SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-K/A

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 2001

                         Commission file number 1-12222

                        BEDFORD PROPERTY INVESTORS, INC.
             (Exact name of Registrant as specified in its charter)

MARYLAND                                                              68-0306514
--------                                                              ----------
(State or other jurisdiction                                    (I.R.S. Employer
of incorporation or organization)                            Identification No.)

                    270 Lafayette Circle, Lafayette, CA 94549
                    -----------------------------------------
                    (Address of principal executive offices)

Registrant's telephone number, including area code               (925)  283-8910
                                                                 ---------------

Securities Registered Pursuant to Section 12(b) of the Act:

                                                           Name of each exchange
Title of each class                                          on which registered
-------------------                                          -------------------

Common Stock, par value $0.02 per share                  New York Stock Exchange
                                                                Pacific Exchange

Securities Registered Pursuant to Section 12(g) of the Act:  None

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

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] The aggregate market value of the voting stock held by
non-affiliates of Registrant as of March 15, 2002 was approximately
$380,456,000. The number of shares of Registrant's Common Stock, par value $0.02
per share, outstanding as of March 15, 2002 was 16,692,040.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement mailed to stockholders in
connection with the Registrant's annual meeting of stockholders, scheduled on
May 16, 2002, are incorporated by reference in items 10 through 12 of Part III
of this report. Except as expressly incorporated by reference, the Registrant's
Proxy Statement shall not be deemed to be part of this report.
<PAGE>

When used in this annual report, the words "believes," "anticipates" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those projected, including, but not limited to, those
set forth in the sections entitled "Potential Factors Affecting Future Operating
Results" and "Qualitative and Quantitative Disclosures About Market Risk" below.
Readers are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

The financial statements for 2001, 2000 and 1999 have been restated as explained
in Note 2 of the accompanying consolidated financial statements. Management's
discussion and analysis below compares the restated 2001 results to the restated
2000 results, and the restated 2000 results to the restated 1999 results.

PART I

ITEM 1. BUSINESS

The Company

Bedford Property Investors, Inc. is a self-administered and self-managed equity
REIT engaged in the business of owning, managing, acquiring and developing
industrial and suburban office properties proximate to metropolitan areas in the
western United States. As of December 31, 2001, the Company owned and operated
86 properties totaling approximately 6.7 million rentable square feet. Of these
86 properties (the "Properties"), 58 are industrial (the "Industrial
Properties") and 28 are suburban office (the "Suburban Office Properties"). As
of December 31, 2001, the Properties were leased to 444 tenants with average
occupancy of approximately 96%. The Properties are located in Northern and
Southern California, Washington, Arizona, Nevada and Colorado.

In addition to the Properties, the Company owns four development properties: one
suburban office, one service center flex and two office-flex projects totaling
233,900 rentable square feet, which were approximately 29% leased as of December
31, 2001.

The Company seeks to grow its asset base through the development of new
industrial and suburban office properties as well as through the acquisition of
industrial and suburban office properties and portfolios of such properties. The
Company's strategy is to operate in suburban markets that are experiencing, or
are expected by the Company to experience, superior economic growth and are
subject to limitations on the development of similar properties. The Company
believes that employment growth is a reliable indicator of future demand for
both industrial and suburban office space. In addition, the Company believes
that certain supply-side constraints, such as limited availability of
undeveloped land in a market, increase a market's potential for higher than
average rental growth over time. The Company continues to target selected
markets in which the Properties are located as well as selected other markets in
which the Company has expertise.

Business Objective and Growth Plan

Business Objective

The Company's business objective is to increase stockholders' long-term total
return through increases in the dividend and the appreciation in value of the
Common Stock. To achieve this objective, the Company seeks to (i) increase cash
flow by internal growth of rents from its existing Properties, (ii) develop new
industrial and suburban office properties, (iii) acquire quality industrial and
suburban office properties and/or portfolios of such properties, and (iv)
repurchase its common stock.


                                       1
<PAGE>

Internal Growth

The Company seeks to increase cash flow from existing Properties through (i) the
lease-up of vacant space, (ii) the reduction of costs associated with tenant
turnover by retaining existing tenants, (iii) the negotiation of increases in
rental rates and of contractual periodic rent increases when market conditions
permit, and (iv) the strict containment of operating expenses and capital
expenditures.

During 2001, leases for 1,071,773 square feet of space expired with a weighted
average base rental rate of $11.37 per square foot. As of December 31, 2001,
approximately 95% of this space has been re-leased, and the weighted average
base rental rate of the new leases is $13.05 per square foot, an increase of
14.8%. Past performance is not necessarily indicative of results that will be
obtained in the future, and no assurance can be given in that regard.

Development

The Company seeks to develop properties in strong markets where (i) demand for
space has caused or is expected to cause occupancy rates to remain high, (ii)
barriers to entry such as scarcity of land or entitlement challenges exist, and
(iii) the project complements its existing portfolio. The Company's management
team has experience in all phases of the development process, including market
analysis, site selection, zoning, design, pre-development leasing, construction
management and permanent financing. Since 2000, the Company has been especially
focused on the development of office-tech and flex-tech product. These are
multi-tenant buildings designed to meet the needs of a wide range of uses. The
flex-tech product anticipates the changing needs of high-growth tenants and
accommodates their need for flexible facility configurations. The Company
evaluates the competitive environment, demand and rent trends, and development
pipelines before embarking on or acquiring each new project. The Company is
currently in the process of developing properties in Northern and Southern
California and Colorado, and is considering developing additional properties in
the same markets as well as in the Pacific Northwest. The Company's management
team has significant development experience in each of these markets.

Prior to July 1, 2002, the Company's activities relating to the development of
new properties, including the due diligence process, were conducted on an
exclusive basis by Bedford Acquisitions, Inc. (BAI), a California corporation
wholly-owned by Mr. Peter Bedford, the Company's Chairman of the Board and Chief
Executive Officer. For these services, BAI earned a success fee in an in amount
equal to 1 1/2 % of the gross amount of the aggregate purchase price of property
acquisitions and dispositions, up to 1 1/2 % of any loans arranged by BAI, plus
up to 7% of development project costs. The total amount of such fees payable to
BAI by the Company was limited to the lesser of : (i) the aggregate amount of
such fees earned or (ii) the aggregate amount of approved expenses incurred by
BAI through the time of such acquisition, disposition, loan or development. On
August 14, 2002, we announced that effective July 1, 2002 we were terminating
our agreement with BAI and had hired its former employees.

Acquisitions

The Company seeks to acquire industrial and suburban office properties and/or
portfolios of such properties. The Company believes that (i) the experience of
its management team, (ii) its existing $150 million credit facility which
contains a $25 million accordion feature, (iii) its relationships with private
and institutional real estate owners, (iv) its strong relationships with real
estate brokers, and (v) its integrated asset management program enable it to
effectively identify and capitalize on acquisition opportunities. Each
acquisition opportunity is reviewed to evaluate whether it meets the following
criteria: (i) potential for higher occupancy levels and/or rents as well as for
lower turnover and/or operating expenses, (ii) ability to generate returns in
excess of the Company's weighted average cost of capital, taking into account
the estimated costs associated with tenant turnover (i.e., tenant improvements,
leasing commissions and the loss of income due to vacancy), and (iii)
availability for purchase at a price at or below estimated replacement cost.
However, the Company has in the past acquired, and may in the future acquire,
properties which do not meet one or more of these criteria. This may be
particularly true with the acquisition of a portfolio of properties, which may
include individual properties that do not meet one or more of the foregoing
criteria.


                                       2
<PAGE>

Following completion of an initial review of a property, the Company may make a
purchase offer, subject to satisfactory completion of its due diligence process.
The due diligence process enables the Company to refine its original estimate of
a property's potential performance and typically includes a complete review and
analysis of the property's physical structure, systems, environmental status and
projected financial performance. The due diligence also includes an evaluation
of the local market including competitive properties and relevant economic and
demographic information. Mr. Bedford and at least one other officer and one
other Board member of the Company will typically visit each proposed acquisition
property before the purchase is closed. Prior to July 1, 2002, acquisitions of
properties for the Company were conducted by BAI as described above.

Share Repurchase

In July 1998, the Company's board of directors approved a share repurchase
program of 3 million shares which was increased first to 4.5 million shares in
September 1999 then to 8 million shares in September 2000 and later to 10
million shares in January 2002. Since November 1998, the Company has repurchased
and retired 7.1 million shares at an average price of $17.90 per share. This
represents 31% of the shares outstanding at November 30, 1998 when the Company
began implementing its share repurchase program.

>From November 1998 when the Company's stock traded at a discount to its
estimated net asset value (estimated based on current cap rate and earning
estimates), the Company bought its shares under the share repurchase program.
During 2001, with a dividend yield approximately equal to 9% and an average
borrowing cost of 6.9%, the Company continued to repurchase its common stock
because buying back stock increases the stockholders' relative percentage
ownership in the Company and therefore brings additional value to that
ownership.

Corporate Strategies

In pursuing its business objectives and growth plans, the Company intends to:

1. Pursue a Market Driven Strategy.

The Company's strategy is to continue to operate in suburban markets which are
experiencing, or are expected by the Company to experience, above average
economic growth, and which are, ideally, subject to supply-side constraints. The
metropolitan areas in which the Company operates have multiple suburban "cores"
and it believes that the potential for growth in these metropolitan areas is
generally greatest in and around these suburban cores. It is the Company's
experience that such suburban cores emerge as jobs move to the suburbs and
typically offer a well-trained and well-educated work force, high quality of
life and, in many cases, a diversified economic base. The Company focuses on
owning, managing, acquiring and developing properties in these suburban cores.
Additionally, the Company seeks out real estate markets that are subject to
supply-side constraints such as limited availability of undeveloped land and/or
geographic, topographic, regulatory and/or infrastructure restrictions. Such
restrictions limit the supply of new commercial space, which, when combined with
a growing employment and population base, enhances the long-term return
potential for an investment in real estate assets.

2. Focus its Efforts in the Western United States.

The Company is currently targeting selected suburban markets in the western
United States. These markets have not been immune to the economic slowdown that
began in the second half of 2000. Job growth in many of the markets in which the
Company operates has slowed significantly and has stopped altogether in others.
Markets that tended to be the strongest participants in the
telecommunication/technology boom of the late 1990s have been the hardest hit by
slowing job-formation. As a consequence, demand for commercial space has
declined as well. However, the Company believes that the combination of the
quality of its assets, the long-term attractiveness of its sub-markets, and its
experience in these markets will provide an opportunity for good returns to its
shareholders in the future.


                                       3
<PAGE>

In 2001, the Company continued the process of selling assets which had either
reached their point of inflection relative to continued growth opportunities,
were located in secondary markets, or were of a quality inconsistent with the
balance of the portfolio. Included in these sales were properties located in
Phoenix, Tucson, and Denver.

3. Develop and Acquire "Service Center Flex and Suburban Office" Properties.

Among the Company's targeted properties are service center flex industrial
properties as well as suburban office flex buildings. These buildings provide
for a wider range of function than that offered by traditional office or
industrial properties and are an efficient facility choice for technology sector
firms that have frequently changing space needs. These properties are divisible
into units ranging from approximately 1,500 square feet to approximately 20,000
square feet in order to accommodate multiple tenants of various sizes and needs.
The buildings, which generally range in size from 8,000 to 80,000 square feet,
have a clear height of 12 to 18 feet and are built using concrete tilt
construction with store fronts incorporated in the front elevation and service
doors or continued storefront in the back elevation. The Company believes that
these properties require more management expertise than other types of
industrial properties and that it has developed such expertise. The Company also
believes that many potential buyers do not wish or are not well- positioned to
undertake such active management. As a result, the Company believes that it
often faces fewer competitors for this product and is generally able to acquire
these properties at above average yields.

4. Sell Selected Assets

The Company funds a portion of its development and acquisition activities and
the share repurchase program through the sale of selected assets. Such assets
include buildings that, in our opinion, have maximized their value or have
become obsolete due to their physical attributes, are in secondary markets, or
are not of a quality consistent with the rest of our properties. In addition, in
2000 the Company redefined its geographical focus in the western United States
and sold real estate assets that did not fit this western orientation.

5. Continue Neighborhooding

Neighborhooding describes expansion in areas where the Company owns existing
properties. This strategy capitalizes on management's expertise and knowledge of
the local market, economy, and tenant needs for expansion. It results in
efficiency in property management and therefore enables the Company to acquire
or develop properties at greater yields. The Company utilized this concept in
developing projects and acquiring properties in Fremont, Napa, Ontario,
Petaluma, and San Diego, California; Phoenix, Arizona; Denver, Colorado; and
Federal Way, Washington.

6. Utilize In-House Asset and Property Management

The Company believes that the long-term value of its Properties is enhanced
through in-house asset management. As of December 31, 2001, the Company directly
manages 85 of its 86 properties. The Company conducts its Northern California
property management activities out of its headquarters office in Lafayette,
California; its Southern California property management activities out of its
regional office in Tustin, California; its Arizona property management
activities out of its regional office in Phoenix, Arizona; its Seattle property
management activities out of its regional office in Seattle, Washington; and its
Colorado property management activities out of its office in Denver, Colorado. A
single asset, a suburban office property located in Reno, Nevada is managed by a
local firm.

The Company's asset management team develops and monitors a comprehensive asset
management plan for each Property in an effort to ensure its efficient
operation. The Company's Vice President of Property/Asset Management works
directly with the Company's internal finance and accounting staff to develop and
monitor detailed budgets and financial reports for each Property. He also works
with each property manager to identify and implement opportunities to improve
cash flow from each Property and to maximize each Property's long-term
investment value. The Company's property management staff is generally
responsible for leasing activities, ordinary maintenance and repairs, keeping


                                       4
<PAGE>

financial records on income and expenses, rent collection, payment of operating
expenses and property operations. The Company's property management philosophy
is based on the belief that the long-term value of the Properties is enhanced by
attention to detail and hands-on service provided by professional in-house
property management. The Company believes that a successful leasing program
starts by servicing existing tenants first. Costs associated with tenant
turnover (i.e., tenant improvements, leasing commissions and the loss of income
due to vacancy) can be significant and, by addressing and attending to existing
tenants' needs, the Company believes that it can increase its retention of
existing tenants and simultaneously make its properties more attractive to new
tenants.

7. Cooperate with Local Real Estate Brokers

The Company seeks to develop strong relationships with local real estate
brokers, who can provide access to tenants as well as general market
intelligence and research. The Company believes that these relationships have
enhanced the Company's ability to attract and retain tenants.

Transactions and Significant Events During 2001

Development and Acquisitions

Development activity during the year included the continued leasing of 144,000
square feet in two projects located in Denver, Colorado and Napa, California,
which were shell complete during 2000. As of December 31, 2001, these projects
were 80% leased with estimated yields ranging from 11% to 12%. The Company also
completed the shell construction and partial lease-up of two projects located in
Napa and Ontario, California, and two projects in Denver, Colorado, adding
263,000 square feet to the available inventory. As of December 31, 2001, these
projects were 36% leased. This new leasable space provides the Company with a
significant opportunity to increase its operating revenue.

The Company also acquired a 9.3 acre parcel of vacant land in Napa, California.
This parcel of land is adjacent to existing Properties and will be used for
future development opportunities.

Sell Selected Assets

During the year, the Company sold four Properties, including three Industrial
Properties and one Suburban Office Property, totaling 342,000 rentable square
feet for $20,178,000. These sales produced gains totaling $5,938,000.

The cash proceeds from these sales were used to fund a portion of the
repurchases of the Company's common stock and a portion of the development
costs.

Use of Information Technology

The Company's management has made a significant commitment to employ information
technology in all the day-to-day operations of the firm. A number of steps have
been taken during the past three years to digitize internal practices and
eliminate redundancies. These steps include the creation of a management
information system designed to facilitate real-time dissemination of operating
results to field offices. This system provides the framework for timely
operations reviews with each Regional Manager, the focus of which are market
opportunities and the action steps necessary to take advantage of them. In
addition, all basic business functions have been digitized to simplify
practices, reduce paper-flow, and enhance productivity.

The Company's Markets

The Properties are located in select markets proximate to metropolitan areas in
Northern and Southern California, Washington, Arizona, Nevada and Colorado.
During the economic recovery of the second half of the 1990s, these markets were
characterized by strong demand for commercial property without significant
increases in supply.


                                       5
<PAGE>

Those trends began to shift during late 2000 and throughout 2001. Job growth and
demand for commercial real estate facilities has slowed in concert with a
national recession that has not left these markets untouched.

The Company believes that, for the most part, the commercial real estate
excesses attending the expansion that ended in 1990 have been avoided in this
cycle. There have not been improvident additions to the stock of suburban office
or flex space and, in consequence, the current imbalance is demand-related and
not a function of new supply. Nonetheless, vacancies began to move up last year
and surplus sub-lease space came on the markets in abundant supply. Generally,
those markets which had experienced the highest rate of job-formation also
experienced the largest proportion of surplus space. The East Side of Seattle
and Silicon Valley in California, both of which experienced significant growth
in telecommunications, technology, and internet-related employment, are good
examples of this trend.

Looking beyond the current economic slowdown, the Company continues to believe
that the Properties which it has acquired and built are of excellent quality and
will retain strong occupancy rates in a competitive market context. In
particular the San Francisco Bay Area, Seattle, and San Diego, areas in which
the Company has over 50% of its square footage, are again areas ranked favorably
as investment markets in the 2002 edition of Emerging Trends in Real Estate, a
publication of PricewaterhouseCoopers and Lend Lease Real Estate Investments.
Quality of life, a well-educated workforce, and natural and environmentally
derived barriers to entry are present in these markets and are characteristics
which have been associated with good real estate returns in the past.

