Kilroy Realty Announces Pricing of $150.0 Million of Exchangeable Senior Notes

LOS ANGELES--(Business Wire)--
Kilroy Realty Corporation (the "Company") (NYSE: KRC) today announced that its
Operating Partnership, Kilroy Realty, L.P. (the "Operating Partnership"), has
priced an offering of $150 million aggregate principal amount of 4.25%
exchangeable senior notes due 2014 (the "notes") in a private placement to
qualified institutional buyers in accordance with Rule 144A under the Securities
Act of 1933, as amended. The Operating Partnership has granted to the initial
purchasers a 13-day option to purchase up to an additional $22.5 million
aggregate principal amount of notes to cover overallotments, if any. The notes
will be guaranteed by the Company on a senior unsecured basis.

The notes will pay interest semi-annually at a rate of 4.25% per annum and
mature on November 15, 2014. The notes will have an initial exchange rate of
27.8307 Company common shares per $1,000 principal amount of the notes,
representing an exchange price of approximately $35.93 per Company common share
and an exchange premium of approximately 17.5% based on the last reported sale
price of $30.58 per Company common share on November 16, 2009. The initial
exchange rate is subject to adjustment under certain circumstances. The notes
will be exchangeable under certain circumstances for cash up to the principal
amount and shares of Company common stock with respect to any exchange value
above the principal amount. The Operating Partnership has the right to make an
irrevocable election to satisfy its exchange obligations entirely with shares of
Company common stock. The notes will be exchangeable prior to the close of
business on the second business day immediately preceding the stated maturity
date, at any time beginning on August 15, 2014, and also upon the occurrence of
specified events. Closing of the sale of the notes is expected to occur on
November 20, 2009.

In connection with the offering of the notes, the Operating Partnership has
entered into capped call transactions with affiliates of certain initial
purchasers of the notes (the "option counterparties") in order to increase the
effective exchange price of the notes to approximately $42.81 per Company common
share, which represents an exchange premium of approximately 40% based on the
last reported sale price of $30.58 per Company common share on November 16,
2009. The capped call transactions are expected generally to reduce the
potential dilution upon exchange of the notes in the event that the market value
per share of Company common stock, as measured under the terms of the capped
call transactions, is greater than the strike price of the capped call
transactions, which corresponds to the initial exchange price of the notes and
is subject to certain adjustments similar to those contained in the notes. If
the initial purchasers exercise their overallotment option to purchase
additional notes, the Operating Partnership may enter into additional capped
call transactions. In connection with hedging the capped call transactions, the
option counterparties or their affiliates expect to enter into various
derivative transactions with respect to the Company`s common stock concurrently
with or shortly after the pricing of the notes and may from time to time
following the pricing of the notes enter into or unwind various derivatives
and/or purchase or sell the Company`s common stock in secondary market
transactions. These activities could increase (or reduce the size of any
decrease in) the price of the Company`s common stock concurrently with or
following the pricing of the notes and could also cause or avoid an increase or
a decrease in the price of the Company`s common stock during any observation
period related to an exchange of notes and during the period prior to the
maturity date.

Proceeds from the offering are expected to be $150 million, or $172.5 million if
the initial purchasers` overallotment option is exercised in full, before
deducting the initial purchasers` discounts and commissions, the cost of the
capped call transactions and the Company`s estimated expenses. The Operating
Partnership intends to use the remainder of the net proceeds from the offering
of the notes to repay outstanding long-term debt, including a portion of the
borrowings under its revolving credit facility, and for other general corporate
purposes.

This notice does not constitute an offer to sell or a solicitation of an offer
to buy securities, nor shall there be any sale of the notes in any state or
jurisdiction in which such an offer, solicitation or sale would be unlawful
prior to the registration or qualification thereof under the securities laws of
any such state or jurisdiction. Any offers of the securities will be made only
by means of a private offering memorandum. The notes and any common stock of the
Company issuable upon the exchange of the notes have not been registered under
the Securities Act of 1933, as amended, or the securities laws of any other
jurisdiction and may not be offered or sold absent registration or an applicable
exemption from registration requirements.

Some of the information presented in this release is forward-looking in nature
within the meaning of the Private Securities Litigation Reform Act of 1995.
Although Kilroy Realty Corporation believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, there can be no
assurance that its expectations will be achieved. For forward-looking statements
herein, the Company claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
The company assumes no obligation to update or supplement forward-looking
statements that become untrue because of subsequent events.

Kilroy Realty Corporation
Richard E. Moran Jr.
Executive Vice President
and Chief Financial Officer
(310) 481-8483
and
Tyler H. Rose
Senior Vice President
and Treasurer
(310) 481-8484

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