UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934.
                      For the year ended December 31, 1996

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934.

                  For the transition period from _____ to _____

                         Commission file number: 33-3657

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP
             (Exact name of registrant as specified in its charter)

               California                                    94-3199021
      (State or other jurisdiction                        (I.R.S. Employer
    of incorporation or organization)                    Identification No.)

  400 South El Camino Real, Suite 1100                       94402-1708
          San Mateo, California                              (Zip Code)
 (Address of principal executive offices)

       Partnership's telephone number, including area code: (415) 343-9300

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
                                (Title of class)

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                                Yes__X__    No ____

No market for the Limited  Partnership Units exists and therefore a market value
for such Units cannot be determined.

       DOCUMENTS INCORPORATED BY REFERENCE: See Exhibit Index in Item 14



                                  Page 1 of 52
<PAGE>


                                     PART I


Item 1.  Business.

Organization and Historical Information

Glenborough  Limited, A California Limited Partnership pursuant to section 15d-5
of the  Securities  Exchange  Act of 1934,  was formed in 1986 to acquire,  own,
operate, develop and lease commercial and residential real estate. To facilitate
compliance  with certain  recording and filing  requirements,  a second  limited
partnership, GOCO Realty Fund I, a California Limited Partnership formerly known
as Glenborough  Operating Co. Ltd., A California Limited  Partnership  ("GOCO"),
was formed in April,  1986 to hold and  operate all real and  personal  property
then or thereafter owned by Glenborough Limited (the "Partnership Property"). At
the end of 1993,  there was a technical  termination of Glenborough  Limited and
Glenborough Partners, A California Limited Partnership  ("Partners"),  commenced
as successor to Glenborough  Limited.  GOCO was succeeded in 1995 by GPA Ltd., A
California Limited Partnership ("GPA").  Partners and GPA operate as an economic
unit and unless specifically designated otherwise,  are referred to collectively
as the  "Partnership".  The  general  partners  of  both  Partners  and  GPA are
Glenborough Corporation,  a California corporation formerly known as Glenborough
Realty  Corporation,   and  Robert  Batinovich  (collectively  "Glenborough"  or
"General Partner").  Glenborough  Corporation is the managing general partner of
the Partnership (the "Managing General  Partner").  Glenborough  Partners is the
sole limited partner of GPA.

In June, 1986, the Partnership  acquired 66 real estate projects from 21 limited
partnerships  and one individual  (collectively,  the  "Predecessor  Owners") in
exchange for 4,899,488 limited partnership units (the "Exchange Transaction").

On May  21,  1992,  New  West  Federal,  the  lender  on  substantially  all the
Partnership Property,  filed a judicial foreclosure action in the Superior Court
of Orange County.  Also on May 21, 1992,  GOCO Realty Fund I filed a petition in
the United States  Bankruptcy Court for the Northern  District of California for
reorganization  under Chapter 11 of the Federal  Bankruptcy Code. On January 13,
1994, a plan of reorganization  was filed with the Bankruptcy court which became
effective  January 24, 1994. Under the plan of  reorganization,  the Partnership
exercised  its option to obtain  releases  from the lender on eight  properties,
while the  options on the  remaining  properties  were not  exercised  and those
properties  were  transferred  to the  lender in  satisfaction  of the  lender's
claims.

As set forth under the plan of reorganization,  two new subsidiary  partnerships
were  created in  February,  1994:  (i) GPA West,  L.P.  ("West"),  and (ii) GPA
Industrial,  L.P.  ("Industrial")  to facilitate the  Partnership's  holding and
transfer  of real  property.  A third  subsidiary  partnership,  GPA Bond,  L.P.
("Bond") was created in December,  1994 to hold and operate a property purchased
on December 29, 1994. The general  partners of each of these  partnerships  were
Glenborough  Corporation and Robert Batinovich while the sole limited partner of
each was GPA.




                                  Page 2 of 52
<PAGE>



Investment in Glenborough Properties L.P.

On December 31, 1995,  Industrial and its four properties were contributed to an
affiliated  partnership,   Glenborough  Properties,  L.P.  ("Properties"),   the
operating  partnership of Glenborough Realty Trust Incorporated  ("GLB"), a real
estate  investment trust managed by affiliates of the  Partnership,  in exchange
for 542,333  limited  partnership  units in  Properties.  The debt  securing the
properties  owned by Industrial was assumed by the acquiring  partnership.  As a
result  of  the  contribution,  Industrial  ceased  to be a  subsidiary  of  the
Partnership at the end of 1995.

In  July,  1996,  the  Partnership   contributed  its  45%  non-voting   limited
partnership  interest in  University  Club Tower (UCT) to Properties in exchange
for 10,606 limited partnership units.

In September,  1996, the Partnership sold its interest in Bond to Properties and
GRT  Corporation,  a wholly  owned  subsidiary  of GLB, in  exchange  for 26,067
limited  partnership  units in Properties.  As a result of the sale,  Bond is no
longer a subsidiary of the Partnership.

At December 31, 1996,  the  Partnership  owns 579,006 units or  approximately  a
7.38% interest in Properties.

Other Investments

In  September,  1995,  the  Partnership  invested  $1,050,000  for a 25% limited
partnership interest in GRC Airport Associates ("GRC Airport"). GRC Airport owns
a property consisting of 10.14 acres of improved land with a 216,780 square foot
building located in San Bruno,  California.  This property is leased to a single
tenant  which  operates  an  off-site  long-term  parking  facility  for the San
Francisco  International  Airport.  Through  January,  1997, the Partnership has
received  distributions  from GRC Airport totaling  $128,000.  Additionally,  in
January, 1997 the Partnership received $500,000, from GRC Airport representing a
return of capital upon the refinancing of the property.

In June and July, 1996, the Partnership  acquired 131,347 units  (representing a
13% interest) of Glenco Squaw Associates ("Squaw"),  an affiliated  partnership,
for $352,000.  Squaw's sole asset is a promissory  note receivable from the sale
of its  interest  in a resort  in Squaw  Valley,  California.  This  sale of its
interest in the resort provided Squaw with: (i) $700,000 cash; (ii) a $2,300,000
promissory note bearing interest at 8% per annum payable quarterly with $800,000
due in 1998 and $1,500,000 due in 1999; and (iii) additional  payment contingent
upon the  consideration  received  in excess of a stated  price  related  to any
future sale of the resort.

In December,  1996, the Partnership purchased 931 limited partnership units or a
2.7%  interest  in  Outlook   Income/Growth  Fund  VIII,  ("Outlook  VIII"),  an
affiliated  partnership,  for $163,000. At December 31, 1996, Outlook VIII owned
interests in three rental properties.

After the cancellation of a total of 1,937,635 limited  partnership units of the
Partnership  from December,  1986 through May, 1994 and the redemption of 50,954
limited  partnership units in June, 1996,  2,910,899  limited  partnership units
were outstanding at December 31, 1996.


                                  Page 3 of 52
<PAGE>


Information  regarding  the  Partnership  Properties is  incorporated  herein by
reference to Item 2. - Properties.

Business Plan

In 1997,  the  Partnership's  intentions  are: (i) to sell the Rosemead  Springs
property; (ii) to explore the feasibility and economic benefit of purchasing, at
substantial  discounts,  limited partnership units in various partnerships;  and
(iii) to locate other suitable investments.

Management and Operations

The Partnership  engages  Glenborough  Corporation  (the "Property  Manager") to
manage the  Partnership  assets.  Pursuant  to a written  management  agreement,
Glenborough Corporation has broad managerial  responsibility for all Partnership
assets,  including  collection  of all rents and other charges due from tenants.
The  agreement  as amended,  expires in 2001,  except that the  Partnership  may
terminate the agreement  without cause on 30-days  written notice or immediately
if Glenborough Corporation ceases to be the managing general partner.

Federal,  state and local statutes,  ordinances and regulations  which have been
enacted or adopted regulating the discharge of materials into the environment or
otherwise  relating to the protection of the environment do not presently have a
material effect on the operations of the Partnership Property nor on the capital
expenditures,  earnings or competitive position of the Partnership. There can be
no assurance that such  regulations will not change or have some material effect
on the Partnership in the future.

The Partnership does not directly employ any individuals.  All regular employees
rendering  services on behalf of the  Partnership  are employees of  Glenborough
Corporation or its affiliates.

The business of the  Partnership to date has involved only one industry  segment
(real estate). The Partnership has no foreign operations and the business of the
Partnership is not seasonal.

Competition

Management  believes that  characteristics  influencing the competitiveness of a
real  estate  project  are  the  geographic   location  of  the  property,   the
professionalism  of the property  manager and the  maintenance and appearance of
the  property,  in  addition  to  external  factors  such  as  general  economic
circumstances,  trends,  and the existence of new,  competing  properties in the
vicinity.  Additional  competitive factors with respect to rental properties are
the ease of access to the property, the adequacy of related facilities,  such as
parking,  and the ability to provide rent  concessions  and tenant  improvements
commensurate  with local market  conditions.  Although  management  believes the
Partnership  Property is  competitive  with  comparable  properties  as to those
factors  within the  Partnership's  control,  over-building  and other  external
factors could  adversely  affect the ability of the  Partnership  to attract and
retain  tenants.  The  marketability  of the  Partnership  Property  may also be
affected  (either  positively  or  negatively)  by these  factors  as well as by
changes in general or local economic  conditions,  including prevailing interest
rates.  Depending  on market and economic  conditions,  the  Partnership  may be
required  to  retain  ownership  of  its  properties  for  periods  longer  than
anticipated,  or may need to dispose  earlier than  anticipated,  or refinance a
property,  at a time or under terms and  conditions  that


                                  Page 4 of 52
<PAGE>


are less advantageous  than would be the case if unfavorable  economic or market
conditions did not exist.

Item 2.  Properties.

As of December 31, 1996,  the  Partnership  owns one rental  property,  Rosemead
Springs Business Center ("Rosemead"),  a 129,500 square foot multi-tenant office
building located in El Monte,  California.  Rosemead consists of seven one-story
and two-story  buildings,  which had an 11% occupancy rate at December 31, 1996.
This property has one lease at December 31, 1996,  totaling  approximately 4,200
square feet or 3% of the leasable  space,  which provides for base monthly rents
of $6,310  and  expires  on  September  7,  1997.  The other  tenant,  occupying
approximately  10,100 square feet of space or 8% of the leasable  space, is on a
month to month lease.  As of December 31, 1996 and the date of this filing,  the
Rosemead  property  is held for sale and  management  has  entered  into a sales
contract;  however,  there can be no assurance  that the sale will actually take
place.

During 1996, the Rosemead  property was assessed $78,000 in property taxes based
on an average realty tax rate of 1.17% plus additional assessments.

Information  regarding  encumbrances  on  Partnership  Property is  incorporated
herein  by  reference  to  Item  8,  Note 6 -  Notes  Payable  in the  Notes  to
Consolidated Financial Statements.

In the opinion of management, the insurance coverage on the Rosemead property is
adequate.

Also,  as of  December  31,  1996,  the  Partnership  owns  limited  partnership
interests ranging from 2.7% to 25% in three affiliated real estate  partnerships
and one partnership whose sole asset is a promissory note.

Item 3.  Legal Proceedings.

The  Partnership  did not  become a party  to,  nor were any of its  assets  the
subject of any material pending legal proceedings in 1996.

Item 4.  Results of Votes of Security Holders.

During the fourth  quarter of fiscal year 1996,  no matters were  submitted to a
vote of security holders through the solicitation of proxies or otherwise.




                                  Page 5 of 52
<PAGE>



                                     PART II

Item 5.  Market for the Registrant's Equity and Related Security Holder Matters.

Market Information

There is no public  market  for units of  limited  partnership  interest  in the
Partnership  (the  "Units") and it is not expected  that any will  develop.  The
Units have  limited  transferability.  Restrictions  on transfer  may be imposed
under certain state securities laws.  Consequently,  holders of Units may not be
able to liquidate their investments and the Units may not be readily  acceptable
as collateral.

Holders

As  of  December  31,  1996,  391  holders  of  record  held  2,910,899  Limited
Partnership Units.