Operating Performance (Restated, see Note 2 of the accompanying consolidated
financial statements)

For the year ended December 31, 2001, the Company reported net income before
gain on sales of real estate investments of $28,974,000, on rental revenues of
$99,949,000, compared with net income before gain on sales of real estate
investments of $29,903,000, on rental revenues of $97,518,000 for the year ended
December 31, 2000. Gain on sales of real estate investments for the year ended
December 31, 2001 was $5,976,000 compared with gain on sales of real estate
investments of $38,404,000 for the year ended December 31, 2000. The Company's
Funds From Operations ("FFO": see definition under "Selected Financial Data")
for the year ended December 31, 2001 was $45,250,000 as compared to $43,801,000
for the year ended December 31, 2000. Due to the share repurchase program, FFO
was spread over fewer shares, resulting in the growth of the "per share" amount.

Increase in Dividends on Common Stock

In September 2001, the Company announced a 7% increase in its quarterly Common
Stock dividend from $0.45 to $0.48 per share, or $1.92 on an annualized basis.
The higher dividend rate commenced with the Company's dividend for the third
quarter of 2001. The dividends declared for the four quarters in 2001 totaled
$1.86, a 7% increase compared with the dividends declared for the four quarters
in 2000.

Credit Facility

In May 2001, the Company renewed its revolving credit facility with a bank group
led by Bank of America. The facility, which matures on June 2004, consists of a
$150 million secured line with an accordion feature to expand the facility to
$175 million, if needed. Interest on the facility is at a floating rate equal to
either the lender's published "reference rate" or LIBOR plus a margin ranging
from 1.30% to 1.55%, depending on the Company's leverage level. At December 31,
2001, the facility had an outstanding balance of $80,925,000, with an interest
rate of LIBOR plus 1.55% (an effective rate of 4.99%). The Company was in
compliance with the covenants and requirements of its revolving credit facility
throughout 2001.


                                       6
<PAGE>

Mortgage Loans

In November 2001, the Company obtained $21,819,000 of new first mortgage
financing from Union Bank of California. The financing, a renewal of an existing
mortgage with the same lender, consists of a three-year loan, bearing interest
at a floating rate of LIBOR plus 1.6% (an effective rate of 4.02% as of December
31, 2001). The old loan, which had an outstanding balance of approximately $14
million and a maturity date of January 2, 2002, carried a fixed interest of
7.5%. The $21,819,000 mortgage is collaterized by the same property pool as the
expiring loan, namely nine properties located in California. Proceeds of the new
mortgage loan were used to pay off the expiring mortgage and to pay down a
portion of the outstanding balance of the Company's credit facility.

In August 2001, the Company closed on $18 million of mortgage financing from
Washington Mutual Bank. The loan has a 10-year term and bears interest at a
floating rate of a trailing 1-year treasury rate plus 2.60% (an effective rate
of 7.92% as of December 31, 2001). Proceeds from the loan were used to pay down
a portion of the outstanding balance of the $150 million line of credit.

Dividends

The Company has made regular quarterly distributions to the holders of its
Common Stock every quarter since the second quarter of 1993, and has increased
the dividend fifteen times since then from $0.10 per share in the second quarter
of 1993 to $0.48 per share in the fourth quarter of 2001. In March 2002, the
Company declared a dividend distribution for the first quarter 2002 to its
stockholders in the amount of $0.48 per share of Common Stock, payable 15 days
after the quarter-end.

Tenants

Based on rentable square feet, as of December 31, 2001, the Suburban Office
Properties and Industrial Properties were approximately 96% occupied by a total
of 444 tenants, of which 117 were Suburban Office Property tenants and 327 were
Industrial Property tenants. The Company's tenants include local, regional,
national and international companies engaged in a wide variety of businesses.

Financing

The Company expects cash flow from operations to be sufficient to pay operating
expenses, real estate taxes, general and administrative expenses, and interest
on indebtedness and to make distributions to stockholders required to maintain
the Company's REIT qualification.

The Company expects to fund the cost of acquisitions, capital expenditures,
costs associated with lease renewals and reletting of space, repayment of
indebtedness, share repurchases, and development of properties from (i) cash
flow from operations, (ii) borrowings under the credit facility and, if
available, other indebtedness (which may include indebtedness assumed in
acquisitions), and (iii) the sale of certain real estate investments.

Insurance

The Company carries commercial general liability coverage with primary limits of
$1 million per occurrence and $2 million in the aggregate, as well as a $40
million umbrella liability policy. This coverage protects the Company against
liability claims as well as the cost of defense. The Company carries property
insurance on a replacement value basis covering both the cost of direct physical
damage and the loss of rental income. This coverage is subject to certain
exclusions, including terrorism and mold. Separate flood and earthquake
insurance is provided with an annual aggregate limit of $10 million subject to a
deductible of 2-10% of total insurable value per building with respect to the
earthquake coverage. Additional flood and earthquake coverage with an aggregate
limit of $20 million is provided for property located in California. The Company
also carries director and officer liability insurance with an aggregate limit of
$10 million, and a fidelity bond in the amount of $1 million. This coverage
protects the Company's directors and officers against liability claims as well
as the cost of defense.


                                       7
<PAGE>

Competition, Regulation, and Other Factors

The success of the Company depends upon, among other factors, general economic
conditions and trends, including real estate trends, interest rates, government
regulations and legislation, income tax laws and zoning laws. The Company
typically competes in its markets with other REITs, institutional owners, and
private operators of commercial property.

The Company's real estate investments are located in markets in which they face
significant competition for the rental revenues they generate. Many of the
Company's investments, particularly the office buildings, are located in markets
in which there is a significant supply of available space, resulting in intense
competition for tenants and low rents. For example, the Company owns property in
the east side market in Seattle. This market has been negatively affected by job
loss in that region and there is considerable inventory available. In addition,
the Company owns property in Phoenix, Arizona and in Denver, Colorado. In both
of these cities, substantial amounts of development have occurred, resulting in
excess inventory at a time when demand has slackened.

The Company believes that its competitive strengths will enable it to operate
successfully in the face of these risks. These competitive strengths include an
experienced management team, a long history of operations in all of its current
markets, a diversified tenant base, and limited exposure to a significant
single-tenant default.

Government Regulations

The Company's properties are subject to various federal, state and local
regulatory requirements such as local building codes and other similar
regulations. The Company believes its properties are currently in substantial
compliance with all applicable regulatory requirements, although expenditures at
its properties may be required to comply with changes in these laws. No material
expenditures are contemplated at this time in order to comply with any such laws
or regulations.

Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real estate is liable for the costs of removal or
remediation of certain hazardous or toxic substances released on, above, under,
or in such property. Such laws often impose such liability without regard to
whether the owner knew of, or was responsible for, the presence of such
hazardous or toxic substances. The costs of such removal or remediation could be
substantial. Additionally, the presence of such substances or the failure to
properly remediate such substances may adversely affect the owner's ability to
borrow using such real estate as collateral.

The Company believes that it is in compliance in all material respects with all
federal, state and local laws regarding hazardous or toxic substances, and the
Company has not been notified by any governmental authority of any non-
compliance or other claim in connection with any of its present or former
properties. Accordingly, the Company does not currently anticipate that
compliance with federal, state and local environmental protection regulations
will have any material adverse impact on the financial position, results of
operations or liquidity of the Company. There can be no assurance, however, that
future discoveries or events at the Company's properties, or changes to current
environmental regulations, will not result in such a material adverse impact.

Other Information

The Company currently employs 44 full time employees, including eleven employees
hired from BAI effective July 1, 2002. The Company is not dependent upon a
single tenant or a limited number of tenants.


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<PAGE>

ITEM 2. PROPERTIES

Real Estate Summary

As of December 31, 2001, the Company's real estate investments (restated, see
Note 2 of the accompanying consolidated financial statements) were diversified
by property type as follows (dollars in thousands):

                                        Number of                  Percent
                                       Properties     Cost        of Total
                                       -----------------------------------------
Industrial buildings                         58     $303,169           46%
Office buildings                             29      326,459           50%
Operating properties held for sale            3       11,036            2%
Land held for development                    11       13,398            2%
      -------------------------------------------------------------------------

Total                                       101     $654,062          100%
      -------------------------------------------------------------------------


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<PAGE>

As of December 31, 2001, the Company's real estate investments (restated, see
Note 2 of the accompanying consolidated financial statements) were diversified
by geographic region as follows (dollars in thousands):

                                            Number of  Investment    % of Total
                                           Properties    Amount      Investment
                                           -------------------------------------
Industrial buildings
--------------------
Northern California                             29     $152,267           23
Arizona                                         15       72,185           11
Southern California                             12       64,517           10
Greater Seattle Area                             2       14,200            2
                                           -------------------------------------

Total industrial buildings                      58      303,169           46
                                           -------------------------------------

Office buildings
----------------
Northern California                              5       26,042            4
Arizona                                          5       36,068            5
Southern California                              4       31,341            5
Colorado                                         8      103,488           16
Greater Seattle Area                             6      116,566           18
Nevada                                           1       12,954            2
                                           -------------------------------------

Total office buildings                          29      326,459           50
                                           -------------------------------------

Operating properties held for sale
----------------------------------
Northern California                              3       11,036            2
                                           -------------------------------------

Total operating properties held for sale         3       11,036            2
                                           -------------------------------------

Land held for development
-------------------------
Northern California                              4        5,654            *
Arizona                                          1          637            *
Southern California                              4        3,168            *
Colorado                                         2        3,939            *
                                           -------------------------------------

Total land held for development                 11       13,398            2
                                           -------------------------------------

Total                                          101     $654,062          100%
                                           =====================================

* Less than 1%


                                       10
<PAGE>

Percentage Leased and 10% Tenants

The following table sets forth the occupancy rates for each of the last five
years, the number of tenants occupying 10% or more of the developed square feet
at the property as of the end of the year and the principal business of the
tenants in the Company's properties at December 31, 2001.

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
INDUSTRIAL BUILDINGS
--------------------
Northern California
Building #3 at Contra Costa
  Diablo Ind. Park, Concord        100% 1     100% 1     100% 1     100% 1     100% 1    Television cable service.

Building #8 at Contra Costa
  Diablo Ind. Park, Concord        100% 1     100% 1     100% 1     100% 1     100% 1    Warehouse and storage of medical supplies.

Building #18 at
  Mason Ind. Park, Concord         100% 2      92% 2     100% 2     100% 2     100% 2    Warehouse of scaffolding materials and
                                                                                         construction supplies; roofing contractor.

Milpitas Town Center, Milpitas     100% 4     100% 3     100% 4     100% 3     100% 3    Manufacturer of blood glucose meters;
                                                                                         integrated technology solutions;
                                                                                         manufacturer of vacuum pumps and related
                                                                                         parts.

598 Gibraltar Drive, Milpitas      100% 1     100% 1     100% 1     100% 1     100% 1    Electronic computer component manufacturer.

Auburn Court, Fremont              100% 4     100% 4      68% 3     100% 4     100% 4    Research and development of silicon
                                                                                         implants and other medical products;
                                                                                         electronic computer component manufacturer;
                                                                                         computer software developer; high-
                                                                                         performance fiber optic components
                                                                                         supplier.
47650 Westinghouse Drive,
   Fremont                         100% 1     100% 1     100% 1     100% 1     100% 1    Electronic personal computer board
                                                                                         assembly.

410 Allerton, South
    San Francisco                  100% 1     100% 1     100% 1     100% 1     100% 1   Candy manufacturer and distributor.
</TABLE>


                                      11
<PAGE>

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Northern California (continued)
400 Grandview, South
    San Francisco                  100% 4     100% 4     100% 4     100% 4     100% 4    Radiology research and developer; freight
                                                                                         forwarding companies; retail display
                                                                                         company.

342 Allerton, South
    San Francisco                  100% 4     100% 4     100% 4     100% 4     100% 4    Freight forwarding companies; food broker.

301 East Grand, South
    San Francisco                  100% 3      100%3      75% 2     100% 3     100% 3    Freight forwarding; distributor of MRI
                                                                                         equipment; moving company.

Fourier Avenue, Fremont            100% 1     100% 1     100% 1     100% 1     100% 1    Manufacturer of testers and equipment for
                                                                                         semi-conductors.

Lundy Avenue, San Jose             100% 2      82% 1     100% 2     100% 2     100% 2    Testing and distribution of semi-conductors
                                                                                         and other related electronic components;
                                                                                         software sales and development.

115 Mason Circle, Concord          100% 5     100% 5     100% 5     100% 5     100% 5    Manufacturer and distributor of pipeline;
                                                                                         distributor of fund raising products;
                                                                                         distributor of water purifying systems;
                                                                                         fluid sealing and handling company.

47600 Westinghouse Drive,
   Fremont                         100% 1     100% 1     100% 1     100% 1     100% 1    Research and development assembly and
                                                                                         testing related to the semi-conductor/
                                                                                         electronics industry.

860-870 Napa Valley Corporate
   Way, Napa                        86% 3     100% 3      88% 2      94% 2     100% 2    Winery; engineering company and software
                                                                                         developer.

47633 Westinghouse Drive,
   Fremont                         100% 1     100% 1     100% 1     100% 1     100% 1    Research and development assembly and
                                                                                         testing related to the semi-conductor/
                                                                                         electronics industry.
</TABLE>


                                       12
<PAGE>

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
47513 Westinghouse Drive,
  Fremont                             N/A     100% 2     100% 2     100% 2     100% 2    Manufacturer of semi-conductor equipment;
                                                                                         manufacturer and designer of arterial
                                                                                         balloon catheters and other related
                                                                                         devices.

Bordeaux Centre, Napa                 N/A      38% 2      89% 4     100% 5     100% 5    Cork manufacturer; marine electronics
                                                                                         distributor; wine storage and distributor;
                                                                                         research and development of packaging
                                                                                         material; and wine club distributor.

O'Toole Business Park, San Jose     90% 0      89% 0     100% 0     100% 1      84% 1    Commercial print shop.

6500 Kaiser Drive, Fremont         100% 1     100% 1     100% 1     100% 1     100% 1    Research and development, manufacturer of
                                                                                         computers.

Bedford Fremont Business Park,
  Fremont                          100% 1     100% 1      97% 1      97% 1      97% 1    Administration and testing of samples for
                                                                                         managed care organizations.

Spinnaker Court, Fremont           100% 2     100% 2     100% 2     100% 3     100% 3    Design-to-distribution of computing
                                                                                         solutions; manufacturer of electronic
                                                                                         components for semiconductor; developer of
                                                                                         broadband products and related components.

2277 Pine View Way, Petaluma       100% 1     100% 1     100% 1     100% 1     100% 1    Manufacturer and distributor of eyeglass
                                                                                         lenses for world-wide distribution.

The Mondavi Building, Napa         100% 1     100% 1     100% 1     100% 1     100% 1    Wine storage and administration.

Monterey Commerce Center 2,
   Monterey*                       100% 1     100% 1     100% 1     100% 1     100% 1    Language interpretation.
</TABLE>


                                       13
<PAGE>

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Northern California (continued)
Monterey Commerce Center 3,
   Monterey*                       100% 3     100% 3     100% 3      81% 4      81% 4    Office equipment sales/service; telephone/
                                                                                         data switching center; electronic building
                                                                                         systems sales/service/warehousing;
                                                                                         pharmaceutical sales/service/warehousing.

Parkpoint Business Center,
    Santa Rosa                        N/A     100% 3     100% 3      95% 3      98% 3    Physical therapy and rehabilitation; point
                                                                                         of sale machine manufacturer; mortgage
                                                                                         broker.

2180 S. McDowell Blvd.,
    Petaluma                          N/A     100% 2      81% 1      69% 1     100% 2    Manufacturer of high-end, commercial grade
                                                                                         sound equipment; valve and regulator
                                                                                         automation sales and manufacturer.

2190 S. McDowell Blvd.,
    Petaluma                          N/A     100% 2     100% 2     100% 2     100% 2    Bread distributor; distributor of paper and
                                                                                         packaging products.

Carneros Commons Phase II,
    Napa                              N/A        N/A        N/A        N/A      63% 1    Wine maker and exporter.

Southern California
Dupont Industrial Center,
    Ontario                        100% 1      97% 1     100% 2     100% 1      97% 1    Distributor of swimming pool supplies.

3002 Dow Business Center,
    Tustin                         100% 0      99% 0      99% 0      98% 0      98% 0    No single tenant over 10%.

Carroll Tech I, San Diego          100% 1     100% 1     100% 1     100% 1     100% 1    Sales and service of point of sales
                                                                                         equipment.

Vista 1, Vista                     100% 1       0% 0       0% 0     100% 1     100% 1    Water purifying components manufacturer.

Vista 2, Vista                     100% 1     100% 1     100% 1     100% 1     100% 1    Manufacturer of graphite golf club shaft.
</TABLE>


                                       14
<PAGE>

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Southern California (continued)
Signal Systems Building,
    San Diego                      100% 1     100% 1     100% 1     100% 1     100% 1    Developer and manufacturer of avionic
                                                                                         diagnostic equipment.

Carroll Tech II, San Diego         100% 1     100% 1     100% 1     100% 1     100% 1    Bio-technology company.

2230 Oak Ridge Way, Vista          100% 1     100% 1     100% 1     100% 1     100% 1    Manufacturer of equipment for circuit board
                                                                                         assembly.

