Good day ladies and gentlemen and welcome to the quarter three 2008 Kilroy Realty Corp. earnings call. (Operator Instructions) I would now like to turn the presentation over to your host for today's call, Mr. Richard Moran; you may proceed.

Good morning everyone and thanks for joining us. With me today are John Kilroy, our CEO; Jeff Hawken, our COO; Tyler Rose, our Treasurer and Heidi Roth, our Controller. At the outset, I need to say that some of the information we will be discussing this morning is forward-looking in nature. Please refer to our supplemental package for a statement regarding the forward-looking information in this call and in the supplemental. This call is being telecast live on our website and will be available for replay for the next 10 days, both by phone and over the internet. Our press release and supplemental package have been filed on a Form 8-K with the SEC and both are also available on our website. John will start the call with an overview of the quarter and our key markets, I'll add financial highlights and update our 2008 earnings guidance, and then we will be happy to take your questions.

Thanks Richard and hello everyone and thanks for joining us. KRC had a good third quarter. We reported solid financial results and added two office properties to the portfolio that were on schedule, on budget, and fully leased. But the economic uncertainty caused by the extraordinary turmoil we’re seeing in credit markets has caused many companies in the region to continue to delay making business decisions including real estate decisions. They are trying to digest what all of the negative economic news means to their businesses. Meanwhile unemployment rates in our submarkets continue to tick up with Los Angeles with 7.8%, Orange County at 5.7% and San Diego at 6.4%. Yet we haven’t seen any wide spread layoffs across regions or industries and so far we’re not seeing any new financial distress among our current roster of tenants other then the situations we discussed on previous calls. This is a market that will reward patience, quality assets, solid execution, and financial strength. In leasing we’ve made very significant progress this year. Year-to-date we have executed new or renewing leases on 1.9 million square feet of space by way of comparison, we signed 1.7 million square feet in all of 2007. In the third quarter leases commenced on approximately 575,000 square feet of space at rents that were 34% higher on a GAAP basis and we are making good progress on our 2009 expirations. We started 2008 with 2 million square feet expiring next year. We now have approximately 1.4 million square feet of that left. Of the 600,000 square feet of 2009 renewals to date, the cash rents were up approximately 11% and the GAAP rents were up approximately 29%. In development we delivered two properties totaling 253,000 square feet during the quarter with a total investment of approximately $66…

Thanks John, FFO was $1.00 a share in the third quarter and $2.64 for the first nine months of the year, the third quarter included a net impact of $0.12 related to the Intuit lease termination and $0.08 related to the Favrille liquidation both of which we went through in detail in the last quarter’s call. Stabilized occupancy at the end of the third quarter was 90.7%, down from 92.8% at the end of the second quarter and 94% at year-end 2007. By product type, office occupancy was 89.5% and industrial occupancy was 93.4%. Same store NOI in the third quarter was up 16.1% on a GAAP basis and 20.7% on a cash basis. Excluding the impact of the Intuit and Favrille situations same store NOI would have been flat on a GAAP basis and down 2% on a cash basis. For the first nine months of the year GAAP NOI rose 1.6% and cash NOI was up 5.9%, again excluding the impact of both Intuit and Favrille and two lease termination payments that we received back in the second quarter of 2007. Same store NOI for the first nine months would have been up 1% on a GAAP basis and up 2% on a cash basis. Office rents increased 33% on a GAAP basis and 12% on a cash basis for leases that commenced during the quarter. Industrial rents were up 38% on a GAAP basis and 11% on a cash basis. As John mentioned we’ve made substantial progress on 2009 renewals and we now have 1.4 million square feet of space expiring in 2009. About half of that is industrial and half is office. From a regional perspective we have 340,000 square feet expiring in Los Angeles, 800,000 square feet expiring in Orange County and 700,000 square feet…

(Operator Instructions) Your first question comes from the line of Irwin Guzman - Citi

It looks like you have about $300 million capacity left on the credit facility and an option to expand that by another $100 million with development spend coming off have you considered repurchasing some stock at these levels?

Repurchasing stock I think we’re certainly mindful of the stock price and aware of that. I think our first priority right now as it has been over the last couple of years is making sure we protect our balance sheet and preserve our maximum liquidity. So that’s something we’ve been actively considering but at this point our number one priority is to make sure we protect our balance sheet.

You mentioned the Sony BMG expiration as we look out into 2009 are there any other large expirations that you’re focusing on now that we should be tracking?

No actually in LA the Sony building that’s 95,000 square feet that comes back January 1st is the largest in the LA region. Everything else is pretty minimal.

