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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 1, 2023
KILROY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 001-12675 95-4598246
(State or other jurisdiction of
incorporation or organization)		 (Commission File No.) (I.R.S. Employer
Identification No.)

12200 W. Olympic Boulevard, Suite 200, Los Angeles, California, 90064
(Address of principal executive offices) (Zip Code)

(310) 481-8400
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Registrant Title of each class Name of each exchange on which registered Ticker Symbol
Kilroy Realty Corporation Common Stock, $.01 par value New York Stock Exchange KRC

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐










Item 2.02    Results of Operations and Financial Condition.

On February 1, 2023, Kilroy Realty Corporation issued a press release announcing its earnings for the quarter and full year ended December 31, 2022 and distributed certain supplemental financial information. On February 1, 2023, Kilroy Realty Corporation also posted the supplemental information on its website located at www.kilroyrealty.com. The text of the supplemental information and the related press release are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference herein.

Exhibits 99.1 and 99.2 are being furnished pursuant to Item 2.02 and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act regardless of any general incorporation language in such filing.

Item 7.01    Regulation FD Disclosure.

As discussed in Item 2.02 above, Kilroy Realty Corporation issued a press release announcing its earnings for the quarter and full year ended December 31, 2022 and distributed certain supplemental information. On February 1, 2023, Kilroy Realty Corporation also posted the supplemental information on its website located at www.kilroyrealty.com.

The information being furnished pursuant to Item 7.01 shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act regardless of any general incorporation language in such filing.

Item 9.01    Financial Statements and Exhibits.

(a) Financial statements of businesses acquired: None.
(b) Pro forma financial information: None.
(c) Shell company transactions: None.
(d) Exhibits:

The following exhibits are furnished with this Current Report on Form 8-K:
Exhibit No. Description
99.1**
99.2**
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
_______________
**    Furnished herewith.



SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



Kilroy Realty Corporation
Date: February 1, 2023
By: /s/ Merryl E. Werber
Merryl E. Werber
Senior Vice President,
Chief Accounting Officer and Controller




EX-99.1 2 exhibit991.htm EX-99.1 Document

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Q4 2022 Supplemental Financial Report
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Table of Contents
Page
5
29
31
32
34-36
38-41
This Supplemental Financial Report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, among other things, information concerning lease expirations, debt maturities, potential investments, development and redevelopment activity, projected construction costs, dispositions and other forward-looking financial data. In some instances, forward-looking statements can be identified by the use of forward-looking terminology such as “expect,” “future,” “will,” “would,” “pursue,” or “project” and variations of such words and similar expressions that do not relate to historical matters. Forward-looking statements are based on Kilroy Realty Corporation’s current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of Kilroy Realty Corporation’s control. Accordingly, actual performance, results and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: global market and general economic conditions, including periods of heightened inflation, and their effect on our liquidity and financial conditions and those of our tenants; adverse economic or real estate conditions generally, and specifically, in the States of California, Texas and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses; our ability to re-lease property at or above current market rates; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers' financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; our ability to maintain our status as a REIT; and uncertainties regarding the impact of the COVID-19 pandemic, and restrictions intended to prevent its spread, on our business and the economy generally. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect Kilroy Realty Corporation’s business and financial performance, see the factors included under the caption “Risk Factors” in Kilroy Realty Corporation’s quarterly report on Form 10-Q for the period ended September 30, 2022 and in its annual report on Form 10-K for the year ended December 31, 2021, and its other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information and speak only as of the dates on which they are made. Kilroy Realty Corporation assumes no obligation to update any forward-looking statement made in this Supplemental Financial Report that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.
Pictured on cover page, in order of appearance: Indeed Tower, Austin, TX | Santa Fe Summit, San Diego, CA | 201 Third, San Francisco, CA –Market Capitalization and Common Stock Data


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01
Corporate Data and Financial Highlights

–Company Background
–Executive Summary
–Financial Highlights
–Net Income Available to Common Stockholders / FFO Guidance and Outlook
–Consolidated Balance Sheets
–Consolidated Statements of Operations
–Net Operating Income


Q4 2022 Supplemental Financial Report
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Company Background

–Funds From Operations and Funds Available for Distribution Kilroy Realty Corporation (NYSE: KRC), a publicly traded real estate investment trust and member of the S&P MidCap 400 Index, is a leading U.S. landlord and developer, with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, Greater Seattle and Austin, Texas. The Company has over seven decades of experience developing, acquiring and managing office, life science and mixed-use real estate assets. At December 31, 2022, the Company’s stabilized portfolio totaled approximately 16.2 million square feet of primarily office and life science space that was 91.6% occupied and 92.9% leased. The Company also has 1,001 residential units in the Los Angeles and San Diego regions, which had an average occupancy of 93.3% for the quarter ended December 31, 2022.
Board of Directors Executive and Senior Management Team Investor Relations
John Kilroy Chairman John Kilroy Chief Executive Officer 12200 W. Olympic Blvd., Suite 200
Los Angeles, CA 90064
(310) 481-8400
Web: www.kilroyrealty.com
E-mail: investorrelations@kilroyrealty.com
Edward F. Brennan, PhD Lead Independent Tyler H. Rose President (departing March 1, 2023)
Jolie Hunt Justin W. Smart President, Development and Construction (incoming President, March 1, 2023)
Scott S. Ingraham
Louisa G. Ritter Robert Paratte Executive VP, Chief Leasing Officer and Senior Advisor to the Chairman
Gary R. Stevenson
Bill Hutcheson
Peter B. Stoneberg Heidi R. Roth Executive VP, Chief Administrative Officer Senior VP, Investor Relations & Capital Markets
John Osmond Executive VP, Head of Asset Management
Eliott Trencher Executive VP, Chief Investment Officer,
Interim Chief Financial Officer
Merryl Werber Senior VP, Chief Accounting Officer and Controller
Equity Research Coverage
BofA Securities Jefferies LLC
Camille Bonnel (416) 369-2140 Peter Abramowitz (212) 336-7241
BMO Capital Markets Corp. J.P. Morgan
John P. Kim (212) 885-4115 Anthony Paolone (212) 622-6682
BTIG Mizuho Securities USA LLC
Thomas Catherwood (212) 738-6140 Vikram Malhotra (212) 282-3827
Citigroup Investment Research RBC Capital Markets
Michael Griffin (212) 816-5871 Mike Carroll (440) 715-2649
Credit Suisse Robert W. Baird & Co.
Tayo Okusanya (212) 325-1402 David B. Rodgers (216) 737-7341
Deutsche Bank Securities, Inc. Scotiabank
Derek Johnston (210) 250-5683 Nicholas Yulico (212) 225-6904
Evercore ISI Wells Fargo
Steve Sakwa (212) 446-9462 Blaine Heck (443) 263-6529
Goldman Sachs & Co. LLC Wolfe Research
Caitlin Burrows (212) 902-4736 Andrew Rosivach (646) 582-9250
Green Street Advisors
Dylan Burzinski (949) 640-8780
Kilroy Realty Corporation is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Kilroy Realty Corporation’s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Kilroy Realty Corporation or its management. Kilroy Realty Corporation does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.
1
Q4 2022 Supplemental Financial Report
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Executive Summary
Quarterly Financial Highlights Quarterly Operating Highlights
• Revenues grew approximately 8.9% to $284.3 million compared to the prior year
• Stabilized portfolio was 91.6% occupied and 92.9% leased at quarter-end
• Net income available to common stockholders per diluted share of $0.45, an
• Approximately 716,000 square feet of leases commenced in the stabilized and
   increase of approximately 12.5% compared to the prior year    development portfolios
• FFO per diluted share of $1.17, an increase of approximately 11.4% compared to
• Approximately 328,000 square feet of leases executed, including approximately
   the prior year
   102,000 square feet in the development portfolio
• Same Store NOI and Same Store Cash NOI decreased 2.1% and 0.7%,
◦GAAP rents increased approximately 31.1% from prior levels
   respectively, compared to the prior year
◦Cash rents increased approximately 12.3% from prior levels
◦Prior year Same Store NOI and Same Store Cash NOI includes $4.6 million
           and $6.4 million of non-recurring items, respectively
           
Capital Markets Highlights Strategic Highlights
• As of the date of this report, approximately $1.7 billion of total liquidity comprised • Commenced GAAP revenue recognition on the entirety of the approximately
   of approximately $290.0 million of cash and cash equivalents, $300.0 million    308,000 square foot space leased by Indeed, Inc. at our Indeed Tower
   available under the new unsecured term loan facility and full availability under the    development project in Austin
   $1.1 billion unsecured revolving credit facility
• Commenced construction on the life science redevelopment of 4400 Bohannon
• As previously disclosed in October, the Company entered into a term loan
    Drive, an approximately 48,000 square foot operating property in the San Francisco
   agreement that provides for a $400.0 million unsecured delayed draw term loan    Bay Area's Menlo Park submarket
   facility with an additional $100.0 million accordion feature
◦In January, the Company amended the term loan agreement to exercise
              the accordion feature for borrowings of up to $500.0 million, under which
              $200.0 million has been drawn
  

________________________
Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 38-39 “Definitions Included in Supplemental.”
2
Q4 2022 Supplemental Financial Report
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Financial Highlights
(unaudited, $ in thousands, except per share amounts)
Three Months Ended
 
12/31/2021 (1)
 3/31/2022 6/30/2022
9/30/2022 (1)
 12/31/2022
INCOME ITEMS:
Capitalized Interest and Debt Costs $ 21,773  $ 19,098  $ 19,491  $ 19,677  $ 19,216 
Cash Lease Termination Fees (2)
 $ 2,139  $ 637  $ 374  $ 165  $ 503 
Net Income Available to Common Stockholders per common share – diluted (3)
 $ 0.40  $ 0.45  $ 0.40  $ 0.68  $ 0.45 
Funds From Operations per common share – diluted (4)
 $ 1.05  $ 1.16  $ 1.17  $ 1.17  $ 1.17 
EBITDA, as adjusted (5)
 $ 168,110  $ 168,668  $ 170,511  $ 170,453  $ 174,421 
RATIOS:
Net Operating Income Margins 73.5  % 72.5  % 71.5  % 70.6  % 70.3  %
Fixed Charge Coverage Ratio - Net Income 1.4x 1.6x 1.4x 2.3x 1.5x
Fixed Charge Coverage Ratio - EBITDA 4.4x 4.5x 4.6x 4.5x 4.4x
Net Income Payout Ratio 110.9  % 103.2  % 113.7  % 73.5  % 107.2  %
FFO Payout Ratio 48.7  % 44.5  % 44.0  % 45.6  % 45.6  %
FAD Payout Ratio 68.7  % 55.3  % 54.4  % 54.7  % 60.9  %

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______________________________________________________
Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 38-39 “Definitions Included in Supplemental.”
(1)Net Income Available to Common Stockholders also includes $17.3 million and $5.3 million of gains on sale of depreciable operating properties for the three months ended September 30, 2022 and December 31, 2021, respectively.
(2)Represents cash receipts of lease termination fees in the period they are received, which may not correspond to the timing of GAAP revenue recognition of the lease termination fee over the remaining term of the lease.
(3)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(4)Please refer to page 8 for reconciliations of GAAP Net Income Available to Common Stockholders to Funds From Operations available to common stockholders and unitholders and Funds Available for Distribution to common stockholders and unitholders and page 9 for a reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution to common stockholders and unitholders.
(5)Please refer to pages 40-41 for reconciliations of GAAP Net Income Available to Common Stockholders to Net Operating Income and EBITDA, as adjusted. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by Nareit, as the Company does not have any unconsolidated joint ventures.
3
Q4 2022 Supplemental Financial Report
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Market Capitalization and Common Stock Data
(unaudited, $ and shares/units in thousands, except per share amounts)
Market Capitalization (1)
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Dividends per common share (2)
 $ 0.52  $ 0.52  $ 0.52  $ 0.54  $ 0.54 
Closing common shares (3)
 116,464 116,716 116,871 116,877 116,878
Closing common partnership units (3)
 1,151 1,151 1,151 1,151 1,151
117,615 117,867 118,022 118,028 118,029
______________________________________________________
(1)Please refer to page 31 for additional information regarding our capital structure.
(2)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(3)As of the end of the period.
4
Q4 2022 Supplemental Financial Report
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Net Income Available to Common Stockholders / FFO Guidance and Outlook
(unaudited, $ and shares/units in thousands, except per share amounts)
The Company is providing a guidance range of Nareit-defined FFO per diluted share for its fiscal year 2023 of $4.40 to $4.60 per share with a midpoint of $4.50 per share.
Full Year 2023 Range
Low End High End
Net income available to common stockholders per share - diluted $ 1.85  $ 2.03 
Weighted average common shares outstanding - diluted (1)
 117,500  117,500 
Net income available to common stockholders $ 217,000  $ 239,000 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 2,600  3,100 
Net income attributable to noncontrolling interests in consolidated property partnerships 24,000  26,000 
Depreciation and amortization of real estate assets 316,000  316,000 
Gains on sales of depreciable real estate —  — 
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (35,000) (36,000)
Funds From Operations (2)
 $ 524,600  $ 548,100 
Weighted average common shares and units outstanding - diluted (3)
 119,100  119,100 
FFO per common share/unit - diluted (3)
 $ 4.40  $ 4.60 

Key Assumptions 2022 Actuals 2023 Assumptions
Same Store Cash NOI growth (2)
 7.0% 0.0% to 2.0%
Average occupancy 91.2% 86.5% to 88.0%
Total development spending $345 million $450 million to $550 million
Dispositions $48 million $0 to $200 million
________________________
(1)Calculated based on estimated weighted average shares outstanding including non-participating share-based awards.
(2)See pages 35-36 for Management Statements on Funds From Operations and Same Store Cash Net Operating Income.
(3)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.

