares outstanding - diluted (1)	117,650		117,650

Net income available to common stockholders	$	624,000	$	631,000
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership	6,200		6,400
Net income attributable to noncontrolling interests in consolidated property partnerships	23,500		24,500
Depreciation and amortization of real estate assets	285,000		285,000
Gains on sales of depreciable real estate	(458,000)		(458,000)
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships	(36,000)		(37,000)
Funds From Operations (2)	$	444,700	$	451,900

Weighted average common shares/units outstanding – diluted (3)	118,850		118,850

Funds From Operations per common share/unit – diluted (3)	$	3.74	$	3.80

Key 2021 assumptions:

•Guidance range includes approximately $13.4 million of costs related to the early redemption of the $300.0 million of $3.800% senior notes

•Same Store Cash NOI growth of 5.0% to 5.5% (4)

•Year-end occupancy of approximately 91.5%

•Total remaining development spending of approximately $100 million to $150 million

________________________

(1)Calculated based on estimated weighted average shares outstanding including non-participating share-based awards.

(2)See management statement for Funds From Operations at end of release.

(4)See management statement for Same Store Cash Net Operating Income on page 36 of our Supplemental Financial Report furnished on Form 8-K with this press release.

The company’s guidance estimates for the full year 2021, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this press release, reflect management’s views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this press release. Although these guidance estimates reflect the impact on the company’s operating results of an assumed range of future disposition activity, these guidance estimates do not include any estimates of possible future gains or losses from possible future dispositions because the magnitude of gains or losses on sales of depreciable operating properties, if any, will depend on the sales price and depreciated cost basis of the disposed assets at the time of disposition, information that is not known at the time the company provides guidance, and the timing of any gain recognition will depend on the closing of the dispositions, information that is also not known at the time the company provides guidance and may occur after the relevant guidance period. We caution you not to place undue reliance on our assumed range of future disposition activity because any potential future disposition transactions will ultimately depend on the market conditions and other factors, including but not limited to the company’s capital needs, the particular assets being sold and the company’s ability to defer some or all of the taxable gain on the sales. These guidance estimates also do not include the impact on operating results from potential future acquisitions, possible capital markets activity, possible future impairment charges or any events outside of the company’s control. There can be no assurance that the company’s actual results will not differ materially from these estimates.

Conference Call and Audio Webcast

The company’s management will discuss third quarter results and the current business environment during the company’s October 28, 2021 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/krc211028.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 https://dpregister.com/sreg/10148269/d9abb9d1ff. A replay of the conference call will be available via telephone on October 28, 2021 through November 4, 2021 by dialing (877) 344-7529 and entering passcode 10148269. 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/shareholders/investor-events/default.aspx.

About Kilroy Realty Corporation

Kilroy Realty Corporation (NYSE: KRC, the “company”, “Kilroy”) is a leading U.S. landlord and developer, with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, the Pacific Northwest and Austin, Texas. 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 and productivity for some of the world’s leading technology, entertainment, life science and business services companies.

The company 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, life science and mixed-use projects.

As of September 30, 2021, Kilroy’s stabilized portfolio totaled approximately 15.2 million square feet of primarily office and life science space that was 91.5% occupied and 93.9% leased. The company also had more than 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 79.9%. In addition, the company had six in-process development projects with an estimated total investment of $2.6 billion, totaling approximately 3.0 million square feet of office and life science space. The office and life science space was 52% leased.

A Leader in Sustainability and Commitment to Corporate Social Responsibility

The company is listed on the Dow Jones Sustainability World Index and has been recognized by industry organizations around the world. The company’s stabilized portfolio was 78% LEED certified, 44% Fitwel certified, the highest of any non-government organization, and 72% of eligible properties were ENERGY STAR certified as of September 30, 2021.

The company has been recognized by GRESB, the Global Real Estate Sustainability Benchmark, as the listed sustainability leader in the Americas for eight of the last nine 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 eight years as well as ENERGY STAR’s highest honor of Sustained Excellence, for the past six years.