6960 Flanders Drive, San Diego        N/A     100% 1     100% 1     100% 1     100% 1    Geotechnical and environmental consultant.

Canyon Vista Center, San Diego        N/A        N/A     100% 3     100% 3     100% 3    Designer of interactive entertainment
                                                                                         software; product development testing and
                                                                                         marketing; testing of computer networking
                                                                                         products.

6325 Lusk Blvd., San Diego            N/A        N/A     100% 2     100% 2     100% 1    Bio-tech company developing diabetes
                                                                                         self-test products.

Jurupa Business Center, Phase I,
     Ontario                          N/A        N/A        N/A        N/A       0% 0    New development project in lease-up phase.

Arizona
Westech Business Center, Phoenix    96% 0      95% 0      96% 0      95% 0      94% 0    No single tenant over 10%.

Westech II, Phoenix                   N/A     100% 3     100% 2     100% 2     100% 2    Healthcare consultants; travel agency.

2601 W. Broadway, Tempe            100% 1     100% 1     100% 1     100% 1     100% 1    Wireless phone service provider.

Phoenix Airport Center #2,
    Phoenix                        100% 1     100% 1     100% 1     100% 1     100% 1    Electronic parts sales and customer
                                                                                         service.

Phoenix Airport Center #3,
    Phoenix                        100% 1     100% 1     100% 1     100% 1     100% 1    Cosmetic manufacturer and distributor.
</TABLE>


                                       15
<PAGE>

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Arizona (continued)
Phoenix Airport Center #4,
    Phoenix                        100% 1     100% 1     100% 1     100% 1     100% 1    Package delivery/service call center.

Phoenix Airport Center #5,
    Phoenix                           N/A     100% 1     100% 1     100% 1     100% 1    Healthcare maintenance organization
                                                                                         corporate office.

Butterfield Business Center,
    Tucson                         100% 3     100% 3     100% 2     100% 2     100% 2    Sears call center; research and development
                                                                                         of automobile care items.

Butterfield Tech Center II,
    Tucson                            N/A        N/A      56% 2     100% 4     100% 4    Package distribution facilities; school
                                                                                         book distribution facility; distributor of
                                                                                         industrial uniform supplies.

Greystone Business Park,
    Tempe                             N/A        N/A      11% 1      86% 3     100% 3    Sales and service of electronic equipment;
                                                                                         business communications equipment and
                                                                                         multimedia integrations services; sales,
                                                                                         service and support facilities for
                                                                                         distribution of electrical components.

Cimarron Business Park,
     Scottsdale                       N/A      98% 2      97% 2      90% 1      79% 1    Printing and sales office.

Rio Salado Corporate Centre,
     Phoenix                          N/A        N/A        N/A         0%         0%    Rehabilitated property in lease-up phase.

Phoenix Tech Center,
     Phoenix                          N/A        N/A        N/A     100% 1     100% 1    Reprocessing/recycling of single-use
                                                                                         non-medical devices.

The Adams Brothers Building,
     Phoenix                          N/A        N/A     100% 1     100% 1     100% 1    Interior design and home products sales.
</TABLE>


                                       16
<PAGE>

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Arizona (continued)
Bedford Realty Partners, L.P.,
     Phoenix                          N/A        N/A     100% 2     100% 2      91% 2    Medical research; consulting engineers.

Greater Seattle Area
Highlands Campus Building B,
     Bothell                          N/A        N/A        N/A      86% 4      93% 4    Manufacturer and distributor of
                                                                                         micro-biological lab testing equipment;
                                                                                         medical prescription service provider;
                                                                                         wholesaler of flooring products;
                                                                                         telecommunication.

Highlands Campus Building C,
     Bothell                          N/A        N/A        N/A      60% 2      75% 3    Civil engineering consulting; manufacturer
                                                                                         and distributor of ultrasound equipment;
                                                                                         home furnishings club/distributor.

OFFICE BUILDINGS
----------------
Northern California
Village Green, Lafayette            99% 1     100% 2     100% 2     100% 2     100% 2    Environmental consultant; real estate
                                                                                         investment trust.

Carneros Commons Phase I,             N/A        N/A        N/A       0% 0      30% 1    E-commerce payment processing service.
  Napa

Canyon Park, San Ramon             100% 2     100% 2     100% 2     100% 2     100% 2    Geotechnical lab and research; healthcare
                                                                                         provider.

Crow Canyon Centre, San Ramon         N/A        N/A      50% 1     100% 2     100% 2    Healthcare provider; real estate mortgage
                                                                                         and interior designer.

Monterey Commerce Center 1,
   Monterey*                        87% 4      82% 4      79% 3      88% 3      92% 3    Technology - software; technology - digital
                                                                                         audio discs; financing/loan servicing.

3380 Cypress Drive, Petaluma          N/A     100% 1     100% 1     100% 1     100% 1    Manufacturer of hearing devices.
</TABLE>


                                       17
<PAGE>

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
OFFICE BUILDINGS (continued)
----------------
Southern California
Laguna Hills Square, Laguna         96% 4      93% 4      95% 4     100% 2     100% 2    Medical facility; optometry and eye
                                                                                         surgery.

Carroll Tech III, San Diego        100% 1     100% 1     100% 1     100% 1     100% 1    On-line game developer.

Scripps Wateridge, San Diego       100% 2     100% 2     100% 2     100% 2     100% 2    Wireless communications; supplier of
                                                                                         digital wireless communication products and
                                                                                         technologies.

Carroll Tech IV, San Diego            N/A        N/A     100% 1     100% 1     100% 1    Manufacturer of video games.

Colorado
Oracle Building, Denver            100% 2     100% 2     100% 2     100% 2     100% 2    Computer software company; banking.

Texaco Building, Denver               N/A     100% 1     100% 1     100% 1     100% 1    Oil company.

WaterPark @ Briarwood Bldg. 1,
     Englewood                        N/A        N/A        N/A      62% 1     100% 2    Corporate travel agency; resort time share
                                                                                         company.

Belleview Corp. Plaza II Office,
     Denver                           N/A        N/A        N/A        N/A      20% 1    Healthcare company.

WaterPark @ Briarwood Bldg. 2,
     Englewood                        N/A        N/A        N/A      70% 2     100% 2    Data processing solutions for the finance
                                                                                         industry; distributor of electrical
                                                                                         components and computer products.

WaterPark @ Briarwood Bldg. 3,
     Englewood                        N/A        N/A        N/A        N/A      22% 1    Insurance provider.

WaterPark @ Briarwood Bldg. 4,
     Englewood                        N/A        N/A        N/A        N/A     100% 1    County government.
</TABLE>


                                       18
<PAGE>

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
OFFICE BUILDINGS (continued)
----------------
Colorado (continued)
Bedford Center @ Rampart,
     Englewood                        N/A        N/A        N/A      97% 3      96% 3    Office equipment sales and leasing;
                                                                                         insurance company; corporate travel agency.

Arizona
Executive Center at Southbank,
    Phoenix                         98% 3      98% 3      98% 3      92% 3     100% 3    Travel agency; call center for medical
                                                                                         records; telemarketing call center.

Phoenix Airport Center #1,
    Phoenix                        100% 5     100% 5     100% 3     100% 5      88% 3    Banking services; security services and
                                                                                         sales office; electronic marketing and
                                                                                         sales.

Cabrillo Executive Center,
    Phoenix                           N/A      97% 2     100% 2      94% 3      96% 3    Insurance company; provider of email
                                                                                         systems and software for businesses; home
                                                                                         builder.

Mountain Pointe Office Park,
     Phoenix                          N/A        N/A       0% 0     100% 1     100% 1    Civil engineering.

1355 S. Clearview Avenue,
     Mesa                             N/A        N/A     100% 1     100% 1     100% 1    Debt collection services.

Greater Seattle Area
Orillia Office Park, Renton        100% 1     100% 1     100% 1     100% 1     100% 1    Manufacturer of aircraft.

Adobe Systems Bldg. 1, Seattle        N/A     100% 1     100% 1     100% 1     100% 1    Computer software design and engineering.

Adobe Systems Bldg. II, Seattle       N/A      77% 1     100% 2     100% 2     100% 2    Computer software design and engineering;
                                                                                         non-profit acupuncture and alternative
                                                                                         medicine school and clinic.
</TABLE>


                                       19
<PAGE>

           Percentage Occupied/Number of Tenants Occupying 10% or more

<TABLE>
<CAPTION>
                                    1997       1998       1999       2000       2001
Property                           %   #      %   #      %   #      %   #      %   #     Principal Business at December 31, 2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>       <C>
OFFICE BUILDINGS (continued)
----------------
Greater Seattle Area (continued)
Highlands Campus, Bldg. A,
     Bothell                          N/A        N/A      38% 1     100% 2     100% 2    Computer software research and development;
                                                                                         cellular phone manufacturer.

The Federal Way Building,
     Federal Way                      N/A        N/A     100% 3     100% 2     100% 2    Property/casualty insurance company;
                                                                                         gasoline company.

Federal Way Building II,
     Federal Way                      N/A        N/A     100% 4     100% 3      88% 3    Producer of semiconductor/computer
                                                                                         technology components; financial advisor
                                                                                         and lender; and insurance company.

Nevada
U. S. Bank Centre, Reno             94% 1      99% 1     100% 2      90% 2      80% 2    Insurance services; mining.
</TABLE>

* Presented as held for sale in the accompanying balance sheet as of December
31, 2001.


                                       20
<PAGE>

Lease Expirations - Real Estate Portfolio

The following table presents lease expirations for each of the ten years and
thereafter beginning January 1, 2002. The table presents: (i) the number of
leases that expire each year, (ii) the square feet covered by such expiring
leases, and (iii) the percentage of total occupied square feet for expiring
leases.

                              Number of                     Percentage
                               Leases      Occupied         of Occupied
Year                          Expiring    Square Feet       Square Feet
----                          --------    -----------       -----------

2002                             92          729,607           11.3%
2003                             85          924,329           14.3
2004                            106        1,659,100           25.6
2005                             84        1,354,188           20.9
2006                             46          642,244            9.9
2007                             13          505,084            7.8
2008                              6           39,109            0.6
2009                              4          124,480            1.9
2010                              6          365,875            5.7
2011 and thereafter               2          130,200            2.0
                                ---        ---------          -----

     Total                      444        6,474,216          100.0%
                                ===        =========          =====


                                       21
<PAGE>

Principal Provisions of Leases

The following table sets forth the principal provisions of leases which
represent more than 10% of the gross leasable area ("GLA") of each of the
Company's Properties and the realty tax rate for each Property for 2001.

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
INDUSTRIAL BUILDINGS
--------------------
Northern California
Building #3 at Contra Costa        $19,099        1           21,840        21,840         $8.28          Feb. 05        None
    Diablo Ind. Park, Concord    $1.01/100

Building #8 at Contra Costa        $28,564        1           31,800        31,800        $11.61          Dec. 05     1-5 yr.
    Diablo Ind. Park, Concord    $1.01/100

Building #18 at Mason              $21,203        2           28,836         7,225         $7.68           May 03        None
     Industrial Park, Concord    $1.01/100                                   4,825         $9.00          Feb. 06        None

Milpitas Town Center,              $72,620        4          102,620        23,924        $18.00          Apr. 04      1-1yr.
    Milpitas                     $1.10/100                                                                            1-5 yr.
                                                                            24,426        $11.28          Apr. 04     1-1 yr.
                                                                                                                      1-2 yr.
                                                                            30,840        $15.00          Jul. 03     1-5 yr.
                                                                            23,430        $14.16          Jan. 05        None

598 Gibraltar Drive,               $48,446        1           45,090        45,090        $19.97          Apr. 05        None
    Milpitas                     $1.10/100

Auburn Court,                      $48,994        4           68,030        16,095        $15.60          Jul. 04        None
    Fremont                      $1.04/100                                  12,060        $14.40          Apr. 03        None
                                                                            15,755        $15.00          Mar. 03        None
                                                                            18,160        $22.05          Jul. 05        None
</TABLE>


                                       22
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Northern California (continued)
47650 Westinghouse Drive,          $16,546        1           24,030        24,030        $10.80          Sep. 04        None
     Fremont                     $1.04/100

410 Allerton,                      $27,222        1           46,050        46,050         $9.60          Apr. 06        None
    South San Francisco          $1.02/100

400 Grandview,                     $83,462        4          107,004        21,841         $8.19          Dec. 03        None
    South San Francisco          $1.02/100                                  43,642         $6.72          Mar. 06        None
                                                                            18,789         $9.17           May 04        None
                                                                            18,864         $6.84          Jan. 03        None

342 Allerton,                      $55,487        4           69,312        19,751        $11.40          Mar. 03        None
    South San Francisco          $1.02/100                                   9,720         $9.85          Mar. 05        None
                                                                            30,953        $15.60          Feb. 06        None
                                                                             8,888        $10.53          Aug. 02        None

301 East Grand,                    $34,540        3           57,846        26,240         $8.77          Jun. 03        None
    South San Francisco          $1.02/100                                  17,206         $5.29          Dec. 03        None
                                                                            14,400         $9.00          Jan. 05     1-5 yr.

Fourier Avenue,                   $108,302        1          104,400       104,400        $10.67          Apr. 04        None
    Fremont                      $1.04/100

Lundy Avenue,                      $53,410        2           60,428        49,342        $15.60          Apr. 06     1-5 yr.
    San Jose                     $1.09/100                                  11,086        $15.60          Jul. 04     1-5 yr.
</TABLE>


                                       23
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Northern California (continued)
115 Mason Circle,                  $19,780        5           35,000         5,833         $7.05          Apr. 05        None
     Concord                     $1.01/100                                   5,832         $8.40          Jul. 04        None
                                                                             8,154         $7.92          Aug. 02        None
                                                                             7,296         $7.00          Nov. 02     1-3 yr.
                                                                             7,885         $7.66          Apr. 03        None

47600 Westinghouse Drive,          $17,194        1           24,030        24,030        $11.64          Oct. 03     1-3 yr.
     Fremont                     $1.04/100

860-870 Napa Valley Corporate      $84,946        2           67,775        17,551        $13.20          Feb. 03        None
    Way, Napa                    $1.03/100                                   7,558        $11.02              MTM        None

47633 Westinghouse Drive,          $54,631        1           50,088        50,088        $12.55          Oct. 03     1-3 yr.
     Fremont                     $1.04/100

47513 Westinghouse Drive,         $104,348        2           65,385        35,132        $16.56          Feb. 05     1-5 yr.
     Fremont                     $1.04/100                                  30,253        $15.60          Feb. 04     1-5 yr.

Bordeaux Centre,                  $161,673        5          150,000        22,075         $8.10          Nov. 07     2-5 yr.
     Napa                        $1.03/100                                  16,076         $7.55          Nov. 07     1-5 yr.
                                                                            51,790         $6.11          Jan. 04     1-5 yr.
                                                                            18,434         $6.19          Dec. 04     1-5 yr.
                                                                            16,180         $8.90           May 05     1-5 yr.

O'Toole Business Park,            $119,894        1          122,320        14,005        $22.20          Apr. 03        None
    San Jose                     $1.09/100

6500 Kaiser Drive,                $170,711        1           78,611        78,611        $10.20          Sep. 04     2-5 yr.
     Fremont                     $1.04/100
</TABLE>


                                       24
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Northern California (continued)
Bedford Fremont Business Center,  $147,291        1          146,509        71,532        $16.92          Jul. 03     1-3 yr.
    Fremont                      $1.04/100

Spinnaker Court,                  $151,274        3           98,500        53,380        $22.80          Mar. 04        None
     Fremont                     $1.04/100                                  24,350        $10.51          Mar. 05        None
                                                                            20,770        $28.35          Nov. 05     1-5 yr.

2277 Pine View Way,               $107,348        1          120,480       120,480         $7.61          Mar. 07     2-5 yr.
    Petaluma                     $1.07/100

The Mondavi Building,             $103,711        1          120,157       120,157         $5.42          Sep. 12     1-5 yr.
     Napa                        $1.03/100

Monterey Commerce                  $23,780        1           28,020        28,020        $15.60          Dec. 05     1-5 yr.
    Center 2, Monterey           $1.00/100

Monterey Commerce                  $23,465        4           24,240         3,817        $16.20          Jul. 04        None
    Center 3, Monterey           $1.00/100                                   3,050        $14.76          Nov. 03     1-3 yr.
                                                                             4,448        $15.60          Oct. 05     1-5 yr.
                                                                             8,350        $17.40          Oct. 05     1-5 yr.

Parkpoint Business Center,         $74,844        3           67,869         8,767        $16.20          Dec. 01        None
    Santa Rosa                   $1.09/100                                   7,894        $16.07          Jan. 02        None
                                                                            17,505        $16.20          Mar. 03     1-5 yr.

2180 S. McDowell Blvd.,            $40,999        2           43,197        29,709         $8.53          Mar. 05        None
     Petaluma                    $1.07/100                                  13,488         $9.12          Feb. 06     1-5 yr.