The Company’s guidance estimates for the full year 2023, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this report, reflect management’s views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this report. Although these guidance estimates reflect the impact on the Company’s operating results of an assumed range of future disposition activity, these guidance estimates do not include any estimates of possible future gains or losses from possible future dispositions because the magnitude of gains or losses on sales of depreciable operating properties, if any, will depend on the sales price and depreciated cost basis of the disposed assets at the time of disposition, information that is not known at the time the Company provides guidance, and the timing of any gain recognition will depend on the closing of the dispositions, information that is also not known at the time the Company provides guidance and may occur after the relevant guidance period. We caution you not to place undue reliance on our assumed range of future disposition activity because any potential future disposition transactions will ultimately depend on the market conditions and other factors, including but not limited to the Company’s capital needs, the particular assets being sold and the Company’s ability to defer some or all of the taxable gain on the sales. These guidance estimates also do not include the impact on operating results from potential future acquisitions, possible capital markets activity, possible future impairment charges or any events outside of the Company’s control. There can be no assurance that the Company’s actual results will not differ materially from these estimates.
5
Q4 2022 Supplemental Financial Report
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Consolidated Balance Sheets
(unaudited, $ in thousands)
12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
ASSETS:
Land and improvements $ 1,738,242  $ 1,743,194  $ 1,713,152  $ 1,715,192  $ 1,731,982 
Buildings and improvements 8,302,081  7,693,247  7,530,547  7,509,311  7,543,585 
Undeveloped land and construction in progress 1,691,860  2,183,071  2,272,508  2,158,279  2,017,126 
Total real estate assets held for investment 11,732,183  11,619,512  11,516,207  11,382,782  11,292,693 
Accumulated depreciation and amortization (2,218,710) (2,150,060) (2,104,990) (2,034,193) (2,003,656)
Total real estate assets held for investment, net 9,513,473  9,469,452  9,411,217  9,348,589  9,289,037 
Cash and cash equivalents 347,379  249,981  210,044  331,685  414,077 
Restricted cash —  13,009  13,008  13,007  13,006 
Marketable securities 23,547  22,390  22,988  25,829  27,475 
Current receivables, net 20,583  15,885  13,268  12,107  14,386 
Deferred rent receivables, net 452,200  442,987  435,549  420,895  405,665 
Deferred leasing costs and acquisition-related intangible assets, net 250,846  214,484  217,026  228,426  234,458 
Right of use ground lease assets 126,530  126,708  126,587  126,946  127,302 
Prepaid expenses and other assets, net 62,429  65,096  65,554  57,338  57,991 
TOTAL ASSETS $ 10,796,987  $ 10,619,992  $ 10,515,241  $ 10,564,822  $ 10,583,397 
LIABILITIES AND EQUITY:
Liabilities:
Secured debt, net $ 242,938  $ 244,316  $ 245,680  $ 247,030  $ 248,367 
Unsecured debt, net 4,020,058  3,823,532  3,822,482  3,821,433  3,820,383 
Accounts payable, accrued expenses and other liabilities 392,360  424,087  357,253  391,920  391,264 
Ground lease liabilities 124,994  125,065  125,277  125,414  125,550 
Accrued dividends and distributions 64,285  64,271  61,880  61,951  61,850 
Deferred revenue and acquisition-related intangible liabilities, net 195,959  176,105  176,845  171,121  171,151 
Rents received in advance and tenant security deposits 81,432  82,839  73,273  80,192  74,962 
Total liabilities 5,122,026  4,940,215  4,862,690  4,899,061  4,893,527 
Equity:
Stockholders’ Equity
Common stock 1,169  1,169  1,169  1,167  1,165 
Additional paid-in capital 5,170,760  5,162,088  5,151,705  5,149,968  5,155,232 
Retained earnings 265,118  276,138  260,020  274,193  283,663 
Total stockholders’ equity 5,437,047  5,439,395  5,412,894  5,425,328  5,440,060 
Noncontrolling Interests
Common units of the Operating Partnership 53,524  53,475  53,289  53,472  53,746 
Noncontrolling interests in consolidated property partnerships 184,390  186,907  186,368  186,961  196,064 
Total noncontrolling interests 237,914  240,382  239,657  240,433  249,810 
Total equity 5,674,961  5,679,777  5,652,551  5,665,761  5,689,870 
TOTAL LIABILITIES AND EQUITY $ 10,796,987  $ 10,619,992  $ 10,515,241  $ 10,564,822  $ 10,583,397 
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Q4 2022 Supplemental Financial Report
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Consolidated Statements of Operations
(unaudited, $ and shares in thousands, except per share amounts)
Three Months Ended December 31, Year Ended December 31,
2022 2021 2022 2021
REVENUES
Rental income $ 281,688  $ 259,145  $ 1,086,018  $ 948,994 
Other property income 2,656  1,940  10,969  6,046 
Total revenues 284,344  261,085  1,096,987  955,040 
EXPENSES
Property expenses 55,323  45,519  202,744  165,702 
Real estate taxes 27,151  21,681  105,869  93,209 
Ground leases 2,092  1,862  7,565  7,421 
General and administrative expenses 25,217  23,267  93,642  92,749 
Leasing costs 1,404  876  4,879  3,249 
Depreciation and amortization 91,396  87,309  357,611  310,043 
Total expenses 202,583  180,514  772,310  672,373 
OTHER INCOME (EXPENSES)
Interest and other income, net 1,264  230  1,765  3,916 
Interest expense (23,550) (18,726) (84,278) (78,555)
Gains on sales of depreciable operating properties —  5,297  17,329  463,128 
Loss on early extinguishment of debt —  (12,246) —  (12,246)
Total other (expenses) income (22,286) (25,445) (65,184) 376,243 
NET INCOME 59,475  55,126  259,493  658,910 
Net income attributable to noncontrolling common units of the Operating Partnership (588) (463) (2,283) (6,163)
Net income attributable to noncontrolling interests in consolidated property partnerships (6,262) (7,017) (24,595) (24,603)
Total income attributable to noncontrolling interests (6,850) (7,480) (26,878) (30,766)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 52,625  $ 47,646  $ 232,615  $ 628,144 
Weighted average common shares outstanding – basic 116,878  116,462  116,807  116,429 
Weighted average common shares outstanding – diluted 117,389  117,110  117,220  116,949 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE
Net income available to common stockholders per share – basic $ 0.45  $ 0.41  $ 1.98  $ 5.38 
Net income available to common stockholders per share – diluted $ 0.45  $ 0.40  $ 1.97  $ 5.36 


7
Q4 2022 Supplemental Financial Report
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Funds From Operations and Funds Available for Distribution
(unaudited, $ in thousands, except per share amounts)
Three Months Ended December 31, Year Ended December 31,
2022 2021 2022 2021
FUNDS FROM OPERATIONS: (1)
Net income available to common stockholders $ 52,625  $ 47,646  $ 232,615  $ 628,144 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 588  463  2,283  6,163 
Net income attributable to noncontrolling interests in consolidated property partnerships 6,262  7,017  24,595  24,603 
Depreciation and amortization of real estate assets 89,536  85,628  350,665  303,799 
Gains on sales of depreciable real estate —  (5,297) (17,329) (463,128)
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (9,156) (9,980) (36,198) (37,267)
Funds From Operations (1)(2)
 $ 139,855  $ 125,477  $ 556,631  $ 462,314 
Weighted average common shares/units outstanding – basic (3)
 118,568  118,365  118,586  118,349 
Weighted average common shares/units outstanding – diluted (4)
 119,079  119,012  118,999  118,868 
FFO per common share/unit – basic (1)
 $ 1.18  $ 1.06  $ 4.69  $ 3.91 
FFO per common share/unit – diluted (1)
 $ 1.17  $ 1.05  $ 4.68  $ 3.89 
FUNDS AVAILABLE FOR DISTRIBUTION: (1)
Funds From Operations (1)(2)
 $ 139,855  $ 125,477  $ 556,631  $ 462,314 
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures (28,480) (26,490) (81,328) (89,987)
Amortization of deferred revenue related to tenant-funded tenant improvements (2)(5)
 (5,100) (3,540) (19,321) (16,539)
Net effect of straight-line rents (9,214) (15,099) (47,936) (55,820)
Amortization of net below market rents (6)
 (2,305) (3,200) (10,476) (6,904)
Amortization of deferred financing costs and net debt discount/premium 1,215  930  3,657  3,162 
Non-cash executive compensation expense (7)
 6,712  7,693  28,347  35,315 
Lease related adjustments, leasing costs and other (8)
 833  1,431  9,536  20,228 
Adjustments attributable to noncontrolling interests in consolidated property partnerships 1,223  1,759  5,687  5,440 
Funds Available for Distribution (1)
 $ 104,739  $ 88,961  $ 444,797  $ 357,209 
________________________
(1)See page 36 for Management Statements on Funds From Operations and Funds Available for Distribution. Reported per common share/unit amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(2)FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $5.1 million and $3.5 million for the three months ended December 31, 2022 and 2021, respectively, and $19.3 million and $16.5 million for the year ended December 31, 2022 and 2021, respectively. These amounts are adjusted out of FFO in our calculation of FAD.
(3)Calculated based on weighted average shares outstanding including participating share-based awards and assuming the exchange of all common limited partnership units outstanding.
(4)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options and contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.
(5)Represents revenue recognized during the period as a result of the amortization of deferred revenue recorded for tenant-funded tenant improvements.
(6)Represents the non-cash adjustment related to the acquisition of buildings with above and/or below market rents.
(7)Includes non-cash amortization of share-based compensation and accrued potential future executive retirement benefits.
(8)Includes other cash and non-cash adjustments attributable to lease-related matters including GAAP revenue recognition timing differences, leasing costs and other.
8
Q4 2022 Supplemental Financial Report
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Reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution
(unaudited, $ in thousands)
  Three Months Ended December 31, Year Ended December 31,
  2022 2021 2022 2021
GAAP Net Cash Provided by Operating Activities
$ 108,005  $ 108,843  $ 592,235  $ 516,403 
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures (28,480) (26,490) (81,328) (89,987)
Loss on early extinguishment of debt —  (11,915) —  (11,915)
Depreciation of non-real estate furniture, fixtures and equipment (1,860) (1,681) (6,946) (6,244)
Net changes in operating assets and liabilities (1)
 36,343  34,493  (12,634) (1,975)
Noncontrolling interests in consolidated property partnerships’ share of FFO and FAD
 (7,933) (8,221) (30,511) (31,827)
Cash adjustments related to investing and financing activities (1,336) (6,068) (16,019) (17,246)
Funds Available for Distribution (2)
 $ 104,739  $ 88,961  $ 444,797  $ 357,209 
   
_______________________
(1)Primarily includes changes in the following assets and liabilities: marketable securities; current receivables; prepaid expenses and other assets; accounts payable, accrued expenses and other liabilities; and rents received in advance and tenant security deposits. 
(2)Please refer to page 36 for a Management Statement on Funds Available for Distribution.