Cash Distributions

The Partnership began paying quarterly cash  distributions on April 30, 1987, at
a quarterly rate of $0.375 per Limited Partnership Unit and continued paying the
same quarterly cash distribution through the fourth quarter 1988 distribution on
January  31,  1989.  In  1989,  the  Partnership   lowered  its  quarterly  cash
distribution to $0.25 per Unit for the first quarter distribution and to $0.1875
per Unit beginning with the second quarter 1989 distribution. Distributions were
suspended as of the second  quarter of 1990. In the first  quarter of 1997,  the
Partnership made a special cash distribution totaling $295,000 to help alleviate
its partners' tax burden arising from their portion of the undistributed taxable
income of the Partnership in 1996.




                                  Page 6 of 52
<PAGE>


Item 6.  Selected Financial Data.

The selected  financial  data should be read in  conjunction  with the financial
statements and related notes contained  elsewhere in this report.  This selected
financial  data  is  not  covered  by the  reports  of  the  independent  public
accountants.

<TABLE>
<CAPTION>
                      Condensed Consolidated Operating Data
                     (in thousands, except for Per Unit Data
                          and actual number of assets)
                        For the years ended December 31,

                                   1996     1995      1994      1993     1992
                                   ----     ----      ----      ----     ----

<S>                               <C>      <C>      <C>       <C>        <C>
Total revenues                    $1,581   $3,259   $  7,729  $ 22,061 $ 24,963

Total expenses                     2,424    3,940     10,126    28,389   31,140
                                   -----   ------   --------  --------   ------
Income (loss) before
   extraordinary items              (843)    (681)    (2,397)   (6,328)  (6,177)

Extraordinary items  (Note 1)        125      ---    119,954       (30)     (40)
                                  ------   ------   --------  -------- --------

Net income (loss)                 $ (718)  $ (681)  $117,557  $ (6,358) $(6,217)
                                  ======   ======   ========  ========  =======

Cash distributed (Note 2)         $  ---   $  ---   $    ---  $    ---  $   ---


Per limited partnership unit (Note 3):
   Income (loss) before
    extraordinary items           $ (.28)  $ (.23)   $  (.74)  $  (1.81) $(1.77)
   Net income (loss)              $ (.24)  $ (.23)   $ 36.52   $  (1.82) $(1.78)
   Distributions   (Note 2)       $  ---   $  ---    $   ---   $    ---  $  ---

At December 31:
   Projects held                       1        5         6          30      30
   Mortgage notes receivable held    ---      ---       ---           1       1








                                   (continued)
                             See accompanying notes.
</TABLE>



                                  Page 7 of 52
<PAGE>



<TABLE>
<CAPTION>
                    Condensed Consolidated Balance Sheet Data
                                 (in thousands)

                                                  December 31,
                                   -------------------------------------------
                                   1996     1995      1994      1993     1992
                                   ----     ----      ----      ----     ----
Assets
<S>                               <C>      <C>      <C>       <C>      <C>
Net real estate investments       $3,225   $7,493   $ 19,778  $123,701 $127,395

Notes receivable, net                316       14        ---    44,951   45,635

Cash and other assets              2,492    2,325      3,407    16,630   19,618
                                  ------   ------   --------  -------- --------

Total assets                      $6,033   $9,832   $ 23,185  $185,282 $192,648
                                  ======   ======   ========  ======== ========


Liabilities and Partners' Equity (Deficit)
Notes payable and
 accrued interest                 $2,218   $5,069   $ 17,267  $295,380 $295,310

Other liabilities                     52      155        629     2,170    3,248
                                  ------   ------   --------  -------- --------

Total liabilities                  2,270    5,224     17,896   297,550  298,558

Total partners' equity (deficit)   3,763    4,608      5,289  (112,268)(105,910)
                                  ------   ------   --------  -------- --------
Total liabilities and partners'
   equity (deficit)               $6,033   $9,832   $ 23,185  $185,282 $192,648
                                  ======   ======   ========  ======== ========
</TABLE>



                        NOTES TO SELECTED FINANCIAL DATA


1.    The  Partnership  recognized  extraordinary  items  from  the  Chapter  11
      bankruptcy  reorganization and early forgiveness of debt in 1994, 1993 and
      1992.

2.   The  Partnership  has suspended  distributions  since the second quarter of
     1990.

3.   In 1996,  the per  unit  data is  based  on a  97.71%  limited  partnership
     interest and 2,936,376  weighted average limited partner units outstanding.
     In 1995  and  1994,  the  per  unit  data  is  based  on a  97.73%  limited
     partnership  interest and 2,961,853 and 3,146,492  weighted average limited
     partner units  outstanding,  respectively.  In 1993 and 1992,  the per unit
     data is  based on a  98.01%  limited  partnership  interest  and  3,414,839
     weighted average limited partner units outstanding.

The  comparability  of the  Consolidated  Financial  Data reflected in the above
table has been  affected  by the  reduction  of total  assets and  related  debt
resulting from: (i) the disposition of properties in 1996 and 1995; and (ii) the
bankruptcy reorganization and early extinguishment of debt in 1994.


                                  Page 8 of 52
<PAGE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
          of Operations.

Introduction

The  predecessor   partnership,   Glenborough   Limited,  A  California  Limited
Partnership, commenced operations as of June 30, 1986, following its acquisition
of 66 real estate projects subject to non-recourse institutional debt secured by
the projects and certain other assets,  subject to certain liabilities,  most of
which related to the operations of the projects.  Glenborough  Limited  acquired
the projects and other assets in exchange for Partnership  Units, in an Exchange
Transaction involving 21 limited partnerships and one individual property owner.
At the  end of  1993,  there  was a  technical  termination  of the  predecessor
partnership  and  Glenborough  Partners  commenced as  successor to  Glenborough
Limited (collectively, "the Partnership").

The following  discussion  addresses the  Partnership's  financial  condition at
December 31, 1996 and its results of operations for the years ended December 31,
1996, 1995 and 1994.  This  information  should be read in conjunction  with the
Consolidated Financial Statements, notes thereto and other information contained
elsewhere in this report.

LIQUIDITY AND CAPITAL RESOURCES

In  September,  1995,  the  Partnership  invested  $1,050,000  for a 25% limited
partnership  interest in GRC Airport.  GRC Airport owns a property consisting of
10.14 acres of improved land with a 216,780 square foot building  located in San
Bruno, California.  This property is leased to a single tenant which operates an
off-site long-term parking facility for the San Francisco International Airport.
Through  January,  1997, the  Partnership  has received  distributions  from GRC
Airport  totaling  $128,000.  Additionally,  in  January,  1997 the  Partnership
received  $500,000,  from GRC Airport  representing a return of capital upon the
refinancing of the property.  An amendment to the lease was executed in November
1996 and calls for base  monthly  rent  commencing  in  January  1997 of $96,000
compared to $ 83,000 under the prior lease terms.

Through  three  separate  transactions  in 1995  and  1996,  including  both the
contribution of and sale of its assets,  the Partnership has acquired a total of
579,006  limited  partnership  units in  Properties.  In 1996,  Properties  made
distributions  at an annual rate of $1.20 per limited  partnership  unit.  These
distributions   provide  a  greater  cash  flow  to  the  Partnership  than  the
Partnership  would have realized  (after debt service  payments) had it retained
Industrial,  UCT and Bond. In calendar  year 1996,  the  Partnership  received a
total of $502,000 in distributions from Properties.

Effective  June 30,  1996,  the  Partnership  repurchased  50,954 units from its
limited  partners at a price of $2.50 per unit,  which due to the illiquidity of
the units,  is a substantial  discount  from the  estimated  value of the units.
These units have been  canceled,  which  provides  each  remaining  unitholder a
slightly larger interest in the Partnership's assets,  allowing all investors to
share in the benefits from this purchase.  Management  believes that the limited
partners  opting to sell their  ownership  units back to the  Partnership did so
based on a desire to dispose of illiquid  investments and eliminate the need for
annual processing of tax related information.

                                  Page 9 of 52
<PAGE>

In June and July, 1996, the Partnership  acquired 131,347 units  (representing a
13% interest) of Squaw, an affiliated  partnership,  for $352,000.  Squaw's sole
asset is a promissory  note receivable from the sale of its interest in a resort
in Squaw Valley,  California.  This sale of its interest in the resort  provided
Squaw with:  (i)  $700,000  cash;  (ii) a  $2,300,000  promissory  note  bearing
interest  at 8% per  annum  payable  quarterly  with  $800,000  due in 1998  and
$1,500,000  due in  1999;  and  (iii)  additional  payment  contingent  upon the
consideration received in excess of a stated price related to any future sale of
the resort.

On August 1, 1996, the  Partnership  purchased a $546,370  promissory note and a
$1,350,000  NuView  Union  School  District  Credit for total  consideration  of
$300,000 from an  unaffiliated  partnership  which was  liquidated in the fourth
quarter of 1996.  The  promissory  note is secured by a 199 acre  parcel of land
located in  Riverside,  California,  requires no accrual or payment of interest,
has a ten-year  term and  provides  for a  discounted  payoff of $246,000 in the
first year,  increasing at increments of $30,000 in each subsequent year through
the ten-year term. The School Credits represent prepaid property tax assessments
on specified parcels of land in the Tri-City area of San Bernardino, California.
In order for the  specified  parcels to be  developed,  the School  Credits must
first be repaid to the Partnership.

On September 9, 1996, the  Partnership  paid-off the $2,200,000  debt secured by
the Rosemead  property with proceeds  from a $3,400,000  promissory  note with a
revolving line of credit provision.  As of December 31, 1996,  $1,200,000 of the
total $3,400,000 remained undrawn on the line of credit. The new loan is secured
by the  Partnership's  interest in Properties,  accrues  interest at a rate of 1
percentage point over the lender's index rate and requires monthly interest only
payments.  In January,  1997, the Partnership paid down $700,000 on this line of
credit  from  the  distributions  received  from GRC  Airport  (see  above).  In
February,  1997, the Partnership  drew the remaining  $1,900,000 on this line of
credit to fund the  purchase  of  partnership  units in various  affiliated  and
non-affiliated  partnerships.  In March, 1997, the Partnership obtained approval
from the lender to increase its line of credit from $3,400,000 to $5,000,000.

In December,  1996, the Partnership purchased 931 limited partnership units or a
2.7%  interest in Outlook  VIII, an  affiliated  partnership  for  $163,000.  At
December 31, 1996, Outlook VIII owned interests in three rental properties.

The Partnership's  investments in real estate partnerships have either generated
positive cash flow for the Partnership or management  believes have  substantial
upside potential.

As of December 31, 1996, the only real estate  directly owned by the Partnership
is a 129,500 square foot business center known as Rosemead Springs located in El
Monte, California,  consisting of seven, one and two story buildings. In January
1997, the Partnership  entered into a contract with an unaffiliated  third party
for the sale of Rosemead Springs Business Center.  The sale is expected to close
in April, 1997 for a purchase price of $2,675,000.  The Partnership's management
can provide no guarantee that this sale will close under the terms  specified or
under any other terms.

Management  believes that the  Partnership's  $403,000 cash and cash equivalents
balance at December 31, 1996 plus its available line of credit (discussed above)
are sufficient to meet its operating cash requirements.


                                 Page 10 of 52
<PAGE>


The Partnership  suspended its  distributions  in 1990 in an attempt to increase
liquidity and improve its capital  resources after paying for tenant and capital
improvements, lease commissions,  refinancing costs, and increasing debt service
payments.  As of December 31, 1996,  distributions remain suspended,  however in
March, 1997 the Partnership made a special cash  distribution  totaling $295,000
to help  alleviate its  partners'  tax burden  arising from their portion of the
undistributed taxable income of the Partnership in 1996.

Management  continues  to explore  other  opportunities  where it may invest its
capital resources in order to maximize return to its investors.

RESULTS OF OPERATIONS

1996 versus 1995

Rental revenues  decreased  $2,404,000 or 81% during the year ended December 31,
1996 from the year  ended  December  31,  1995 due to: (i) the  contribution  of
Industrial and its four properties into Properties at December 31, 1995 and (ii)
the sale of Bond to Properties on September 24, 1996.