2190 S. McDowell Blvd.,            $31,132        2           32,719        17,131         $9.62          Mar. 04     1-5 yr.
     Petaluma                    $1.07/100                                  15,588         $8.59          Apr. 06     2-5 yr.
</TABLE>


                                       25
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Northern California (continued)
Carneros Commons Phase II,         $29,815        1           36,885        23,107        $16.14          Oct. 08     2-5 yr.
     Napa                        $1.03/100

Southern California
Dupont Industrial Center,         $204,034        1          451,192       183,244         $2.88          Jan. 07     2-5 yr.
    Ontario                      $1.02/100

3002 Dow Business Center,         $190,479        0          192,125           N/A           N/A              N/A         N/A
    Tustin                       $1.01/100

Carroll Tech I,                    $22,644        1           21,936        21,936         $9.84          Nov. 05     2-3 yr.
    San Diego                    $1.11/100

Vista 1,                           $25,603        1           42,508        42,508         $6.71          Oct. 10    1-10 yr.
     Vista                       $1.03/100

Vista 2,                           $35,168        1           47,550        47,550         $6.86          Sep. 02        None
     Vista                       $1.03/100

Signal Systems Building,          $104,106        1          109,780       109,780        $11.08          Aug. 06     2-5 yr.
    San Diego                    $1.02/100

Carroll Tech II,                   $36,950        1           37,586        37,586        $14.40          Dec. 01        None
    San Diego                    $1.11/100

2230 Oak Ridge Way,                $34,282        1           44,063        44,063         $7.08          Aug. 04     2-5 yr.
    Vista                        $1.01/100

6960 Flanders Drive,               $39,913        1           33,144        33,144        $10.80          Jun. 03        None
    San Diego                    $1.11/100
</TABLE>


                                       26
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Southern California (continued)

Canyon Vista Center,               $71,409        3           63,746        17,591         $7.92          Dec. 04     1-5 yr.
    San Diego                    $1.11/100                                  18,643        $11.88          Jan. 06     1-3 yr.
                                                                            27,512        $11.08           May 02     1-5 yr.

6325 Lusk Blvd.,                   $63,286        1           49,942        49,942        $14.59          Jun. 04     1-5 yr.
    San Diego                    $1.11/100

Jurupa Business Center,            $18,884        0           41,726           N/A           N/A              N/A         N/A
     Ontario                     $1.02/100

Arizona
Westech Business Center,          $137,791        0          143,940           N/A           N/A              N/A         N/A
     Phoenix                    $12.83/100

Westech II,                       $116,192        3           80,878        14,615         $9.24          Oct. 04        None
     Phoenix                    $12.83/100                                  11,819         $9.78          Nov. 02     1-2 yr.
                                                                            11,739         $8.76          Nov. 02     1-2 yr.

2601 W. Broadway,                  $60,411        1           44,244        44,244         $7.72          Jan. 07     2-5 yr.
     Tempe                      $12.36/100

Phoenix Airport Center #2,         $60,044        1           35,768        35,768        $10.50          Aug. 06     1-5 yr.
    Phoenix                     $12.83/100

Phoenix Airport Center #3,         $60,207        1           55,122        55,122         $9.00          Jul. 03     1-2 yr.
    Phoenix                     $12.83/100

Phoenix Airport Center #4,         $36,684        1           30,504        30,504         $8.36          Jun. 05     1-5 yr.
    Phoenix                     $12.83/100
</TABLE>


                                       27
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Arizona (continued)
Phoenix Airport Center #5,        $104,337        1           60,000        60,000         $9.56          Sep. 02     1-5 yr.
    Phoenix                     $12.83/100

Butterfield Business Center,      $125,720        3           95,746        50,000         $6.30          Aug. 04     2-5 yr.
    Tucson                      $17.57/100                                  14,982         $2.86          Aug. 04     1-5 yr.
                                                                            26,026         $8.53          Jun. 04     1-2 yr.

Butterfield Tech Center II,        $42,656        4           33,082         7,383         $7.73          Mar. 06     2-5 yr.
    Tucson                      $17.57/100                                  11,064         $6.72          Sep. 02     1-2 yr.
                                                                             7,259         $6.68          Dec. 02     1-2 yr.
                                                                             7,376         $7.32          Nov. 04        None

Greystone Business Park,           $96,827        3           60,738         6,520        $11.20          Nov. 04     2-3 yr.
    Tempe                       $12.36/100                                  34,471        $11.64          Mar. 07     1-3 yr.
                                                                            19,747        $11.88          Sep. 05     2-5 yr.

Cimarron Business Park,           $145,117        1           94,800        13,800        $11.13          Mar. 04        None
    Scottsdale                  $11.68/100

Rio Salado Corporate Centre,       $76,646        0           80,322           N/A           N/A              N/A         N/A
     Phoenix                    $12.36/100

Phoenix Tech Center,               $36,738        1           39,280        39,280         $9.90          Feb. 05     2-5 yr.
     Phoenix                    $12.79/100

The Adams Brothers Building,       $97,050        1           71,345        71,345         $5.02          Jan. 04     2-5 yr.
    Phoenix                     $17.10/100

Bedford Realty Partners, L.P.,    $187,872        2          101,835        32,729         $9.60              MTM        None
    Phoenix                     $17.10/100                                  30,409         $7.56          Jun. 05        None
</TABLE>


                                       28
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
INDUSTRIAL BUILDINGS (continued)
--------------------
Greater Seattle Area
Highlands Campus Building B,       $74,292        4           69,821        14,970        $12.65          Aug. 04     1-5 yr.
     Bothell                     $1.28/100                                  20,831        $12.30          Jan. 05     1-5 yr.
                                                                             9,412        $11.95          Jul. 08     1-5 yr.
                                                                             9,201        $16.00          Sep. 05        None

Highlands Campus Building C,       $42,927        3           57,478         7,008        $12.36          Jul. 07     1-5 yr.
     Bothell                     $1.28/100                                  27,251        $15.00          Dec. 07        None
                                                                             8,780        $13.32          Oct. 08     1-5 yr.

OFFICE BUILDINGS
----------------
Northern California
Village Green,                     $27,465        2           16,795         2,119        $31.17          Oct. 05        None
     Lafayette                   $1.11/100                                  11,062        $25.59          Mar. 05        None

Carneros Commons Phase I,          $32,300        1           40,290         8,900        $14.40          Mar. 06        None
     Napa                        $1.03/100

Canyon Park,                       $63,625        2           57,667        48,265        $21.69          Feb. 05     2-5 yr.
    San Ramon                    $1.05/100                                   9,402        $23.08          Jan. 03        None

Crow Canyon Centre,                $84,052        2           39,108        19,615        $25.80          Dec. 06     2-5 yr.
    San Ramon                    $1.05/100                                  16,478        $26.16          Jan. 05     1-5 yr.

Monterey Commerce Center 1,        $64,323        4           50,031         5,809        $20.40          Aug. 02     1-3 yr.
    Monterey                     $1.00/100                                   7,000        $19.56          Mar. 03     1-5 yr.
                                                                            16,088        $20.40          Jul. 03        None
                                                                             7,166        $20.40          Jul. 04     1-5 yr.

3880 Cypress Drive,                $56,751        1           35,100        35,100        $13.56           May 07     1-5 yr.
    Petaluma                     $1.09/100
</TABLE>


                                       29
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
OFFICE BUILDINGS (continued)
----------------
Southern California
Laguna Hills Square,               $67,285        5           51,734         8,474        $29.67          Nov. 10     2-5 yr.
     Laguna                      $1.04/100                                   7,368        $26.91          Sep. 05     1-5 yr.
                                                                             6,391        $27.27          Sep. 05     2-5 yr.
                                                                             9,229        $21.84          Jun. 02     2-3 yr.
                                                                             5,981        $29.17          Oct. 10        None

Carroll Tech III,                  $24,824        1           29,307        29,307        $10.38          Mar. 09     1-5 yr.
     San Diego                   $1.11/100

Scripps Wateridge,                $200,630        2          123,853        49,295        $13.85          Jul. 06     1-5 yr.
     San Diego                   $1.11/100                                  74,558        $14.18          Aug. 05     2-3 yr.

Carroll Tech IV,                   $59,555        1           43,415        43,415        $12.81          Mar. 09        None
     San Diego                   $1.11/100

Colorado
Oracle Building,                  $280,947        2           90,712        10,043        $18.00          Oct. 11     4-5 yr.
     Denver                      $8.58/100                                  77,090        $25.00          Sep. 03        None

Texaco Building,                  $576,540        1          237,055       237,055        $20.06          Jan. 05     2-5 yr.
     Denver                      $7.52/100

Waterpark @ Briarwood Bldg. 1,     $83,083        2           29,405        18,295        $13.23          Aug. 05     1-5 yr.
     Englewood                  $11.97/100                                  11,110        $13.25          Feb. 06        None

Belleview Corp. Plaza II -        $108,034        1           81,508        15,644        $17.75          Sep. 06     1-5 yr.
     Office, Denver              $8.58/100

Waterpark @ Briarwood Bldg. 2,    $208,502        3           73,781        14,911        $12.70          Feb. 06        None
     Englewood                  $11.97/100                                  36,077        $13.14          Oct. 05        None
                                                                            21,232        $14.14          Oct. 05     2-5 yr.
</TABLE>


                                       30
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
OFFICE BUILDINGS (continued)
----------------
Colorado (continued)
WaterPark @ Briarwood Bldg. 3,     $14,807        1           73,781        16,301        $14.00          Jan. 07     1-5 yr.
     Englewood                  $11.97/100

WaterPark @ Briarwood Bldg. 4,      $5,900        1           29,400        29,400        $14.00          Feb. 06     1-5 yr.
     Englewood                  $11.97/100

Bedford Center @ Rampart          $674,517        3          165,191        36,857        $13.26          Mar. 04     2-2 yr.
     Englewood                  $10.55/100                                  41,717        $12.50          Dec. 04     2-2 yr.
                                                                            55,550        $13.00          Oct. 05     2-3 yr.

Arizona
Executive Center at Southbank,    $295,537        4          140,157        38,106        $10.33          Jan. 02     1-5 yr.
    Phoenix                     $17.10/100                                  17,910         $8.96          Sep. 03     2-5 yr.
                                                                            30,518        $12.19          Jun. 04     1-5 yr.
                                                                            21,626        $10.00          Jul. 02     2-5 yr.

Phoenix Airport Center #1,         $57,525        3           32,460        19,443        $12.87          Nov. 05     2-5 yr.
    Phoenix                     $12.83/100                                   4,527        $20.00          Dec. 01     1-5 yr.
                                                                             4,449        $19.05          Dec. 02        None

Cabrillo Executive Center,        $149,141        3           60,321        12,400        $18.23          Aug. 08        None
    Phoenix                     $13.30/100                                  21,056        $17.50          Dec. 01        None
                                                                             6,034        $18.79          Oct. 02     1-5 yr.

Mountain Pointe Office Park,       $94,314        1           54,584        54,584        $19.20          Oct. 10     1-5 yr.
    Phoenix                     $12.83/100

1355 S. Clearview Avenue,          $76,586        1           57,193        57,193        $12.72          Apr. 05     2-5 yr.
    Mesa                        $10.95/100
</TABLE>


                                       31
<PAGE>

<TABLE>
<CAPTION>
                                  Annual     # of Leases                 Square Feet   Contract Rent
                                 Property    with 10% or     Project       of Each       ($/Sq/Yr)        Lease       Renewal
Property                        Taxes/Rate   More of GLA   Square Feet     Tenant      At End of Year   Expiration    Options
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>        <C>            <C>           <C>             <C>         <C>
OFFICE BUILDINGS (continued)
----------------
Greater Seattle Area
Orillia Office Park,              $334,984        1          334,255       334,255        $10.50          Feb. 04        None
    Renton                       $1.20/100

Adobe Systems Bldg. 1,            $275,351        1          161,117       161,117        $15.53          Jul. 10     2-5 yr.
    Seattle                      $1.14/100

Adobe Systems Bldg. 2,            $223,300        2          136,111        93,211        $15.53          Jul. 10     2-5 yr.
    Seattle                      $1.14/100                                  19,867        $24.17          Nov. 03        None

Highlands Campus Building A       $122,975        2           74,559        39,824        $14.56           May 05     2-3 yr.
    Bothell                      $1.28/100                                  13,498        $15.50          Dec. 04     1-5 yr.

The Federal Way Building,         $108,300        2           65,000        32,871        $13.10          Apr. 06     2-3 yr.
    Federal Way                  $1.30/100                                  26,420        $14.22          Oct. 04     1-5 yr.

Federal Way Building II,          $198,686        3          115,032        16,230        $15.00          Jun. 05     1-5 yr.
    Federal Way                  $1.30/100                                  50,000        $13.44          Aug. 09     2-5 yr.
                                                                            12,083        $14.99          Apr. 06        None

Nevada
U.S. Bank Centre,                 $142,094        2          104,324        36,363        $20.40          Oct. 04        None
     Reno                        $3.52/100                                  13,064        $21.36          Jun. 04        None
</TABLE>


                                       32
<PAGE>

Average Base Rent

The following table sets forth the average rent at the end of each year for the
last five years for each property owned as of December 31, 2001 (in dollars):

                  Average Base Rent ($/Sq Ft/Yr) At End of Year

<TABLE>
<CAPTION>
                                           1997      1998      1999      2000      2001
                                           ----      ----      ----      ----      ----
<S>                                       <C>       <C>       <C>       <C>       <C>
INDUSTRIAL BUILDINGS:
---------------------
Northern California
Building #3 at Contra Costa Diablo        $6.84     $6.84     $7.80     $8.04     $8.28
Building #8 at Contra Costa Diablo         6.00      6.00      6.72     11.61     11.61
Building #18 at Mason Industrial Park      6.88      6.93      7.22      7.54      8.49
Milpitas Town Center                       8.90     10.69     12.74     14.36     14.62
598 Gibraltar Drive                        9.48     10.44     10.44     19.20     19.97
Auburn Court                               7.80     10.62     11.25     16.13     16.86
47650 Westinghouse Drive                   9.00      9.60     10.20     10.80     10.80
410 Allerton                               5.16      6.60      7.20      7.80      9.60
400 Grandview                              7.03      7.50      7.95      8.27      7.72
342 Allerton                               7.57      7.73      9.13     10.40     12.95
301 East Grand                             5.58      6.30      6.90      7.42      7.79
Fourier Avenue                             8.99      8.99      8.99      8.99     10.67
Lundy Avenue                               7.09      7.36     14.40     14.51     15.60
115 Mason Circle                           6.22      6.59      6.78      7.21      7.60
47600 Westinghouse Drive                  10.20     10.56     10.92     11.28     11.64
860-870 Napa Valley Corporate Way          8.86      9.48      9.90     11.06     11.72
47633 Westinghouse Drive                  11.60     11.83     12.06     12.31     12.55
47513 Westinghouse Drive                    N/A     14.32     14.92     15.52     16.12
Bordeaux Centre                             N/A      7.33      6.57      7.06      7.26
O'Toole Business Park                     10.31     13.81     14.38     17.16     22.09
6500 Kaiser Drive                          9.00      9.60      9.60     10.20     10.20
Bedford Fremont Business Center           11.93     14.63     16.39     17.97     20.23
Spinnaker Court                            8.01      8.25      8.25     14.72     20.93
2277 Pine View Way                         6.91      6.91      7.25      7.25      7.61
The Mondavi Building                       4.92      4.92      5.17      5.17      5.42
Monterey Commerce Center 2                14.16     14.64     15.12     15.60     15.60
Monterey Commerce Center 3                14.70     15.22     15.32     15.59     16.35
Parkpoint Business Center                   N/A     15.19     15.68     16.50     17.03
2180 S. McDowell Blvd                       N/A      8.37     11.20      8.28      8.71
2190 S. McDowell Blvd                       N/A      8.19      8.39      8.89      9.13
Carneros Commons Phase II*                  N/A       N/A       N/A       N/A     16.14

Southern California
Dupont Industrial Center                   3.40      3.44      3.67      3.82      3.88
3002 Dow Business Center                   8.32      8.86      9.52     10.20     10.92
Carroll Tech I                            11.93      3.17      9.11      9.47      9.84
Vista 1                                    0.00      0.00      0.00      3.11      6.71
</TABLE>

* Shell construction completed during 2001; property in lease-up phase.


                                       33
<PAGE>

                  Average Base Rent ($/Sq Ft/Yr) At End of Year

<TABLE>
<CAPTION>
                                       1997      1998      1999      2000      2001
                                       ----      ----      ----      ----      ----
<S>                                   <C>       <C>       <C>       <C>       <C>
INDUSTRIAL BUILDINGS (continued):
--------------------
Southern California (continued)
Vista 2                               $6.61     $6.88     $7.15     $7.44     $6.86
Signal Systems Building                8.11     10.20     10.42     10.79     11.08
Carroll Tech II                       11.52     12.00     13.79     14.40     14.40
2230 Oak Ridge Way                      N/A      6.49      6.63      6.83      7.08
6960 Flanders Drive                     N/A      9.60      9.98     10.38     10.80
Canyon Vista Center                     N/A       N/A      8.86     10.05     10.44
6325 Lusk Blvd                          N/A       N/A     12.48     12.98     14.59
Jurupa Business Center *                N/A       N/A       N/A       N/A       --

Arizona
Westech Business Center                9.44      9.99      9.97     10.37     10.66
Westech II                              N/A      8.86      8.87      9.63      9.78
2601 W. Broadway                       7.14      7.14      7.14      7.43      7.72
Phoenix Airport Center #2              7.20      7.20      7.80      7.80     10.50
Phoenix Airport Center #3              6.36      6.36      7.02      7.02      9.18
Phoenix Airport Center #4              7.20      7.80      7.80      8.36      8.36
Phoenix Airport Center #5              7.21      8.68      8.68      9.56      9.56
Butterfield Business Center            7.08      7.11      6.38      6.45      6.35
Butterfield Tech Center II              N/A       N/A      6.67      6.85      7.07
Greystone Business Park                 N/A       N/A     10.56     10.85     11.67
Cimarron Business Park                  N/A      8.94     10.09     10.29     10.53
Rio Salado Corporate Centre             N/A       N/A       N/A      0.00      0.00
Phoenix Tech Center                     N/A       N/A       N/A      9.90      9.90
The Adams Brothers Building             N/A       N/A      4.56      4.69      5.02
Bedford Realty Partners, L.P.           N/A       N/A      7.21      8.00      8.26

Greater Seattle Area
Highlands Campus Building B             N/A       N/A       N/A     12.34     13.02
Highlands Campus Building C             N/A       N/A       N/A     14.46     14.23
</TABLE>

* Shell construction completed during 2001; property in lease-up phase.