9
Q4 2022 Supplemental Financial Report
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Net Operating Income (1)
(unaudited, $ in thousands)
Three Months Ended December 31, Year Ended December 31,
2022 2021 % Change 2022 2021 % Change
Operating Revenues:
Rental income (2)
 $ 237,884  $ 224,991  5.7  % $ 923,780  $ 825,813  11.9  %
Tenant reimbursements (2)
 43,804  34,154  28.3  % 162,238  123,181  31.7  %
Other property income 2,656  1,940  36.9  % 10,969  6,046  81.4  %
Total operating revenues 284,344  261,085  8.9  % 1,096,987  955,040  14.9  %
Operating Expenses:
Property expenses 55,323  45,519  21.5  % 202,744  165,702  22.4  %
Real estate taxes 27,151  21,681  25.2  % 105,869  93,209  13.6  %
Ground leases 2,092  1,862  12.4  % 7,565  7,421  1.9  %
Total operating expenses 84,566  69,062  22.4  % 316,178  266,332  18.7  %
Net Operating Income $ 199,778  $ 192,023  4.0  % $ 780,809  $ 688,708  13.4  %

chart-7cd35dd251c54acb806.jpgchart-733290fa6d984c72965.jpg
piechartlegend.jpg
________________________
(1)Please refer to page 34 for Management Statements on Net Operating Income and page 40 for a reconciliation of GAAP Net Income Available to Common Stockholders to Net Operating Income.
(2)Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations.
10

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02
Portfolio Data

–Same Store Analysis
–Stabilized Portfolio Occupancy Overview by Region
–Information on Leases Commenced
–Information on Leases Executed
–Stabilized Portfolio Capital Expenditures
–Stabilized Portfolio Lease Expirations
–Top Fifteen Tenants
–2022 Operating Property Dispositions
–Consolidated Ventures (Noncontrolling Property Partnerships)

Q4 2022 Supplemental Financial Report
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Same Store Analysis (1)
(unaudited, $ in thousands)
Three Months Ended December 31, Year Ended December 31,
2022 2021 % Change 2022 2021 % Change
Total Same Store Portfolio
Office Portfolio
Number of properties 109  109  109  109 
Square Feet 13,556,582  13,556,582  13,556,582  13,556,582 
Percent of Stabilized Portfolio 83.7  % 87.7  % 83.7  % 87.7  %
Average Occupancy 91.2  % 91.5  % 91.0  % 91.9  %
Operating Revenues:
Rental income (3)
 $ 189,095  $ 187,286  1.0  % $ 747,621  $ 727,239  2.8  %
Tenant reimbursements (3)
 33,568  31,402  6.9  % 130,304  112,365  16.0  %
Other property income 2,321  1,819  27.6  % 9,110  5,754  58.3  %
Total operating revenues 224,984  220,507  2.0  % 887,035  845,358  4.9  %
Operating Expenses:
Property expenses 44,968  39,534  13.7  % 169,887  148,789  14.2  %
Real estate taxes 20,677  18,339  12.7  % 84,223  81,897  2.8  %
Ground leases 1,897  1,831  3.6  % 7,162  7,390  (3.1) %
Total operating expenses 67,542  59,704  13.1  % 261,272  238,076  9.7  %
Net Operating Income (2)(4)
 $ 157,442  $ 160,803  (2.1) % $ 625,763  $ 607,282  3.0  %
Same Store Analysis (Cash Basis)
  Three Months Ended December 31, Year Ended December 31,
  2022 2021 % Change 2022 2021 % Change
Total operating revenues $ 219,425  $ 212,660  3.2  % $ 860,446  $ 798,259  7.8  %
Total operating expenses 67,445  59,599  13.2  % 260,863  237,687  9.8  %
Cash Net Operating Income (2)(4)
 $ 151,980  $ 153,061  (0.7) % $ 599,583  $ 560,572  7.0  %
________________________
(1)Same Store is defined as all properties owned and included in our stabilized portfolio as of January 1, 2021 and still owned and included in the stabilized portfolio as of December 31, 2022. Same Store includes 100% of consolidated property partnerships as well as the residential tower at Columbia Square and the residential units at our One Paseo mixed-use project.
(2)Please refer to page 40 for a reconciliation of GAAP Net Income Available to Common Stockholders to Same Store Net Operating Income and Same Store Cash Net Operating Income. Adjustments to GAAP operating revenues include the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles and revenue reversals (recoveries) related to tenant creditworthiness.
(3)Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations.
(4)For the three months ended December 31, 2021, Same Store Net Operating Income and Same Store Cash Net Operating Income include $4.6 million and $6.4 million of non-recurring items, respectively.
12
Q4 2022 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region

Portfolio Breakdown Occupied at Leased at
STABILIZED OFFICE PORTFOLIO (1)
 Buildings YTD NOI % SF % Total SF 12/31/2022 9/30/2022 12/31/2022
Greater Los Angeles
Culver City 19 1.0  % 1.0  % 154,165  78.8  % 76.3  % 78.8  %
El Segundo 5 3.7  % 6.8  % 1,103,595  91.2  % 91.7  % 91.2  %
Hollywood 10 7.3  % 7.4  % 1,200,419  90.0  % 89.8  % 90.2  %
Long Beach 7 1.8  % 5.9  % 957,706  75.3  % 76.0  % 86.2  %
West Hollywood 4 0.9  % 1.2  % 189,459  80.0  % 75.9  % 84.1  %
West Los Angeles 8 3.9  % 4.5  % 726,975  83.8  % 79.7  % 83.8  %
Total Greater Los Angeles 53 18.6  % 26.8  % 4,332,319  85.2  % 84.5  % 87.8  %
San Diego County
Del Mar 17 12.8  % 11.1  % 1,791,487  98.7  % 98.8  % 99.4  %
I-15 Corridor 3 0.8  % 2.7  % 433,851  68.2  % 67.3  % 69.6  %
Little Italy / Point Loma 2 0.3  % 1.9  % 312,138  32.3  % 34.4  % 42.2  %
University Towne Center 1 1.1  % 1.0  % 160,444  100.0  % 100.0  % 100.0  %
Total San Diego County 23 15.0  % 16.7  % 2,697,920  86.2  % 86.3  % 88.0  %
San Francisco Bay Area
Menlo Park 6 2.0  % 2.0  % 330,212  84.5  % 76.4  % 91.4  %
Mountain View 3 2.5  % 2.8  % 457,066  100.0  % 87.2  % 100.0  %
Palo Alto 2 1.2  % 1.0  % 165,574  100.0  % 100.0  % 100.0  %
Redwood City 2 3.0  % 2.1  % 347,269  100.0  % 100.0  % 100.0  %
San Francisco 10 27.1  % 21.0  % 3,394,039  93.3  % 93.0  % 93.9  %
South San Francisco 6 8.3  % 5.0  % 806,109  100.0  % 100.0  % 100.0  %
Sunnyvale 4 4.0  % 4.1  % 663,460  100.0  % 100.0  % 100.0  %
Total San Francisco Bay Area 33 48.1  % 38.0  % 6,163,729  95.5  % 93.8  % 96.2  %
Greater Seattle
Bellevue 2 5.5  % 5.7  % 919,295  99.3  % 99.3  % 99.3  %
Lake Union / Denny Regrade 8 12.8  % 12.8  % 2,080,883  97.1  % 97.1  % 97.1  %
Total Greater Seattle 10 18.3  % 18.5  % 3,000,178  97.7  % 97.7  % 97.7  %
TOTAL STABILIZED OFFICE PORTFOLIO 119 100.0  % 100.0  % 16,194,146  91.6  % 90.8  % 92.9  %

Average Office Occupancy
Quarter-to-Date Year-to-Date
90.9% 91.2%
________________________
(1)Includes stabilized retail space, which contributed approximately 2.8% of YTD NOI.


13
Q4 2022 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region, continued
  Submarket Square Feet Occupied Leased
Greater Los Angeles, California
3101-3243 La Cienega Boulevard Culver City 154,165  78.8  % 78.8  %
2240 E. Imperial Highway El Segundo 122,870  100.0  % 100.0  %
2250 E. Imperial Highway El Segundo 298,728  96.9  % 96.9  %
2260 E. Imperial Highway El Segundo 298,728  100.0  % 100.0  %
909 N. Pacific Coast Highway El Segundo 244,880  81.3  % 81.3  %
999 N. Pacific Coast Highway El Segundo 138,389  69.3  % 69.3  %
1350 Ivar Avenue Hollywood 16,448  100.0  % 100.0  %
1355 Vine Street Hollywood 183,129  100.0  % 100.0  %
1375 Vine Street Hollywood 159,236  100.0  % 100.0  %
1395 Vine Street Hollywood 2,575  100.0  % 100.0  %
1500 N. El Centro Avenue (1)
 Hollywood 113,447  28.8  % 28.8  %
1525 N. Gower Street Hollywood 9,610  100.0  % 100.0  %
1575 N. Gower Street Hollywood 264,430  100.0  % 100.0  %
6115 W. Sunset Boulevard Hollywood 26,238  100.0  % 100.0  %
6121 W. Sunset Boulevard Hollywood 93,418  100.0  % 100.0  %
6255 W. Sunset Boulevard Hollywood 331,888  88.3  % 88.9  %
3750 Kilroy Airport Way Long Beach 10,718  100.0  % 100.0  %
3760 Kilroy Airport Way Long Beach 166,761  96.4  % 100.0  %
3780 Kilroy Airport Way Long Beach 221,452  79.3  % 86.4  %
3800 Kilroy Airport Way Long Beach 192,476  87.7  % 87.7  %
3840 Kilroy Airport Way Long Beach 138,441  0.0  % 51.8  %
3880 Kilroy Airport Way Long Beach 96,923  100.0  % 100.0  %
3900 Kilroy Airport Way Long Beach 130,935  82.8  % 91.2  %
8560 W. Sunset Boulevard West Hollywood 76,558  59.0  % 69.2  %
8570 W. Sunset Boulevard West Hollywood 49,276  95.6  % 95.6  %
8580 W. Sunset Boulevard West Hollywood 6,875  59.0  % 59.0  %
8590 W. Sunset Boulevard West Hollywood 56,750  97.4  % 97.4  %
12100 W. Olympic Boulevard West Los Angeles 155,679  100.0  % 100.0  %
12200 W. Olympic Boulevard West Los Angeles 154,544  90.3  % 90.3  %
12233 W. Olympic Boulevard West Los Angeles 156,746  71.5  % 71.5  %
12312 W. Olympic Boulevard West Los Angeles 76,644  100.0  % 100.0  %
2100/2110 Colorado Avenue West Los Angeles 104,853  55.4  % 55.4  %
501 Santa Monica Boulevard West Los Angeles 78,509  85.3  % 85.3  %
Total Greater Los Angeles 4,332,319  85.2  % 87.8  %
 
________________________
(1)This property is part of a complex of properties and is analyzed at the complex level.
14
Q4 2022 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region, continued
Submarket Square Feet Occupied Leased
San Diego County, California
12225 El Camino Real Del Mar 58,401  100.0  % 100.0  %
12235 El Camino Real Del Mar 53,751  100.0  % 100.0  %
12340 El Camino Real Del Mar 109,307  100.0  % 100.0  %
12390 El Camino Real Del Mar 73,238  100.0  % 100.0  %
12770 El Camino Real Del Mar 75,035  100.0  % 100.0  %
12780 El Camino Real Del Mar 140,591  100.0  % 100.0  %
12790 El Camino Real Del Mar 87,944  100.0  % 100.0  %
12830 El Camino Real Del Mar 196,444  100.0  % 100.0  %
12860 El Camino Real Del Mar 92,042  100.0  % 100.0  %
12348 High Bluff Drive Del Mar 39,193  100.0  % 100.0  %
12400 High Bluff Drive Del Mar 216,518  100.0  % 100.0  %
3579 Valley Centre Drive
Del Mar 54,960  100.0  % 100.0  %
3611 Valley Centre Drive Del Mar 132,425  96.4  % 96.4  %
3661 Valley Centre Drive Del Mar 131,662  100.0  % 100.0  %
3721 Valley Centre Drive Del Mar 115,193  100.0  % 100.0  %
3811 Valley Centre Drive Del Mar 118,912  100.0  % 100.0  %
3745 Paseo Place Del Mar 95,871  80.5  % 93.8  %
 13480 Evening Creek Drive North (1)
 I-15 Corridor 143,401  6.4  % 10.5  %
13500 Evening Creek Drive North I-15 Corridor 143,749  100.0  % 100.0  %
13520 Evening Creek Drive North I-15 Corridor 146,701  97.5  % 97.5  %
2100 Kettner Boulevard Little Italy 204,682  0.0  % 15.1  %
2305 Historic Decatur Road Point Loma 107,456  93.9  % 93.9  %
9455 Towne Centre Drive University Towne Center 160,444  100.0  % 100.0  %
Total San Diego County 2,697,920  86.2  % 88.0  %
________________________
(1)This property is part of a complex of properties and is analyzed at the complex level.