Income  from  investments  in  affiliated  partnerships  during  the year  ended
December 31, 1996 of $502,000 represents  dividends received from its investment
in Properties.

Equity in earnings from  investment in an  affiliated  partnership  increased in
1996 as such investment was not acquired until  September,  1995; and thus, 1995
represented only a partial year of operations.

Interest  and other  revenue  increased  $93,000  or 28%  during  the year ended
December  31,  1996 over the year ended  December  31,  1995  largely due to the
recognition as other income of: (i) a  non-refundable  deposit received from the
potential  buyer of Rosemead  Springs  after the sale fell through in 1996,  and
(ii) a fee in 1996 for the dissolution of a purchase/sale  agreement paid by the
owner of a property which the Partnership was negotiating to acquire.

Operating,  general  and  administrative,  depreciation  and  amortization,  and
interest expenses  decreased in 1996 compared to 1995 due to the contribution of
Industrial and sale of Bond to Properties.

At December 31, 1996, after several unsuccessful  contracts to sell the property
for an amount that would recover its carrying value,  management  concluded that
the carrying value of the Partnership's  investment in Rosemead Springs Business
Center  and  adjacent  lots was in  excess  of its  estimated  fair  value and a
provision  for  impairment of the  investment  in the amount of  $1,090,000  was
recorded.  The estimated fair value of the Rosemead property has been based on a
current offer for the property less selling costs.

The  Partnership  recognized  $125,000 in gain from debt  forgiveness  after the
lender on the loan secured by the Bond office building forgave $125,000 in debt,
prior to the sale of Bond.




                                 Page 11 of 52
<PAGE>




1995 versus 1994

Total  revenue and expenses  decreased  in all areas  except  interest and other
revenue during 1995 compared to 1994 due to the transferring of all but eight of
the remaining properties back to Brazos (lender) during the first five months of
1994 in the bankruptcy  reorganization.  Two of the eight properties transferred
from Brazos were sold soon after in 1994.

Interest and other revenue increased during this same period,  largely resulting
from the loan fees received upon the advances to unaffiliated  partnerships  and
from  property  tax  refunds  from  successful   property  tax  appeals  on  the
Partnership's current properties.





                                 Page 12 of 52
<PAGE>



Item 8.  Financial Statements and Supplementary Data.


             GLENBOROUGH PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP

             INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE


                                                                          Page

Report of Independent Public Accountants...................................14

Financial Statements:

      Consolidated Balance Sheets - December 3l, l996
           and l995 .......................................................15

      Consolidated Statements of Operations
           for the years ended December 3l, l996, l995
           and l994........................................................16

      Consolidated Statements of Partners' Equity
           (Deficit) for the years ended December 3l, l996,
           l995 and l994...................................................17

      Consolidated Statements of Cash Flows for the years
           ended December 3l, l996, l995 and l994..........................18

      Notes to the Consolidated Financial Statements ......................20

Financial Statement Schedule:

Schedule III - Consolidated Real Estate
      Investments and Related Accumulated Depreciation
           at December 31, 1996 and Note thereto...........................32

Financial Statement Exhibit:
      Financial Statements of Significant Subsidiary.......................34

Other  schedules are omitted either  because of the absence of conditions  under
which they are  required or because  the  required  information  is given in the
financial statements or notes thereto.





                                 Page 13 of 52
<PAGE>










                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
GLENBOROUGH PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP:

We have audited the  accompanying  consolidated  balance  sheets of  GLENBOROUGH
PARTNERS,  A CALIFORNIA LIMITED  PARTNERSHIP,  as of December 31, 1996 and 1995,
and  the  related  consolidated  statements  of  operations,   partners'  equity
(deficit)  and cash  flows  for each of the  three  years  in the  period  ended
December 31, 1996.  These  consolidated  financial  statements  and the schedule
referred to below are the  responsibility of the Partnership's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
GLENBOROUGH PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP, as of December 31, 1996,
and 1995,  and the results of its  operations and its cash flows for each of the
three years in the period ended December 31, 1996, in conformity  with generally
accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
consolidated  financial  statements taken as a whole. The accompanying  schedule
listed  in the  index to  consolidated  financial  statements  and  schedule  is
presented  for the  purpose  of  complying  with  the  Securities  and  Exchange
Commission's  rules  and is  not a  required  part  of  the  basic  consolidated
financial  statements.  This  information  has been  subjected  to the  auditing
procedures applied in our audits of the basic consolidated  financial statements
and, in our opinion,  is fairly  stated in all material  respects in relation to
the basic consolidated financial statements taken as a whole.





San Francisco, California
February 11, 1997 (except with regards
  to the matter discussed in Note 2, as to
  which the date is March 28, 1997)




                                 Page 14 of 52
<PAGE>




                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                           Consolidated Balance Sheets
                           December 31, 1996 and 1995
                    (in thousands, except units outstanding)

Assets                                                   1996          1995
------                                                 --------      --------
Real estate investment:
  Land                                                 $   ---       $   483
  Building and improvements                                ---         2,778
                                                       -------       -------
                                                           ---         3,261
Less:
  Accumulated depreciation                                 ---           (75)
                                                       -------       -------
     Net real estate investment                            ---         3,186


Real estate held for sale - net                          3,225         4,307


Other assets:
  Cash and cash equivalents                                403           812
  Notes receivable and other assets                        368           400
  Deferred financing and other fees, net
     of accumulated amortization of $234 and
     $219 at December 31,1996 and 1995, respectively        33            64
  Investments in affiliated partnerships                 2,004         1,063
                                                       -------       -------

Total assets                                           $ 6,033       $ 9,832
                                                       =======       =======

Liabilities and Partners' Equity
  Notes payable                                        $ 2,200       $ 5,035
  Accrued interest                                          18            34
  Accounts payable and accrued expenses                     52           155
                                                       -------       -------

Total liabilities                                        2,270         5,224
                                                       -------       -------

Partners' equity
  General partner                                          404           420
  Limited partners, 2,910,899 and 2,961,853
      units outstanding at December 31, 1996
      and 1995, respectively                             3,359         4,188
                                                       -------       -------

Total partners' equity                                   3,763         4,608
                                                       -------       -------

Total liabilities and partners' equity                 $ 6,033       $ 9,832
                                                       =======       =======




  The accompanying notes are an integral part of these consolidated statements.




                                 Page 15 of 52
<PAGE>

<TABLE>
<CAPTION>
                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                      Consolidated Statements of Operations
              For the years ended December 31, 1996, 1995 and 1994
                     (in thousands, except per unit amounts)

                                                  1996         1995       1994
                                                  ----         ----       ----
Revenue:
<S>                                              <C>        <C>        <C>
  Rental                                         $   563    $ 2,967    $  5,821
  Income from investments in
      affiliated partnerships                        502        ---         ---
  Equity in earnings (loss) of
      affiliated partnerships                         86        (45)        ---
  Interest and other                                 430        337         277
  Gain on property sales                             ---        ---       1,631
                                                 -------    -------    --------

  Total revenues                                   1,581      3,259       7,729
                                                 -------    -------    --------

Expenses:
  Operating, including $47, $132 and $445
      paid to affiliates in 1996, 1995
      and 1994, respectively                         517        625       2,500
  General and administrative, including
      $217, $292 and $590 paid to affiliates
      in 1996, 1995 and 1994, respectively           316        521       1,466
  Depreciation and amortization                       74        914       1,540
  Interest expense                                   427      1,880       3,620
  Provision for impairment of real estate
      held for sale                                1,090        ---         ---
  Loss on investment in unconsolidated
      joint venture                                  ---        ---       1,000
                                                 -------    -------    --------

  Total expenses                                   2,424      3,940      10,126
                                                 -------    -------    --------

Loss before extraordinary items                     (843)      (681)     (2,397)

Extraordinary items:
  Gain from bankruptcy reorganization
      and early extinguishment of debt               ---        ---     119,954
  Gain on forgiveness of debt                        125        ---         ---
                                                 -------    -------    --------

Net income (loss)                                $  (718)   $  (681)   $117,557
                                                 =======    =======    ========


Loss before extraordinary items
  per Limited Partnership Unit                   $  (.28)   $  (.23)   $   (.74)
Extraordinary items per Limited Partnership Unit     .04        ---       37.26
                                                 -------    -------    --------
Net income (loss) per Limited Partnership Unit   $  (.24)   $  (.23)   $  36.52
                                                 =======    =======    ========
</TABLE>



 The accompanying notes are an integral part of these consolidated statements.



                                 Page 16 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                   Consolidated Statements of Partners' Equity
         (Deficit) For the years ended December 31, 1996, 1995 and 1994
                                 (in thousands)

                                                                       Total
                                                                     Partners'
                                       General         Limited        Equity
                                       Partner         Partners      (Deficit)
                                     -----------      ---------      ----------

Balance, December 31, 1993           $   (2,234)      $(110,034)     $(112,268)

Net income                                2,669         114,888        117,557
                                     ----------       ---------      ---------

Balance, December 31, 1994                  435           4,854          5,289

Net loss                                    (15)           (666)          (681)
                                     ----------       ---------       --------

Balance, December 31, 1995                  420           4,188          4,608

Redemption of Units                         ---            (127)          (127)

Net loss                                    (16)           (702)          (718)
                                     ----------       ---------       --------

Balance, December 31, 1996           $      404       $   3,359       $  3,763
                                     ==========       =========       ========

















  The accompanying notes are an integral part of these consolidated statements.




                                 Page 17 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                    Consolidated Statements of Cash Flows For
                the years ended December 31, 1996, 1995 and 1994
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                        1996              1995          1994
                                                                        ----              ----          ----
Cash flows from operating activities:
<S>                                                                  <C>               <C>           <C>
    Net income (loss)                                                $   (718)         $  (681)      $117,557
    Adjustments to reconcile net income
        (loss) to net cash provided by
        (used for) operating activities:
          Depreciation and amortization                                    74              914          1,540
          Amortization of loan fees, included in
             interest expense                                              22               55            442
          Gain on property sales                                          ---              ---         (1,631)
          Loss on investment in unconsolidated joint venture              ---              ---          1,000
          (Income) loss on investments in
             affiliated partnerships                                      (86)              45            ---
          Gain from bankruptcy reorganization
             and early extinguishment of debt                             ---              ---       (119,954)
          Gain on forgiveness of debt                                    (125)             ---            ---
          Provision for impairment of real estate held for sale         1,090              ---            ---
          Changes in certain assets and liabilities:
             Increase in deferred financing and other fees                (56)             (77)          (462)
             Decrease in prepaid incentive and transaction fees
                (paid to related party)                                   ---              ---            348
             Decrease (increase) in other assets                          131              270           (503)
             Increase (decrease) in amount due from affiliate             195              (60)            60
             Increase in accrued interest                                   1              ---            107
             Decrease in accounts payable
                and accrued expenses                                      (56)            (379)          (554)
                                                                     --------          -------       --------

    Net cash provided by (used for) operating activities                  472               87         (2,050)
                                                                     --------          -------       --------

Cash flows from investing activities:
    Distribution from unconsolidated joint venture                        102              ---            ---
    Purchases of real estate                                              ---              ---           (318)
    Improvements to real estate                                           (26)            (108)          (440)
    Proceeds from sales of real estate                                    ---              ---          5,520
    Investment in unconsolidated joint venture                            ---              ---         (1,000)
    Increase in restricted cash                                           ---              ---            (35)
    Investment in affiliated partnership                                 (515)          (1,108)           ---
    Increase in notes receivable                                         (302)          (2,154)           ---
    Principal payment on note receivable                                  ---            2,141            ---
                                                                     --------          -------       --------

    Net cash provided by (used for) investing activities                 (741)          (1,229)         3,727
                                                                     --------          -------       --------
</TABLE>


                                                    (continued)


                                 Page 18 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                Consolidated Statements of Cash Flows - continued
               For the years ended December 31, 1996 1995 and 1994
                                 (in thousands)
<TABLE>
<CAPTION>