                                       34
<PAGE>

                  Average Base Rent ($/Sq Ft/Yr) At End of Year

<TABLE>
<CAPTION>
                                       1997      1998      1999      2000      2001
                                       ----      ----      ----      ----      ----
<S>                                  <C>       <C>       <C>       <C>       <C>
OFFICE BUILDINGS:
-----------------
Northern California
Village Green                        $23.24    $23.70    $24.45    $26.69    $27.58
Carneros Commons Phase I                N/A       N/A       N/A      0.00     15.35
Canyon Park                           15.92     16.44     16.44     20.92     21.92
Crow Canyon Centre                      N/A       N/A     25.20     25.43     26.66
Monterey Commerce Center 1            20.12     19.78     19.69     20.36     20.68
3880 Cypress Drive                      N/A     13.08     13.08     13.56     13.56

Southern California
Laguna Hills Square                   23.90     24.79     25.17     24.44     25.51
Carroll Tech III                       8.52      8.52      9.60      9.98     10.38
Scripps Wateridge                     11.41     12.53     13.16     13.40     14.05
Carroll Tech IV                         N/A       N/A     15.00     12.44     12.81

Colorado
Oracle Building                       23.37     23.34     23.34     23.34     24.22
Texaco Building                         N/A     18.05     18.05     20.06     20.06
WaterPark @ Briarwood Bldg. 1           N/A       N/A       N/A     12.90     13.24
Belleview Corp. Plaza II Office *       N/A       N/A       N/A       N/A     17.75
WaterPark @ Briarwood Bldg. 2           N/A       N/A       N/A     13.18     13.39
WaterPark @ Briarwood Bldg. 3 *         N/A       N/A       N/A       N/A     14.00
WaterPark @ Briarwood Bldg. 4           N/A       N/A       N/A       N/A     14.00
Bedford Center @ Rampart                N/A       N/A       N/A     12.73     13.09

Arizona
Executive Center at Southbank          9.23      9.46      9.64      9.89     10.78
Phoenix Airport Center #1             13.81     13.69     13.97      9.97     14.97
Cabrillo Executive Center               N/A     16.64     17.03     17.24     18.00
Mountain Pointe Office Park             N/A       N/A       N/A     19.20     19.20
1355 S. Clearview Avenue                N/A       N/A     12.72     12.72     12.72

Greater Seattle Area
Orillia Office Park                    9.35      9.35      9.35     10.50     10.50
Adobe Systems Bldg. 1                   N/A     15.53     15.53     15.53     15.53
Adobe Systems Bldg. 2                   N/A     22.04     16.71     16.74     17.39
Highlands Campus Building A             N/A       N/A     12.51     15.06     15.25
The Federal Way Building                N/A       N/A     12.65     13.77     13.77
Federal Way Building II                 N/A       N/A     14.20     14.31     14.24

Nevada
U.S. Bank Centre                      18.59     18.76     19.03     22.48     21.07
</TABLE>

* Shell construction completed during 2001; property in lease-up phase.


                                       35
<PAGE>

Tax Information

The following table sets forth tax information of the Company's real estate
investments at December 31, 2001, as follows: (i) Federal tax basis, (ii) method
of depreciation, and (iii) life claimed, with respect to each property or
component thereof for purposes of depreciation (dollars in thousands):

<TABLE>
<CAPTION>
                                                          Federal       Depreciation       Life
Depreciable assets                                      Tax Basis             Method    In Years
-----------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>                 <C>
INDUSTRIAL BUILDINGS
--------------------

Northern California                                      $  5,171       MACRS - 200%        5.00
                                                            2,841       MACRS - 150%       15.00
                                                            3,783      Straight Line       31.50
                                                          100,123      Straight Line       39.00
                                                         --------
                                                          111,918

Southern California                                         1,562       MACRS - 200%        5.00
                                                              871       MACRS - 150%       15.00
                                                           43,130      Straight Line       39.00
                                                         --------
                                                           45,563

Arizona                                                     2,186       MACRS - 200%        5.00
                                                            1,210       MACRS - 150%       15.00
                                                           48,211      Straight Line       39.00
                                                         --------
                                                           51,607

Greater Seattle Area                                       10,345      Straight Line       39.00
                                                         --------
Total depreciable assets for industrial buildings         219,433
                                                         --------

OFFICE BUILDINGS
----------------

Northern California                                         2,547       MACRS - 200%        5.00
                                                            1,485       MACRS - 150%       15.00
                                                           22,038      Straight Line       39.00
                                                         --------
                                                           26,070

Southern California                                         2,563       MACRS - 200%        5.00
                                                            1,390       MACRS - 150%       15.00
                                                           18,085      Straight Line       39.00
                                                         --------
                                                           22,038

Arizona                                                     2,721       MACRS - 200%        5.00
                                                            1,564       MACRS - 150%       15.00
                                                           19,093      Straight Line       39.00
                                                         --------
                                                           23,378

Greater Seattle Area                                       11,770       MACRS - 200%        5.00
                                                            6,274       MACRS - 150%       15.00
                                                           79,960      Straight Line       39.00
                                                         --------
                                                           98,004

Nevada                                                      1,258       MACRS - 200%        5.00
                                                              674       MACRS - 150%       15.00
                                                            8,924      Straight Line       39.00
                                                         --------
                                                           10,856
</TABLE>


                                       36
<PAGE>

<TABLE>
<CAPTION>
                                                          Federal       Depreciation       Life
Depreciable assets                                      Tax Basis             Method    In Years
-----------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>                 <C>
OFFICE BUILDINGS (continued)
----------------

Colorado                                                    6,702       MACRS - 200%        5.00
                                                            3,584       MACRS - 150%       15.00
                                                           69,440      Straight Line       39.00
                                                         --------
                                                           79,726
                                                         --------
Total depreciable assets for office buildings             260,072
                                                         --------

Grand total                                              $479,505
                                                         ========
</TABLE>

For additional information on the Company's real estate portfolio, see Note 3 to
the Consolidated Financial Statements.


                                       37
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock of the Company trades on the New York Stock Exchange and the
Pacific Exchange under the symbol "BED." As of March 15, 2002, the Company had
937 stockholders of record. A significant number of these stockholders are also
nominees holding stock in street name for individuals. The following table shows
the high and low sale prices per share reported on the New York Stock Exchange
and the dividends declared per share by the Company on the Common Stock for each
quarterly period during 2000 and 2001.

                                                                     Dividend
                                          High            Low       Per Share
                                      ------------------------------------------

2000
         First Quarter                   $17.63         $15.63           $.42
         Second Quarter                   19.44          15.63            .42
         Third Quarter                    21.06          18.56            .45
         Fourth Quarter                   20.75          18.00            .45

2001
         First Quarter                    21.00          18.30            .45
         Second Quarter                   20.96          18.00            .45
         Third Quarter                    22.20          18.50            .48
         Fourth Quarter                   23.24          19.60            .48


                                       38
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

Following is a table of selected financial data of the Company for the last five
years (which should be read in conjunction with the discussion under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and Notes thereto
contained herein):

                (in thousands of dollars, except per share data)

<TABLE>
<CAPTION>
                                          2001          2000          1999          1998          1997
                                      Restated(1)   Restated(1)   Restated(1)   Restated(1)   Restated(1)
---------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>           <C>           <C>           <C>
Operating Data:
     Rental income                    $ 99,949      $ 97,518      $ 90,527      $ 73,451      $ 46,377
     Gain on sales of real
        estate investments               5,976        38,404         7,796            --        11,533
     Net income                         34,950        68,307        38,659        29,695        30,752
     Per common share -
     assuming dilution:
         Income before
         extraordinary item           $   2.06      $   3.70      $   1.82      $   1.30      $   1.91
         Net income                   $   2.06      $   3.70      $   1.81      $   1.30      $   1.91

Balance Sheet Data:
     Real estate investments          $605,078      $608,511      $647,950      $579,121      $422,549
     Bank loan payable                  80,925        77,320       137,156       147,443         8,216
     Mortgage loans payable            242,066       224,205       206,880        80,116        60,323
     Common and other
         stockholders' equity          275,880       296,199       296,644       345,249       345,887

Other Data:
     Net cash provided by
         operating activities         $ 47,082      $ 45,703      $ 45,191      $ 37,370      $ 24,583
     Net cash provided (used) by
           investing activities         (6,977)       70,127       (71,467)     (166,187)     (179,821)
     Net cash provided (used) by
           financing activities        (37,753)     (114,254)       26,574       128,742       155,271
     Funds From Operations(2)           45,250        43,801        44,257        40,480        25,044
     Dividends declared per share     $   1.86      $   1.74      $   1.56      $   1.32      $   1.13
</TABLE>

     (1) Effective July 2002, the Company corrected its accounting treatment for
fees incurred under its contractual relationship with Bedford Acquisitions, Inc.
("BAI") (see Note 6 of the accompanying consolidated financial statements),
commencing in the fourth quarter of 1997 and continuing through the quarter
ended June 30, 2002. This new treatment was based on the Company's independent
auditors' advice that they would no longer support the prior method of
accounting for BAI. The Company has been advised by its independent auditors
that the correction of the accounting treatment for fees paid to BAI did not
arise from any change in the operations of BAI or the Company or the discovery
of any new facts relating to these operations. The Company's transactions with
BAI and the effects of those transactions have been disclosed in detail in each
Form 10-K, Form 10-Q, and Proxy Statement the Company filed with the SEC for all
periods affected. The Company has evaluated its independent auditors'
recommendation and agrees that, according to generally accepted accounting
principles, a change in accounting for transactions between the Company and BAI
is appropriate. Effective October 1, 1997, fees charged by BAI should have been
deemed internal costs and expensed to the extent that such fees do not represent
payments to BAI for direct and incremental development costs or for independent
third party costs incurred by BAI on the Company's behalf. The Company has
restated its financial statements for all quarters commencing with the fourth
quarter of 1997 through the first quarter of 2002 to correct the accounting for
these services. The previously reported amounts and restated amounts for 2001,
2000 and 1999 are presented in Note 2 of the accompanying consolidated financial
statements. The previously reported amounts and restated amounts for 1998 and
1997 are as follows:


                                       39
<PAGE>

(Dollars in thousand, except per share amounts)

                                                    1998          1997
                                                 ----------    ----------

Operating Data:
       Net income:
           As reported                             $ 31,496      $ 31,291
           Restated                                  29,695        30,752
    Per common share - assuming dilution:
          Net income:
           As reported                             $   1.38      $   1.94
           Restated                                    1.30          1.91

Balance Sheet Data:
    Real estate investments:
           As reported                             $581,458      $423,086
           Restated                                 579,121       422,549
    Common and other stockholders' equity:
           As reported                              347,589       346,426
           Restated                                 345,249       345,887

Other Data:
    Net cash provided by
       operating activities:
           As reported                               38,949        25,041
           Restated                                  37,370        24,583
    Net cash used by investing activities:
           As reported                             (168,018)     (180,358)
           Restated                                (166,187)     (179,821)
    Net cash provided by financing activities:
           As reported                              128,994       155,350
           Restated                                 128,742       155,271
    Funds From Operations:
           As reported                               42,312        25,582
           Restated                                  40,480        25,044

     (2) Management considers Funds From Operations to be one measure of the
performance of an equity REIT. Funds From Operations is used by financial
analysts in evaluating REITs and can be one measure of a REIT's ability to make
cash distributions. Presentation of this information provides the reader with an
additional measure to compare the performance of REITs. Funds From Operations
generally is defined by the National Association of Real Estate Investment
Trusts as net income (loss) (computed in accordance with accounting principles
generally accepted in the United States of America), excluding extraordinary
items such as gains (losses) from debt restructurings and sales of property,
plus depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Funds From Operations was computed by the
Company in accordance with this definition. It does not represent cash generated
by operating activities in accordance with accounting principles generally
accepted in the United States of America; it is not necessarily indicative of
cash available to fund cash needs and should not be considered as an alternative
to net income (loss) as an indicator of the Company's operating performance or
as an alternative to cash flow as a measure of liquidity. Further, Funds From
Operations as disclosed by other REITs may not be comparable to the Company's
presentation.


                                       40
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Overview

The following should be read in conjunction with the Selected Financial Data and
the consolidated financial statements and notes thereto, all of which are
included herein.

When used in this annual report, the words "believes," "anticipates" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those projected, including, but not limited to, those
set forth in the sections entitled "Potential Factors Affecting Future Operating
Results" and "Qualitative and Quantitative Disclosures About Market Risk" below.
Readers are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

Critical Accounting Policies and Estimates

In response to the SEC's Release Numbers 33-8040, "Cautionary Advice Regarding
Disclosure About Critical Accounting Policies," and 33-8056, "Commission
Statement about Management's Discussion and Analysis of Financial Condition and
Results of Operations," the Company has identified the following critical
accounting policies that affect its more significant judgments and estimates
used in the preparation of its consolidated financial statements. The
preparation of the Company's financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management of the Company to make estimates and judgments that affect the
reported amounts of assets and liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. On an on-going basis, the
Company evaluates its judgments and estimates, including those related to asset
impairment, rental income recognition and allowance for doubtful accounts. The
Company states these accounting policies in the notes to the consolidated
financial statements and at relevant sections in this discussion and analysis.
These estimates are based on the information that currently is available and on
various other assumptions that are believed to be reasonable under the
circumstances. Actual results could vary from those estimates and those
estimates could be different under different assumptions or conditions.

Real estate investments are recorded at cost less accumulated depreciation. The
cost of real estate investments includes the purchase price and other related
acquisition costs and cost to develop the properties including amounts paid to
BAI which are capitalizable. See "Related Party Transactions" for a description
of the Company's transactions with BAI. Development costs also include interest
and real estate taxes incurred during the construction period. Expenditures for
maintenance and repairs that do not add to the value or prolong the useful life
of the property are expensed. Expenditures for asset replacements or significant
improvements that extend the life or increase the property's value are
capitalized. Real estate properties are depreciated using the straight-line
method over estimated useful lives. When circumstances such as adverse market
conditions indicate a possible impairment of the value of a property, the
Company will initiate a review of the recoverability of the property's carrying
value. The review of recoverability is based on an estimate of the future
undiscounted cash flows (excluding interest charges) expected to result from the
real estate investment's use and eventual disposition. These cash flows consider
factors such as expected future operating income, trends and prospects, as well
as the effects of leasing demand, competition and other factors. If impairment
exists due to the inability to recover the carrying value of a real estate
investment, an impairment loss is recorded to the extent that the carrying value
exceeds the estimated fair value of the property. The carrying values of real
estate investments are classified as properties held for sale when management
has decided to sell the properties and the properties are actively marketed for
sale. Depreciation of these properties is discontinued at that time, but
operating revenues, interest and other operating expenses continue to be
recognized until the date of sale. If active marketing ceases, the properties
are reclassified as operating and depreciation is resumed effective with the
date the property was originally presented as held for sale.


                                       41
<PAGE>

The Company's impairment assessments are necessarily subjective in nature and
may result in a direct impact on its net income, because taking an impairment
loss results in an immediate negative adjustment to net income.

Base rental income is recognized on a straight-line basis over the terms of the
respective lease agreements. Differences between rental income recognized and
amounts contractually due under the lease agreements are credited or charged, as
applicable, to straight-line rent receivables. The amount of straight-line rent
receivable is included in other assets in the accompanying consolidated balance
sheets and is charged against income upon early termination of a lease or as a
reduction of gain on sale upon the sale of the property. Leases for both
industrial and office space generally contain provisions under which the tenants
reimburse the Company for a portion of property operating expenses and real
estate taxes and other recoverable costs incurred by the Company. These
reimbursable expenses are recorded as revenue by the Company when incurred.

The Company must make estimates of the uncollectibility of its accounts
receivable related to minimum rent, straight-line rent receivable, expense
reimbursements and other revenue or income. The Company specifically analyzes
accounts receivable and historical bad debts, tenant concentrations, tenant
credit worthiness, tenant security deposits, letters of credit and lease
guarantees provided by the tenant, current economic trends and changes in tenant
payment terms when evaluating the adequacy of the allowance for doubtful
accounts receivable. These estimates have a direct impact on the Company's net
income, because an increase in the Company's bad debt allowance would result in
lower net income.

Restatement

The financial statements for 2001, 2000 and 1999 have been restated as explained
in Note 2 of the accompanying consolidated financial statements. Management's
discussion and analysis below compares the restated 2001 results to the restated
2000 results, and the restated 2000 results to the restated 1999 results.

Results of Operations

The Company's operations consist of developing, owning and operating industrial
and suburban office properties located primarily in the western United States.