15
Q4 2022 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region, continued
  Submarket Square Feet Occupied Leased
San Francisco Bay Area, California
4100 Bohannon Drive Menlo Park 47,379  100.0  % 100.0  %
4200 Bohannon Drive Menlo Park 45,451  65.8  % 65.8  %
4300 Bohannon Drive Menlo Park 63,079  48.7  % 85.3  %
4500 Bohannon Drive Menlo Park 63,078  100.0  % 100.0  %
4600 Bohannon Drive Menlo Park 48,147  93.0  % 93.0  %
4700 Bohannon Drive Menlo Park 63,078  100.0  % 100.0  %
1290-1300 Terra Bella Avenue Mountain View 114,175  100.0  % 100.0  %
680 E. Middlefield Road Mountain View 171,676  100.0  % 100.0  %
690 E. Middlefield Road Mountain View 171,215  100.0  % 100.0  %
1701 Page Mill Road Palo Alto 128,688  100.0  % 100.0  %
3150 Porter Drive Palo Alto 36,886  100.0  % 100.0  %
900 Jefferson Avenue Redwood City 228,505  100.0  % 100.0  %
900 Middlefield Road Redwood City 118,764  100.0  % 100.0  %
100 Hooper Street San Francisco 417,914  100.0  % 100.0  %
100 First Street San Francisco 480,457  94.6  % 98.7  %
303 Second Street San Francisco 784,658  84.9  % 84.9  %
201 Third Street San Francisco 346,538  77.3  % 77.3  %
360 Third Street San Francisco 429,796  99.6  % 99.6  %
250 Brannan Street San Francisco 100,850  100.0  % 100.0  %
301 Brannan Street San Francisco 82,834  100.0  % 100.0  %
333 Brannan Street San Francisco 185,602  100.0  % 100.0  %
345 Brannan Street San Francisco 110,050  99.7  % 99.7  %
350 Mission Street San Francisco 455,340  99.7  % 99.7  %
345 Oyster Point Boulevard South San Francisco 40,410  100.0  % 100.0  %
347 Oyster Point Boulevard South San Francisco 39,780  100.0  % 100.0  %
349 Oyster Point Boulevard South San Francisco 65,340  100.0  % 100.0  %
350 Oyster Point Boulevard South San Francisco 234,892  100.0  % 100.0  %
352 Oyster Point Boulevard South San Francisco 232,215  100.0  % 100.0  %
354 Oyster Point Boulevard South San Francisco 193,472  100.0  % 100.0  %
505 Mathilda Avenue Sunnyvale 212,322  100.0  % 100.0  %
555 Mathilda Avenue Sunnyvale 212,322  100.0  % 100.0  %
599 Mathilda Avenue Sunnyvale 76,031  100.0  % 100.0  %
605 Mathilda Avenue Sunnyvale 162,785  100.0  % 100.0  %
Total San Francisco Bay Area 6,163,729  95.5  % 96.2  %


16
Q4 2022 Supplemental Financial Report
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Stabilized Portfolio Occupancy Overview by Region, continued
Submarket Square Feet Occupied Leased
Greater Seattle, Washington
601 108th Avenue NE Bellevue 490,738  99.8  % 99.8  %
10900 NE 4th Street Bellevue 428,557  98.8  % 98.8  %
2001 West 8th Avenue Denny Regrade 539,226  90.0  % 90.0  %
333 Dexter Avenue North Lake Union 618,766  100.0  % 100.0  %
701 N. 34th Street Lake Union 141,860  100.0  % 100.0  %
801 N. 34th Street Lake Union 173,615  100.0  % 100.0  %
837 N. 34th Street Lake Union 112,487  100.0  % 100.0  %
320 Westlake Avenue North Lake Union 184,644  96.1  % 96.1  %
321 Terry Avenue North Lake Union 135,755  100.0  % 100.0  %
401 Terry Avenue North Lake Union 174,530  100.0  % 100.0  %
Total Greater Seattle 3,000,178  97.7  % 97.7  %
TOTAL STABILIZED OFFICE PORTFOLIO 16,194,146  91.6  % 92.9  %

Average Residential Occupancy
RESIDENTIAL PROPERTIES Submarket Total No. of Units Quarter-to-Date Year-to-Date
Greater Los Angeles
1550 N. El Centro Avenue Hollywood 200 92.3% 93.5%
6390 De Longpre Avenue Hollywood 193 90.2% 88.2%
San Diego County
3200 Paseo Village Way Del Mar 608 94.7% 95.2%
TOTAL RESIDENTIAL PROPERTIES 1,001 93.3% 93.5%
17
Q4 2022 Supplemental Financial Report
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Information on Leases Commenced (1)
Quarter to Date
# of Leases (2)
Square Feet (2)
 Weighted
Average Lease
Term (Mo.)
TI/LC
Per Sq.Ft. (3)
TI/LC
Per Sq.Ft. /Year (3)
 Changes in
GAAP Rents		 Changes in
Cash Rents
New Renewal New Renewal Total
2nd Generation (4)
 10  8  275,770  84,470  360,240  78  $ 78.38  $ 12.06  41.2  % 18.6  %
Development Leasing (5)
 2  —  355,645  —  355,645  158  $ 131.25  $ 9.97 
TOTAL: 12  8  631,415  84,470  715,885 

Year to Date
# of Leases (2)
Square Feet (2)
 Weighted
Average Lease
Term (Mo.)
TI/LC
Per Sq.Ft. (3)
TI/LC
Per Sq.Ft. /Year (3)
 Changes in
GAAP Rents		 Changes in
Cash Rents
New Renewal New Renewal Total
2nd Generation (4)
 46  31  580,943  290,138  871,081  75  $ 60.18  $ 9.63  31.3  % 12.4  %
Development Leasing (5)
 10  1  932,439  945  933,384  146  $ 133.26  $ 10.95 
TOTAL: 56  32  1,513,382  291,083  1,804,465 
________________________
(1)Includes 100% of consolidated property partnerships.
(2)Represents leasing activity for leases that commenced at properties in the stabilized and development and redevelopment portfolios during the period, net of month-to-month leases.
(3)Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs.
(4)Includes leases for which re-leasing timing was impacted by the COVID-19 pandemic.
(5)Represents leases commenced on new construction added to the stabilized portfolio and leasing activity for leases signed in our development and redevelopment portfolios.
18
Q4 2022 Supplemental Financial Report
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Information on Leases Executed (1)
Quarter to Date (2)
# of Leases (3)
Square Feet (3)
 Weighted
Average Lease
Term (Mo.)
TI/LC
Per Sq.Ft. (4)
TI/LC
Per Sq.Ft. /Year (4)
 Changes in
GAAP Rents		 Changes in
Cash Rents		 Retention
Rates
New Renewal New Renewal Total
2nd Generation (5)
 14  8  141,666  84,470  226,136  75  $ 40.52  $ 6.48  31.1  % 12.3  % 32.0  %
Development Leasing (6)
 4  —  102,198  —  102,198  157  $ 168.40  $ 12.87 
TOTAL: 18  8  243,864  84,470  328,334 

Year to Date (7)
# of Leases (3)
Square Feet (3)
 Weighted
Average Lease
Term (Mo.)
TI/LC
Per Sq.Ft. (4)
TI/LC
Per Sq.Ft. /Year (4)
 Changes in
GAAP Rents		 Changes in
Cash Rents		 Retention
Rates
New Renewal New Renewal Total
2nd Generation (5)
 46  31  468,900  290,138  759,038  84  $ 66.79  $ 9.54  29.8  % 11.0  % 30.7  %
Development Leasing (6)
 8  1  133,273  945  134,218  147  $ 161.31  $ 13.17 
TOTAL: 54  32  602,173  291,083  893,256 
________________________
(1)Includes 100% of consolidated property partnerships.
(2)During the three months ended December 31, 2022, 13 new leases totaling 203,811 square feet were signed but not commenced as of December 31, 2022.
(3)Represents leasing activity for leases signed at properties in the stabilized and development and redevelopment portfolios during the period, net of month-to-month leases.
(4)Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs.
(5)Includes leases for which re-leasing timing was impacted by the COVID-19 pandemic.
(6)Represents leasing on new construction added to the stabilized portfolio and leasing activity for leases signed in our development and redevelopment portfolios.
(7)During the year ended December 31, 2022, 24 new leases totaling 327,133 square feet were signed but not commenced as of December 31, 2022.
19
Q4 2022 Supplemental Financial Report
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Stabilized Portfolio Capital Expenditures
($ in thousands)
Total 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022
1st Generation (Nonrecurring) Capital Expenditures: (1)
Capital Improvements $ 3,371  $ (868) $ 271  $ 1,855  $ 2,113 
Tenant Improvements & Leasing Commissions (2)
 1,236  (284) —  596  924 
Total $ 4,607  $ (1,152) $ 271  $ 2,451  $ 3,037 
Total 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022
2nd Generation (Recurring) Capital Expenditures: (1)
Capital Improvements $ 34,886  $ 10,803  $ 10,093  $ 9,045  $ 4,945 
Tenant Improvements & Leasing Commissions (2)
 46,442  17,677  10,577  9,848  8,340 
Total $ 81,328  $ 28,480  $ 20,670  $ 18,893  $ 13,285 
________________________
(1)Includes 100% of capital expenditures of consolidated property partnerships.
(2)Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements.

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Stabilized Portfolio Lease Expiration Summary (1)
($ in thousands, except for annualized rent per sq. ft.)