Your next question comes from the line of David Rodgers - RBC Capital Markets

Is the debt that you repaid with your line of credit, what are your thoughts about permanent financing on that?

I don’t mean to sound relaxed at all, we are fortunate that we have a relatively low debt leverage compared with what debt capacity was available at the peak of the credit cycle so we’ve tried to be very disciplined so we have the flexibility and the luxury of not having to go into the debt markets right now. I think that’s something we’re actively aware of and testing day to day. I think over time I think you’ll see us back in the debt markets but right now there obviously rather lender favorable if they’re open at all. I think we’ll probably wait a bit just see how things settle out. I don’t mean at all to say that we’re relaxed because in this environment I don’t think anybody can be.

Is that your stand too with the April debt maturity? Have you had any talks about how you’re going to satisfy that one?

I think there’s a lot of time between now and then. As I said, fortunately if you run through any analysis of our debt capacity even in an return to fairly traditional prior generation mortgage lending policies we have plenty of debt capacity to refinance our debt over time even if we’ve done the analysis, even if you assume that debt markets stay [inaudible] for the next five years and we have to refinance all of our debt, even that which matures in 2011, 2012, and 2013 even if you underwrite it at 9% or 10% we still have coverage of one six or one seven on that based on our last 12 months NOI. When you run any sort of analysis based on our current debt levels I think except in the case of a permanent cataclysm in the debt markets we have adequate debt capacity to do it in an orderly manner and obviously what’s underlying my comments here is that we’re very mindful of diluting our shareholders over time if we incurred debt costs that are precipitously higher then where they might settle in.

How much unused capacity do you have on your line of credit?

We have $237 million outstanding as of the end of the third quarter leaving just over $300 million available.

Can you provide some color on how your tenant reserves or bad debt expense has changed the past couple of quarters?

In the third quarter we didn’t book any bad debt expense. As you know you can’t arbitrarily book general reserves so from second quarter to third quarter there was no change in bad debt expense.

Your next question comes from the line of Dave Aubuchon – Robert W. Baird Dave Aubuchon – Robert W. Baird: Can you give initial expectations for the space at Sony exiting? Can you illuminate your strategy right now?

That building, right in Santa Monica it’s actually a very well located facility. Its three buildings, underground parking, 95,000 square feet. Its really a pretty spectacular facility. We’re in the process of looking at different improvements we’re going to be making to it. We’ve already had a fair amount of interest both from entertainment companies as well as architecture firms so we’re anticipating to have good demand for that facility as it hits the market in January. Dave Aubuchon – Robert W. Baird: You mentioned that rents were well under market, can you care to provide more detail there, and how much CapEx do you think you’ll be spending on this space?

The rents in that building today are around $3.00 net net net and the market is substantially greater then that. The brokers tell us they’re anywhere from the high fives to the high sixes depending upon different types of users. So we think there’s some considerable upside whether we’ll recognize all of that in this market or not, we don’t know. Dave Aubuchon – Robert W. Baird: You said it was a 10-year lease that was expiring? What’s your initial expectation for CapEx there in that space?

I think we’re anticipating probably somewhere in the $50 range as we look at broad users and not knowing if we get a single tenant or multi tenants. Dave Aubuchon – Robert W. Baird: Are they moving just within the market, they exiting the market or do you know where they’re going?

Yes, they’re moving to I believe what was the Creative Artist building over in Beverly Hills which is about, as I understand about 60,000 feet. They didn’t need the entire 95,000 feet that we have. Dave Aubuchon – Robert W. Baird: Can you detail what the collateral is behind the $75 million maturity in April of 2009?

It’s a portfolio of office properties in both, mainly in San Diego and Los Angeles. Dave Aubuchon – Robert W. Baird: And where would you guess that the $75 million is on a loan to value given today’s market prices?

On a cap rate at, just take 7%, we think the loan to value is under 25%. Dave Aubuchon – Robert W. Baird: Regarding and I know you didn’t give 2009 guidance but just looking at the convert accounting guidance that’s going to go into effect next year, any initial guess about what the impact is going to be there?

Not sure we’re ready to say that but basically as I understand it you take what you would have borrowed at and which we think would have been in the fives then and compare that with what the actual coupon rate is which is 3 ¼, and you take the difference and record that as non-cash interest expense. I think that’s what we’ll wind up doing. Dave Aubuchon – Robert W. Baird: And the assumption is when you actually exited the convert deal what you could borrow at, not current market?

Yes.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Thank you all very much for joining us on the busy day, we appreciate your interest in KRC.