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Kilroy Realty Corporation Reports 11.9% Increase In First Quarter FFO Per Share

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LOS ANGELES, May 3, 2000 (PRIMEZONE) -- Kilroy Realty Corporation (NYSE: KRC - news) today reported financial results for its first quarter ended March 31, 2000, with funds from operations (FFO) of $20.7 million, or $0.66 per share, up 11.9% on a per-share basis from $18.8 million, or $0.59 per share, in the first quarter of 1999. Net income in the first quarter was $9.6 million, or $0.35 per share, compared to $9.9 million, or $0.36 per share, in the year-earlier quarter. Revenues totaled $43.8 million, up from $37.6 million a year ago. All per-share amounts are presented on a diluted basis.

``Market conditions for commercial real estate in Southern California remain strong and steady,'' said John B. Kilroy, Jr., KRC's president and chief executive officer. ``With this healthy backdrop, we continue to execute an ambitious development program that includes a committed pipeline that will add $284 million in new properties to our portfolio over the next three years.''

During the first quarter, KRC completed 72,000 square feet of office space in the Del Mar submarket of San Diego for a total investment of approximately $15.6 million. The property was 100% leased on completion. Overall occupancy for the company's portfolio at first quarter's end, including the newly stabilized property, was 97%.

KRC's committed development pipeline of nearly 1.4 million square feet of office space in Southern California is already 88% pre-leased or otherwise committed, with individual properties scheduled for completion at various dates through 2002.

The company repurchased 1,999,300 shares during the first quarter at an average price per share of $20.58. KRC has now completed the repurchase of approximately 2.3 million shares of its announced three-million share repurchase program.

KRC Acquires Note Securing Key El Segundo Office Project

Earlier this week, KRC initiated actions that has put it in a position to potentially acquire the last remaining commercial property developed by Kilroy Industries and still privately held by Kilroy Airport Imperial Co. (``KAICO'') which is owned and controlled by the Kilroy family. The project consists of two office buildings, totaling 366,000 square feet, and a parking structure, which are located at the corner of Imperial Highway and Sepulveda Boulevard in El Segundo, a prime gateway location to Los Angeles International Airport. One of the buildings is fully-leased to Hughes Aircraft Company (``Hughes'') and the other is vacant.

On May 1, 2000, KRC purchased an outstanding $71 million note on the property held by an institutional lender for a discounted price of $45.3 million. The loan has a principal balance of $61 million and accrued interest of $10 million. In addition, the company has agreed to pay KAICO a total of $3.7 million: $2.3 million in reimbursement of expenditures incurred by KAICO since 1997, and $1.4 million to be paid at a later date for modification to an existing option that Kilroy Realty, L.P. holds to purchase the property. The option to purchase the property is subject to a Hughes right of first offer. In the event that KRC were to acquire the property, the company estimates that it could invest an additional $20 million to $30 million in the property.

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 office and industrial property sectors. For more than 50 years, the company has owned, developed, acquired and managed 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 $550 million. At March 31, 2000, 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.

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


                                     Three Months      Three Months
                                        Ended              Ended
                                    March 31, 2000    March 31, 1999
                                    ---------------   ---------------


  Revenues                                $ 43,764           $ 37,550

  Net income available to
   common stockholders (1)                 $ 9,578            $ 9,910

  Weighted average common
   shares outstanding - basic               27,228             27,633
  Weighted average common
   shares outstanding - diluted             27,229             27,633

  Net income per share of 
   common stock - basic                     $ 0.35             $ 0.36
  Net income per share of 
   common stock - diluted                   $ 0.35             $ 0.36

  Funds From Operations                   $ 20,680           $ 18,790

  Weighted average common 
   shares/units outstanding
   - basic (2)                              31,130             31,913
  Weighted average common 
   shares/units outstanding
   - diluted (2)                            31,130             31,913

  Funds From Operations per
   common share/unit - basic (2)            $ 0.66             $ 0.59
  Funds From Operations per 
   common share/unit - diluted (2)          $ 0.66             $ 0.59

  Common shares outstanding
   at end of period                         26,223             27,629
  Common partnership units 
   outstanding at end of period              3,805              4,673
                                    ---------------   ----------------
     Total common shares and units 
      outstanding at end of period          30,028             32,302


                                    March 31, 2000    March 31, 1999
                                    ---------------   ----------------

  Occupancy rates:
     California                              96.6%              94.9%
     Washington                             100.0%              95.3%
     Arizona                                100.0%             100.0%
     Nevada                                 100.0%             100.0%
                                    ---------------   ----------------
      Weighted average total                 96.8%              95.1%

  Total square feet of stabilized
   properties owned at end of period:
     Office                                  6,225              5,727
     Industrial                              6,432              6,152
                                    ---------------   ----------------
      Total                                 12,657             11,879


    (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)



                                        March 31,        December 31,
                                          2000              1999
                                    ----------------   ---------------
  ASSETS
  INVESTMENT IN REAL ESTATE:
   Land and improvements                  $ 276,318         $ 274,463
   Buildings and improvements               959,035           946,130
   Undeveloped land and 
    construction in progress, net           220,472           189,645
                                    ----------------   ---------------
    Total investment in real estate       1,455,825         1,410,238
   Accumulated depreciation
    and amortization                       (182,453)         (174,427)
                                    ----------------   ---------------
    Investment in real estate, net        1,273,372         1,235,811

  Cash and cash equivalents                   9,301            26,116
  Restricted cash                             5,361             6,636
  Tenant receivables, net                    24,760            22,078
  Deferred financing and
   leasing costs, net                        30,306            27,840
  Prepaid expenses and
   other assets                               3,659             2,020
                                    ----------------   ---------------
 TOTAL ASSETS                           $ 1,346,759       $ 1,320,501
                                    ================   ===============



