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Kilroy Realty Corporation Reports 10.2% Increase in Fourth Quarter FFO Per Share

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LOS ANGELES, Feb. 2, 2000 (PRIMEZONE) -- Kilroy Realty Corporation (NYSE:KRC) today reported financial results for its fourth quarter ended December 31, 1999, with funds from operations (FFO) of $20.9 million, or $0.65 per share, up 10.2% on a per-share basis from $18.9 million, or $0.59 per share, in the fourth quarter of 1998. Net income in the fourth quarter declined to $8.3 million, or $0.30 per share, down from $10.2 million, or $0.37 per share, in the year-earlier quarter. Revenues in the period totaled $42.6 million, compared to $39.3 million a year ago.

In its 1999 fiscal year, the company reported FFO of $80.6 million, or $2.50 per share, an 8.7% increase on a per-share basis from $71.2 million, or $2.30 per share, in 1998. Net income in 1999 rose to $39.9 million, or $1.44 per share, compared to $38.8 million, or $1.43 per share, in the prior year. Revenues in the year totaled $159.7 million, up from $137.1 million in 1998. All per-share amounts are presented on a diluted basis.

``Kilroy Realty capitalized on the robust commercial real estate market in Southern California in 1999 and continued the successful development and lease-up of the company's over $500 million property pipeline,'' said John B. Kilroy, Jr., KRC's president and chief executive officer.

Kilroy Realty completed and stabilized eight properties in 1999 totaling $125 million in new development. These new developments added 1.2 million square feet of space to the company's office and industrial real estate portfolio and were 100% leased at the end of the year. Year-end occupancy for the company's operating portfolio, including the newly stabilized properties, was 97%, up from 96% at the end of 1998.

Through December 1999, the company had also committed to build or initiated construction on another 1.4 million square feet of office space, representing a total projected investment of $274 million. Approximately 86% of this new space has been preleased or committed to tenants, including major, multi-year leases signed during 1999 with Peregrine Systems in San Diego, SCAN Health in Long Beach, and eToys in West Los Angeles.

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 KRC'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, and Long Beach, where the company's total development program is over $500 million. At December 31, 1999, the company owned 6.1 million square feet of commercial office space and 6.5 million square feet of industrial space. More information on Kilroy Realty can be found at www.kilroyrealty.com.

                   KILROY REALTY CORPORATION
                   SUMMARY QUARTERLY RESULTS
         (unaudited, in thousands, except per share data)

                            3 Mos.    3 Mos.     Year       Year
                            Ended     Ended      Ended      Ended
                          12/31/99  12/31/98   12/31/99   12/31/98

Revenues                  $ 42,647  $ 39,294   $ 159,700  $ 137,088 

Net income available to 
 common stockholders (1)  $  8,278  $ 10,173   $  39,895  $  38,822

Weighted average common      
 shares outstanding
 - basic                    27,884    27,639      27,701     26,989 
Weighted average common    
 shares outstanding
 - diluted                  27,884    27,640      27,727     27,060 

Net income per share                                   
 of common stock 
 - basic                  $   0.30  $   0.37    $   1.44   $   1.44 
Net income per share                                   
 of common stock 
 - diluted                $   0.30  $   0.37    $   1.44   $   1.43 

Funds From Operations     $ 20,945  $ 18,868    $ 80,631   $ 71,174 

Weighted average common                                             
 shares/units outstanding
 - basic (2)                32,284    31,840      32,201     30,897 
Weighted average common                                             
 shares/units outstanding
 - diluted (2)              32,284    31,840      32,227     30,967


Funds From Operations per                                           
 common share/unit -                            
 basic (2)                $   0.65  $   0.59    $   2.50   $   2.30
Funds From Operations per                                           
 common share/unit -                                               
 diluted (2)              $   0.65  $   0.59    $   2.50   $   2.30

 Common shares outstanding                        
  at end of period                                27,808     27,639 

