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Scripps Health Signs Major Lease at Kilroy Centre Del Mar; Office Campus is Now 93 Percent Committed

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Kilroy Centre Del Mar Stands Out As Major Del Mar Success Story, Leasing Approximately 389,000 Square Feet Of Space In 2003

LOS ANGELES--(BUSINESS WIRE)--Nov. 4, 2003-- Kilroy Realty Corporation (NYSE: KRC) and Scripps Health announced today that Scripps Health has entered into a 17-year lease for 112,563 square feet of space at Kilroy Centre Del Mar located in the Del Mar area of San Diego. Kilroy Centre Del Mar is a five-building office campus encompassing 539,150 square feet of class-A office space. The lease is one of the most significant lease transactions consummated in San Diego county this year. The Scripps Health transaction brings Kilroy Centre Del Mar to 93 percent committed.

"Scripps Health is a world renowned health care organization and a testament to the premier level of companies that inhabit our work environments," said John B. Kilroy, Jr., president and chief executive officer of Kilroy Realty Corporation. "Our business focus remains centered on developing workplace environments in the most desirable submarkets in order to provide these companies what they need to service their customer base. In this way, we are developing more than office space, we're developing long-term relationships with our tenants."

According to Scripps Health officials, the company will use the facility for an ambulatory surgery center, imaging services as well as physician offices. It will occupy three floors in July of 2004, and the two remaining floors when the existing tenant's lease expires in November 2005, subject to two one-year extension options. Founded in 1924 by Ellen Browning Scripps, Scripps Health has operated as a not-for-profit, San Diego-based health care system for more than 75 years. The system includes more than 2,600 affiliated physicians, five acute care hospitals, an ambulatory care network, and home health care services employing 10,500 people and treating 525,000 patients annually.

"We have a commitment to our growing patient base in San Diego. That's why Kilroy Centre Del Mar is such an important location for Scripps. It has high visibility along I-5 as well as adjacency to the critical Route 56 link. From this location, we can significantly increase our service to residents of North San Diego County and Carmel Valley, substantially broadening our reach," said Chris Van Gorder, President and CEO of Scripps Health.

Historically, Kilroy Realty began development of the campus in 1999 after signing a 538,654-square-foot lease with Peregrine Systems, which at the time was the largest single office lease transaction in San Diego history. While Peregrine was not able to realize its full commitment, KRC's development foresight enabled the developer to effectively diversify the tenant base and increase rents over the original contract rents. Today, Kilroy Centre Del Mar is home to high-profile firms such as Paul Hastings, Memec, and Fair Isaac.

"Over the last 14 months, this project has experienced a remarkable turnaround, moving from more than 400,000 square feet of space available to less than 35,000 square feet available," said Steve Scott, senior vice president, Kilroy Realty. "The project's flexibility was key to that success. When we initiate a development, we look for strong locations in amenity-rich environments, then maximize the entitlements and the permitted uses during the planning process. This way we're well-positioned to react to changing market conditions, industry cycles and ensure we maximize long-term value for our shareholders."

While Kilroy Centre Del Mar has a range of nearby amenities including numerous hotels and one of Del Mar's premier neighborhood centers with a variety of restaurants, retail and convenience shops, it is the residential growth, top-ranked school districts, increasing regional affluence and new transportation corridors that have made the campus and the Del Mar Heights area the preferred office market, according to Scott. To that end, the Del Mar submarket went from approximately 30 percent overall availability in early 2003 to well below 15 percent overall availability, including current activity.

Bret Gossett, Jerry Keeney, Doug Lozier and Robert Merkin of CBRE represented Kilroy Realty Corp. Brian Gallagher of HealthWest Realty Advisors represented Scripps Health.

About Kilroy Realty Corp.

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. Principal submarkets for KRC's current development program include El Segundo and coastal San Diego. At September 30, 2003, the company owned 7.3 million square feet of commercial office space and 4.9 million square feet of industrial space. More information can be found at

About Scripps Health

Scripps is a world leader in the diagnosis and treatment of disease and is at the forefront of prevention, medical innovation, clinical research and technology. Scripps is recognized for quality health care, named among America's Best Hospitals by U.S. News and World Report (2002, 2003), earning the National Research Corporation's Consumers Choice Award (2001, 2002 and 2003), and among the nation's 100 Top Hospitals from Solucient (2000, 2001). Scripps is affiliated with The Scripps Research Institute, one of the country's largest private, not-for-profit research organizations, recognized internationally for biomedical research. More information can be found at

Kilroy Realty Corporation
Richard E. Moran Jr., 310-481-8483
Tyler H. Rose, 310-481-8484

SOURCE: Kilroy Realty Corporation