Cash flows from financing activities:                                    1996             1995           1994
                                                                         -----           ------         -----
<S>                                                                  <C>               <C>           <C>
    Proceeds from notes payable                                      $  2,200          $ 1,200       $    912
    Principal payments on notes payable                                (2,213)          (1,850)        (1,491)
    Redemption of limited partnership units                              (127)             ---            ---
                                                                     --------          -------       --------

    Net cash used for financing activities                               (140)            (650)          (579)
                                                                     --------          -------       --------

Net increase (decrease) in cash and cash equivalents                     (409)          (1,792)         1,098

Cash and cash equivalents (net of restricted cash):
        Beginning of period                                               812            2,604          1,506
                                                                     --------          -------       --------

        End of period                                                $    403          $   812       $  2,604
                                                                     ========          =======       ========


Supplemental disclosure of cash flow information:
    Cash paid for interest                                           $    421          $ 1,898       $  3,070
                                                                     ========          =======       ========
    Purchase of existing notes receivable                            $    ---          $(2,368)      $    ---
                                                                     ========          =======       ========
    Notes receivable paid off                                        $    ---          $ 2,368       $    ---
                                                                     ========          =======       ========

Supplemental disclosure of non cash transactions:
    Purchase of real estate:
        Increase in notes payable through purchase
        of real estate                                               $    ---          $   ---       $  2,835
                                                                     ========          =======       ========
    Bankruptcy reorganization and early extinguishment of debt:
        Rollout and foreclosure of real estate, net                  $    ---          $   ---       $(99,867)
        Extinguishment of debt                                            ---              ---        280,482
        Other                                                             ---              ---        (60,661)
                                                                     --------          -------       --------
    Gain from bankruptcy reorganization
        and early extinguishment of debt                             $    ---          $   ---       $119,954
                                                                     ========          =======       ========

    Contribution of subsidiary partnership to an affiliated partnership:
        Contribution of real estate, net                             $  3,145         $(11,799)  $        ---
        Assumption of debt by acquiring
          partnership (including accrued interest)                     (2,714)          11,583            ---
        Other assets and liabilities                                       10              216            ---
                                                                     --------          -------  -------------

        Net investment in affiliated partnership                     $    441         $    ---   $        ---
                                                                     ========         ========   ============
</TABLE>



  The accompanying notes are an integral part of these consolidated statements.



                                 Page 19 of 52
<PAGE>




                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994


Note 1.  SUMMARY OF PARTNERSHIP AND SIGNIFICANT ACCOUNTING POLICIES

Glenborough Limited, A California Limited Partnership, and GOCO Realty Fund I, a
California Limited Partnership formerly known as Glenborough Operating Co. Ltd.,
A California Limited Partnership ("GOCO"),  were formed in 1986 to acquire, own,
operate, develop and lease commercial and residential real estate. At the end of
1993,  there was a technical  termination  of Glenborough  Limited.  Glenborough
Partners, A California Limited Partnership ("Partners"),  commenced as successor
to  Glenborough  Limited.  GOCO was  succeeded in 1995 by GPA Ltd., A California
Limited  Partnership  ("GPA").  Partners and GPA operate as an economic unit and
unless specifically  designated  otherwise,  are referred to collectively as the
"Partnership".  The general  partners of both  Partners and GPA are  Glenborough
Corporation,  a California  corporation  formerly  known as  Glenborough  Realty
Corporation,  and Robert  Batinovich  (collectively  "Glenborough"  or  "General
Partner").  Glenborough  Corporation  is the  managing  general  partner  of the
Partnership (the "Managing General Partner").  Glenborough  Partners is the sole
limited partner of GPA.

In June, 1986, the Partnership  acquired 66 real estate projects from 21 limited
partnerships  and one individual  (collectively,  the  "Predecessor  Owners") in
exchange for 4,899,488 limited partnership units (the "Exchange Transaction").

On May 21,  1992,  GOCO  Realty  Fund I filed a petition  in the  United  States
Bankruptcy  Court for the Northern  District of  California  for  reorganization
under Chapter 11 of the Federal  Bankruptcy Code. On January 13, 1994, a plan of
reorganization  was filed  with the  Bankruptcy  court  which  became  effective
January 24, 1994. Under the plan of  reorganization,  the Partnership  exercised
its option to obtain  releases  from the lender on eight  properties,  while the
options on the remaining properties were not exercised and those properties were
transferred to the lender in satisfaction of the lender's claims.

As set forth under the plan of reorganization,  two new subsidiary  partnerships
were  created in  February,  1994:  (i) GPA West,  L.P.  ("West"),  and (ii) GPA
Industrial,  L.P.  ("Industrial")  to facilitate the  Partnership's  holding and
transfer  of real  property.  A third  subsidiary  partnership,  GPA Bond,  L.P.
("Bond") was created in December,  1994 to hold and operate a property purchased
on December 29, 1994. The general  partners of each of these  partnerships  were
Glenborough  Corporation and Robert Batinovich while the sole limited partner of
each was GPA.

Through December 31, 1995, all three  partnerships  were subsidiaries of GPA. On
December  31,  1995,  the  Partnership   contributed  Industrial  and  its  four
properties  to  an  affiliated   partnership,   Glenborough   Properties,   L.P.
("Properties"),   the  operating   partnership  of   Glenborough   Realty  Trust
Incorporated  ("GLB"),  a real estate  investment trust managed by affiliates of
the  Partnership,   in  exchange  for  542,333  limited   partnership  units  in
Properties.  The debt securing the


                                 Page 20 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994

properties  owned by Industrial was assumed by the acquiring  partnership.  As a
result  of  the  contribution,  Industrial  ceased  to be a  subsidiary  of  the
Partnership effective December 31, 1995.

On July 15, 1996, the Partnership contributed its 45% non-voting limited partner
interest in an affiliated  partnership,  University Club Tower ("UCT") (see Note
5),  to  Properties  in  exchange  for  10,606  limited   partnership  units  in
Properties.

On September  24, 1996,  the  partners of Bond sold their  respective  ownership
interests in Bond to Properties and GRT  Corporation,  a wholly owned subsidiary
of  GLB.  Properties  issued  26,067  limited  partnership  units  and  paid-off
approximately  $2,800,000  of  indebtedness  secured  by the  Bond  property  in
exchange for the interests in Bond. As of September 24, 1996, as a result of the
sale, Bond is no longer a subsidiary of the Partnership.

As a  result  of the  transactions  described,  the  Partnership's  real  estate
holdings  as of  December  31, 1996 has been  reduced to one  property  which is
currently held for sale.

Significant Accounting Policies

Basis of Accounting - The accompanying  financial  statements have been prepared
on the  accrual  basis of  accounting  in  accordance  with  generally  accepted
accounting  principles  under the presumption that the Partnership will continue
as a going concern.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that effect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported results of operations  during the reporting  period.
Actual results could differ from those estimates.

Risks and Uncertainties - The Partnership's ability to (i) achieve positive cash
flow  from   operations,   (ii)  meet  its  debt   obligations,   (iii)  provide
distributions  either  from  operations  or  the  ultimate  disposition  of  the
Partnership's properties or (iv) continue as a going concern, may be impacted by
changes in interest rates, property values,  geographic economic conditions,  or
the entry of other  competitors  into the  market.  The  accompanying  financial
statements do not provide for adjustments with regard to these uncertainties.

Investments in Real Estate - In March, 1995, the Financial  Accounting Standards
Board issued  Statement of Financial  Accounting  Standards  No. 121 (SFAS 121),
"Accounting  for  Impairment of Long-Lived  Assets and  Long-Lived  Assets to be
Disposed Of". The  Partnership  adopted SFAS 121 in the fourth  quarter of 1995.
SFAS 121 requires  that an  evaluation  of an  individual  property for possible
impairment be performed  whenever  events or changes in  circumstances  indicate
that an impairment may have occurred and that  long-lived  assets to be disposed
of be carried at the


                                 Page 21 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994

lower of  carrying  amount or fair value.  There was no impact on the  financial
position or results of operations of the Partnership  from the initial  adoption
of SFAS 121.

Rental  Property  - Rental  properties  are  stated  at cost  unless  events  or
circumstances  indicate  that cost cannot be  recovered,  in which case carrying
value of the property is reduced to estimated fair value.  Estimated fair value:
(i) is based  upon the  Partnership's  plans for  continued  operations  of each
property;  (ii) is computed  using  estimated  sales  price,  as  determined  by
prevailing   market  values  for  comparable   properties   and/or  the  use  of
capitalization  rates multiplied by annualized rental income based upon the age,
construction and use of the building, and (iii) does not purport, for a specific
property, to represent the current sales price that the Partnership could obtain
from third parties for such property. The fulfillment of the Partnership's plans
related to each of its  properties is dependent  upon,  among other things,  the
presence of economic conditions which will enable the Partnership to continue to
hold  and  operate  the  properties   prior  to  their  eventual  sale.  Due  to
uncertainties  inherent  in the  valuation  process  and in the  economy,  it is
reasonably  possible  that the actual  results of operating and disposing of the
Partnership's   properties   could  be   materially   different   than   current
expectations.

The rental  property which is reflected on the  Partnership's  December 31, 1995
balance sheet was sold on September 24, 1996.

Depreciation is provided using the straight line method over the useful lives of
the respective assets.

Real Estate Held for Sale - Rental property held for sale is stated at the lower
of cost or  estimated  fair value.  Estimated  fair value is computed  using the
estimated fair market sales price of the rental property. Once a rental property
is classified as "held for sale", depreciation of the asset is ceased.

Cash and Cash  Equivalents - The Partnership  considers  certificates of deposit
and money market funds with  original  maturities of less than ninety days to be
cash equivalents.

Deferred  Financing  Costs and Other Fees - Deferred  financing  costs are costs
associated  with  obtaining   financing  and  include  refinancing  and  certain
transaction  fees. These deferred  financing fees are amortized over the life of
the related loan.  Other fees consist  primarily of deferred  lease  commissions
which are amortized over the initial fixed term of the related lease agreement.

Rental  Income - Rental  income is  recognized  as  earned  over the life of the
respective leases.

Allocation of Net Income (Loss) - In 1994 and 1995,  pursuant to the partnership
agreements  of Partners and GPA, the general  partners and limited  partners had
ownership  interests  of 2.27% and  97.73%,  respectively.  This  percentage  is
derived  from  the  general  partners'  1%  direct  interest in


                                 Page 22 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994

GPA and a 1.27% indirect  interest  through their 1.28% general partner interest
in Partners' 99% interest in GPA.

As a result of an offer  made to all of the  Partnership's  investors  in April,
1996, the Partnership paid $127,000,  a substantial  discount from the estimated
value  of the  units,  to  repurchase  50,954  limited  partnership  units  from
investors.  These units were canceled  with an effective  date of June 30, 1996.
The  reduction in  outstanding  limited  partnership  units  resulted in revised
ownership  interests  of 2.29% and 97.71% by the  general  partners  and limited
partners, respectively.

Net Income (Loss) Per Limited  Partnership  Unit - Net income (loss) per limited
partnership  unit is based on the  limited  partners'  allocation  of net income
(loss) divided by the weighted  average  limited partner units  outstanding.  In
1996, 1995 and 1994, the weighted average limited partner units  outstanding was
2,936,376, 2,961,853 and 3,146,492, respectively.

Income  Taxes - No provision  for income  taxes is included in the  accompanying
consolidated  financial  statements,  as the Partnership's results of operations
are  allocated  to the partners for  inclusion  in their  respective  income tax
returns.  Net  income  (loss)  and  partners'  equity  (deficit)  for  financial
reporting  purposes will differ from the  Partnership  income tax return because
accounting  methods used for certain  items differ for  financial  reporting and
income tax purposes.

Consolidation - The accompanying  consolidated  financial statements include the
accounts of  Partners  and its  majority  owned  partnerships  GPA,  West,  Bond
(through  September 24, 1996), and Industrial  (through  December 31, 1995). All
significant  intercompany  balances and transactions have been eliminated in the
consolidation.

Reclassifications  - Certain 1995 and 1994  balances have been  reclassified  to
conform with the current year presentation.