 Common partnership units                                          
  outstanding at end of period                     4,229      4,201 
 Total common shares and units                                      
    outstanding at end of period                  32,037     31,840 


                                                12/31/99   12/31/98 
 Occupancy rates: 
   California                                     96.4%      95.9%
   Washington                                     99.6%      90.8%
   Arizona                                       100.0%     100.0%
   Nevada                                        100.0%     100.0% 
    Weighted average total                        96.7%      95.9%


 Total square feet of stabilized                                    
 properties owned at end of period:                                 
    Office                                       6,148      5,600 
    Industrial                                   6,477      6,157 
     Total                                      12,625     11,757 


 (1) Net income after minority interests.                        

 (2) Calculated based on weighted average shares outstanding     
     assuming conversion of all common limited partnership units 
     outstanding.                                                



      KILROY REALTY CORPORATION CONSOLIDATED BALANCE SHEETS
                   (unaudited, in thousands)


                                            December 31,  December 31,
                                                1999          1998   

ASSETS                                                              
 INVESTMENT IN REAL ESTATE:                                         
 Land and improvements                        $  274,463  $  253,500 
 Buildings and improvements                      946,130     828,425 
 Undeveloped land and construction                                
  in progress, net                               189,645     112,359 
  Total investment in real estate              1,410,238   1,194,284 
 Accumulated depreciation and amortization      (174,427)   (145,437)
  Investment in real estate, net               1,235,811   1,048,847 

 Cash and cash equivalents                        26,116       6,443 
 Restricted cash                                   6,636       6,896 
 Tenant receivables, net                          22,078      18,919 
 Notes receivable from related parties                         8,798 
 Deferred financing and leasing costs, net        27,840      16,168 
 Prepaid expenses and other assets                 2,020       3,146 

   TOTAL ASSETS                               $1,320,501  $1,109,217 



LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES:
 Mortgage debt                               $  325,516  $  133,383
 Unsecured line of credit                       228,000     272,000
 Accounts payable and accrued expenses           26,260      16,791
 Accrued distributions                           13,456      12,895
 Rents received in advance and
  tenant security deposits                       20,287      17,749
  Total liabilities                             613,519     452,818

MINORITY INTERESTS:
 8.075% Series A Cumulative 
  Redeemable Preferred unitholders               73,716      73,718
 9.375% Series C Cumulative
  Redeemable Preferred unitholders               34,464      34,410
 9.250% Series D Cumulative 
  Redeemable Preferred unitholders               44,022           
 Common unitholders                              71,920      72,372
 Minority interest in Development LLCs            9,931           
  Total minority interests                      234,053     180,500


STOCKHOLDERS' EQUITY:                                            
 Common stock                                       278         276
 Additional paid-in capital                     491,204     487,467
 Distributions in excess of earnings            (18,553)    (11,844)
  Total stockholders' equity                    472,929     475,899

  TOTAL LIABILITIES & STOCKHOLDERS' EQUITY   $1,320,501  $1,109,217



 KILROY REALTY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
         (unaudited, in thousands, except per share data)


                               3 Mos.     3 Mos.    Year      Year  
                               Ended      Ended     Ended     Ended 
                              12/31/99  12/31/98  12/31/99  12/31/98

REVENUES:
  Rental income              $  38,241 $  32,521 $ 140,182 $ 117,338
  Tenant reimbursements          3,786     4,111    16,316    14,956
  Interest income                  315       507     1,175     1,698
  Other income                     305     2,155     2,027     3,096
   Total revenues               42,647    39,294   159,700   137,088

EXPENSES: 
  Property expenses              5,152     5,512    20,669    19,281
  Real estate taxes              3,400     3,025    12,369    10,383
  General and administrative                                    
   expenses                      2,310     2,240     9,091     7,739
  Ground leases                    395       326     1,397     1,223
  Provision for potentially                                    
   unrecoverable pre-
   development costs                       1,700               1,700
  Interest expense               7,889     5,926    26,309    20,568
  Depreciation and                                
   amortization                 11,217     7,041    33,794    26,200
      Total expenses            30,363    25,770   103,629    87,094