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. For the second year in a row, the company has been named to Bloomberg’s 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, Texas and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses; 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 annual report on Form 10-K for the year ended December 31, 2020 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 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

SUMMARY OF QUARTERLY RESULTS

(unaudited; in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021			2020
Revenues	$	232,326	$	228,314	$	693,955		$	669,065

Net income available to common stockholders	$	47,028	$	49,028	$	580,498		$	108,463

Weighted average common shares outstanding – basic	116,457		115,226		116,418			112,406
Weighted average common shares outstanding – diluted	116,963		115,668		116,894			112,876

Net income available to common stockholders per share – basic	$	0.40	$	0.42	$	4.98		$	0.95
Net income available to common stockholders per share – diluted	$	0.40	$	0.42	$	4.96		$	0.95

Funds From Operations (1)(2)	$	115,998	$	117,391	$	336,837		$	320,653

Weighted average common shares/units outstanding – basic (3)	118,357		118,306		118,343			115,529
Weighted average common shares/units outstanding – diluted (4)	118,862		118,747		118,820			115,999

Funds From Operations per common share/unit – basic (2)	$	0.98	$	0.99	$	2.85		$	2.78
Funds From Operations per common share/unit – diluted (2)	$	0.98	$	0.99	$	2.83		$	2.76

Common shares outstanding at end of period					116,462			115,247
Common partnership units outstanding at end of period					1,151			1,932
Total common shares and units outstanding at end of period					117,613			117,179

					September 30, 2021			September 30, 2020
Stabilized office portfolio occupancy rates: (5)
Greater Los Angeles					86.4		%	90.8		%
San Diego County					91.8		%	86.7		%
San Francisco Bay Area					93.0		%	94.2		%
Greater Seattle					97.2		%	94.7		%
Weighted average total					91.5		%	92.2		%

Total square feet of stabilized office properties owned at end of period: (5)
Greater Los Angeles					4,436			4,031
San Diego County					2,619			2,147
San Francisco Bay Area					5,763			6,350
Greater Seattle					2,381			1,802
Total					15,199			14,330

________________________

(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.

(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.

(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 September 30, 2020 include the office properties that were sold subsequent to September 30, 2020.

KILROY REALTY CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited; in thousands)


	September 30, 2021		December 31, 2020
ASSETS
REAL ESTATE ASSETS:
Land and improvements	$	1,702,423	$	1,628,848
Buildings and improvements	7,282,341		6,783,092
Undeveloped land and construction in progress	2,237,742		1,778,106
Total real estate assets held for investment	11,222,506		10,190,046
Accumulated depreciation and amortization	(1,962,730)		(1,798,646)
Total real estate assets held for investment, net	9,259,776		8,391,400


Cash and cash equivalents	348,417		731,991
Restricted cash	13,042		91,139
Marketable securities	27,285		27,481
Current receivables, net	11,646		12,007
Deferred rent receivables, net	394,297		386,658
Deferred leasing costs and acquisition-related intangible assets, net	229,334		210,949
Right of use ground lease assets	127,657		95,523
Prepaid expenses and other assets, net	60,063		53,560
TOTAL ASSETS	$	10,471,517	$	10,000,708

LIABILITIES AND EQUITY
LIABILITIES:
Secured debt, net	$	249,690	$	253,582
Unsecured debt, net	3,673,183		3,670,099

Accounts payable, accrued expenses and other liabilities	441,357		445,100
Ground lease liabilities	125,676		97,778
Accrued dividends and distributions	61,845		59,431
Deferred revenue and acquisition-related intangible liabilities, net	160,687		128,523
Rents received in advance and tenant security deposits	68,441		68,874