  LIABILITIES & STOCKHOLDERS' EQUITY
  LIABILITIES:
   Mortgage debt                          $ 332,842         $ 325,516
   Unsecured line of credit                 292,500           228,000
   Accounts payable and
    accrued expenses                         25,792            26,260
   Accrued distributions                     13,513            13,456
   Rents received in advance
    and tenant security deposits             19,083            20,287
                                    ----------------   ---------------
    Total liabilities                       683,730           613,519
                                    ----------------   ---------------

  MINORITY INTERESTS:
   8.075% Series A Cumulative
    Redeemable Preferred unitholders         73,716            73,716
   9.375% Series C Cumulative 
    Redeemable Preferred unitholders         34,464            34,464
   9.250% Series D Cumulative
    Redeemable Preferred unitholders         44,322            44,022
   Common unitholders of the
    Operating Partnership                    63,468            71,920
   Minority interest in
    Development LLCs                          9,599             9,931
                                    ----------------   ---------------
    Total minority interests                225,569           234,053
                                    ----------------   ---------------


   STOCKHOLDERS' EQUITY:
   Common stock                                 262               278
   Additional paid-in capital               457,974           491,204
   Distributions in excess
    of earnings                             (20,776)          (18,553)
                                    ----------------   ---------------
    Total stockholders' equity              437,460           472,929
                                    ----------------   ---------------

    TOTAL LIABILITIES &
     STOCKHOLDERS' EQUITY               $ 1,346,759       $ 1,320,501
                                    ================   ===============



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


                                      Three Months       Three Months
                                         Ended             Ended
                                      March 31, 2000   March 31, 1999
                                    ----------------  ----------------
  REVENUES:
   Rental income                           $ 37,702          $ 32,818
   Tenant reimbursements                      4,694             4,123
   Interest income                              294               400
   Other income                               1,074               209
                                    ----------------   ---------------
       Total revenues                        43,764            37,550
                                    ----------------   ---------------

  EXPENSES:
   Property expenses                          5,458             5,134
   Real estate taxes                          3,387             3,009
   General and administrative expense         2,632             2,314
   Ground leases                                389               337
   Interest expense                           7,828             5,759
   Depreciation and amortization              9,323             7,217
                                    ----------------   ---------------
       Total expenses                        29,017            23,770
                                    ----------------   ---------------

  Income from operations before
   loss on disposition of operating
   property, equity in income of
   unconsolidated subsidiary and
   minority interests                        14,747            13,780
  Loss on disposition of
   operating property                          (305)
  Equity in income of
   unconsolidated subsidiary                      7
                                    ----------------   ---------------
  Income before minority interests           14,449            13,780
                                    ----------------   ---------------


  Minority interests:
   Distributions on Cumulative
    Redeemable Preferred units               (3,375)           (2,334)
   Minority interest in earnings
    of Operating Partnership                 (1,372)           (1,536)
   Minority interest in earnings
    of Development LLCs                        (124)
                                    ----------------   ---------------
       Total minority interests              (4,871)           (3,870)
                                    ----------------   ---------------

  Net income                                $ 9,578           $ 9,910
                                    ================   ===============



Weighted average shares
   outstanding - basic                       27,228            27,633
  Weighted average shares
   outstanding - diluted                     27,229            27,633

  Income per common share - basic            $ 0.35            $ 0.36
                                    ================   ===============
  Income per common share - diluted          $ 0.35            $ 0.36
                                    ================   ===============


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


                                     Three Months       Three Months
                                         Ended             Ended
                                      March 31, 2000   March 31, 1999
                                     ----------------  ---------------

  Net income                                $ 9,578           $ 9,910

   Adjustments:
       Minority interest in
        earnings of Operating
        Partnership                           1,372             1,536
       Depreciation and
        amortization                          9,323             7,217
       Loss on disposition of
        operating property                      305
       Other                                    102               127
                                    ----------------   ---------------
  Funds From Operations                    $ 20,680          $ 18,790
                                    ================   ===============

  Weighted average common
   shares/units outstanding - basic          31,130            31,913
  Weighted average common 
   shares/units outstanding - diluted        31,130            31,913

  Funds From Operations per common
   share/unit - basic                        $ 0.66            $ 0.59
                                    ================   ===============

  Funds From Operations per common
   share/unit - diluted                      $ 0.66            $ 0.59
                                    ================   ===============



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


                                      Three Months     Three Months
                                         Ended             Ended
                                      March 31, 2000   March 31, 1999
                                    ----------------- ----------------

  Funds From Operations                    $ 20,680          $ 18,790

   Adjustments:
       Amortization of deferred
        financing costs                         206               294
       Tenant improvements,
        leasing commissions
        and recurring capital
        expenditures                           (904)           (1,101)
       Net effect of 
        straight-line rents                  (1,508)           (1,389)
                                    ----------------   ---------------
  Funds Available for Distribution         $ 18,474          $ 16,594
                                    ================   ===============

  Funds Available for Distribution
   per common share/unit - basic             $ 0.59            $ 0.52
                                    ================   ===============

  Funds Available for Distribution
   per common share/unit - diluted           $ 0.59            $ 0.52
                                    ================   ===============


CONTACT:  Richard E. Moran Jr.
          Executive Vice President
            and Chief Financial Officer
          (310) 563-5533

          Tyler H. Rose
          Senior Vice President
            and Treasurer
          (310) 563-5531