Variances in revenues, expenses, net income and cash flows in the years compared
below were due primarily to the acquisition, development and sale of operating
properties as follows:

<TABLE>
<CAPTION>
                            2001                          2000                         1999
                  -------------------------     -----------------------     -----------------------
                     Number of      Square         Number of    Square          Number of    Square
                     Properties      Feet          Properties    Feet           Properties    Feet
                  -------------------------     -----------------------     -----------------------
<S>                        <C>      <C>                <C>    <C>                   <C>     <C>
Acquisitions
------------
    Industrial             --          --              --          --               5       334,000
    Office                 --          --               1       165,000             4       280,000
                    -----------------------     -----------------------     -----------------------
                           --          --               1       165,000             9       614,000
                    =======================     =======================     =======================

Development
-----------
     Industrial             1        37,000             3       160,000             2       235,000
     Office                 4       185,000             2       103,000             3       154,000
                    -----------------------     -----------------------     -----------------------
                            5       222,000             5       263,000             5       389,000
                    =======================     =======================     =======================

Sales
-----
    Industrial              3       290,000            15       917,000             3       448,000
    Office                  1        52,000             5       314,000             1       114,000
                    -----------------------     -----------------------     -----------------------
                            4       342,000            20     1,231,000             4       562,000
                    =======================     =======================     =======================
</TABLE>


                                       42
<PAGE>

Comparison of 2001 to 2000

Income from Property Operations

Income from property operations (defined as rental income less rental expenses)
increased $462,000 or 1% in 2001 compared with 2000. This is due to an increase
in rental income of $2,431,000, partially offset by an increase in rental
expenses (which include operating expenses, real estate taxes, and depreciation
and amortization) of $1,969,000.

The increase in rental income and expenses is primarily attributable to the
property acquired in 2000 and properties developed during 2001 and 2000. These
acquisition and development activities increased rental income and rental
expenses in 2001 by $5,191,000 and $3,230,000, respectively, as compared to
2000. These increases were partially offset by the sale of fifteen industrial
properties and five office properties in 2000, and the sale of three industrial
properties and one office property in 2001, which resulted in a reduction in
rental income and rental expenses of $9,392,000 and $3,175,000, respectively, as
compared to 2000. The remaining increase in rental income of $6,632,000 is
primarily due to an increase in rental rates and expense recovery income. The
remaining increase of $1,914,000 in rental expenses is mainly due to increases
in real estate taxes, and depreciation and amortization expense.

Expenses

General and administrative expenses increased $2,173,000 or 50% in 2001 compared
to 2000, primarily as a result of $2,250,000 of BAI financing fees earned in
connection with the renewal of the $150 million credit facility in 2001,
partially offset by $120,000 of tax service fees accrued in 2000 for a cost
segregation study performed by the Company's outside accountants. Interest
expense, which includes amortization of loan fees, decreased $2,227,000 or 9% in
2001 compared with 2000. The decrease is attributable to lower interest rates on
the Company's variable rate debt and a lower weighted average outstanding debt
balance in 2001 as compared to 2000. The amortization of loan fees was
$1,573,000 and $1,597,000 for 2001 and 2000, respectively.

Other (Expense) Income

During 2001, the Company recorded $526,000 in other expense. This sum represents
$400,000 for litigation accruals and $126,000 of pre-development costs incurred
for a project in Denver that was subsequently abandoned due to deterioration in
market conditions. During 2000, the Company recorded $615,000 in other income.
This sum represents a forfeited earnest money deposit from a buyer who failed to
perform under the terms of the Purchase and Sale Agreement for a property
located in Tempe, Arizona.

Gain on Sales of Real Estate Investments, Net

In the fourth quarter 2001, the Company sold two industrial properties in
Denver, Colorado, an industrial property in Tempe, Arizona, and an office
property in Tucson, Arizona for net sale prices totaling $19,282,000, which
resulted in an aggregate gain of approximately $5,976,000.

In the first quarter 2000, the Company sold an industrial property in San Jose,
California and two industrial properties in Beaverton, Oregon for net sale
prices totaling $36,338,000, which resulted in an aggregate gain of
approximately $15,234,000.

In the second quarter 2000, the Company sold an industrial property in San
Diego, California for a net sale price of $2,165,000, which resulted in a gain
of approximately $10,000.

In the third quarter 2000, the Company sold three office properties, ten
industrial properties, and a .99 acre parcel of land for net sale prices
totaling $74,773,000, which resulted in an aggregate net gain of approximately
$20,365,000. The properties were located in Mountain View, California; Bellevue,
Washington; Overland Park and Lenexa, Kansas; Kansas City, Missouri; and Austin,
Texas.

In the fourth quarter 2000, the Company sold an office property in Overland
Park, Kansas, an office property in Austin, Texas, and an industrial property in
Farmers Branch, Texas, which included 1.43 acres of land. These properties were
sold for net sale prices totaling $17,306,000, which resulted in an aggregate
net gain of $2,795,000.


                                       43
<PAGE>

Dividends

Common stock dividends to stockholders and distributions to Operating
Partnership (OP) Unitholders declared for the first and second quarters of 2001
were $0.45 per share or OP Unit, and $0.48 per share or OP Unit for the third
and fourth quarters. Consistent with the Company's policy, dividends and
distributions were paid in the quarter following the quarter in which they were
declared.

Comparison of 2000 to 1999

Income from Property Operations

Income from property operations (defined as rental income less rental expenses)
increased $3,087,000 or 6% in 2000 compared with 1999. This is due to an
increase in rental income of $6,991,000, partially offset by an increase in
rental expenses (which include operating expenses, real estate taxes and
depreciation and amortization) of $3,904,000.

The increase in rental income and expenses is primarily attributable to
properties acquired and properties developed during 2000 and 1999. These
acquisition and development activities increased rental income and rental
expenses in 2000 by $9,513,000 and $4,367,000, respectively, as compared to
1999. These increases were partially offset by the sale of one office property
and three industrial properties in 1999, and the sale of fifteen industrial
properties and five office properties in 2000, which resulted in a reduction in
rental income and rental expenses of $7,300,000 and $2,946,000, respectively, as
compared to 1999. The remaining increase in rental income of $4,778,000 is
primarily due to an increase in rental rates and expense recovery income. The
remaining increase of $2,483,000 in rental expenses is mainly due to increases
in property tax assessments, management fees and electricity costs.

Expenses

General and administrative expenses increased $556,000 or 11% in 2000 compared
to 1999, primarily as a result of increased costs in 2000 associated with stock
compensation benefits and $120,000 of tax service fees accrued for a cost
segregation study performed by the Company's outside accountants. Interest
expense, which includes amortization of loan fees, increased $5,826,000 or 31%
in 2000 compared with 1999. The increase is attributable to the Company's higher
borrowing costs and related costs to finance the property acquisitions and
development activities during 1999 and 2000, the repurchase of shares since
November 1998, and higher amortization of loan fees in 2000. The amortization of
loan fees was $1,597,000 and $1,464,000 for 2000 and 1999, respectively.

Other (Expense) Income

During 2000, the Company recorded $615,000 in other income. This sum represents
a forfeited earnest money deposit from a buyer who failed to perform under the
terms of the Purchase and Sale Agreement for a property located in Tempe,
Arizona. The Company did not incur any amounts for other expense or income
during the year 1999.

Gain on Sales of Real Estate Investments, Net

In the first quarter 2000, the Company sold an industrial property in San Jose,
California and two industrial properties in Beaverton, Oregon for net sale
prices totaling $36,338,000, which resulted in an aggregate gain of
approximately $15,234,000.

In the second quarter 2000, the Company sold an industrial property in San
Diego, California for a net sale price of $2,165,000, which resulted in a gain
of approximately $10,000.

In the third quarter 2000, the Company sold three office properties, ten
industrial properties, and a .99 acre parcel of land for net sale prices
totaling $74,773,000, which resulted in an aggregate net gain of approximately
$20,365,000. The properties were located in Mountain View, California; Bellevue,
Washington; Overland Park and Lenexa, Kansas; Kansas City, Missouri; and Austin,
Texas.

In the fourth quarter 2000, the Company sold an office property in Overland
Park, Kansas, an office property in Austin, Texas, and an industrial property in
Farmers Branch, Texas, which included 1.43 acres of land. These properties were


                                       44
<PAGE>

sold for net sale prices totaling $17,306,000, which resulted in an aggregate
net gain of $2,795,000.

In the first quarter 1999, the Company sold an industrial property in South San
Francisco, California for a net sale price of $1,789,000, which resulted in a
gain of approximately $540,000.

In the second quarter 1999, the Company sold an office property in Salt Lake
City, Utah and a 1.35 acre parcel of land in Vista, California for net sale
prices totaling $13,545,000, which resulted in an aggregate gain of
approximately $7,048,000.

In the third quarter 1999, the Company sold an industrial property in Modesto,
California for a net sale price of $4,012,000, which resulted in a gain of
approximately $218,000.

In the fourth quarter 1999, the Company sold an industrial property in Lenexa,
Kansas for a net sale price of $4,895,000, which resulted in a loss of
approximately $10,000.

Dividends

Common stock dividends to stockholders and distributions to OP Unitholders
declared for the first and second quarters of 2000 were $0.42 per share or OP
Unit, and $0.45 per share or OP Unit for the third and fourth quarters.
Consistent with the Company's policy, dividends and distributions were paid in
the quarter following the quarter in which they were declared.

Liquidity and Capital Resources

The Company expects to fund the cost of acquisitions, capital expenditures,
costs associated with lease renewals and reletting of space, repayment of
indebtedness, share repurchases, and development of properties from (i) cash
flow from operations, (ii) borrowings under the credit facility and, if
available, other indebtedness (which may include indebtedness assumed in
acquisitions), and (iii) the sale of certain real estate investments.

The Company's cash and cash equivalents increased to $5,512,000 at December 31,
2001, from $3,160,000 at December 31, 2000. This increase is due to $47,082,000
of cash provided from operations, partially offset by $6,977,000 and $37,753,000
used by investing activities and financing activities, respectively.

Net cash of $47,082,000 provided by operating activities consisted primarily of
$49,386,000 of net income adjusted for non-cash items, and a $2,304,000 net
increase in working capital. The net increase in working capital resulted from
an increase in other liabilities, partially offset by expenditures incurred by
the Company in acquiring other assets and a decrease in accounts payable and
accrued expenses.

Net cash of $6,977,000 used for investing activities consisted of cash used for
investments in real estate of $26,259,000, offset by net proceeds from sales of
real estate investments of $19,282,000. Cash used for investments in real estate
of $26,259,000 consists of $20,873,000 in developments costs, and $5,386,000 of
investments in existing properties. The Company expects to have capital
expenditures of approximately $9,900,000 for 2002.

Net cash used by financing activities of $37,753,000 consisted of repayments of
bank borrowings and mortgage loans of $61,552,000, payment of dividends and
distributions of $31,767,000, the repurchase of 1,394,018 shares of stock for
$27,346,000, and the redemption of 5,932 shares of OP Units for $131,000, offset
by net proceeds from bank borrowings and mortgage loans of $80,747,000 and net
proceeds from stock options exercised by employees and directors of $2,296,000.

The Company's ability to continue to finance its operations is subject to
several uncertainties. For example, the Company's ability to obtain mortgage
loans on income producing property is dependent upon the ability to attract and
retain tenants and the economics of the various markets in which the properties
are located, as well as the willingness of mortgage-lending institutions to make
loans secured by real property. The Company's ability to sell real estate


                                       45
<PAGE>

investments is partially dependent upon the ability of purchasers to obtain
financing at reasonable commercial rates.

In May 2001, the Company renewed its revolving credit facility with a bank group
led by Bank of America. The facility, which matures on June 1, 2004, consists of
a $150 million secured line with an accordion feature which allows the Company
at its option to expand the facility to $175 million, if needed. Interest on the
facility is at a floating rate equal to either the lender's published "reference
rate" or LIBOR plus a margin ranging from 1.30% to 1.55% depending on the
Company's leverage level. As of December 31, 2001, the facility had an
outstanding balance of $80,925,000 and an effective interest rate of 4.99%.

In August 2001, the Company obtained $18 million of mortgage financing from
Washington Mutual Bank. The loan has a 10-year term and bears interest at a
floating rate of a trailing one-year treasury rate plus 2.60% (an effective rate
of 7.92% as of December 31, 2001). The trailing one-year treasury rate, which is
calculated by averaging the previous twelve months' rates, is adjusted every six
months with a minimum and maximum 1% change over the previous six month rate.
Proceeds from the loan were used to pay down a portion of the outstanding
balance of the $150 million line of credit.

In November 2001, the Company obtained $21,819,000 of new first mortgage
financing from Union Bank of California. The financing, a renewal of an existing
mortgage with the same lender, consists of a three-year loan, bearing interest
at a floating rate of LIBOR plus 1.60% (an effective rate of 4.02% as of
December 31, 2001). The old loan, which had an outstanding balance of
approximately $14 million and a maturity date of January 2, 2002, carried a
fixed interest of 7.50%. The $21,819,000 mortgage is collaterized by the same
property pool as the expiring loan, namely nine properties located in
California. Proceeds of the new mortgage loan were used to pay off the expiring
mortgage and to pay down a portion of the outstanding balance of the Company's
credit facility.

On August 2, 2002 we obtained from our bank group a $40,000,000 commitment for
an unsecured bridge facility that is to be funded upon the acquisition of
additional real estate.

The Company was in compliance with the covenants and requirements of its various
debt financings during the year ended December 31, 2001. The Company anticipates
that the cash flow generated by its real estate investments and funds available
under the above credit facility will be sufficient to meet its short-term
liquidity requirements.

Contractual Obligations and Commercial Commitments

The following summarizes the Company's contractual obligations and other
commitments at December 31, 2001, and the effect such obligations could have on
its liquidity and cash flow in future periods (in thousands):

<TABLE>
<CAPTION>
                                                Amount of Commitment Expiring by Period
                                    --------------------------------------------------------------
                                       Less
                                       than        1-3          4-5        Over 5
                                      1 year      Years        Years        Years        Total
                                    --------------------------------------------------------------
<S>                                   <C>        <C>          <C>          <C>         <C>
Bank Loan Payable                     $ --       $ 80,925     $   --       $  --       $ 80,925
Mortgage Loans Payable                 5,048       48,501      103,822      84,695      242,066
Construction Contract Commitments      1,584         --           --          --          1,584
Standby Letters of Credit              2,096         --           --          --          2,096
                                    --------------------------------------------------------------

Total                                 $8,728     $129,426     $103,822     $84,695     $326,671
                                    ==============================================================
</TABLE>

Related Party Transactions


                                       46
<PAGE>

Prior to July 1, 2002 the Company's activities relating to the acquisition of
new properties, sales of Company owned real estate, development of real
property, and financing arrangements were performed by Bedford Acquisitions,
Inc., (BAI), a corporation wholly-owned by Peter Bedford, the Company's Chairman
of the Board and Chief Executive Officer. The Company used the services of BAI
for its acquisition, disposition, financing and development activities because
the Company incurred expenses related only to those transactions which were
successfully completed. These services were provided pursuant to written
agreements (renewable annually since January 1, 1995), which provide that BAI
was obligated to provide services to the Company with respect to the Company's
acquisition, disposition, financing and development activities, and that BAI was
responsible for the payment of expenses incurred for these activities. BAI was
required to submit to the Company a cost estimate for the Company's approval
relating to each activity, setting forth the estimated timing and amount of all
projected BAI costs relating to such activities. Pursuant to the agreement, Mr.
Bedford was obligated to pay BAI's expenses described above if BAI failed to
make any such payments in a timely fashion, provided that Mr. Bedford was not
obligated to pay any such amounts exceeding $1 million or following a
termination of BAI's obligations based on the expiration or termination of the
term of the agreement.

This arrangement provided that BAI earned a success fee in an amount equal to 1
1/2% of the purchase price of property acquisitions, 1 1/2% of the sale price of
dispositions, up to 1 1/2% of the amount of any loans (less third-party
commissions), and up to 7% of the development costs. The total amount of such
fees payable to BAI by the Company was limited to the lesser of: (i) the
aggregate amount of such fees earned, or (ii) the aggregate amount of approved
expenses incurred by BAI through the time of such acquisition, disposition,
financing or development activity.

On August 14, 2002, the Company announced that effective July 1, 2002, it was
terminating the agreement with BAI and had hired its former employees.

For the years ended December 31, 2001, 2000, and 1999, the Company paid BAI an
aggregate amount of approximately $2,816,000, $2,431,000 and $2,783,000,
respectively, for acquisition, disposition, financing, and development
activities performed pursuant to this arrangement. As of December 31, 2001 and
2000, the Company had an accrued liability of $1,945,000 and $866,000,
respectively, for fees earned by BAI in excess of amounts paid to BAI by the
Company under the agreement.

At December 31, 2001 and 2000, the Company did not have any other relationships
with unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes. As such, the Company is not
materially exposed to any financing, liquidity, market or credit risk that could
arise if the Company had engaged in such relationships.

Potential Factors Affecting Future Operating Results

Many factors affect the Company's actual financial performance and may cause the
Company's future results to be different from past performance or trends. These
factors include the following:

Change in Accounting for Costs Associated with Acquisitions, Financings and
Development costs

The Company is currently evaluating the impact of the accounting treatment for
certain costs related to development, acquisitions and financings on future
operating results. Based on the 2001, 2000 and 1999 net income, the Company
anticipates that the effect will not be material for 2002.

Economic Environment

Both the national economy and the economies of the western states in which the
Company owns, manages and develops properties have been and continue to be in a
recession. The early indicators of how this affects the real estate industry in
general, and the Company in particular, are slightly reduced occupancy rates,
flattening of growth in market rental


                                       47
<PAGE>

rates, and reduced activity levels in the flow of prospective tenants for space
currently available for lease.