Note 2.  RELATED PARTY TRANSACTIONS

As  discussed  in Note 1,  the  general  partners  of  Partners  and GPA and its
subsidiaries  are  Glenborough  Corporation and Robert  Batinovich.  Glenborough
Corporation  is the  managing  general  partner of the  Partnership  and has the
exclusive management and control of the business of the Partnership.

Fees to Affiliates

Glenborough  Corporation  and its  affiliates  are  entitled to receive  expense
reimbursements,  fees,  and other  compensation  for  services  provided  to the
Partnership as follows:

Property  management  fees  - 3% to  5% of  gross  property  receipts  collected


                                 Page 23 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994

Incentive  fee - .5% of the fair value of assets to the extent  earnings  exceed
$1.50 per unit Transaction fee - 2% of qualifying  transaction price Refinancing
fee - 1% of qualifying net loan refinancing proceeds

Fees  and  reimbursable  expenses  paid  to  Glenborough  and  included  in  the
Partnership's operating expenses for the years ended December 31, 1996, 1995 and
1994 are as follows (in thousands):

                                                1996         1995         1994
                                               -----        ------      ------
Property management fees                       $  30        $  106      $  239
Property management salaries (reimbursed)         17            26         206
                                               -----        ------      ------

Total property management fees and salaries    $  47        $  132      $  445
                                               =====        ======      ======

Leasing fees                                   $ ---        $  ---      $   50
                                               =====        ======      ======

The Partnership also reimburses  Glenborough for expenses  incurred for services
provided  to  the  Partnership  such  as  accounting,  investor  services,  data
processing, legal and administrative services, and the actual costs of goods and
materials used for or by the Partnership.  Glenborough was reimbursed  $217,000,
$292,000 and $590,000 for such expenses in 1996, 1995 and 1994, respectively.

Loss on Investment in Unconsolidated Joint Venture

In order for the  Partnership  to obtain free and clear title from  Brazos,  the
previous  mortgage holder on the properties  known as the J.I. Case and Navistar
buildings, the Partnership made a $1,000,000 principal paydown on a note payable
on behalf of an affiliated partnership.  In December,  1994, the Partnership and
the  affiliated  partnership,  UCT,  agreed  that  the  $1,000,000  paid  by the
Partnership and any subsequent  payments on behalf of UCT would be an investment
in UCT. The $1,000,000  investment was made possible after Glenborough  waived a
portion  of its  potential  transaction  fees due from the  Partnership  for the
disposition of properties in 1994.

At December 31, 1994, the General Partner  concluded that there was no equity in
UCT,  therefore  the  $1,000,000  invested  in UCT was  recognized  as a loss on
investment in unconsolidated joint venture in 1994.

Note receivable from affiliate

On March 28, 1995,  West purchased a $1,908,000  mortgage note  receivable  from
California Federal Bank, secured by a first deed of trust on a property owned by
an affiliated  partnership.  This  transaction was funded from the proceeds of a
1994 property sale. This note was repaid in May, 1995.


                                 Page 24 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994

Note 3.  REAL ESTATE HELD FOR SALE

At December 31, 1996 the Partnership has a 129,500 square foot office project in
El Monte, California, known as Rosemead Springs which is held for sale. In prior
years,  the  Partnership  received  offers which supported its carrying value of
approximately  $4,315,000. At December 31, 1996, after unsuccessfully closing on
offers which would recover the property's carrying value,  management  concluded
that the carrying  value of the  Partnership's  investment  in Rosemead  Springs
Business  Center and adjacent lots was in excess of its estimated fair value and
a provision  for  impairment of the  investment in the amount of $1,090,000  was
recorded.  The estimated fair value of the Rosemead property has been based on a
current purchase offer for the property less selling costs.

Note 4.  NOTE RECEIVABLE AND OTHER ASSETS

On August 1, 1996, the  Partnership  purchased a $546,370  promissory note and a
$1,350,000 credit with the NuView Union School District  ("School  Credits") for
total  consideration  of $300,000  from an  unaffiliated  partnership  which was
liquidating. The promissory note is secured by a 199 acre parcel of land located
in Riverside,  California, requires no accrual or payment of interest, has a ten
year term and  provides  for a  discounted  payoff of $246,000 in the first year
increasing at increments of $30,000 in each subsequent year through the ten year
term. The School Credits represent prepaid property tax assessments on specified
parcels of land in the Tri-City area of San Bernardino, California. In order for
the specified  parcels to be developed,  the School Credits must first be repaid
to the  Partnership.  At December 31, 1996, these assets are recorded at cost of
$300,000 and are included in notes receivable and other assets.

At December 31, 1995, the  Partnership  had incurred $3,000 in costs and $75,000
in  purchase  deposits  for the  potential  acquisition  of a lodging  property.
Through May,  1996,  costs had  increased  to $35,000 and  purchase  deposits to
$500,000.  However,  in May,  1996,  the  Partnership's  offer  was  outbid in a
bankruptcy  court action  procedure  and the costs  incurred and the $500,000 in
purchase  deposits  plus  accrued  interest  was  refunded  to the  Partnership.
Additionally,  in June,  1996,  the  Partnership  received a net  breakup fee of
$52,000 which is included in other income on the 1996 statement of operations.

Note 5.  INVESTMENT IN AFFILIATED PARTNERSHIPS

GLENBOROUGH PROPERTIES:
As  stated  in  Note  1, on  December  31,  1995,  the  Partnership  contributed
Industrial  and its four  properties  including  related  debt, to an affiliated
partnership,  Properties, in exchange for 542,333 limited partnership units. The
net assets contributed to the operating  partnership had a net carrying value of
zero.


                                 Page 25 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994

On July  15,  1996,  the  Partnership  contributed  its 45%  non-voting  limited
partnership  interest in UCT (see below) to  Properties,  in exchange for 10,606
limited  partnership  units in  Properties.  The net  investment  contributed to
Properties had a net carrying value of zero.

On September 24, 1996, the  Partnership  sold its ownership  interest in Bond to
Properties  in  exchange  for  26,067  limited  partnership  units,  giving  the
Partnership  a  cumulative  total  of  579,006  units.  The net  assets  sold to
Properties  had a net carrying  value of $441,000.  In September,  1996,  Heller
Financial  Inc.,  the  lender on the loan  secured by the Bond  Street  Building
forgave  $125,000 in debt,  prior to the sale of Bond to  Properties,  discussed
above. As a result,  the Partnership  recognized  $125,000 of extraordinary gain
from forgiveness of debt.

Since the  Partnership  holds only a 7.38%  ownership  interest in Properties at
December 31, 1996, the Partnership  accounts for this investment  using the cost
method.  The  Partnership's  investment  in  Properties  at December 31, 1996 is
$441,000 which represents the equity in Bond at the time of sale.

Properties paid $502,000 in  distributions  to the Partnership in 1996. A fourth
quarter  1996  distribution  of $185,000 was  declared by  Properties'  board of
directors in January, 1997 and paid to the Partnership in March, 1997.

GLENCO SQUAW ASSOCIATES:
In 1996,  the  Partnership  purchased  131,347 units (13% of the total units) in
Glenco Squaw  Associates  ("Squaw")  from  investors  for  $352,000.  Squaw is a
partnership  whose sole asset is a promissory note from the sale of its interest
in a resort in Squaw Valley,  California.  Since the Partnership owns only a 13%
interest in Squaw,  the  Partnership  accounts for the investment in Squaw using
the cost method.

OUTLOOK INCOME/GROWTH FUND VIII:
In December,  1996,  the  Partnership  purchased 931 limited  partnership  units
(equal to a 2.7%  interest)  in Outlook  Income/Growth  Fund VIII,  a California
Limited  Partnership  ("Outlook  VIII"),  for  $163,000.  At December  31, 1996,
Outlook  VIII owned  interests  in three  properties:  (i) a 71,000  square foot
retail shopping center in San Jose, California; (ii) a 96,000 square foot retail
shopping  center in San Marcos,  Texas,  which is currently  held for sale;  and
(iii) a 50%  interest  in a  342-unit  apartment  complex in  Huntington  Beach,
California.  The Partnership  accounts for this investment in Outlook VIII using
the cost method.

GRC AIRPORT ASSOCIATES:
In September,  1995, the Partnership made a $1,050,000 investment to acquire 25%
of an unconsolidated joint venture, GRC Airport Associates ("GRC Airport").  The
sole real  estate  asset of GRC  Airport  is a 216,000  square  foot  industrial
warehouse in San Bruno,  California  purchased


                                 Page 26 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994

in October, 1995 for $9,225,000.  The Partnership accounts for its investment in
GRC Airport using the equity method.

In 1996,  the  Partnership  received  distributions  totaling  $102,000 from GRC
Airport. A fourth quarter 1996 distribution to the Partnership of $26,500 plus a
return of  capital of  $500,000  was  declared  and paid to the  Partnership  in
January, 1997.

Summary  condensed  balance sheet  information  as of December 31, 1996, and the
condensed  statement  of  operations  for the year then ended are as follows (in
thousands):

                      Balance Sheet as of December 31, 1996

Investment in real estate, net                               $ 9,304
Other assets                                                     278
                                                             -------
     Total assets                                            $ 9,582
                                                             =======

Note payable                                                 $ 5,180
Other liabilities                                                204
                                                             -------
     Total liabilities                                         5,384
Partners' equity                                               4,198
     Total liabilities and partners' equity                  $ 9,582
                                                             =======


                             Statement of Operations
                      For the Year Ended December 31, 1996

Revenue                                                     $ 1,242
Expenses                                                        911
                                                            -------
Net income                                                  $   331
                                                            =======





                                 Page 27 of 52
<PAGE>


                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994


Note 6.  NOTES PAYABLE

Notes  payable  as of  the  stated  balance  sheet  dates  was  as  follows  (in
thousands):

                                                         1996          1995
                                                         ----          ----

A $3,400  line of credit  with  Mid-Peninsula
Bank,  secured by the Partnership's  interest
in Glenborough Properties.  The loan requires
monthly interest only payments, accruing at a
rate of 1 percentage  point over the lender's
index  rate   (effective  rate  of  9.25%  at
December 31, 1996), and matures  September 8,
1997.                                                  $ 2,200        $ ---

Note payable due Mid-Peninsula  Bank, secured
by first  deed of trust on  Rosemead  Springs
and  the  Partnership's   investment  in  GRC
Airport. The loan originally matured on April
15, 1996,  but was extended to coincide  with
the approval of a $3,400 line of credit. This
loan  was  paid off in  September,  1996.                   --        2,200

Note  payable  due  Heller   Financial  Inc.,
secured  by  first  deed of trust on the Bond
Street  Building.  The loan required  monthly
interest only payments at three hundred fifty
(350)  basis  points  plus  the  three  month
"Libor"  rate and  matured  on  December  31,
1999.  The loan was  assumed  and paid off by
Properties  upon its  acquisition of the Bond
property on  September  24,  1996.                          --        2,835
                                                       -------       ------

Total notes payable                                    $ 2,200      $ 5,035
                                                       =======      =======

Note 7.  OPTION PLAN

The Partnership's  Option Plan provided for the grant of nonstatutory options to
purchase units to the General  Partners and the officers,  directors,  employees
and certain  consultants of the Managing General Partners,  the property manager
and its  affiliates.  Individuals  who rendered  services to  Glenborough or its
affiliates as an  independent  contractor  may be  considered an "employee"  for
purposes of the Option  Plan,  provided  services  are  rendered on a continuing
basis.


                                 Page 28 of 52
<PAGE>

                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994

In 1995,  all of the  options  were  terminated  except  those  held by a former
director  to  purchase  19,000  Partnership  units  at  $6.50  per  unit.  These
outstanding options remain exercisable through the year 2000.

Note 8.  INCOME TAXES

Federal  and  state  income  tax laws  provide  that the  income  or loss of the
Partnership  is  reportable  by the  partners  in their  respective  income  tax
returns.  Accordingly,  no  provisions  for such  taxes  have  been  made in the
accompanying financial statements.  The Partnership reports certain transactions
differently for tax and financial reporting purposes.