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# of Expiring Leases 13  13 16 21 27 16 17 16 64 54 62 36 22 37 31 14 13
% of Total Leased Sq. Ft. 2.0  % 4.0  % 2.1  % 2.2  % 1.9  % 1.1  % 2.2  % 2.7  % 5.1  % 13.3  % 7.2  % 7.0  % 6.6  % 10.5  % 13.1  % 7.2  % 11.8  %
Annualized Base Rent $10,946 $30,133 $13,597 $17,691 $13,438 $6,590 $11,749 $23,196 $37,168 $90,757 $41,487 $64,904 $53,105 $91,127 $129,488 $71,555 $112,765
% of Total Annualized Base Rent (2)
 1.3  % 3.7  % 1.7  % 2.1  % 1.7  % 0.8  % 1.4  % 2.8  % 4.5  % 11.1  % 5.1  % 7.9  % 6.5  % 11.1  % 15.8  % 8.7  % 13.8  %
Annualized Rent per Sq. Ft. $37.10 $51.41 $44.74 $55.42 $47.81 $41.21 $37.45 $58.17 $49.88 $46.76 $39.76 $63.45 $55.17 $59.73 $67.73 $67.84 $66.06
________________________
(1)For leases that have been renewed early with existing tenants, the expiration date and annualized base rent information presented takes into consideration the renewed lease terms. Excludes leases not commenced as of December 31, 2022, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of December 31, 2022.
(2)Includes 100% of annualized base rent of consolidated property partnerships.
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Stabilized Portfolio Lease Expiration Schedule by Region
($ in thousands, except for annualized rent per sq. ft.)
Year
Region # of
Expiring Leases		 Total
Square Feet		 % of Total
Leased Sq. Ft.
Annualized
Base Rent (1)
 % of Total
Annualized
Base Rent		 Annualized Rent
per Sq. Ft.
2023 Greater Los Angeles 39  538,031  3.7  % $ 24,907  3.0  % $ 46.29 
San Diego 9  174,914  1.2  % 7,670  0.9  % 43.85 
San Francisco Bay Area 10  326,443  2.2  % 19,907  2.4  % 60.98 
Greater Seattle 5  464,901  3.2  % 19,883  2.5  % 42.77 
Total 63  1,504,289  10.3  % $ 72,367  8.8  % $ 48.11 
2024 Greater Los Angeles 44  561,449  3.9  % $ 24,629  3.0  % $ 43.87 
San Diego 9  57,303  0.3  % 3,199  0.4  % 55.83 
San Francisco Bay Area 12  288,538  2.0  % 18,663  2.3  % 64.68 
Greater Seattle 11  246,137  1.7  % 8,482  1.0  % 34.46 
Total 76  1,153,427  7.9  % $ 54,973  6.7  % $ 47.66 
2025 Greater Los Angeles 25  192,464  1.3  % $ 8,467  1.0  % $ 43.99 
San Diego 19  225,535  1.5  % 10,766  1.3  % 47.74 
San Francisco Bay Area 10  186,282  1.3  % 12,383  1.5  % 66.47 
Greater Seattle 10  140,831  1.0  % 5,552  0.7  % 39.42 
Total 64  745,112  5.1  % $ 37,168  4.5  % $ 49.88 
2026 Greater Los Angeles 16  380,356  2.6  % $ 14,617  1.8  % $ 38.43 
San Diego 12  224,861  1.5  % 10,547  1.3  % 46.90 
San Francisco Bay Area 15  940,216  6.5  % 49,396  6.0  % 52.54 
Greater Seattle 11  395,359  2.7  % 16,197  2.0  % 40.97 
Total 54  1,940,792  13.3  % $ 90,757  11.1  % $ 46.76 
2027 Greater Los Angeles 33  712,945  5.0  % $ 26,033  3.2  % $ 36.51 
San Diego 16  239,005  1.6  % 11,926  1.5  % 49.90 
San Francisco Bay Area 3  5,041  —  % 263  —  % 52.17 
Greater Seattle 10  86,543  0.6  % 3,265  0.4  % 37.73 
Total 62  1,043,534  7.2  % $ 41,487  5.1  % $ 39.76 
2028
and
Beyond		 Greater Los Angeles 38  1,140,285  7.8  % $ 67,225  8.2  % $ 58.95 
San Diego 47  1,383,878  9.6  % 86,113  10.5  % 62.23 
San Francisco Bay Area 44  4,085,604  28.0  % 296,817  36.2  % 72.65 
Greater Seattle 24  1,574,926  10.8  % 72,789  8.9  % 46.22 
Total 153  8,184,693  56.2  % $ 522,944  63.8  % $ 63.89 
________________________
(1)Includes 100% of annualized base rent of consolidated property partnerships.
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Top Fifteen Tenants (1)
($ in thousands)  
Tenant Name Region
Annualized Base Rental Revenue (2)
 Rentable
Square Feet		 Percentage of
Total Annualized Base Rental Revenue		 Percentage of
Total Rentable
Square Feet		 Year(s) of Lease Expiration
Global technology company Greater Seattle /
San Diego County		 $ 39,631  779,210  4.8  % 4.8  % 2032 / 2033
Cruise LLC San Francisco Bay Area 35,449  374,618  4.3  % 2.3  % 2031
Stripe, Inc. San Francisco Bay Area 33,110  425,687  4.0  % 2.6  % 2034
Amazon.com (3)
 Greater Seattle 31,437  709,276  3.8  % 4.4  % 2023 / 2029 / 2030
LinkedIn Corporation / Microsoft Corporation San Francisco Bay Area 29,752  663,460  3.6  % 4.1  % 2024 / 2026
Adobe Systems, Inc. San Francisco Bay Area /
Greater Seattle		 27,897  523,416  3.4  % 3.2  % 2027 / 2031
Salesforce, Inc. San Francisco Bay Area 24,076  451,763  2.9  % 2.8  % 2031 / 2032
DoorDash, Inc. San Francisco Bay Area 23,842  236,759  2.9  % 1.5  % 2032
Riot Games, Inc. (4)
 Greater Los Angeles 22,855  340,584  2.8  % 2.1  % 2023 / 2024 / 2031
Okta, Inc. San Francisco Bay Area 22,387  273,371  2.7  % 1.7  % 2028
Netflix, Inc. Greater Los Angeles 21,854  361,388  2.7  % 2.2  % 2032
Box, Inc. San Francisco Bay Area 20,390  341,441  2.5  % 2.1  % 2028
Cytokinetics, Inc. San Francisco Bay Area 18,167  234,892  2.2  % 1.5  % 2033
DIRECTV, LLC (5)
 Greater Los Angeles 16,085  532,956  2.0  % 3.3  % 2023 / 2026 / 2027
Synopsys, Inc. San Francisco Bay Area 15,492  342,891  1.9  % 2.1  % 2030
Total Top Fifteen Tenants $ 382,424  6,591,712  46.5  % 40.7  %
       
________________________
(1)The information presented is as of the date of the report.
(2)Includes 100% of annualized base rental revenues of consolidated property partnerships.
(3)The 2023 lease expiration represents 71,481 rentable square feet that expired on January 30, 2023, which is excluded from the table above, and 375,479 rentable square feet expiring on April 30, 2023.
(4)The 2023 lease expiration represents 128,416 rentable square feet expiring on November 30, 2023.
(5)The 2023 lease expiration represents 151,455 rentable square feet that expired on January 1, 2023, which is excluded from the table above.
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2022 Operating Property Dispositions
($ in millions)

COMPLETED OPERATING PROPERTY DISPOSITIONS Submarket Month of
Disposition		 No. of Buildings Rentable
Square Feet
Sales
Price (1)
1st Quarter
None
2nd Quarter
None
3rd Quarter
3130 Wilshire Boulevard, Santa Monica, CA West Los Angeles August 1 96,085  $ 48.0 
4th Quarter
None
TOTAL DISPOSITIONS 1 96,085  $ 48.0 
____________________
(1)Represents gross sales price before the impact of commissions, closing costs and purchase price credits.
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Consolidated Ventures (Noncontrolling Property Partnerships)

Property (1)
 Venture Partner Submarket Rentable Square Feet KRC Ownership %
100 First Street, San Francisco, CA Norges Bank Real Estate Management San Francisco 480,457 56%
303 Second Street, San Francisco, CA Norges Bank Real Estate Management San Francisco 784,658 56%
900 Jefferson Avenue and 900 Middlefield Road, Redwood City, CA (2)
 Local developer Redwood City 347,269 93%
____________________
(1)For breakout of Net Operating Income by partnership, refer to page 40, Reconciliation of Net Income Available to Common Stockholders to Same Store Net Operating Income.
(2)Reflects the KRC ownership percentage at time of agreement. Actual percentage may vary depending on cash flows or promote structure.
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03
Development


–Stabilized Office & Life Science Development & Redevelopment Projects
–In-Process Development & Redevelopment
–Future Development Pipeline

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Stabilized Office & Life Science Development & Redevelopment Projects
($ in millions)
STABILIZED OFFICE & LIFE SCIENCE DEVELOPMENT & REDEVELOPMENT PROJECTS Location Construction Start Date
Stabilization Date (1)
Total Estimated Investment (2)
 Rentable
Square Feet		 % Leased Total Project % Occupied
1st Quarter
None
2nd Quarter
333 Dexter Avenue North Lake Union 2Q 2017 2Q 2022 $ 385.0  618,766  100% 100%
3rd Quarter
2100 Kettner Little Italy 3Q 2019 3Q 2022 140.0  204,682  15% —%
12340 El Camino Real (3)
 Del Mar 4Q 2021 3Q 2022 40.0  109,307  100% 100%
12400 High Bluff Drive (4)
 Del Mar 1Q 2022 3Q 2022 50.0  181,949  100% 100%
4th Quarter
None
TOTAL: $ 615.0  1,114,704  84% 82%
____________________
(1)Represents the earlier of 95% occupancy date or one year from substantial completion of base building components.
(2)For redevelopment projects, includes the existing depreciated basis for the buildings to be redeveloped, except for 12400 High Bluff Drive, which includes 66% of the depreciated basis, representing the 66% of the building that was subject to redevelopment.
(3)Redevelopment project.
(4)Completed 144,000 rentable square feet that was in the scope of redevelopment.
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In-Process Development & Redevelopment
($ in millions)
Location Construction Start Date
Estimated Stabilization Date (2)
Estimated Rentable Square Feet (3)
Total Estimated Investment
Total Cash Costs Incurred as of
12/31/2022 (4)
 % Leased Total Project % Occupied
TENANT IMPROVEMENT (1)
Office
Austin
Indeed Tower Austin CBD 2Q 2021 4Q 2023 734,000  $ 690.0  $ 606.9  71% 58%
TOTAL: 734,000  $ 690.0  $ 606.9  71% 58%

UNDER CONSTRUCTION Location Construction Start Date
Estimated Stabilization Date (2)
Estimated Rentable Square Feet (3)
 Total Estimated Investment
Total Cash Costs Incurred as of
12/31/2022 (4)(5)
 % Leased
Office / Life Science
San Francisco Bay Area
Kilroy Oyster Point - Phase 2 South San Francisco 2Q 2021 2Q 2025 875,000  $ 940.0  $ 358.2  —%
4400 Bohannon Drive (6)
 Menlo Park 4Q 2022 3Q 2025 48,000  55.0  16.7  —%
San Diego County
9514 Towne Centre Drive University Towne Center 3Q 2021 4Q 2023 71,000  60.0  33.1  100%
4690 Executive Drive (6)
 University Towne Center 1Q 2022 3Q 2023 52,000  25.0  15.6  100%
TOTAL: 1,046,000  $ 1,080.0  $ 423.6  12%
________________________
(1)Represents projects that have reached cold shell condition and are ready for tenant improvements, which may require additional major base building construction before being placed in service.
(2)For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components. For multi-phase projects, interest and carry cost capitalization may cease and recommence driven by various factors, including tenant improvement construction and other tenant related timing or project scope. For projects being redeveloped, redevelopment will occur in phases based on existing lease expiration dates and timing of the tenant improvement build-out.
(3)For projects being redeveloped, represents the total square footage leased.
(4)Represents costs incurred as of December 31, 2022, excluding GAAP accrued liabilities and leasing overhead.
(5)For redevelopment projects, includes the existing depreciated basis for the buildings to be redeveloped.
(6)Redevelopment project.
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Future Development Pipeline
($ in millions)
FUTURE DEVELOPMENT PIPELINE Location
Approx. Developable
Square Feet (1)
Total Cash Costs Incurred as of 12/31/2022 (2)
Greater Los Angeles
1633 26th Street West Los Angeles 190,000 $ 14.6 
San Diego County
Santa Fe Summit South / North 56 Corridor 600,000 - 650,000 106.8 
2045 Pacific Highway Little Italy 275,000 51.9 
Kilroy East Village East Village TBD 66.1 
San Francisco Bay Area
Kilroy Oyster Point - Phases 3 and 4 South San Francisco 875,000 - 1,000,000 203.5 
Flower Mart SOMA 2,300,000 472.2 
Greater Seattle
SIX0 - Office & Residential Denny Regrade 925,000 173.3 
Austin
Stadium Tower Stadium District / Domain 493,000 59.0 
TOTAL: $ 1,147.4 
________________________
(1)The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes or project design.
(2)Represents costs incurred as of December 31, 2022, excluding accrued liabilities recorded in accordance with GAAP.