The Company's property types and locations provide some degree of risk
diversification but are not immune to a prolonged down cycle in the real estate
markets in which the Company operates. Although the Company believes it is well
positioned to meet the challenges ahead, it is possible that further reductions
in occupancy rates and the absence of rental rate growth, or even reductions in
market rental rates, will result in reduction of rental revenues, operating
income, cash flows, and the market value of the Company's shares. Prolonged
recession could also affect the Company's ability to obtain financing at
acceptable rates of interest and to access funds from the disposition of
properties at acceptable disposition prices.

These conditions and those that follow and many other factors affect the
Company's actual financial performance and may cause the Company's future
results to be markedly outside of the Company's current expectations.

Interest Rate Fluctuations

At the present time, borrowings under the Company's credit facility, the $4.6
million and $21.8 million mortgage loans from Union Bank, the $30.9 million
mortgage loans from Security Life of Denver Insurance Company, and the $18.0
million mortgage loan from Washington Mutual bear interest at floating rates.
The floating interest rate on the $30.9 million mortgage loans has been fixed
for a period of one year with interest swap agreements which expire on July 1,
2002. The LIBOR rate on the $21.8 million mortgage loan has been fixed for a
period of one year. Its effective interest rate of 4.02% expires on December 20,
2002. The Company recognizes that its results from operations may be negatively
impacted by future increases in interest rates and substantial additional
borrowings to finance property acquisitions, development projects and share
repurchases.

Lease Renewals

While the Company historically has been successful in renewing and reletting
space, the Company is subject to the risk that certain leases expiring in 2002
and beyond may not be renewed, or the terms of renewal may be less favorable to
the Company than current lease terms. The Company expects to incur costs in
making improvements or repairs to its portfolio of properties required by new or
renewing tenants and expects to incur expenses associated with brokerage
commissions payable in connection with the reletting of space.

Inflation

Most of the leases require the tenants to pay their share of operating expenses,
including common area maintenance, real estate taxes and insurance, thereby
reducing the Company's exposure to increases in costs and operating expenses
resulting from inflation. Inflation, including escalations in electricity costs
in California and neighboring states, however, could result in an increase in
the Company's borrowing and other operating expenses.

Government Regulations

The Company's properties are subject to various federal, state and local
regulatory requirements such as local building codes and other similar
regulations. The Company believes its properties are currently in substantial
compliance with all applicable regulatory requirements, although expenditures at
its properties may be required to comply with changes in these laws. No material
expenditures are contemplated at this time in order to comply with any such laws
or regulations.

Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real estate is liable for the costs of removal or
remediation of certain hazardous or toxic substances released on, above, under,
or in such property. Such laws often impose such liability without regard to
whether the owner knew of, or was responsible for, the presence of such
hazardous or toxic substances. The costs of such removal or remediation could be
substantial. Additionally, the presence of such substances or the failure to
properly remediate such substances may adversely affect


                                       48
<PAGE>

the owner's ability to borrow using such real estate as collateral.

The Company believes that it is in compliance in all material respects with all
federal, state and local laws regarding hazardous or toxic substances, and the
Company has not been notified by any governmental authority of any non-
compliance or other claim in connection with any of its present or former
properties. Accordingly, the Company does not currently anticipate that
compliance with federal, state and local environmental protection regulations
will have any material adverse impact on the financial position, results of
operations or liquidity of the Company. There can be no assurance, however, that
future discoveries or events at the Company's properties, or changes to current
environmental regulations, will not result in such a material adverse impact.

Financial Performance

Management considers Funds From Operations (FFO) to be one measure of the
performance of an equity REIT. FFO during the three and twelve months ended
December 31, 2001 was $11,616,000 and $45,250,000, respectively. During the same
periods in 2000, FFO was $10,207,000 and $43,801,000, respectively. FFO is used
by financial analysts in evaluating REITs and can be one measure of a REIT's
ability to make cash distributions. Presentation of this information provides
the reader with an additional measure to compare the performance of REITs. FFO
is generally defined by the National Association of Real Estate Investment
Trusts as net income (loss) (computed in accordance with accounting principles
generally accepted in the United States of America), excluding extraordinary
items such as gains (losses) from debt restructurings and sales of property,
plus depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO was computed by the Company in accordance
with this definition. FFO does not represent cash generated by operating
activities in accordance with accounting principles generally accepted in the
United States of America; it is not necessarily indicative of cash available to
fund cash needs and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or as an
alternative to cash flow as a measure of liquidity. Further, FFO as disclosed by
other REITs may not be comparable to the Company's presentation.

<TABLE>
<CAPTION>
                                                      Three Months Ended           Twelve Months Ended
                                                         December 31,                  December 31,
                                                     2001           2000           2001           2000
                                                  ----------     ----------     ----------     ----------
<S>                                               <C>            <C>            <C>            <C>
Funds From Operations
  (in thousands, except share amounts):

             Net income                           $   13,069     $    9,227     $   34,950     $   68,307
             Add:
                 Depreciation and amortization         4,489          3,739         16,134         13,762
                 Minority interest                        34             35            142            136
                 (Gain) on sales of real
                   estate investments, net            (5,976)        (2,794)        (5,976)       (38,404)
                                                  ----------     ----------     ----------     ----------

             Funds From Operations                $   11,616     $   10,207     $   45,250     $   43,801
                                                  ==========     ==========     ==========     ==========

             Weighted average number of
                 shares - diluted                 16,531,537     17,666,761     17,045,493     18,501,905
                                                  ==========     ==========     ==========     ==========
</TABLE>


                                       49
<PAGE>

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to interest rate changes primarily as a result of its
line of credit and long-term debt used to maintain liquidity and fund capital
expenditures and expansion of the Company's real estate investment portfolio and
operations. The Company's interest rate risk management objective is to limit
the impact of interest rate changes on earnings and cash flows and to lower its
overall borrowing costs. To achieve its objectives, the Company balances its
borrowings between fixed and variable rate debt. While the Company has entered
into interest swap agreements to minimize its exposure to interest rate
fluctuations, the Company does not enter into derivative or interest rate
transactions for speculative purposes.

The Company's interest rate risk is monitored using a variety of techniques. The
table below presents the principal amounts, weighted average interest rates,
fair values and other terms required by year of expected maturity to evaluate
the expected cash flows and sensitivity to interest rate changes (dollars in
thousands):

<TABLE>
<CAPTION>
                                                                                                                      Fair
                                   2002        2003        2004        2005        2006    Thereafter     Total       Value
                                 --------    --------    --------    --------    --------    --------    --------    --------
<S>                                <C>         <C>       <C>          <C>            <C>      <C>        <C>         <C>
Variable rate LIBOR debt           $1,333      $1,840    $102,950     $28,842        $541     $15,551    $151,057    $151,057

Weighted average interest rate       5.19%       4.82%       4.80%       3.95%       7.92%       7.92%       4.97%       4.97%

Fixed rate debt                    $3,715     $21,278      $3,358     $27,710     $46,729     $69,144    $171,934    $181,813

Weighted average interest rate       7.11%       7.07%       7.36%       7.19%       7.67%       7.17%       7.30%       6.00%
</TABLE>

As the table incorporates only those exposures that exist as of December 31,
2001, it does not consider those exposures or positions which could arise after
that date. As a result, the Company's ultimate realized gain or loss with
respect to interest rate fluctuations will depend on the exposures that arise
during the period, the Company's hedging strategies at that time, and interest
rates.

On June 18, 2001, the Company entered into interest swap agreements with United
California Bank. The swap agreements allow the Company to hedge its exposure to
variable interest rates on two mortgages with remaining principal balances
totaling $26,425,000 by effectively paying a fixed rate of interest over the
term of the swap agreement. Interest rate pay differentials that arise under
these swap agreements are recognized in interest expense over the term of the
contracts. These interest rate swap agreements were considered to be fully
effective in hedging the variable rate risk associated with the two mortgages.


                                       50
<PAGE>

The following summarizes the principal value and fair value of the Company's
interest swap contracts. The principal value at December 31, 2001 provides an
indication of the extent of the Company's involvement in these contracts but
does not represent exposure to credit, interest rate or market risks (dollars in
thousands):

<TABLE>
<CAPTION>
    Principal       Fixed        Contract         Cumulative        Approximate Liability
    Amount(1)       Rate         Maturity       Cash Paid, Net     at December 31, 2001(2)
    ---------      ------        --------       --------------     -----------------------
<S>                 <C>             <C>              <C>                   <C>
     $22,878        5.55%      July 1, 2002          $128                  $268
       3,547        5.55%      July 1, 2002            29                    42
     -------                                         ----                  ----
     $26,425                                         $157                  $310
     =======                                         ====                  ====
</TABLE>

(1)  The principal amount is included in the table of qualitative and
     quantitative disclosure about market risk as variable rate LIBOR debt and
     fixed rate debt, as applicable.

(2)  Represents the approximate amount which the Company would have paid as of
     December 31, 2001 if the swap contracts were terminated.

To determine the fair values of derivative instruments in accordance with SFAS
133, the Company uses the discounted cash flow method, which requires the use of
assumptions about market conditions and risks existing at the balance sheet
date. Considerable judgment is required in interpreting market data to develop
estimates of market value. Accordingly, estimated fair value is a general
approximation of value, and such value may or may not actually be realized.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is submitted as a separate section of this Form 10-K.
See Item 14.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

The information required by Items 10 through 12 of Part III was incorporated by
reference from the Registrant's Proxy Statement which was mailed to
stockholders in connection with the Registrant's annual meeting of stockholders
on May 16, 2002.

ITEM 13. RELATED PARTY TRANSACTIONS

Acquisitions, Dispositions, Development and Financing Costs

Prior to July 1, 2002 the Company's activities relating to the acquisition of
new properties, sales of Company owned real estate, development of real
property, and financing arrangements were performed by Bedford Acquisitions,
Inc., (BAI), a corporation wholly-owned by Peter Bedford, the Company's Chairman
of the Board and Chief Executive Officer. The Company used the services of BAI
for its acquisition, disposition, financing and development activities because
the Company incurred expenses related only to those transactions which were
successfully completed. These services were provided pursuant to written
agreements (renewable annually since January 1, 1995), which provide that BAI
was obligated to provide services to the Company with respect to the Company's
acquisition, disposition, financing


                                       51
<PAGE>

and development activities, and that BAI was responsible for the payment of
expenses incurred for these activities. BAI was required to submit to the
Company a cost estimate for the Company's approval relating to each activity,
setting forth the estimated timing and amount of all projected BAI costs
relating to such activities. Pursuant to the agreement, Mr. Bedford was
obligated to pay BAI's expenses described above if BAI failed to make any such
payments in a timely fashion, provided that Mr. Bedford was not obligated to pay
any such amounts exceeding $1 million or following a termination of BAI's
obligations based on the expiration or termination of the term of the agreement.

This arrangement provided that BAI earned a success fee in an amount equal to 1
1/2% of the purchase price of property acquisitions, 1 1/2% of the sale price of
dispositions, up to 1 1/2% of the amount of any loans (less third-party
commissions), and up to 7% of the development costs. The total amount of such
fees payable to BAI by the Company was limited to the lesser of: (i) the
aggregate amount of such fees earned, or (ii) the aggregate amount of approved
expenses incurred by BAI through the time of such acquisition, disposition,
financing or development activity.

On August 14, 2002, the Company announced that effective July 1, 2002, it was
terminating the agreement with BAI and had hired its former employees.

For the years ended December 31, 2001, 2000, and 1999, the Company paid BAI an
aggregate amount of approximately $2,816,000, $2,431,000 and $2,783,000,
respectively, for acquisition, disposition, financing, and development
activities performed pursuant to this arrangement. As of December 31, 2001 and
2000, the Company had an accrued liability of $1,945,000 and $866,000,
respectively, for fees earned by BAI in excess of amounts paid to BAI by the
Company under the agreement.

At December 31, 2001 and 2000, the Company did not have any other relationships
with unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes. As such, the Company is not
materially exposed to any financing, liquidity, market or credit risk that could
arise if the Company had engaged in such relationships.

Other Transactions

Martin I. Zankel, a member of the Board of Directors of the Company, and his
associates provide legal services to the Company for which his firm was paid, in
the aggregate, $3,315 in 2001.

Indebtedness of Management

In September 1995, the Company established a Management Stock Acquisition
program, which was modified by the Board in December 1999. Under the program,
options exercised by key members of management may be exercised and paid for
with a note payable to the Company. Each note is due the earlier of nine years
and nine months after the date of the option grant or within ninety days from
termination of employment, with interest payable quarterly. Mr. Bedford, Mr.
Moore and Ms. Kihara, each of whom are executive officers of the Company, have
exercised options in the aggregate for 85,000, 5,000 and 12,750 shares of Common
Stock, respectively, in exchange for notes totaling $1,081,300, $88,125 and
$149,625, respectively. All of the notes are payable to the Company, bear
interest at 7.5% per annum, are full recourse and are secured in part by a
pledge to the Company of the Common Stock. As of February 28, 2002, $811,485,
$86,667 and $122,441, was the principal amount outstanding, respectively, under
the note owed by each of Mr. Bedford, Mr. Moore and Ms. Kihara.


                                       52
<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

A. 1.  Financial Statements

                                                                            Page
                                                                            ----

       Independent Auditors' Report.                                          F1

       Consolidated Balance Sheets as of December 31, 2001 and
       2000 - Restated.                                                       F2

       Consolidated Statements of Income for the years ended December 31,
       2001, 2000 and 1999 - Restated.                                        F3

       Consolidated Statements of Stockholders' Equity for the years ended
       December 31, 2001, 2000 and 1999 - Restated.                           F4

       Consolidated Statements of Cash Flows for the years ended December
       31, 2001, 2000 and 1999 - Restated.                                    F5

       Notes to Consolidated Financial Statements.                            F6


                                       53
<PAGE>

2. Financial Statement Schedule

                                                                            Page
                                                                            ----

     Schedule III - Real Estate and Accumulated Depreciation - Restated      F27

     All other schedules have been omitted as they are not applicable, or not
     required or because the information is given in the Consolidated Financial
     Statements or related Notes to Consolidated Financial Statements.

3. Exhibits

Exhibit No.                             List of Exhibits

3.1(a)    Articles of Incorporation of Bedford Property Investors, Inc. is
          incorporated herein by reference to Exhibit 4.2 of the Company's
          Registration Statement on Form S-2 (File No. 333-00921) filed on
          February 14, 1996.

3.1(b)    Articles of Amendment of Charter of Bedford Property Investors, Inc.
          is incorporated herein by reference to Exhibit 4.2 of the Company's
          Amendment No. 1 to its Registration Statement on Form S-2/A (File No.
          333-00921) filed on March 29, 1996.

3.1(c)    Articles of Amendment of Charter of Bedford Property Investors, Inc.
          is incorporated herein by reference to Exhibit 3.1 to the Company's
          Form 10-Q for the quarter ended June 30, 1997.

3.2       Amended and Restated Bylaws of the Company are incorporated herein by
          reference to Exhibit 3.2 to the Company's Form 10-K for the year ended
          December 31, 2000.

10.6(a)   BPIA Agreement dated as of January 1, 1995, by and between Westminster
          Holdings, Inc., a California corporation doing business as BPI
          Acquisitions and Bedford Property Investors, Inc., is incorporated
          herein by reference to Exhibit 10.6 (a) to the Company's Form 10-K for
          the year ended December 31, 2000.

10.6(b)   Amendment to BPIA Agreement dated as of January 1, 1997 is
          incorporated herein by reference to Exhibit 10.6(b) to the Company's
          Form 10-K for the year ended December 31, 2000.

10.6(c)   Second Amendment to BPIA Agreement dated as of January 1, 1999 is
          incorporated herein by reference to Exhibit 10.6(c) to the Company's
          Form 10-K for the year ended December 31, 2000.

10.6(d)   Third Amendment to BPIA Agreement dated as of December 10, 2000 is
          incorporated herein by reference to Exhibit 10.6(d) to the Company's
          Form 10-K for the year ended December 31, 2000.

10.6(e)   Fourth Amendment to BPIA Agreement dated as of December 10, 2000 is
          incorporated herein by reference to Exhibit 10.6(e) to the Company's
          Form 10-K for the year ended December 31, 2000.

10.6(f)   Fifth Amendment to BPIA Agreement dated as of November 10, 2001 is
          incorporated herein by reference to Exhibit 10.6(f) to the Company's
          Form 10-K for the year ended December 31, 2001.


                                       54
<PAGE>

10.13     Promissory Note dated March 20, 1996 executed by the Company and
          payable to the order of Prudential Insurance Company of America is
          incorporated herein by reference to Exhibit 10.13 to the Company's
          Amendment No. 1 to its Registration Statement on Form S-2 (File No.
          333-00921) filed on March 29, 1996.

10.14     Loan Agreement dated as of December 24, 1996 between Bedford Property
          Investors, Inc. as Borrower and Union Bank of California, N.A. as
          Lender is incorporated herein by reference to Exhibit 10.14 to the
          Company's Form 10-K for the year ended December 31, 1996.

10.15     The Company's Dividend Reinvestment and Stock Purchase Plan is
          incorporated herein by reference to the Company's post-effective
          Amendment No. 1 to its Registration Statement on Form S-3 (File No.
          333-33795) filed on November 20, 1997.

10.16     The Company's Amended and Restated Employee Stock Plan incorporated
          herein by reference to Exhibit 10.16 to the Company's Form 10-K for
          the year ended December 31, 1997.