The  Partnership's  tax returns,  its qualification as a partnership for federal
income tax  purposes,  and the amount of taxable  income or loss are  subject to
examination by the federal and state taxing  authorities.  If such  examinations
result in changes to the Partnership's taxable income or loss, the tax liability
of the partners could change accordingly.

For federal income tax reporting, (i) revenues and expenses are recognized on an
accrual  basis,  i.e.  lease income is  recognized  under the terms of the lease
contract,  (ii)  fees  paid for  services  related  to  seeking  and  evaluating
potential  real  estate  investments  are  deducted  if and  when  the  plans of
acquisition are subsequently abandoned, (iii) depreciation is provided for under
accelerated  and  modified  accelerated  cost  recovery  methods,  (iv)  certain
organizational  costs  classified as syndication  costs for tax purposes are not
deductible,  and  (v) bad  debts  are  deducted  and  written  off  when  deemed
uncollectible.




                                 Page 29 of 52
<PAGE>


                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994


The following is a  reconciliation  for the years ended December 31, 1996,  1995
and 1994,  of the net income  (loss) for  financial  reporting  purposes  to the
estimated  taxable  income  (loss)  determined  in  accordance  with  accounting
practices used in preparation of federal income tax returns (in thousands):


                                                     1996       1995      1994
                                                     -----     ------    -----
Net income (loss) per financial statements        $  (718)   $  (681)  $117,557
     Adjustments:
         Loss from investment in affiliated
           partnerships                               (54)    (1,000)       ---
         Depreciation                                 (45)       392      1,132
         Provision for impairment of investment
           in unconsolidated joint venture          1,090        ---        ---
         Loan fee amortization                        ---        ---     (2,626)
         Gain on disposition of real estate           ---        ---    (95,188)
         Loss on investment in unconsolidated
           joint venture                              ---        ---      1,000
         Other                                       (116)      (388)      (343)
                                                  -------    -------   --------
Partners' income (loss) for
     federal income tax purposes                  $   157    $(1,677)  $ 21,532
                                                  =======    =======   ========


The following is a reconciliation  as of December 31, 1996 and 1995 of partners'
equity (deficit) for financial  reporting purposes to estimated partners' equity
(deficit) for federal income tax purposes (in thousands):

                                                     1996               1995
                                                    -----              -----
Partners' equity per financial statements         $  3,763         $   4,608
     Adjustments:
         Real estate investments                   (14,500)          (14,500)
         Depreciation                                5,801             5,846
         Cumulative provision for impairment
           of investment in real estate              1,090               ---
         Unit redemptions                          (35,501)          (35,501)
         Other                                        (183)              ---
                                                  --------         ---------
Partners' equity (deficit) for
      federal income tax purposes                $ (39,530)        $ (39,547)
                                                 =========         =========




                                 Page 30 of 52
<PAGE>


                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                 Notes to the Consolidated Financial Statements
                        December 31, 1996, 1995 and 1994


Note 9.  SUBSEQUENT EVENTS

In January,  1997, the Partnership paid down $700,000 on the Mid-Peninsula  Bank
line of  credit.  The funds  used to pay down the line of  credit  came from the
January, 1997 distributions from GRC Airport of $526,500 and cash reserves as of
December 31,  1996.  In  February,  1997,  the  Partnership  drew the  remaining
$1,900,000  available on the line of credit to fund the purchase of  partnership
units in various  affiliated and  non-affiliated  real estate  partnerships.  On
March 6, 1997, the Partnership obtained approval from the lender to increase its
line of credit from  $3,400,000  to  $5,000,000  and  subsequently  has drawn an
additional $280,000 to fund a special distribution to its partners.






                                 Page 31 of 52
<PAGE>



                              GLENBOROUGH PARTNERS
                        A CALIFORNIA LIMITED PARTNERSHIP

                                  SCHEDULE III
                REAL ESTATE AND RELATED ACCUMULATED DEPRECIATION

                                December 31, 1996
                                 (in thousands)
<TABLE>
<CAPTION>

Column A              Column B          Column C               Column D
-------------      ------------    ------------------     ----------------
                                                              Net Costs
                                                             Capitalized
                                                              (Reduced)
                                         Initial             Subsequent
                                         Cost to              to Acqui-
                                       Partnership             sition
                                     ----------------      ---------------


Properties          Encumbrances    Land     Buildings      Improvements
------------        ------------    -----   ----------    ----------------
Rosemead Springs
 Business Center,
<S>                     <C>        <C>        <C>             <C>
 El Monte, CA (1)       $  0       $ 2,874    $ 9,792         $ (6,514)


Note  (1):  Rosemead  Springs  is  classified  as real  estate  held for sale at
December 31, 1996.
</TABLE>

<TABLE>
<CAPTION>

Column A                        Column E                Column F       Column G     Column H       Column I
-------------          ---------------------------    -----------    -----------    --------    --------------

                                                                                                Life on Which
                                                                                                Depreciation
                               Gross Amount                                                     in the Latest
                                Carried at             Accumulated      Date of       Date    Income Statement
                             December 31, 1996        Depreciation   Construction   Acquired    Is Computed
                       ----------------------------   -------------  ------------   --------   --------------
                                 Buildings
                                    and
Properties             Land       Improv     Totals
------------           -----     --------    ------
Rosemead Springs
 Business Center,
<S>                  <C>         <C>        <C>          <C>             <C>         <C>           <C>
 El Monte, CA (1)    $ 1,309     $ 4,843    $ 6,152      $  2,927        1980        7/15/83       50 years



</TABLE>

                        See accompanying reconciliations





                                 Page 32 of 52
<PAGE>


                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP

                       RECONCILIATION OF REAL ESTATE COST
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                                 (in thousands)

     NOTE TO SCHEDULE III - REAL ESTATE AND RELATED ACCUMULATED DEPRECIATION


                                     1996           1995          1994
                                    ------         ------        -----

Balance, beginning of period      $    3,261     $  18,121     $ 166,576

Real estate addition                     ---           ---         3,153
Improvements                              18           108           440
Disposition of real estate            (3,279)      (14,968)     (144,814)
Real estate held for sale                ---           ---        (7,234)
                                  ----------     ---------     ---------
Balance, end of period            $      ---     $   3,261     $  18,121
                                  ==========     =========     =========


                   RECONCILIATION OF ACCUMULATED DEPRECIATION
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                                 (in thousands)

                                     1996            1995         1994
                                    ------          ------        -----

Balance, beginning of period      $       75     $   2,901     $  42,875

Depreciation expense                      59           343         1,467
Disposition of real estate              (134)       (3,169)      (38,765)
Real estate held for sale                ---           ---        (2,676)
                                  ----------     ---------      --------

Balance, end of period            $      ---     $      75      $  2,901
                                  ==========     =========      ========


The aggregate  cost basis of real estate owned at December 31, 1996, for federal
income tax purposes was approximately $ 3,304.




                                 Page 33 of 52
<PAGE>



Exhibit:  Financial Statements of Significant Subsidiary



            GRC AIRPORT ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP

                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULE


                                                                         Page

Report of Independent Public Accountants..................................35

Financial Statements:

      Balance Sheet - December 3l, l996 ..................................36

      Statement of Operations
           for the year ended December 3l, l996...........................37
      Statement of Partners' Equity
           for the year ended December 3l, l996...........................38

      Statement of Cash Flows for the year
           ended December 3l, l996........................................39

      Notes to the Financial Statements ..................................40

Financial Statement Schedule:

Schedule III - Real Estate
      Investments and Related Accumulated Depreciation at
          December 31, 1996 and Note thereto..............................43

Other  schedules are omitted either  because of the absence of conditions  under
which they are  required or because  the  required  information  is given in the
financial statements or notes thereto.





                                 Page 34 of 52
<PAGE>







                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
GRC AIRPORT ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP:

We have audited the  accompanying  balance  sheet of GRC AIRPORT  ASSOCIATES,  A
CALIFORNIA  LIMITED  PARTNERSHIP,  as of  December  31,  1996,  and the  related
statements  of  operations,  partners'  equity  and cash flows for the year then
ended.  These  financial  statements and the schedule  referred to below are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of GRC AIRPORT  ASSOCIATES,  A
CALIFORNIA LIMITED PARTNERSHIP,  as of December 31, 1996, and the results of its
operations  and its cash  flows  for the year  then  ended  in  conformity  with
generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole.  The  accompanying  schedule listed in the index to
financial statements and schedule is presented for the purpose of complying with
the Securities and Exchange Commission's rules and is not a required part of the
basic financial statements.  This information has been subjected to the auditing
procedures  applied in our audit of the basic  financial  statements and, in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
financial statements taken as a whole.





San Francisco, California
February 11, 1997




                                 Page 35 of 52
<PAGE>




                             GRC AIRPORT ASSOCIATES,
                        A CALIFORNIA LIMITED PARTNERSHIP

                                  Balance Sheet
                                December 31, 1996
                    (in thousands, except units outstanding)

Assets
Real estate investment:
  Land                                       $      1,711
  Building and improvements                         7,835
                                             ------------
                                                    9,546
Less:
  Accumulated depreciation                           (242)
                                             ------------
    Net real estate investment                      9,304

Other assets:
  Cash                                                 78
  Accounts receivable                                  69
  Deferred financing and other fees,
     net of accumulated amortization of $23            74
  Prepaid expenses                                     57
                                              -----------

Total assets                                  $     9,582
                                              ===========

Liabilities and Partners' Equity
Liabilities:
  Note payable                                $    5,180
  Accrued interest                                    39
  Accounts payable and accrued expenses              165
                                              ----------

Total liabilities                                  5,384

Partners' equity
  General partner                                      3
  Limited partners, 8 limited partnership
      units outstanding                            4,195
                                              ----------

Total partners' equity                             4,198
                                              ----------

Total liabilities and partners' equity        $    9,582
                                              ==========






        The accompanying notes are an integral part of these statements.



                                 Page 36 of 52
<PAGE>



                            GRC AIRPORT ASSOCIATES,
                        A CALIFORNIA LIMITED PARTNERSHIP



                             Statement of Operations

                      For the year ended December 31, 1996
                                 (in thousands)

Revenue:
  Rental                                       $     1,227
  Interest                                              15
                                               -----------

  Total revenue                                      1,242

Expenses:
  Operating, including $60, paid to affiliates         191
  General and administrative                            14
  Depreciation and amortization                        202
  Interest expense                                     504
                                               -----------

  Total expenses                                       911
                                               -----------

Net income                                     $       331
                                               ===========


Net income per Limited Partnership Unit        $        41
                                               ===========




















        The accompanying notes are an integral part of these statements.



                                 Page 37 of 52
<PAGE>


                            GRC AIRPORT ASSOCIATES,
                        A CALIFORNIA LIMITED PARTNERSHIP

                          Statement of Partners' Equity
                      For the year ended December 31, 1996
                                 (in thousands)

                                                              Total
                                  General      Limited       Partners'
                                  Partner      Partners       Equity
                                  -------      --------      --------

Balance, December 31, 1995        $   ---      $  3,867      $  3,867

Net income                              3           328           331
                                  -------      --------      --------

Balance, December 31, 1996        $     3      $  4,195      $  4,198
                                  =======      ========      ========





























        The accompanying notes are an integral part of these statements.




                                 Page 38 of 52
<PAGE>


                            GRC AIRPORT ASSOCIATES,
                        A CALIFORNIA LIMITED PARTNERSHIP

                             Statement of Cash Flows
                      For the year ended December 31, 1996
                                 (in thousands)

Cash flows from operating activities:
Net income                                                      $     331
Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                                   202
      Amortization of loan fees, included in interest expense          17
      Changes in certain assets and liabilities:
         Increase in account receivable                               (29)
         Increase in deferred financing and other fees                (36)
         Increase in prepaid expenses                                 (32)
         Decrease in accrued interest                                 (13)
                                                                 --------
         Decrease in accounts payable and accrued expenses            (26)
                                                                 --------

Net cash provided by operating activities                             414
                                                                 --------

Cash flows from investing activities:
    Improvements to real estate                                       (65)
                                                                 --------

    Net cash used for investing activities                            (65)
                                                                 --------

Cash flows from financing activities:
    Principal payments on notes payable                              (773)
    Cash contribution by limited partners                             525
    Cash distribution                                                (381)
                                                                 --------

    Net cash used for financing activities                           (629)
                                                                 ---------

Net decrease in cash                                                 (280)

Cash:
    Beginning of period                                               358
                                                                 --------

    End of period                                                $     78
                                                                 ========

Supplemental disclosure of cash flow information:
    Cash paid for interest                                       $   500
                                                                 =======







        The accompanying notes are an integral part of these statements.