Income from operations
 before gain (loss) on 
 dispositions of operating 
 properties, equity in 
 income of unconsolidated
 subsidiary and minority
 interests                      12,284    13,524    56,071    49,994
Gain (loss) on dispositions                                         
  of operating properties          (29)                 46          
Equity in income of                                                 
 unconsolidated subsidiary          39        29        17         5
Income before minority                           
 interests                      12,294    13,553    56,134    49,999 

Minority interests:                                                  
  Distributions on                                                   
   Cumulative Redeemable                          
   Preferred units              (2,557)   (1,852)   (9,560)   (5,556)
  Minority interest in                                               
   earnings of Operating                          
   Partnership                  (1,294)   (1,528)   (6,480)   (5,621)
  Minority interest in                                               
   earnings of                                                       
   Development LLCs               (165)               (199)          
    Total minority                                
     interests                  (4,016)   (3,380)  (16,239)  (11,177)

Net income                   $   8,278  $ 10,173  $ 39,895  $ 38,822 

Weighted average shares                                              
  outstanding - basic           27,884    27,639    27,701    26,989 
Weighted average shares                                              
  outstanding - diluted         27,884    27,640    27,727    27,060 

Income per common                                
 share - basic               $    0.30  $   0.37  $   1.44  $   1.44
Income per common                                 
 share - diluted             $    0.30  $   0.37  $   1.44  $   1.43





                  KILROY REALTY CORPORATION
                    FUNDS FROM OPERATIONS
       (unaudited, in thousands, except per share data)


                            3 Mos.     3 Mos.     Year       Year
                            Ended      Ended      Ended      Ended
                           12/31/99   12/31/98   12/31/99   12/31/98

Net income                 $  8,278  $  10,173   $ 39,895   $ 38,822 

Adjustments:                                                         
  Minority interest                                                  
   in earnings                                   
   of Operating                                  
   Partnership                1,294      1,528      6,480      5,621
  Depreciation and                                                 
   amortization              11,217      7,041     33,794     26,200
  (Gain) loss on                                                     
   dispositions of                               
   operating properties          29                   (46)          
  Other                         127        126        508        531 
Funds From Operations      $ 20,945  $  18,868   $ 80,631   $ 71,174 

Weighted average common                                              
  shares/units                                                       
  outstanding -  basic       32,284     31,840     32,201     30,897
Weighted average common                                              
  shares/units                                                       
  outstanding - diluted      32,284     31,840     32,227     30,967 


Funds From Operations
 per common share/unit
 - basic                   $   0.65  $    0.59   $   2.50   $   2.30 
Funds From Operations 
 per common share/unit
 - diluted                 $   0.65  $    0.59   $   2.50   $   2.30 




                    KILROY REALTY CORPORATION
                 FUNDS AVAILABLE FOR DISTRIBUTION
         (unaudited, in thousands, except per share data)


                              3 Mos.     3 Mos.    Year       Year 
                              Ended      Ended     Ended      Ended 
                             12/31/99   12/31/98  12/31/99   12/31/98

Funds From Operations       $  20,945  $ 18,868  $  80,631  $  71,174

Adjustments:            
    Amortization of
     deferred financing
     costs                        645       287      1,465       995 
    Tenant improvements,
     leasing commissions
     and recurring                                         
     capital expenditures      (2,322)     (942)    (5,596)   (3,190)
    Net effect of 
     straight-line 
     rents                     (2,300)   (1,526)    (6,866)   (4,509)
Funds Available for   
 Distribution               $  16,968  $ 16,687  $  69,634  $ 64,470 

Funds Available for 
 Distribution per 
 common share/unit
 - basic                    $    0.53  $   0.52  $    2.16  $   2.09 
Funds Available for
 Distribution per 
 common share/unit
 - diluted                  $    0.53  $   0.52  $    2.16  $   2.08



Contact:  Kilroy Realty Corporation
          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