Q4 2008 Dividend/Distribution

The Company's $0.35 per share dividend/distribution will be payable onJanuary 29, 2009 to common stockholders of record on January 16, 2009, withan ex-dividend date of January 14, 2009. It is anticipated that greaterthan 75% of this dividend/distribution will be a return of capital. Thefinal determination of such amount will be made in early 2009 when theCompany can determine its earnings and profits. The final tax status of thedividend/distribution may differ substantially from this preliminaryinformation.

"In light of the uncertainty in the financial markets and energy sector, wefelt it was prudent to reduce our dividend to a level that we believe willbe sustainable, based on dividends and interest earned on the currentportfolio," stated Kevin S. McCarthy, Chairman and CEO of the Company. "Inthe past, we have included in our dividend a portion of the realized gainsgenerated by the portfolio. While we still have realized gains that havenot been distributed, we believe it is more appropriate to retain this cashuntil there is more certainty in the financial markets."

GUIDANCE for Fiscal 2009

Based on the Company's portfolio of investments and average yields on thoseinvestments as of November 30, 2008, we estimate dividends, distributions,and interest income will be approximately $5.6 million per quarter. Suchestimate does not reflect any changes in cash distributions made by MLPs orchanges in interest rates based on the movement in LIBOR rates sinceNovember 30, 2008.

Amount Invested Average ($ in AnnualPortfolio Category millions) Yield(1)(2) ------------ -----------Private MLPs $ 92.1 10.7% ------------ -----------Public MLPs and MLP Affiliates $ 60.9 16.2% ------------ -----------Fixed Income(3) $ 20.0 13.4% ------------ -----------Repurchase Agreements(4) $ 2.8 0.3% ------------ -----------

(1) Average yields include return of capital distributions. Return ofcapital distributions are reported as a reduction to gross dividends anddistributions to arrive at net investment income reported under generallyaccepted accounting principles.

(2) Average yields for Public MLPs and MLP Affiliates are based on the mostrecently declared distributions as of November 30, 2008. Amount investedand average yields for Private MLPs are based on November 30, 2008valuations and distribution rates.

(3) The amount invested and average yield excludes the Company's $10million ProPetro investment (the Company does not anticipate receiving cashinterest payments during fiscal 2009 on this investment). The average yieldincludes amortization of the purchase price discount, as reported on theCompany's income statement.

(4) Includes repurchase agreements at November 30, 2008 less Q4 2008dividend/distribution of $3.5 million.

Base Management Fees and Other Operating Expenses -- Base management feesare estimated to be approximately $0.8 million per quarter. Otheroperating expenses are estimated to be approximately $0.6 million aquarter.

Interest Expense -- Based on $57.0 million borrowed under the Company'sSenior Secured Revolving Credit Facility as of November 30, 2008, interestexpense is estimated to be approximately $0.5 million per quarter assuminga LIBOR rate of 1.85%.

The Company does not provide guidance on realized gains or incentivemanagement fees.

Payment of future dividends/distributions is subject to approval by theCompany's Board of Directors, as well as meeting the covenants of theCompany's revolving credit facility. Should market conditions deterioratefurther and/or interest income or distributions from the Company'sinvestments be less than expectations, the Company will determine theappropriate distribution rate at that time.

Unaudited Balance Sheet

The Company's unaudited summary balance sheet at December 31, 2008 (shownbelow) reflects a deferred tax asset of $18.1 million, or $1.79 per share,and is net of a valuation allowance of $12.9 million. The Company's policyregarding the valuation allowance was established during October 2008 andis in conformity with generally accepted accounting principles. TheCompany also disclosed that it does not include the Company's deferred taxasset in the calculation of its management fee.

Kayne Anderson Energy Development Company Balance Sheet November 30, 2008 Unaudited (in Millions) ------------Investments $ 183.0Repurchase agreements and cash 6.3Net deferred tax asset (1) 18.1Other assets 2.2 ------------ Total assets 209.6Senior secured revolving credit facility 57.0Other liabilities 2.4 ------------ Total liabilities 59.4 ------------Net assets $ 150.2 ============10.1 million common shares currently outstanding(1) Net of $12.9 million valuation allowance

The Company is a non-diversified, closed-end investment company thatelected to be treated as a business development company under theInvestment Company Act of 1940. The Company's investment objective is togenerate both current income and capital appreciation primarily throughequity and debt investments. The Company will seek to achieve thisobjective by investing at least 80% of its net assets together with theproceeds of any borrowings (its "total assets") in securities of companiesthat derive the majority of their revenue from activities in the energyindustry, including: (a) Midstream Energy Companies, which are businessesthat operate assets used to gather, transport, process, treat, terminal andstore natural gas, natural gas liquids, propane, crude oil or refinedpetroleum products; (b) Upstream Energy Companies, which are businessesengaged in the exploration, extraction and production of natural resources,including natural gas, natural gas liquids and crude oil, from onshore andoffshore geological reservoirs; and (c) Other Energy Companies, which arebusinesses engaged in owning, leasing, managing, producing, processing andsale of coal and coal reserves; the marine transportation of crude oil,refined petroleum products, liquefied natural gas, as well as otherenergy-related natural resources using tank vessels and bulk carriers; andrefining, marketing and distributing refined energy products, such as motorgasoline and propane to retail customers and industrial end-users.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press releasecontains "forward-looking statements" as defined under the U.S. federalsecurities laws. Generally, the words "believe," "expect," "intend,""estimate," "anticipate," "project," "will" and similar expressionsidentify forward-looking statements, which generally are not historical innature. Forward-looking statements are subject to certain risks anduncertainties that could cause actual results to materially differ from theCompany's historical experience and its present expectations or projectionsindicated in any forward-looking statement. These risks include, but arenot limited to, changes in economic and political conditions; regulatoryand legal changes; energy industry risk; commodity pricing risk; leveragerisk; valuation risk; non-diversification risk; interest rate risk; taxrisk; and other risks discussed in the Company's filings with the SEC. Youshould not place undue reliance on forward-looking statements, which speakonly as of the date they are made. The Company undertakes no obligation topublicly update or revise any forward-looking statements made herein. Thereis no assurance that the Company's investment objectives will be attained.

Contact:KA Fund Advisors, LLCMonique Vo877-657-3863http://www.kaynefunds.com/