                                 Page 39 of 52
<PAGE>


                            GRC AIRPORT ASSOCIATES,
                        A CALIFORNIA LIMITED PARTNERSHIP

                        Notes to the Financial Statements
                                December 31, 1996


Note 1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

GRC Airport Associates,  A California Limited  Partnership,  ("GRC Airport") was
formed on August 31, 1995, to acquire,  operate, lease and sell a parcel of land
comprising  approximately 10.14 acres with an approximately  216,780 square foot
building in San Bruno,  California  ("Skypark").  GRC  Airport has issued  eight
limited  partnership  units  ("Units").  The  general  partner is GRC Airport GP
Incorporated, a California corporation whose president is Robert Batinovich.

Allocation  of  distributions,  net income and net loss are made pursuant to the
terms of the Agreement of Limited Partnership. Distributions are allocated first
ninety-nine  percent (99%) to the GRC Airport  limited  partners and one percent
(1%) to the general partner until the GRC Airport limited  partners  receive its
invested capital plus a cumulative,  but non-compounded  annual return of twelve
percent (12%) on the GRC Airport limited  partners  adjusted  invested  capital;
thereafter  eighty-five  percent (85%) to the GRC Airport  limited  partners and
fifteen percent (15%) to the general partner. Generally, net income is allocated
to the partners to the extent of any deficit in their  capital  accounts then by
the same method  distributions  would be allocated to the partners.  Net loss is
allocated ninety-nine percent (99%) to the GRC Airport limited partners (only to
the extent  that the GRC  Airport  limited  partners  capital  accounts  are not
reduced below zero) with all other net loss allocated to the general partner.

Significant Accounting Policies

Basis of Accounting - The accompanying  financial  statements have been prepared
on the  accrual  basis of  accounting  in  accordance  with  generally  accepted
accounting  principles  under the presumption that the Partnership will continue
as a going concern.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that effect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported results of operations  during the reporting  period.
Actual results could differ from those estimates.

Risks and Uncertainties - The Partnership's ability to (i) achieve positive cash
flow  from   operations,   (ii)  meet  its  debt   obligations,   (iii)  provide
distributions  either  from  operations  or  the  ultimate  disposition  of  the
Partnership's properties or (iv) continue as a going concern, may be impacted by
changes in interest rates, property values,  geographic economic conditions,  or
the entry of other  competitors  into the  market.  The  accompanying  financial
statements do not provide for adjustments with regard to these uncertainties.

Investment in Real Estate - In March, 1995, the Financial  Accounting  Standards
Board issued  Statement of Financial  Accounting  Standards  No. 121 (SFAS 121),
"Accounting  for  Impairment of Long-Lived  Assets and  Long-Lived  Assets to be
Disposed Of". GRC Airport  adopted SFAS 121 in the fourth quarter


                                 Page 40 of 52
<PAGE>

                            GRC AIRPORT ASSOCIATES,
                        A CALIFORNIA LIMITED PARTNERSHIP

                       Notes to the Financial Statements
                               December 31, 1996

of 1995.  SFAS 121 requires that an  evaluation  of an  individual  property for
possible  impairment be performed  whenever  events or changes in  circumstances
indicated that an impairment may have occurred and that long-lived  assets to be
disposed of be carried at the lower of carrying amount or fair value.  There was
no impact on the financial position or results of operations of GRC Airport from
the initial adoption of SFAS 121.

Rental   Property  -  Rental  property  is  stated  at  cost  unless  events  or
circumstances  indicate  that cost cannot be  recovered,  in which case carrying
value of the property is reduced to estimated fair value.  Estimated fair value:
(i) is based upon GRC Airport's plans for continued  operations of the property;
(ii) is computed using estimated sales price, as determined by prevailing market
values  for  comparable  properties  and/or  the  use  of  capitalization  rates
multiplied by annualized rental income based upon the age,  construction and use
of the  building,  and (iii)  does not  purport,  for a  specific  property,  to
represent  the  current  sales price that GRC  Airport  could  obtain from third
parties for such property. The fulfillment of GRC Airport's plans related to its
property  is  dependent  upon,  among  other  things,  the  presence of economic
conditions  which will  enable GRC  Airport to  continue to hold and operate the
property  prior to its  eventual  sale.  Due to  uncertainties  inherent  in the
valuation process and in the economy,  it is reasonably possible that the actual
results of operating and disposing of GRC Airport's property could be materially
different than current expectations.

Cash and Cash  Equivalents - Certificates of deposit and money market funds with
original  maturities  of  less  than  ninety  days  are  considered  to be  cash
equivalents.

Deferred  Financing  Costs and Other Fees - Deferred  financing  costs are costs
associated  with  obtaining   financing  and  include  refinancing  and  certain
transaction  fees. These deferred  financing fees are amortized over the life of
the related loan. Other fees consist of organizational costs which are amortized
over five years.

Rental  Income - Rental  income is  recognized  as  earned  over the life of the
respective lease.

Net Income (Loss) Per Limited  Partnership  Unit - Net income (loss) per limited
partnership  unit is based on the  limited  partners'  allocation  on net income
(loss) divided by the weighted average limited partner units outstanding.

Income  Taxes - No provision  for income  taxes is included in the  accompanying
financial  statements,  as GRC Airport's  results of operations are allocated to
the partners for inclusion in their  respective  income tax returns.  Net income
(loss) and partners'  equity for financial  reporting  purposes will differ from
the GRC Airport  income tax return because  accounting  methods used for certain
items differ for financial reporting and income tax purposes.

Note 2.  RELATED PARTY TRANSACTIONS

GRC Airport GP  Incorporated  and its affiliates are entitled to receive expense
reimbursements,  fees,  and other  compensation  for  services  provided  to the
Partnership as follows:

Property management fees - 5% of gross partnership revenue collected
Acquisition fee - $184,500 payable only to the extent that distributions paid to
     GRC  Airport's  limited  partners  are  at a rate  of  10%  of the  limited
     partners' adjusted invested capital,  without depleting cash reserves below
     $50,000.


                                 Page 41 of 52
<PAGE>

                            GRC AIRPORT ASSOCIATES,
                        A CALIFORNIA LIMITED PARTNERSHIP

                       Notes to the Financial Statements
                               December 31, 1996

Refinancing fee - 1% of qualifying net loan refinancing proceeds

Property  management  fees of $60,000  were paid to an  affiliate of the general
partner in 1996 and are  included in GRC  Airport's  operating  expenses for the
year ended December 31, 1996.

Note 3.  NOTE PAYABLE

At December 31, 1996,  GRC Airport had a $5,180,000  note payable due to Amresco
Management,  Inc.,  secured by the Skypark property.  The loan was refinanced in
January,  1997 with a $7,500,000 loan, secured by the Skypark property.  The new
loan accrues  interest at 8.774% fixed for ten years (225 basis points above the
10 year Treasury Yield) and requires  $61,783 in monthly  principal and interest
payments. The loan matures on January 7, 2007.

Note 4.  TENANT LEASE

GRC Airport's sole real estate  property has one operating lease at December 31,
1996 that expires October 31, 2016.  Future minimum rents on the  non-cancelable
lease as of December 31, 1996 is as follows (in thousands):

             1997                         $       1,150
             1998                                 1,207
             1999                                 1,268
             2000                                 1,331
             2001                                 1,398
             Thereafter                          20,847
                                          -------------

             Total                        $      27,201
                                          =============

Note 5.  TAXABLE INCOME

GRC Airport's tax returns, the qualification of GRC Airport as a partnership for
federal  income tax  purposes,  and the amount of income or loss are  subject to
examination by federal and state taxing authorities. If such examinations result
in changes to GRC  Airport's  taxable  income or loss,  the tax liability of the
partners could change accordingly.

Note 6.  SUBSEQUENT EVENT

In January,  1997,  GRC  Airport  made a fourth  quarter  1996  distribution  of
$110,000  and a return of capital of  $2,000,000  was  declared  and paid to its
partners.



                                 Page 42 of 52
<PAGE>


                             GRC AIRPORT ASSOCIATES
                        A CALIFORNIA LIMITED PARTNERSHIP

                                  SCHEDULE III
                REAL ESTATE AND RELATED ACCUMULATED DEPRECIATION

                                December 31, 1996
                                 (in thousands)
<TABLE>
<CAPTION>

  Column A        Column B              Column C             Column D
-------------  --------------     --------------------    --------------


                                                            Net Costs
                                                           Capitalized
                                        Initial             Subsequent
                                        Cost to              to Aqui-
                                      Partnership             sition
                                  ------------------     ---------------


Properties       Encumbrances     Land     Buildings      Improvements
------------     ------------     -----   ----------    ----------------
Skypark,
<S>                 <C>           <C>        <C>                 <C>
 San Bruno, CA      $ 5,180       $ 1,711    $ 7,514             $    321

</TABLE>


<TABLE>
<CAPTION>

  Column A                 Column E                Column F      Column G     Column H    Column I
-------------  ------------------------------   -------------   ------------  --------  -------------

                                                                                         Life on Which
                                                                                         Depreciation
                                                                                        in the Latest
                         Gross Amount                                                       Income
                         Carried at              Accumulated      Date of      Date       Statement
                       December 31, 1996         Depreciation   Construction  Acquired   Is Computed
                -----------------------------    ------------   ------------  --------  -------------
                          Buildings
                            and
Properties      Land       Improv      Totals
------------    -----     --------      -----
Skypark,
<S>             <C>         <C>       <C>           <C>            <C>        <C>          <C>
 San Bruno, CA  $ 1,711     $ 7,835   $  9,546      $  242         N/A        10/10/95     39 years

</TABLE>



                        See accompanying reconciliations




                                 Page 43 of 52
<PAGE>



                             GRC AIRPORT ASSOCIATES,
                        A CALIFORNIA LIMITED PARTNERSHIP

                       RECONCILIATION OF REAL ESTATE COST
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                                 (in thousands)

     NOTE TO SCHEDULE III - REAL ESTATE AND RELATED ACCUMULATED DEPRECIATION




Balance, beginning of period                                  $   9,481

Improvements                                                         65
                                                              ---------

Balance, end of period                                        $   9,546
                                                              =========


                   RECONCILIATION OF ACCUMULATED DEPRECIATION
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                                 (in thousands)



Balance, beginning of period                                  $     41

Depreciation expense                                               201
                                                              --------

Balance, end of period                                        $    242
                                                              ========


The aggregate  cost basis of real estate owned at December 31, 1996, for federal
income tax purposes was approximately $ 9,546.





                                 Page 44 of 52
<PAGE>




Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
            Financial Disclosure.

None.




                                 Page 45 of 52
<PAGE>




                                    PART III


Item 10. Directors and Executive Officers of the Registrant.

General Partners

The Partnership has no directors or executive officers.  The general partners of
the  Partnership  are  Glenborough  Corporation  ("GC",  the  "Managing  General
Partner",   formerly  known  as  Glenborough  Realty   Corporation)  and  Robert
Batinovich.

Robert  Batinovich was the President,  Chief  Executive  Officer and Chairman of
Glenborough  Corporation  from  its  inception  in 1987  until  his  resignation
effective  January 10, 1996.  On August 31,  1994,  Mr.  Batinovich  was elected
Chairman,  President and Chief  Executive  Officer of  Glenborough  Realty Trust
Incorporated  ("GLB"), a newly created Real Estate Investment Trust, which began
trading on the New York Stock  Exchange on January 31, 1996.  He was a member of
the  Public  Utilities  Commission  from 1975 to  January  1979 and served as it
President  from  January  1977 to January  1979.  He is a member of the Board of
Directors of Farr Company, a publicly held company that manufactures  industrial
filters.  He has extensive real estate investment  experience.  Mr. Batinovich's
business  background  includes  managing and owning  manufacturing,  vending and
service companies and a national bank.

