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Kilroy Realty Corporation Signs 11-Year Lease with eToys for Entire Second Phase of Westside Media Center

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Agreement Also Includes Option to Lease the Third Phase of Development at The

West LA Office Complex

LOS ANGELES, Dec. 22 /PRNewswire/ -- Kilroy Realty Corporation (NYSE: KRC) today announced that it has signed an 11-year lease agreement with eToys (Nasdaq: ETYS), a leading internet-based retailer of children's products, for the entire four-story, 151,000-square-foot office building currently under construction at KRC's Westside Media Center in West Los Angeles. The agreement also includes an option for eToys to lease the Media Center's entire third phase of development, a similar 151,000-square-foot office building scheduled to begin construction in mid-2000.

eToys plans to relocate its Santa Monica corporate headquarters to the Westside Media Center complex in 2000, when the second-phase office building currently under construction is completed. The rapidly expanding pioneer in e-commerce retailing also requested a short-term option on KRC's third phase of construction at the Media Center to accommodate its anticipated growth.

Kilroy Realty planned the Westside Media Center with tenants like eToys in mind. The low-rise, campus-style design of the office complex offers flexibility for rapidly changing space needs and an informal, collegial atmosphere that is often preferred by knowledge-based companies. And its strategic location along LA's western border places the complex at ground zero for the "new media" commercial and entertainment juggernaut rapidly taking shape on LA's Westside. KRC acquired the four-acre property with an existing 78,000-square-foot building, which it has renovated and fully leased to National Digital Television Center, a subsidiary of AT&T.

Some of the information presented in this release is forward-looking in nature. Although the information is based on the company's current best judgment, actual results could vary from expectations stated here. Numerous factors will affect KRC's actual results, some of which are beyond the company's control. These include the timing and strength of regional economic growth, the strength of commercial and industrial real estate markets, competitive market conditions, future interest rate levels and capital market conditions. For further information, please see Kilroy's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.

Kilroy Realty Corporation is a Southern California-based real estate investment trust active in the commercial office and industrial property sectors. The company has a 50-year history of owning, developing, acquiring and managing real estate assets in the coastal regions of California and Washington. Principal submarkets for the company's current development projects include Los Angeles, San Diego, Long Beach and Orange County, and the company's total development program is nearly $500 million. At September 30, 1999, the company owned 6.2 million square feet of commercial office space and 6.4 million square feet of industrial space. More information on Kilroy Realty can be found at www.kilroyrealty.com.

SOURCE Kilroy Realty Corporation

CONTACT: Richard E. Moran Jr., Executive Vice President and Chief Financial Officer, 310-563-5533, or Tyler H. Rose, Senior Vice President and Treasurer, 310-563-5531, both of Kilroy Realty Corporation/