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04
Debt and
Capitalization Data

–Capital Structure
–Debt Analysis

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Capital Structure
As of December 31, 2022 ($ in thousands)
chart-57b6134ceb3543e59af.jpg
Debt Balance (3)
 Stated Rate Maturity Date
Unsecured Debt (4)
$ 425,000  3.45  % 12/15/2024
$ 400,000  4.38  % 10/1/2025
$ 50,000  4.30  % 7/18/2026
$ 200,000  5.23  %
10/3/2026 (5)
$ 200,000  4.35  % 10/18/2026
$ 175,000  3.35  % 2/17/2027
$ 400,000  4.75  % 12/15/2028
$ 75,000  3.45  % 2/17/2029
$ 400,000  4.25  % 8/15/2029
$ 500,000  3.05  % 2/15/2030
$ 350,000  4.27  % 1/31/2031
$ 425,000  2.50  % 11/15/2032
$ 450,000  2.65  % 11/15/2033
$ 4,050,000  3.72  %
Secured Debt
$ 159,973  3.57  % 12/1/2026
$ 83,496  4.48  % 7/1/2027
$ 243,469  3.88  %
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________________________
(1)Value based on closing share price of $38.67 as of December 31, 2022.
(2)Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships.
(3)Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts.
(4)As of December 31, 2022, there was no outstanding balance on the unsecured revolving credit facility.
(5)The maturity date of the unsecured term loan assumes the exercise of the two twelve-month extensions at the Company’s option.
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Debt Analysis
As of December 31, 2022
chart-6cf5daefb65d4ba2a85.jpgchart-3aabf539125641eeab8.jpg
TOTAL DEBT COMPOSITION (1)
Weighted Average
Interest Rate
Years to Maturity (2)
Secured vs. Unsecured Debt
Unsecured Debt 3.7% 6.3
Secured Debt 3.9% 4.1
Floating vs. Fixed-Rate Debt
Floating-Rate Debt 5.2% 3.8
Fixed-Rate Debt 3.7% 6.2
   
Stated Interest Rate 3.7% 6.1
GAAP Effective Rate 3.8%
GAAP Effective Rate Including Debt Issuance Costs 4.0%
 
KEY DEBT COVENANTS (3)
Covenant Actual Performance
as of December 31, 2022
Unsecured Credit and Term Loan Facility and Private Placement Notes:
Total debt to total asset value less than 60% 29%
Fixed charge coverage ratio greater than 1.5x 3.8x
Unsecured debt ratio greater than 1.67x 3.38x
Unencumbered asset pool debt service coverage greater than 1.75x 4.53x
Unsecured Senior Notes due 2024, 2025, 2028, 2029, 2030, 2032 and 2033:
Total debt to total asset value less than 60% 37%
Interest coverage greater than 1.5x 8.4x
Secured debt to total asset value less than 40% 2%
Unencumbered asset pool value to unsecured debt greater than 150% 294%
________________________
(1)As of December 31, 2022, there was no outstanding balance on the unsecured revolving credit facility.
(2)The maturity date of the unsecured term loan assumes the exercise of the two twelve-month extensions at the Company’s option.
(3)All covenant ratio titles utilize terms and are calculated as defined in the respective debt and credit agreements.
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05
Non-GAAP Supplemental
Measures

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Management Statements on Non-GAAP Supplemental Measures
Included in this section are management’s statements regarding certain non-GAAP financial measures provided in this supplemental financial report and, with respect to Funds From Operations available to common stockholders and common unitholders (“FFO”), in the Company’s earnings release on February 1, 2023 and the reasons why management believes that these measures provide useful information to investors about the Company’s financial condition and results of operations.

Net Operating Income:

Management believes that Net Operating Income (“NOI”) is a useful supplemental measure of the Company’s operating performance. The Company defines NOI as follows: consolidated operating revenues (rental income and other property income) less consolidated property and related expenses (property expenses, real estate taxes and ground leases). Other real estate investment trusts (“REITs”) may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to other REITs.

Because NOI excludes leasing costs, general and administrative expenses, interest expense, depreciation and amortization, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the consolidated revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. The Company uses NOI to evaluate its operating performance on a portfolio basis since NOI allows the Company to evaluate the impact that factors such as occupancy levels, lease structure, rental rates, and tenant base have on the Company’s results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company’s financial and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of performance in the real estate industry.

However, NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect general and administrative expenses, leasing costs, interest expense, depreciation and amortization costs, other nonproperty income and losses and the level of capital expenditures necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.

Same Store Net Operating Income:

Management believes that Same Store NOI is a useful supplemental measure of the Company’s operating performance. Same Store NOI represents the consolidated NOI for all of the properties that were owned and included in the Company's stabilized portfolio for two comparable reporting periods. Because Same Store NOI excludes the change in NOI from developed, redeveloped, acquired and disposed of and held for sale properties, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating Same Store NOI, and accordingly, the Company’s Same Store NOI may not be comparable to other REITs.

However, Same Store NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect the operations of the Company’s entire portfolio, nor does it reflect the impact of general and administrative expenses, leasing costs, interest expense, depreciation and amortization costs, other nonproperty income and losses and the level of capital expenditures necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.
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Management Statements on Non-GAAP Supplemental Measures, continued
Same Store Cash Net Operating Income:

Management believes that Same Store Cash NOI is a useful supplemental measure of the Company’s operating performance. Same Store Cash NOI represents the consolidated NOI for all of the properties that were owned and included in the Company’s stabilized portfolio for two comparable reporting periods, adjusted for the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles, and the provision for bad debts. Because Same Store Cash NOI excludes the change in NOI from developed, redeveloped, acquired and disposed of and held for sale properties, it highlights operating trends on a cash basis such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating Same Store Cash NOI, and accordingly, our Same Store Cash NOI may not be comparable to other REITs.

However, Same Store Cash NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect the operations of the Company's entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company's results from operations.

EBITDA, as adjusted:

Management believes that consolidated earnings before interest expense, depreciation and amortization, gain/loss on early extinguishment of debt, gains and losses on depreciable real estate, net income attributable to noncontrolling interests, preferred dividends and distributions, original issuance costs of redeemed preferred stock and preferred units, and impairment losses (“EBITDA, as adjusted”) is a useful supplemental measure of the Company’s operating performance. When considered with other GAAP measures and FFO, management believes EBITDA, as adjusted, gives the investment community a more complete understanding of the Company’s consolidated operating results, including the impact of general and administrative expenses and acquisition-related expenses, before the impact of investing and financing transactions and facilitates comparisons with competitors. Management also believes it is appropriate to present EBITDA, as adjusted, as it is used in several of the Company’s financial covenants for both its secured and unsecured debt. However, EBITDA, as adjusted, should not be viewed as an alternative measure of the Company’s operating performance since it excludes financing costs as well as depreciation and amortization costs which are significant economic costs that could materially impact the Company’s results of operations and liquidity. Other REITs may use different methodologies for calculating EBITDA, as adjusted, and, accordingly, the Company’s EBITDA, as adjusted, may not be comparable to other REITs. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by Nareit, as the Company does not have any unconsolidated joint ventures.

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Management Statements on Non-GAAP Supplemental Measures, continued
Funds From Operations:

The Company calculates Funds From Operations available to common stockholders and common unitholders (“FFO”) in accordance with the 2018 Restated White Paper on FFO approved by the Board of Governors of Nareit. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders.

Management believes that FFO is a useful supplemental measure of the Company’s operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of the Company’s activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, the Company’s FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, management believes that FFO along with the required GAAP presentations provides a more complete measurement of the Company’s performance relative to its competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide.

However, FFO should not be viewed as an alternative measure of the Company’s operating performance since it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties, which are significant economic costs and could materially impact the Company’s results from operations.

Funds Available for Distribution:

Management believes that Funds Available for Distribution available to common stockholders and common unitholders (“FAD”) is a useful supplemental measure of the Company’s liquidity. The Company computes FAD by adding to FFO the non-cash amortization of deferred financing costs, debt discounts and premiums and share-based compensation awards, amortization of above (below) market rents for acquisition properties and non-cash executive compensation expense then subtracting recurring tenant improvements, leasing commissions and capital expenditures and eliminating the net effect of straight-line rents, amortization of deferred revenue related to tenant improvements, adjusting for other lease related items and amounts of gain or loss on marketable securities related to the Company’s executive deferred compensation plan that are capitalized as development costs, and after adjustment for amounts attributable to noncontrolling interests in consolidated property partnerships. FAD provides an additional perspective on the Company’s ability to fund cash needs and make distributions to stockholders by adjusting FFO for the impact of certain cash and non-cash items, as well as adjusting FFO for recurring capital expenditures and leasing costs. Management also believes that FAD provides useful information to the investment community about the Company’s financial position as compared to other REITs since FAD is a liquidity measure used by other REITs. However, other REITs may use different methodologies for calculating FAD and, accordingly, the Company’s FAD may not be comparable to other REITs.
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06
Definitions and Reconciliations


Q4 2022 Supplemental Financial Report
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Definitions Included in Supplemental

Annualized Base Rent:
Includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net. Amounts represent percentage of total portfolio annualized contractual base rental revenue.
Change in GAAP / Cash Rents (Leases Commenced):
Calculated as the change between GAAP / cash rents for new/renewed leases and the expiring GAAP / cash rents for the same space. Includes leases for which re-leasing timing was impacted by the COVID-19 pandemic and restrictions intended to prevent its spread. Excludes leases for which the space was vacant when the property was acquired by the Company.
Change in GAAP / Cash Rents (Leases Executed):
Calculated as the change between GAAP / cash rents for signed leases and the expiring GAAP / cash rents for the same space. Includes leases for which re-leasing timing was impacted by the COVID-19 pandemic and restrictions intended to prevent its spread. Excludes leases for which the space was vacant when the property was acquired by the Company.
Estimated Stabilization Date (Development):
Management’s estimation of the earlier of stabilized occupancy (95%) or one year from the date of the cessation of major base building construction activities for office and retail properties and upon substantial completion for residential properties.
FAD Payout Ratio:
Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by FAD.
First Generation Capital Expenditures:
Capital expenditures for newly acquired space, newly developed, and redeveloped space, or a significant change in use or repositioning of space that result in additional revenue generated when the space is re-leased. These costs are not subtracted in our calculation of FAD.
Fixed Charge Coverage Ratio - EBITDA:
Calculated as EBITDA, as adjusted, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums) and current year accrued preferred dividends.
Fixed Charge Coverage Ratio - Net Income:
Calculated as net income, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums) and current year accrued preferred dividends.
FFO Payout Ratio:
Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by FFO attributable to common stockholders and unitholders.


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Q4 2022 Supplemental Financial Report
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Definitions Included in Supplemental, continued

GAAP Effective Rate:
The rate at which interest expense is recorded for financial reporting purposes, which reflects the amortization of any discounts/premiums, excluding debt issuance costs.
Interest Coverage Ratio:
Calculated as EBITDA, as adjusted, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums).
Net Effect of Straight-Line Rents:
Represents the straight-line rent income recognized during the period offset by cash received during the period that was applied to deferred rents receivable balances for terminated leases and the provision for bad debts recorded for deferred rent receivable balances.
Net Income Payout Ratio:
Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by net income.
Net Operating Income Margins:
Calculated as net operating income divided by total revenues.
Retention Rates (Leases Commenced):
Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.
Same Store Portfolio:
Our Same Store Portfolio includes all of our properties owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1, 2021 and still owned and included in the stabilized portfolio as of December 31, 2022. It does not include undeveloped land, development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, completed residential developments not yet stabilized and properties held-for-sale. We define redevelopment properties as those projects for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property.
Second Generation Capital Expenditures:
Second generation leasing includes space in the stabilized portfolio where we have made capital expenditures to maintain the current market revenue stream; generally recurring in nature or related to space previously occupied.
Stated Interest Rate:
The rate at which interest expense is recorded per the respective loan documents, excluding the impact of the amortization of any debt discounts/premiums.
Tenant Improvement Phase:
Represents projects that have reached cold shell condition and are ready for tenant improvements, which may require additional major base building construction before being placed in service.