Total liabilities	4,780,879		4,723,387

EQUITY:
Stockholders’ Equity
Common stock	1,165		1,160
Additional paid-in capital	5,146,049		5,131,916
Retained earnings (distributions in excess of earnings)	297,250		(103,133)
Total stockholders’ equity	5,444,464		5,029,943
Noncontrolling Interests
Common units of the Operating Partnership	53,788		49,875
Noncontrolling interests in consolidated property partnerships	192,386		197,503
Total noncontrolling interests	246,174		247,378
Total equity	5,690,638		5,277,321
TOTAL LIABILITIES AND EQUITY	$	10,471,517	$	10,000,708

KILROY REALTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
REVENUES
Rental income	$	230,720	$	227,122	$	689,849	$	664,111

Other property income	1,606		1,192		4,106		4,954
Total revenues	232,326		228,314		693,955		669,065

EXPENSES
Property expenses	40,842		39,236		120,183		116,048
Real estate taxes	24,153		23,868		71,528		67,924

Ground leases	1,708		2,119		5,559		6,766
General and administrative expenses	22,990		18,572		69,482		76,179

Leasing costs	798		986		2,373		3,772
Depreciation and amortization	73,213		71,863		222,734		226,318
Total expenses	163,704		156,644		491,859		497,007

OTHER INCOME (EXPENSES)
Interest income and other net investment gain	976		1,869		3,686		1,579
Interest expense	(16,105)		(19,468)		(59,829)		(49,796)


Gain on sale of depreciable operating property	—		—		457,831		—
Total other (expenses) income	(15,129)		(17,599)		401,688		(48,217)

NET INCOME	53,493		54,071		603,784		123,841

Net income attributable to noncontrolling common units of the Operating Partnership	(460)		(785)		(5,700)		(1,857)
Net income attributable to noncontrolling interests in consolidated property partnerships	(6,005)		(4,258)		(17,586)		(13,521)
Total income attributable to noncontrolling interests	(6,465)		(5,043)		(23,286)		(15,378)






NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	47,028	$	49,028	$	580,498	$	108,463

Weighted average common shares outstanding – basic	116,457		115,226		116,418		112,406
Weighted average common shares outstanding – diluted	116,963		115,668		116,894		112,876

Net income available to common stockholders per share – basic	$	0.40	$	0.42	$	4.98	$	0.95
Net income available to common stockholders per share – diluted	$	0.40	$	0.42	$	4.96	$	0.95

KILROY REALTY CORPORATION

FUNDS FROM OPERATIONS

(unaudited; in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income available to common stockholders	$	47,028	$	49,028	$	580,498	$	108,463
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership	460		785		5,700		1,857
Net income attributable to noncontrolling interests in consolidated property partnerships	6,005		4,258		17,586		13,521
Depreciation and amortization of real estate assets	71,703		70,422		218,171		218,841
Gain on sale of depreciable real estate	—		—		(457,831)		—
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships	(9,198)		(7,102)		(27,287)		(22,029)
Funds From Operations(1)(2)(3)	$	115,998	$	117,391	$	336,837	$	320,653

Weighted average common shares/units outstanding – basic (4)	118,357		118,306		118,343		115,529
Weighted average common shares/units outstanding – diluted (5)	118,862		118,747		118,820		115,999

Funds From Operations per common share/unit – basic (2)	$	0.98	$	0.99	$	2.85	$	2.78
Funds From Operations per common share/unit – diluted (2)	$	0.98	$	0.99	$	2.83	$	2.76

________________________

(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 and common unitholders.

(3)FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $4.1 million and $4.4 million for the three months ended September 30, 2021 and 2020, respectively, and $13.0 million and $17.4 million for the nine months ended September 30, 2021 and 2020, respectively.

(4)Calculated based on weighted average shares outstanding including participating share-based awards (i.e. certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding.

(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.



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


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


☐			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))


(a)						Financial statements of businesses acquired: None.

(b)						Pro forma financial information: None.

(c)						Shell company transactions: None.

(d)						Exhibits:


Exhibit No.						Description
99.1**						Supplemental Operating and Financial Data for the quarter ended September 30, 2021

99.2**						Press Release dated October 2 7 , 2021 regarding third quarter 2021 earnings

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)


(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)