Kilroy Realty Corporation Reports Fourth Quarter Financial Results.

LOS ANGELES -- Kilroy Realty Corporation (NYSE:KRC) today reported financial results for its fourth quarter ended December 31, 2006 with net income available for common stockholders of $9.2 million, or $0.28 per share, compared to a net loss for common stockholders of $1.6 million, or $0.06 per share, in the fourth quarter of 2005. Revenues from continuing operations in the fourth quarter totaled $64.0 million, up from $59.6 million in the prior year's fourth quarter. Funds from operations (FFO) for the period totaled $27.3 million, or $0.79 per share, compared to $8.5 million, or $0.26 per share, in the year-earlier period.

For its fiscal year ended December 31, 2006, KRC reported net income available for common stockholders of $72.3 million, or $2.30 per share, compared to $24.2 million, or $0.84 per share, in fiscal 2005. Revenues from continuing operations in 2006 totaled $251.2 million, up from $236.4 million in 2005. FFO for the year totaled $118.2 million, or $3.48 per share, compared to $63.6 million, or $1.95 per share, in 2005.

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

"Operating conditions in KRC's primary Southern California real estate markets strengthened appreciably throughout 2006, boosting results in our existing portfolio and providing an excellent backdrop for our development-driven growth strategies," said John B. Kilroy, Jr., the company's president and chief executive officer. "In 2007, our stabilized properties are projected to benefit from higher rental rates and our nearly fully preleased development pipeline is scheduled to add over one million square feet of rentable space to our portfolio."

KRC added one new office building with 77,000 rentable square feet to its stabilized portfolio in 2006 with a total estimated investment of $21 million. The new property, located in the Rancho Bernardo submarket of coastal San Diego, is 100% leased.

The company has five additional projects currently under development, all located in high quality submarkets of San Diego. These five projects encompass eight buildings totaling approximately 1.1 million rentable square feet and are 82% preleased. In the aggregate, they represent a total estimated investment of approximately $362 million, of which $171 million has been spent to date.

KRC also has one redevelopment project underway, a 107,000-square-foot property in Los Angeles County with a total estimated incremental investment of approximately $15 million. It is 77% preleased.

In January 2007, KRC acquired two value-added sites in San Diego, including Evening Creek Corporate Center, an existing two-building redevelopment opportunity along the I-15 corridor for $24.7 million, and the third phase of Santa Fe Summit, 10.5 acres of land adjacent to Phases I and II of the company's existing Santa Fe Summit project on the 56 corridor for $28.0 million.

Earnings guidance for 2007 will be discussed by KRC management during the company's February 5, 2007 earnings conference call. The call will begin at 11:00 a.m. Pacific time and last approximately one hour. Those interested in listening via the Internet can access the conference call at www.kilroyrealty.com. Please go to the website 15 minutes before the call and register. It may be necessary to download audio software to hear the conference call. Those interested in listening via telephone can access the conference call at [phone], reservation #31562769. A replay of the conference call will be available via phone through February 16, 2007 at [phone], reservation #32602994, or via the Internet at the company's website.

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

Kilroy Realty Corporation, a member of the S&P Small Cap 600 Index, is a Southern California-based real estate investment trust active in the office and industrial property sectors. For more than 50 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of California and Washington. Kilroy Realty currently has an in-process development and redevelopment pipeline of approximately 1.2 million square feet in Los Angeles and San Diego counties. At December 31, 2006, the company owned 7.8 million rentable square feet of commercial office space and 3.9 million rentable square feet of industrial space. More information is available at www.kilroyrealty.com.

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