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Q4 2022 Supplemental Financial Report
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Reconciliation of Net Income Available to Common Stockholders to Same Store Net Operating Income
(unaudited, $ in thousands)
  Three Months Ended December 31, Year Ended December 31,
  2022 2021 2022 2021
Net Income Available to Common Stockholders $ 52,625  $ 47,646  $ 232,615  $ 628,144 
Net income attributable to noncontrolling common units of the Operating Partnership 588  463  2,283  6,163 
Net income attributable to noncontrolling interests in consolidated property partnerships 6,262  7,017  24,595  24,603 
Net Income 59,475  55,126  259,493  658,910 
Adjustments:
General and administrative expenses 25,217  23,267  93,642  92,749 
Leasing costs 1,404  876  4,879  3,249 
Depreciation and amortization 91,396  87,309  357,611  310,043 
Interest income and other income, net (1,264) (230) (1,765) (3,916)
Interest expense 23,550  18,726  84,278  78,555 
Loss on early extinguishment of debt —  12,246  —  12,246 
Gain on sale of depreciable operating property —  (5,297) (17,329) (463,128)
Net Operating Income, as defined (1)
 199,778  192,023  780,809  688,708 
Wholly-Owned Properties 174,983  165,304  682,260  587,143 
Consolidated property partnerships: (2)
100 First Street (3)
 6,116  5,861  23,593  24,560 
303 Second Street (3)
 12,702  14,846  50,998  53,080 
Crossing/900 (4)
 5,977  6,012  23,958  23,925 
Net Operating Income, as defined (1)
 199,778  192,023  780,809  688,708 
Non-Same Store Net Operating Income (5)
 (42,336) (31,220) (155,046) (81,426)
Same Store Net Operating Income 157,442  160,803  625,763  607,282 
GAAP to Cash Adjustments:
GAAP Operating Revenues Adjustments, net (6)
 (5,559) (7,847) (26,589) (47,099)
GAAP Operating Expenses Adjustments, net 97  105  409  389 
Same Store Cash Net Operating Income $ 151,980  $ 153,061  $ 599,583  $ 560,572 
     
________________________
(1)Please refer to pages 34-35 for Management Statements on Net Operating Income, Same Store Net Operating Income and Same Store Cash Net Operating Income.
(2)Reflects Net Operating Income for all periods presented.
(3)For all periods presented, an unrelated third party entity owned approximately 44% common equity interests in two properties located at 100 First Street and 303 Second Street in San Francisco, CA.
(4)For all periods presented, an unrelated third party entity owned an approximate 7% common equity interest in two properties located at 900 Jefferson Avenue and 900 Middlefield Road in Redwood City, CA.
(5)Includes the results of one office property disposed of during the first quarter 2021, two office operating properties disposed of during the fourth quarter 2021, one office operating property disposed of in the third quarter of 2022, our 193-unit residential project added to the stabilized portfolio in the second quarter of 2021, one office development building added to the stabilized portfolio in the second quarter of 2021, two office development buildings added to the stabilized portfolio in the third quarter of 2021, two office development buildings added to the stabilized portfolio in the fourth quarter of 2021, one office development building added to the stabilized portfolio during the second quarter of 2022, one office development building and two life science redevelopment buildings added to the stabilized portfolio during the third quarter of 2022, one operating property acquired during the third quarter of 2021, and our in-process and future development projects.
(6)Includes the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles and revenue reversals (recoveries) related to tenant creditworthiness.
40
Q4 2022 Supplemental Financial Report
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Reconciliation of Net Income Available to Common Stockholders to EBITDA, as Adjusted
(unaudited, $ in thousands)
  Three Months Ended December 31,
  2022 2021
Net Income Available to Common Stockholders $ 52,625  $ 47,646 
Interest expense 23,550  18,726 
Depreciation and amortization 91,396  87,309 
Loss on early extinguishment of debt —  12,246 
Net income attributable to noncontrolling common units of the Operating Partnership 588  463 
Net income attributable to noncontrolling interests in consolidated property partnerships 6,262  7,017 
Gain on sale of depreciable operating property —  (5,297)
EBITDA, as adjusted (1)
 $ 174,421  $ 168,110 
________________________
(1)Please refer to page 35 for a Management Statement on EBITDA, as adjusted. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by Nareit, as the Company does not have any unconsolidated joint ventures.

41

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EX-99.2 3 exhibit992.htm EX-99.2 Document
Exhibit 99.2
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Contact: FOR RELEASE:
Eliott Trencher February 1, 2023
Executive Vice President,
Chief Investment Officer,
Interim Chief Financial Officer
(310) 481-8587
Or
Bill Hutcheson
Senior Vice President,
Investor Relations & Capital Markets
(415) 778-5678
 

KILROY REALTY CORPORATION REPORTS
FOURTH QUARTER FINANCIAL RESULTS
---------------

LOS ANGELES, February 1, 2023 - Kilroy Realty Corporation (NYSE: KRC) today reported financial results for its fourth quarter and full year ended December 31, 2022.

Fourth Quarter and Full Year Highlights

Financial Results
•Achieved annual revenues in excess of $1.0 billion for the first time
•Revenues grew approximately 8.9% to $284.3 million for the quarter ended December 31, 2022, as compared to $261.1 million for the quarter ended December 31, 2021
•Net income available to common stockholders of $0.45 per diluted share, an increase of approximately 12.5% as compared to $0.40 per diluted share for the quarter ended December 31, 2021
•Funds from operations available to common stockholders and unitholders (“FFO”) of $139.9 million, or $1.17 per diluted share, an increase of approximately 11.4% as compared to $125.5 million, or $1.05 per diluted share for the quarter ended December 31, 2021

Leasing and Occupancy
•Stabilized portfolio was 91.6% occupied and 92.9% leased at December 31, 2022
•Concluded 2022 with the highest quarterly leasing volume, signing approximately 328,000 square feet of new and renewing leases, including approximately 102,000 square feet of leases signed in the development portfolio
◦GAAP and cash rents increased approximately 31.1% and 12.3%, respectively, from prior levels in the stabilized portfolio
•In January, signed approximately 131,000 square feet of new and renewing leases

1


Liquidity
•As previously disclosed in October, the company entered into a term loan agreement that provides for a $400.0 million unsecured delayed draw term loan facility with an additional $100.0 million accordion feature
◦In January, the company amended the term loan agreement to exercise the accordion feature for borrowings of up to $500.0 million, under which $200.0 million has been drawn
•As of the date of this release, the company had approximately $1.7 billion of total liquidity comprised of approximately $290.0 million of cash and cash equivalents, $300.0 million available under the unsecured term loan facility and full availability under the $1.1 billion unsecured revolving credit facility
•Investment grade credit rated with approximately 95% unsecured debt and no significant debt maturities until the fourth quarter of 2024

Dividend
•The company’s Board of Directors declared and paid a regular quarterly cash dividend on its common stock of $0.54 per share, equivalent to an annual rate of $2.16

Capital Allocation
•During the first quarter, completed the acquisition of a 2.9-acre land site in the Stadium District of Austin, adjacent to the Domain, for a cash purchase price of $40.0 million. The site is adjacent to Austin’s MLS Q2 Stadium and is fully-entitled for approximately 493,000 square feet of new Class A office
•During the third quarter, generated gross proceeds of $48.0 million and a gain on sale of $17.3 million from the company’s capital recycling program through the disposition of 3130 Wilshire in Santa Monica

Development and Redevelopment
•During the quarter, commenced GAAP revenue recognition on the entirety of the approximately 308,000 square foot space leased by Indeed, Inc. at our Indeed Tower development project in Austin
•During the quarter, commenced construction on the life science redevelopment of 4400 Bohannon Drive in the San Francisco Bay Area’s Menlo Park submarket. Additionally, in the first quarter, the company commenced construction on the life science redevelopment of 4690 Executive Drive in San Diego’s University Towne Center submarket
•Added approximately $615.0 million of new development and redevelopment properties to the stabilized portfolio during the year
◦333 Dexter, a $385.0 million, approximately 619,000 square foot office project located in Seattle’s Lake Union submarket, of which phase one was completed in 2020; the project is 100% leased to a global technology company
◦2100 Kettner, a $140.0 million, approximately 205,000 square foot office project located in the Little Italy submarket of San Diego; the project is 15% leased as of the date of this release
◦12340 El Camino Real, a $40.0 million, approximately 110,000 square foot life science redevelopment project located in the Del Mar submarket of San Diego, which is 100% leased
◦12400 High Bluff Drive, a $50.0 million, approximately 182,000 square foot life science redevelopment project located in the Del Mar submarket of San Diego, which is 100% leased


2


Sustainability and Corporate Social Responsibility
•For the fourth consecutive year, included in Bloomberg’s Gender Equality Index
•Named the GRESB Regional Sector Leader in the Americas for Development (Diversified), earning the highly competitive GRESB 5 Star designation
•For the seventh consecutive year, awarded the ENERGY STAR Partner of the Year Sustained Excellence Award
•Included as a member of the Dow Jones Sustainability World Index since 2017
•Listed on U.S. EPA’s National Top 100 List of largest green power users
•Received the Fitwel Best in Building Health Excellence Award for Most Certifications of All Time
•On-site solar at Kilroy properties has the capacity to generate over 6 megawatts of clean electricity, which is equivalent to over 1,200 homes’ electricity use for one year

Net Income Available to Common Stockholders / FFO Guidance and Outlook
The company is providing a guidance range of Nareit-defined FFO per diluted share for the full year 2023 of $4.40 to $4.60 per share, with a midpoint of $4.50 per share.
Full Year 2023 Range
Low End High End
Net income available to common stockholders per share - diluted $ 1.85  $ 2.03 
Weighted average common shares outstanding - diluted (1)
 117,500  117,500 
Net income available to common stockholders $ 217,000  $ 239,000 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 2,600  3,100 
Net income attributable to noncontrolling interests in consolidated property partnerships 24,000  26,000 
Depreciation and amortization of real estate assets 316,000  316,000 
Gains on sales of depreciable real estate —  — 
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (35,000) (36,000)
Funds From Operations (2)
 $ 524,600  $ 548,100 
Weighted average common shares/units outstanding – diluted (3)
 119,100  119,100 
Funds From Operations per common share/unit – diluted (3)
 $ 4.40  $ 4.60 

Key Assumptions 2022 Actuals 2023 Assumptions
Same Store Cash NOI growth (4)
 7.0% 0.0% to 2.0%
Average occupancy 91.2% 86.5% to 88.0%
Total development spending $345 million $450 million to $550 million
Dispositions $48 million $0 to $200 million
 ________________________
(1)Calculated based on estimated weighted average shares outstanding including non-participating share-based awards.
(2)See management statement for Funds From Operations at end of release.
(3)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders and common unitholders.
(4)See management statement for Same Store Cash Net Operating Income on page 35 of our Supplemental Financial Report furnished on Form 8-K with this press release.

The company’s guidance estimates for the full year 2023, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this press release, reflect management’s views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this press release.
3


Although these guidance estimates reflect the impact on the company’s operating results of an assumed range of future disposition activity, these guidance estimates do not include any estimates of possible future gains or losses from possible future dispositions because the magnitude of gains or losses on sales of depreciable operating properties, if any, will depend on the sales price and depreciated cost basis of the disposed assets at the time of disposition, information that is not known at the time the company provides guidance, and the timing of any gain recognition will depend on the closing of the dispositions, information that is also not known at the time the company provides guidance and may occur after the relevant guidance period. We caution you not to place undue reliance on our assumed range of future disposition activity because any potential future disposition transactions will ultimately depend on the market conditions and other factors, including but not limited to the company’s capital needs, the particular assets being sold and the company’s ability to defer some or all of the taxable gain on the sales. These guidance estimates also do not include the impact on operating results from potential future acquisitions, possible capital markets activity, possible future impairment charges or any events outside of the company’s control. There can be no assurance that the company’s actual results will not differ materially from these estimates.