For informational  purposes, the following are the names and a brief description
of the background and experience of each of the controlling  persons,  directors
and executive officers of the Managing General Partner as of February 28, 1997:

Name                          Age           Position

Andrew Batinovich             38            Chief Executive Officer and
                                            Chairman of the Board

Robert Bailey                 35            Secretary and Corporate Counsel

Sandra Boyle                  48            President and
                                            Chief Operating Officer

June Gardner                  45            Director

Terri Garnick                 36            Chief Financial Officer

Judy Henrich                  51            Vice President

Wallace A. Krone Jr.          65            Director


                                 Page 46 of 52
<PAGE>


Andrew  Batinovich was elected Chairman of the Board and Chief Executive Officer
of GC on January  10,  1996.  He has been  employed  by GC since  1983,  and had
functioned  since 1987 as Chief Operating  Officer and Chief Financial  Officer.
Mr. Batinovich also serves as Executive Vice President, Chief Operating Officer,
Chief  Financial  Officer and Director of GLB. He holds a California real estate
broker's  license  and is a Member  of the  National  Advisory  Council  of BOMA
International.  He received his B.A. in International  Finance from the American
University of Paris. Prior to joining Glenborough,  Mr. Batinovich was a lending
officer  with the  International  Banking  Group and the  Corporate  Real Estate
Division of Security Pacific National Bank.

Robert Bailey joined GC in 1989 as Associate  Counsel and was elected  Secretary
of GC on May 15, 1995. He is responsible for all landlord/tenant  documentation,
tenant litigation,  corporate and partnership matters and employment matters. In
1984, he received his Bachelor of Arts degree from the  University of California
at Santa  Barbara and his Juris  Doctor  degree from Vermont Law School in 1987.
From 1987 to 1989,  Mr.  Bailey  was an  associate  with the law firm of Pedder,
Stover,  Hesseltine & Walker, where he specialized in business litigation. He is
a member of the State Bar of California.

Sandra Boyle has been associated  with GC or its associated  entities since 1984
and has served as President and Chief Operating  Officer of GC since January 10,
1996.  She  was  originally  responsible  for  residential  marketing,  and  her
responsibilities  were  gradually  expanded to include  residential  leasing and
management in 1985,  and  commercial  leasing and  management  in 1987.  She was
elected Vice President in 1989, and continues to supervise  marketing,  leasing,
property management  operations and regional offices. Ms. Boyle also serves as a
Senior Vice President of GLB. Ms. Boyle holds a California  real estate broker's
license and a CPM designation,  and is a member of the National Advisory Council
and Finance Committee of BOMA International;  and Board of Directors of BOMA San
Francisco and BOMA California.

June  Gardner  was  elected  a  director  of GC on  January  10,  1996.  She was
associated with GC from 1984 through 1995, as Senior Vice  President,  Corporate
Controller with  responsibilities  in the areas of corporate financial planning,
reporting, accounting and banking relationships.  Before joining GC, Ms. Gardner
was Assistant Vice President of JMB Realty  Corporation  from 1977 to 1984, with
responsibilities in the areas of financial management and reporting.

Terri  Garnick  has served as Chief  Financial  Officer of GC since  January 10,
1996. She is also Senior Vice President,  Chief Accounting Officer and Treasurer
of GLB. Ms. Garnick is responsible for property management accounting, financial
statements,  audits,  Securities  and  Exchange  Commission  reporting,  and tax
returns.  Prior to joining GC in 1989,  Ms.  Garnick was a controller  at August
Financial Corporation from 1986 to 1989 and was a Senior Accountant at Deloitte,
Haskins and Sells from 1983 to 1986.  She is a Certified  Public  Accountant and
has a Bachelor of Science degree from San Diego State University.

Judy  Henrich is a Vice  President  of GC,  effective  January  10,  1996 and is
responsible  for  the  coordination  of all  due  diligence,  broker-dealer  and
investor communications for partnerships managed by GC. Prior to joining GC, Ms.
Henrich,  was associated  with Rancon  Financial  Corporation  from 1981 through
early 1995, as Senior Vice President since 1985, with  responsibilities  similar
to those at GC. Ms.  Henrich also served as Executive  Vice  President of Rancon
Securities  Corporation from


                                 Page 47 of 52
<PAGE>


1988 to 1991, and thereafter as its Chief  Executive  Officer.  Prior to joining
Rancon,  Ms. Henrich was manager of public  relations and advertising for Kaiser
Development Company, a diversified real estate holding company.

Wallace A. Krone has been an entrepreneur in the restaurant business since 1965,
and owns a number of Burger King  restaurants  in the San  Francisco  area.  Mr.
Krone  has been  associated  with GC since  1982 as an  investor  in one or more
partnerships, and has been a member of the board of directors of GC since 1989.

Item 11.          Executive Compensation.

Compensation and Fees

In accordance with the Partnership  Agreement for GPA Ltd, the Managing  General
Partner receives expense  reimbursements  and fees for services  provided to the
Partnership. Information regarding these fees and reimbursements is incorporated
herein by reference to Note 2 of the Notes to Consolidated  Financial Statements
under the heading "Fees to Affiliates"  and Note 1 of the Notes to  Consolidated
Financial Statements under the heading "Allocation of Net Income (Loss)".

The Partnership has no employees and pays no salary or other cash  compensation,
directly to any person other than the fees and expense reimbursements  described
above.  All officers of the Managing  General Partner receive a salary and other
benefits from Glenborough Corporation as compensation for Partnership activities
as well as other  activities  of  Glenborough  Corporation  not  related  to the
Partnership.

Option Plan

As of December 31, 1996,  all  outstanding  options,  except for 19,000  options
exercisable by a former director, have been terminated.




                                 Page 48 of 52
<PAGE>



Item 12. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth certain information  regarding the Units owned on
December  31,  1996 by (a)  each  Unitholder  known  to the  Partnership  to own
beneficially  more than 5% of the outstanding  Units;  (b) each Unitholder under
common control of an officer,  director,  or 5% Unitholder;  (c) each individual
general  partner of the  Partnership  and each director of the managing  general
partner;  and (d) all executive  officers and directors of the managing  general
partner  as  a  group.  All  outstanding  options,  except  for  19,000  options
exercisable by a former director were canceled as of December 4, 1995.

Name of Beneficial                              Units             Percent
Owner (Notes 1 and 2)                           Owned             Owned (3)
---------------------                           -----            ---------

Robert Batinovich
(Note 4)                                        549,469            18.51%

Robert Batinovich,
General Partner                                  34,577             1.16%

Glenborough Realty Trust Incorporated           116,945             3.94%

Glenborough Corporation                           1,108             0.04%

Glenborough Corporation
  General Partner                                 3,842             0.13%

Andrew Batinovich                                24,248             0.82%

Wallace A. Krone, Jr.                            52,026             1.75%
1650 Borel Place, #226
San Mateo, CA 94402

Samuel Scripps (Note 5)                         459,138            15.47%

All Executive Officers and                       77,688             2.62%
Directors as a Group
(3 persons)


Notes:

(1) Unless otherwise indicated, the addresses of the above beneficial owners are
the same as that of the registrant.


                                 Page 49 of 52
<PAGE>


(2) The persons  named on the table have sole voting and  investment  power with
respect  to all  interests  beneficially  owned by them,  subject  to  community
property laws where applicable and the information contained in the footnotes to
the table.  The table  assumes the exercise of  outstanding  options held by one
former  director to acquire an aggregate of 19,000  Units,  which are  presently
exercisable.

(3) Percent owned is calculated  by dividing the sum of the  Unitholder's  Units
and  exercisable  options by the sum of all  outstanding  Units and  exercisable
options.

(4) Excludes Mr. Batinovich's 1.17% General Partner interest in the Partnership.
Excludes  14,817  Units  that  Mr.  Batinovich  may  vote  as  Trustee  for  one
Unitholder, as to which Mr. Batinovich disclaims beneficial ownership.  Excludes
the 0.1% General Partner interest and 1,108 Limited  Partnership  Units owned by
Glenborough  Corporation,  of which Mr. Batinovich was majority owner.  Excludes
5,198  Units  owned by the Robert and Garnet Anne  Batinovich  l982  Irrevocable
Inter  Vivos  Trust for the  benefit of Angela  Batinovich,  as to which  Robert
Batinovich disclaims beneficial ownership.

(5)  Includes  Units owned by three trusts and one  partnership  of which Samuel
Scripps is the beneficial owner.

Item l3.          Certain Relationships and Related Transactions.

Fees and  Reimbursable  Expenses - During l996 and in accordance  with the prior
and  current  Limited  Partnership  Agreements  (incorporated  by  reference  to
Exhibits  10.40  through 10.43 to the  Partnership's  annual report on Form 10-K
dated December 31, 1995, No.  33-3657),  the Managing  General Partner  received
management  fees and  reimbursed  expenses  (see Item 8., Note 2 - Related Party
Transactions).

Item l4. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)      (l)      Financial Statements and
         (2)      Financial Statement Schedule

         See  Item 8 of this  Form  10-K  for the  Financial  Statements  of the
         Partnership,  Notes  thereto,  Report of Independent  Certified  Public
         Accountants,   and  Supplemental  Schedule.  A  Table  of  Contents  to
         Financial Statements,  Supplemental Schedule and Exhibit is included in
         Item 2 and incorporated herein by reference.




                                 Page 50 of 52
<PAGE>



         (3) Exhibits
                                                          Page Number or
Exhibit                                                   Incorporation
Number              Description                           By Reference to
------------------------------------------------------------------------------
10.39          Cash Collateral and Property          Exhibit 10.39 to
               Management Agreement dated            the Annual Report
               July 1, 1992 and amended              on Form 10-K
               October 23, 1992 by and among         No. 33-3657 for the
               New West Federal Savings and          year ended
               Loan Association, GOCO Realty         December 31, 1992.
               Fund I and Glenborough Corporation.

10.40          Limited Partnership Agreement         Exhibit 10.40 to the
               of Glenborough Partners, A            Annual Report on
               California Limited Partnership        Form 10-K No. 33-3657
                                                     for the year ended
                                                     December 31, 1995

10.41          Limited Partnership Agreement of      Exhibit 10.41 to the
               GPA West L.P.                         Annual Report on Form
                                                     10-K No. 33-3657 for
                                                     the year ended
                                                     December 31, 1995

10.42          Limited Partnership Agreement of      Exhibit 10.42 to the
               GPA Industrial L.P.                   Annual Report on Form
                                                     10-K No. 33-3657 for
                                                     the year ended
                                                     December 31, 1994

10.43          Limited Partnership Agreement of      Exhibit 10.43 to the
               GPA Bond L.P.                         Annual Report on Form
                                                     10-K No. 33-3657 for
                                                     the year ended
                                                     December 31, 1994
27.            Financial Data Schedule

(b)            Reports on Form 8-K

No reports on Form 8-K were  required  to be filed in the period  subsequent  to
September 30, l996.




                                 Page 51 of 52
<PAGE>




                                   SIGNATURES


Pursuant to the  requirements of Section l3 or l5(d) of the Securities  Exchange
Act of l934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                              GLENBOROUGH PARTNERS,
                        A CALIFORNIA LIMITED PARTNERSHIP



By:  /s/ Robert Batinovich        By:   Glenborough Corporation,
      Robert Batinovich                    a California corporation
      General Partner



    Date: March 28, 1997                     By: /s/ Andrew Batinovich
                                                 Andrew Batinovich
                                                 Chief Executive Officer
                                                 and Chairman of the Board


                                             Date: March 28, 1997



                                           By: /s/ Terri Garnick
                                               Terri Garnick
                                               Chief Financial Officer

                                           Date: March 28, 1997


                                           By: /s/ June Gardner
                                               June Gardner
                                               Director


                                           Date: March 28, 1997

          (A Majority of the Board of Directors of the General Partner)


                                 Page 52 of 52