Conference Call and Audio Webcast
The company’s management will discuss fourth quarter results and the current business environment during the company’s February 2, 2023 earnings conference call. The call will begin at 10:00 a.m. Pacific Time and last approximately one hour. Those interested in listening via the Internet can access the conference call at https://events.q4inc.com/attendee/252527669. 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 (844) 200-6205 and enter access code 029719 five to 10 minutes prior to the start time to allow time for registration. International callers should dial (929) 526-1599 and enter the same passcode. In order to bypass speaking to the operator on the day of the call, please pre-register anytime at https://www.netroadshow.com/events/login?show=897e4b95&confId=44832. A replay of the conference call will be available via telephone on February 2, 2023 through February 9, 2023 by dialing (866) 813-9403 and entering passcode 044544. International callers should dial (929) 458-6194 and enter the same passcode. The replay will also be available on our website at https://investors.kilroyrealty.com/shareholders/investor-events/default.aspx.

About Kilroy Realty Corporation

Kilroy Realty Corporation (NYSE: KRC, the “company”, “Kilroy”) is a leading U.S. landlord and developer, with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, the Pacific Northwest and Austin, Texas. The company has earned global recognition for sustainability, building operations, innovation and design. As pioneers and innovators in the creation of a more sustainable real estate industry, the company’s approach to modern business environments helps drive creativity and productivity for some of the world’s leading technology, entertainment, life science and business services companies.

The company is a publicly traded real estate investment trust (“REIT”) and member of the S&P MidCap 400 Index with more than seven decades of experience developing, acquiring and managing office, life science and mixed-use projects.

As of December 31, 2022, Kilroy’s stabilized portfolio totaled approximately 16.2 million square feet of primarily office and life science space that was 91.6% occupied and 92.9% leased. The company also had more than 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 93.3%. In addition, the company had two in-process life science redevelopment projects with total estimated redevelopment costs of $80.0 million, totaling approximately 100,000 square feet, and three in-process development projects with an estimated total investment of $1.7 billion, totaling approximately 1.7 million square feet of office and life science space.
4


The in-process development and redevelopment office and life science space is 36% leased.

A Leader in Sustainability and Commitment to Corporate Social Responsibility
Kilroy has a longstanding commitment to sustainability and continues to be a recognized leader in our sector. For over a decade, the company and its sustainability initiatives have been recognized with numerous honors, including being listed on the Dow Jones Sustainability World Index, earning the GRESB five star rating and being named a sector and regional leader in the Americas. Other honors have included the Nareit Leader in the Light Award, being named ENERGY STAR Partner of the Year and receiving the ENERGY STAR highest honor of Sustained Excellence.

Kilroy is proud to have achieved carbon neutral operations across our portfolio since 2020. The company’s office portfolio was 71% LEED certified and 46% Fitwel certified, and 67% of eligible properties were ENERGY STAR certified as of December 31, 2022.

A significant part of the company’s foundation is its commitment to enhancing employee growth, satisfaction and wellness while maintaining a diverse and thriving culture. For the fourth year in a row, the company has been named to Bloomberg’s Gender Equality Index, which recognizes companies committed to supporting gender equality through policy development, representation, and transparency.

More information is available at http://www.kilroyrealty.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: global market and general economic conditions, including periods of heightened inflation, and their effect on our liquidity and financial conditions and those of our tenants; adverse economic or real estate conditions generally, and specifically, in the States of California, Texas and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses; our ability to re-lease property at or above current market rates; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; our ability to maintain our status as a REIT; and uncertainties regarding the impact of the COVID-19 pandemic, and restrictions intended to prevent its spread, on our business and the economy generally.
5


These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors included under the caption “Risk Factors” in our quarterly report on Form 10-Q for the period ending September 30, 2022 and in our annual report on Form 10-K for the year ended December 31, 2021 and our other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information and speak only as of the dates on which they are made. We assume no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.


6


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

Three Months Ended December 31, Year Ended December 31,
  2022 2021 2022 2021
Revenues $ 284,344  $ 261,085  $ 1,096,987 $ 955,040
Net income available to common stockholders $ 52,625  $ 47,646  $ 232,615 $ 628,144
Weighted average common shares outstanding – basic 116,878  116,462  116,807 116,429
Weighted average common shares outstanding – diluted 117,389  117,110  117,220 116,949
Net income available to common stockholders per share – basic $ 0.45  $ 0.41  $ 1.98 $ 5.38
Net income available to common stockholders per share – diluted $ 0.45  $ 0.40  $ 1.97 $ 5.36
Funds From Operations (1)(2)
 $ 139,855  $ 125,477  $ 556,631 $ 462,314
Weighted average common shares/units outstanding – basic (3)
 118,568  118,365  118,586 118,349
Weighted average common shares/units outstanding – diluted (4)
 119,079  119,012  118,999 118,868
Funds From Operations per common share/unit – basic (2)
 $ 1.18  $ 1.06  $ 4.69 $ 3.91
Funds From Operations per common share/unit – diluted (2)
 $ 1.17  $ 1.05  $ 4.68 $ 3.89
Common shares outstanding at end of period 116,878 116,464
Common partnership units outstanding at end of period 1,151 1,151
Total common shares and units outstanding at end of period 118,029 117,615
  December 31, 2022 December 31, 2021
Stabilized office portfolio occupancy rates: (5)
Greater Los Angeles 85.2  % 86.1  %
San Diego County 86.2  % 95.9  %
San Francisco Bay Area 95.5  % 92.4  %
Greater Seattle 97.7  % 97.2  %
Weighted average total 91.6  % 91.9  %
Total square feet of stabilized office properties owned at end of period: (5)
Greater Los Angeles 4,332 4,437
San Diego County 2,698 2,427
San Francisco Bay Area 6,164 6,212
Greater Seattle 3,000 2,381
Total 16,194 15,457
________________________
(1)Reconciliation of Net income available to common stockholders to Funds From Operations available to common stockholders and unitholders and management statement on Funds From Operations are included after the Consolidated Statements of Operations.
(2)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
(3)Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding.
(4)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options and contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.
(5)Occupancy percentages and total square feet reported are based on the company’s stabilized office portfolio for the periods presented. Occupancy percentages and total square feet shown for December 31, 2021 include the office properties that were sold subsequent to December 31, 2021.
7


KILROY REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
  December 31, 2022 December 31, 2021
ASSETS
REAL ESTATE ASSETS:
Land and improvements $ 1,738,242  $ 1,731,982 
Buildings and improvements 8,302,081  7,543,585 
Undeveloped land and construction in progress 1,691,860  2,017,126 
Total real estate assets held for investment 11,732,183  11,292,693 
Accumulated depreciation and amortization (2,218,710) (2,003,656)
Total real estate assets held for investment, net 9,513,473  9,289,037 
Cash and cash equivalents 347,379  414,077 
Restricted cash —  13,006 
Marketable securities 23,547  27,475 
Current receivables, net 20,583  14,386 
Deferred rent receivables, net 452,200  405,665 
Deferred leasing costs and acquisition-related intangible assets, net 250,846  234,458 
Right of use ground lease assets 126,530  127,302 
Prepaid expenses and other assets, net 62,429  57,991 
TOTAL ASSETS $ 10,796,987  $ 10,583,397 
LIABILITIES AND EQUITY
LIABILITIES:
Secured debt, net $ 242,938  $ 248,367 
Unsecured debt, net 4,020,058  3,820,383 
Accounts payable, accrued expenses and other liabilities 392,360  391,264 
Ground lease liabilities 124,994  125,550 
Accrued dividends and distributions 64,285  61,850 
Deferred revenue and acquisition-related intangible liabilities, net 195,959  171,151 
Rents received in advance and tenant security deposits 81,432  74,962 
Total liabilities 5,122,026  4,893,527 
EQUITY:
Stockholders’ Equity
Common stock 1,169  1,165 
Additional paid-in capital 5,170,760  5,155,232 
Retained earnings 265,118  283,663 
Total stockholders’ equity 5,437,047  5,440,060 
Noncontrolling Interests
Common units of the Operating Partnership 53,524  53,746 
Noncontrolling interests in consolidated property partnerships 184,390  196,064 
Total noncontrolling interests 237,914  249,810 
Total equity 5,674,961  5,689,870 
TOTAL LIABILITIES AND EQUITY $ 10,796,987  $ 10,583,397 

8


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

Three Months Ended December 31, Year Ended December 31,
2022 2021 2022 2021
REVENUES
Rental income $ 281,688  $ 259,145  $ 1,086,018  $ 948,994 
Other property income 2,656  1,940  10,969  6,046 
Total revenues 284,344  261,085  1,096,987  955,040 
EXPENSES
Property expenses 55,323  45,519  202,744  165,702 
Real estate taxes 27,151  21,681  105,869  93,209 
Ground leases 2,092  1,862  7,565  7,421 
General and administrative expenses 25,217  23,267  93,642  92,749 
Leasing costs 1,404  876  4,879  3,249 
Depreciation and amortization 91,396  87,309  357,611  310,043 
Total expenses 202,583  180,514  772,310  672,373 
OTHER INCOME (EXPENSES)
Interest and other income, net 1,264  230  1,765  3,916 
Interest expense (23,550) (18,726) (84,278) (78,555)
Gains on sales of depreciable operating properties —  5,297  17,329  463,128 
Loss on early extinguishment of debt —  (12,246) —  (12,246)
Total other (expenses) income (22,286) (25,445) (65,184) 376,243 
NET INCOME 59,475  55,126  259,493  658,910 
Net income attributable to noncontrolling common units of the Operating Partnership (588) (463) (2,283) (6,163)
Net income attributable to noncontrolling interests in consolidated property partnerships (6,262) (7,017) (24,595) (24,603)
Total income attributable to noncontrolling interests (6,850) (7,480) (26,878) (30,766)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 52,625  $ 47,646  $ 232,615  $ 628,144 
Weighted average common shares outstanding – basic 116,878  116,462  116,807  116,429 
Weighted average common shares outstanding – diluted 117,389  117,110  117,220  116,949 
Net income available to common stockholders per share – basic $ 0.45  $ 0.41  $ 1.98  $ 5.38 
Net income available to common stockholders per share – diluted $ 0.45  $ 0.40  $ 1.97  $ 5.36 

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KILROY REALTY CORPORATION
FUNDS FROM OPERATIONS
(unaudited; in thousands, except per share data)
 
Three Months Ended December 31, Year Ended December 31,
2022 2021 2022 2021
Net income available to common stockholders $ 52,625  $ 47,646  $ 232,615  $ 628,144 
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership 588  463  2,283  6,163 
Net income attributable to noncontrolling interests in consolidated property partnerships 6,262  7,017  24,595  24,603 
Depreciation and amortization of real estate assets 89,536  85,628  350,665  303,799 
Gains on sales of depreciable real estate —  (5,297) (17,329) (463,128)
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships (9,156) (9,980) (36,198) (37,267)
Funds From Operations(1)(2)(3)
 $ 139,855  $ 125,477  $ 556,631  $ 462,314 
Weighted average common shares/units outstanding – basic (4)
 118,568  118,365  118,586  118,349 
Weighted average common shares/units outstanding – diluted (5)
 119,079  119,012  118,999  118,868 
Funds From Operations per common share/unit – basic (2)
 $ 1.18  $ 1.06  $ 4.69  $ 3.91 
Funds From Operations per common share/unit – diluted (2)
 $ 1.17  $ 1.05  $ 4.68  $ 3.89 
 ________________________
(1)We calculate Funds From Operations available to common stockholders and common unitholders (“FFO”) in accordance with the 2018 Restated White Paper on FFO approved by the Board of Governors of Nareit. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders.

We believe that FFO is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide.

However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.
 
(2)Reported amounts are attributable to common stockholders and common unitholders.

(3)FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $5.1 million and $3.5 million for the three months ended December 31, 2022 and 2021, respectively, and $19.3 million and $16.5 million for the year ended December 31, 2022 and 2021, respectively.

(4)Calculated based on weighted average shares outstanding including participating share-based awards (i.e. certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding.

(5)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options and contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.


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