10.18     The Company's Amended and Restated 1992 Directors' Stock Option Plan
          is incorporated herein by reference to Exhibit 10.18 to the Company's
          Form 10-K for the year ended December 31, 1997.

10.22     Promissory Note made as of May 28, 1999, by and between Bedford
          Property Investors, Incorporated and Teachers Insurance and Annuity
          Association of America is incorporated herein by reference to Exhibit
          10.22 to the Company's Form 10-Q for the quarter ended June 30, 1999.

10.23     Promissory Note made as of May 28, 1999, by and between Bedford
          Property Investors, Incorporated and Teachers Insurance and Annuity
          Association of America is incorporated herein by reference to Exhibit
          10.23 to the Company's Form 10-Q for the quarter ended June 30, 1999.

10.24     Promissory Note made as of May 28, 1999, by and between Bedford
          Property Investors, Incorporated and Teachers Insurance and Annuity
          Association of America is incorporated herein by reference to Exhibit
          10.24 to the Company's Form 10-Q for the quarter ended June 30, 1999.

10.28     Promissory Note made as of November 22, 1999, by and between Bedford
          Property Investors, Incorporated and Teachers Insurance and Annuity
          Association of America is incorporated herein by reference to Exhibit
          10.28 to the Company's Form 10-K for the year ended December 31, 1999.

10.29     Loan Agreement dated as of July 27, 2000, between Bedford Property
          Investors, Inc. as Borrower and Security Life of Denver Insurance
          Company as Lender is incorporated herein by reference to Exhibit 10.29
          to the Company's Form 10-Q for the quarter ended June 30, 2000.

10.30     Loan Agreement dated as of July 27, 2000, between Bedford Property
          Investors, Inc. as Borrower and Security Life of Denver Insurance
          Company as Lender is incorporated herein by reference to Exhibit 10.30
          to the Company's Form 10-Q for the quarter ended June 30, 2000.

10.31     Amended and Restated Promissory Note dated May 24, 1996 executed by
          the Company and payable to the order of Prudential Insurance Company
          of America is incorporated herein by reference to Exhibit 10.13 to the
          Company's Form 10-Q for the quarter ended June 30, 1996.


                                       55
<PAGE>

10.32     Loan Agreement dated as of January 30, 1998 between Bedford Property
          Investors, Inc. as Borrower and Prudential Insurance Company of
          America as Lender is incorporated herein by reference to Exhibit 10.15
          to the Company's Form 10-K for the year ended December 31, 1997.

10.34     Form of Retention Agreement is incorporated herein by reference to
          Exhibit 10.34 to the Company's Form 10-K for the year ended December
          31, 2000.

10.35     Fifth Amended and Restated Credit Agreement among Bedford Property
          Investors, Inc., The Banks Party Hereto, Bank of America, NA, as
          Administrative Agent for The Banks, Union Bank of California, NA, as
          Co-Agent, and Banc of America Securities LLC, as Sole Lead Arranger
          and Sole Book Manager, dated May 18, 2001 is incorporated herein by
          reference to Exhibit 10.35 to the Company's Form 10-Q for the quarter
          ended June 30, 2001.

10.36     Promissory Note, dated as of July 23, 2001, between Bedford Property
          Investors, Inc. as Borrower and Washington Mutual Bank as Lender is
          incorporated herein by reference to Exhibit 10.36 to the Company's
          Form 10-Q for the quarter ended June 30, 2001.

10.37     Interest Rate Protection Agreement, dated as of June 18, 2001, between
          Bedford Property Investors, Inc. and United California Bank, formerly
          Sanwa Bank California is incorporated herein by reference to Exhibit
          10.37 to the Company's Form 10-Q for the quarter ended June 30, 2001.

10.38     Interest Rate Protection Agreement, dated as of June 18, 2001, between
          Bedford Property Investors, Inc. and United California Bank, formerly
          Sanwa Bank California, is incorporated herein by reference to Exhibit
          10.38 to the Company's Form 10-Q for the quarter ended June 30, 2001.

10.39     Master Agreement, dated as of May 15, 2001, between Bedford Property
          Investors, Inc. and United California Bank, formerly Sanwa Bank
          California, is incorporated herein by reference to Exhibit 10.39 to
          the Company's Form 10-Q for the quarter ended June 30, 2001.

10.40     Amended and Restated Promissory Note, dated as of November 19, 2001,
          between Bedford Property Investors, Inc. as borrower and Union Bank of
          California, N.A. as lender is incorporated herein by reference to
          Exhibit 10.40 to the Company's Form 10-K for the year ended December
          31, 2001.

12*       Ratio of Earnings to Fixed Charges.

23.1*     Consent of KPMG LLP, independent auditors.

* Filed herewith


                                       56
<PAGE>

                          Independent Auditors' Report

To the Stockholders and the Board of Directors of
Bedford Property Investors, Inc.:

We have audited the consolidated financial statements of Bedford Property
Investors, Inc. and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
audited the consolidated financial statement schedule as listed in the
accompanying index. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 financial position of Bedford Property
Investors, Inc. and subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America. Also in our
opinion, the related consolidated financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

As discussed in note 2 to the consolidated financial statements, the Company has
restated its consolidated financial statements as of December 31, 2001 and 2000
and for each of the years in the three-year period ended December 31, 2001.

                                        KPMG LLP

San Francisco, California
February 11, 2002, except for notes 2 and 17 to the
   consolidated financial statements which are as of August 16, 2002


                                       F1
<PAGE>

                BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2001 AND 2000
               (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                             2001               2000
                                                       (Restated,          (Restated,
                                                      see Note 2)         see Note 2)
---------------------------------------------------------------------------------------
<S>                                                      <C>                <C>
Assets:

Real estate investments:
  Industrial buildings                                   $303,169           $305,352
  Office buildings                                        326,459            308,453
  Operating properties held for sale                       11,036              5,226
  Properties under development                               --               13,676
  Land held for development                                13,398             11,625
---------------------------------------------------------------------------------------
                                                          654,062            644,332
  Less accumulated depreciation                            48,984             35,821
---------------------------------------------------------------------------------------
                                                          605,078            608,511
Cash and cash equivalents                                   5,512              3,160
Other assets                                               20,215             19,179
---------------------------------------------------------------------------------------

                                                         $630,805           $630,850
=======================================================================================

Liabilities and Stockholders' Equity:

Bank loan payable                                        $ 80,925           $ 77,320
Mortgage loans payable                                    242,066            224,205
Accounts payable and accrued expenses                      11,653             15,665
Dividends and distributions payable                         7,962              8,005
Other liabilities                                          11,184              8,227
---------------------------------------------------------------------------------------

    Total liabilities                                     353,790            333,422
---------------------------------------------------------------------------------------

Minority interest in consolidated partnership               1,135              1,229
---------------------------------------------------------------------------------------
Stockholders' equity:
 Common stock, par value $0.02 per share;
   authorized 50,000,000 shares;
   issued and outstanding 16,515,200
   shares in 2001 and 17,709,738 shares in 2000               330                354
 Additional paid-in capital                               292,731            316,084
 Accumulated dividends in
  excess of net income                                    (16,871)           (20,239)
 Accumulated other comprehensive loss                        (310)              --
---------------------------------------------------------------------------------------
      Total stockholders' equity                          275,880            296,199
---------------------------------------------------------------------------------------
                                                         $630,805           $630,850
=======================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F2
<PAGE>

                BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 and 1999
               (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                  2001               2000                 1999
                                                              (Restated,          (Restated,           (Restated,
                                                             see Note 2)         see Note 2)          see Note 2)
-------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                 <C>                 <C>
Property operations:
    Rental income                                                $99,949             $97,518             $90,527
    Rental expenses:
       Operating expenses                                         16,122              16,814              14,550
       Real estate taxes                                           9,209               8,920               8,074
       Depreciation and amortization                              16,134              13,762              12,968
-------------------------------------------------------------------------------------------------------------------

Income from property operations                                   58,484              58,022              54,935

General and administrative expenses                               (6,506)             (4,333)             (4,889)
Interest income                                                      202                 500                 182
Interest expense                                                 (22,538)            (24,765)            (18,939)
Other (expense) income                                              (526)                615                --
-------------------------------------------------------------------------------------------------------------------

Income before gain on sales of real
    estate investments and minority interest                      29,116              30,039              31,289

Gain on sales of real estate investments, net                      5,976              38,404               7,796

Minority interest                                                   (142)               (136)               (128)
-------------------------------------------------------------------------------------------------------------------

Income before extraordinary item                                  34,950              68,307              38,957

Extraordinary item-loss on early extinguishment of debt             --                  --                  (298)
-------------------------------------------------------------------------------------------------------------------

Net income                                                       $34,950             $68,307             $38,659
===================================================================================================================

Earnings per share - basic:
   Income before extraordinary item                              $  2.09             $  3.75             $  1.83
   Extraordinary item-loss on early extinguishment of debt          --                  --                 (0.01)
-------------------------------------------------------------------------------------------------------------------

Net income per share - basic                                     $  2.09             $  3.75             $  1.82
===================================================================================================================

Weighted average number of shares - basic                     16,747,498          18,236,512          21,267,088
===================================================================================================================

Earnings per share - diluted:
   Income before extraordinary item                              $  2.06             $  3.70             $  1.82
   Extraordinary item-loss on early extinguishment of debt          --                  --                 (0.01)
-------------------------------------------------------------------------------------------------------------------

Net income per share - diluted                                   $  2.06             $  3.70             $  1.81
===================================================================================================================

Weighted average number of shares - diluted                   17,045,493          18,501,905          21,477,013
===================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F3
<PAGE>

                BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                       Accumulated     Accumulated      Total
                                                          Additional     dividends           other     stock-
                                                  Common     paid-in  in excess of   comprehensive   holders'
                                                   stock     capital    net income            loss     equity
----------------------------------------------------------------------------------------------------------------
<S>                                                 <C>     <C>           <C>              <C>       <C>
Balance, December 31, 1998
   (Restated, see Note 2)                           $453    $407,760      $(62,964)        $--       $345,249

Issuance of common stock                               6       1,001         --             --          1,007

Repurchase and retirement of common stock            (67)    (56,518)        --             --        (56,585)

Amortization of deferred compensation                --          977         --             --            977

Net income (Restated, see Note 2)                    --         --         38,659           --         38,659

Dividends to common stockholders
 ($1.56 per share)                                   --         --        (32,663)          --        (32,663)
----------------------------------------------------------------------------------------------------------------

Balance, December 31, 1999
   (Restated, see Note 2)                            392     353,220      (56,968)          --        296,644

Issuance of common stock                               8       3,221         --             --          3,229

Repurchase and retirement of common stock            (46)    (41,892)        --             --        (41,938)

Amortization of deferred compensation                --        1,535         --             --          1,535

Net income (Restated, see Note 2)                    --         --         68,307           --         68,307

Dividends to common stockholders
 ($1.74 per share)                                   --         --        (31,578)          --        (31,578)
----------------------------------------------------------------------------------------------------------------

Balance, December 31, 2000
   (Restated, see Note 2)                            354     316,084      (20,239)          --        296,199

Issuance of common stock                               4       2,254         --             --          2,258

Repurchase and retirement of common stock            (28)    (27,318)        --             --        (27,346)

Amortization of deferred compensation                --        1,711         --             --          1,711

Dividends to common stockholders
 ($1.86 per share)                                   --         --        (31,582)          --        (31,582)
----------------------------------------------------------------------------------------------------------------

Subtototal                                           330     292,731      (51,821)          --        241,240
----------------------------------------------------------------------------------------------------------------

Net income (Restated, see Note 2)                    --         --         34,950           --         34,950

Other comprehensive loss                             --         --           --            (310)         (310)
----------------------------------------------------------------------------------------------------------------

Comprehensive income (loss)                          --         --         34,950          (310)       34,640
----------------------------------------------------------------------------------------------------------------

Balance, December 31, 2001 (Restated, see Note 2)   $330    $292,731      $(16,871)       $(310)     $275,880
================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F4
<PAGE>

                BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                2001            2000           1999
                                                             (Restated,      (Restated,     (Restated,
                                                            see Note 2)     see Note 2)    see Note 2)
--------------------------------------------------------------------------------------------------------
<S>                                                             <C>          <C>           <C>
Operating Activities:
   Net income                                                   $34,950      $ 68,307      $ 38,659
   Adjustments to reconcile net income to net cash provided
           by operating activities:
       Minority interest                                            142           136           128
       Depreciation and amortization                             18,054        15,658        14,135
       Stock compensation amortization                            1,711         1,535           977
       Uncollectible accounts expense                               505            42           247
       Gain on sales of real estate investments, net             (5,976)      (38,404)       (7,796)
       Change in other assets                                    (3,393)       (6,857)       (4,683)
       Change in accounts payable and accrued expenses           (1,558)        4,931         1,534
       Change in other liabilities                                2,647           355         1,990
--------------------------------------------------------------------------------------------------------

Net cash provided by operating activities                        47,082        45,703        45,191
--------------------------------------------------------------------------------------------------------

Investing Activities:
   Investments in real estate                                   (26,259)      (60,454)      (95,708)
   Proceeds from sales of real estate investments, net           19,282       130,581        24,241
--------------------------------------------------------------------------------------------------------

Net cash (used) provided by investing activities                 (6,977)       70,127       (71,467)
--------------------------------------------------------------------------------------------------------

Financing Activities:
  Proceeds from bank loan payable                                55,467        79,624       141,972
  Repayments of bank loan payable                               (53,659)     (139,778)     (152,657)
  Proceeds from mortgage loans payable, net of loan costs        25,280        30,153       134,684
  Repayments of mortgage loans payable                           (7,893)      (13,566)       (8,995)
  Issuance of common stock                                        2,296         3,229         1,027
  Repurchase and retirement of common stock                     (27,346)      (41,938)      (56,585)
  Redemption of partnership units                                  (131)         --            (160)
  Payment of dividends and distributions                        (31,767)      (31,978)      (32,712)
--------------------------------------------------------------------------------------------------------

Net cash (used) provided by financing activities                (37,753)     (114,254)       26,574
--------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                         2,352         1,576           298
Cash and cash equivalents at beginning of year                    3,160         1,584         1,286
--------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of year                        $ 5,512      $  3,160      $  1,584
========================================================================================================

Supplemental disclosure of cash flow information
a) Non-cash investing and financing activities:
          Debt incurred with real estate acquired               $  --        $   --        $  5,602
b) Cash paid during the year for interest, net of amounts
          capitalized                                           $21,149      $ 23,372      $ 16,624
========================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F5
<PAGE>

                BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

Note 1 - Organization and Summary of Significant Accounting Policies and
Practices

The Company

Bedford Property Investors, Inc. (the "Company") is a Maryland real estate
investment trust with investments primarily in industrial and suburban office
properties concentrated in the western United States. The Company's common stock
trades under the symbol "BED" on both the New York Stock Exchange and Pacific
Exchange.

Critical Accounting Policies and Use of Estimates

In response to the SEC's Release Number 33-8040, "Cautionary Advice Regarding
Disclosure About Critical Accounting Policies," the Company identifies asset
impairment, and rental income recognition and allowance for doubtful accounts as
its critical accounting areas that affect its more significant judgments and
estimates used in the preparation of its consolidated financial statements. The
related accounting policies are included in this and other notes to the
consolidated financial statements and, as appropriate, in Management's
Discussion and Analysis of Financial Condition and Results of Operations.

The preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management of the Company to make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of financial statements, and the reported
amounts of revenues and expenses during the reporting periods. On an on-going
basis, the Company evaluates its judgments and estimates, including those
related to asset impairment, rental income recognition and allowance for
doubtful accounts. These judgments and estimates are based on the information
that currently is available and on various other assumptions that are believed
to be reasonable under the circumstances. Actual results could vary from those
estimates and those estimates could be different under different assumptions or
conditions. Future adverse changes in market conditions or poor operating
results could result in an inability to recover real estate investment carrying
values that may not be reflected in current carrying values and could require an
impairment charge in the future. Future adverse changes in market conditions
could also impact the Company's revenues earned from tenants and may affect the
adequacy of the allowance for doubtful accounts receivable.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
Bedford Realty Partners, L.P. All significant inter-entity balances have been
eliminated in consolidation.

Real Estate Investments

Real estate investments are recorded at cost less accumulated depreciation. The
cost of real estate investments includes the purchase price and other related
acquisition costs and cost to develop the properties including amounts paid to
BAI which are capitalizable (see Note 6). Development costs also include
interest and real estate taxes incurred during the construction period.
Expenditures for maintenance and repairs that do not add to the value or prolong
the useful life of the property are expensed. Expenditures for asset
replacements or significant improvements that extend the life or increase the
property's value are capitalized. Real estate investment costs are depreciated
using the straight-line method over estimated useful lives as follows: building
improvements - 45 years; tenant improvements - term of related lease. The
depreciable cost for buildings in development is based on the percentage of
leased space until the building becomes fully leased or one year after shell
completion. When circumstances such as adverse market conditions indicate a
possible impairment of the value of a property, the Company will initiate a
review of the recoverability of the property's carrying value. The review of
recoverability is based on an estimate of the future undiscounted cash flows
(excluding interest charges) expected to result from the real estate
investment's use and eventual disposition. These cash flows consider factors
such as expected future operating income, trends and prospects, as well as the
effects of leasing demand, competition and other factors. If impairment exists
due to the inability to recover the carrying value of a real estate investment,
an impairment loss is recorded to the extent that the carrying value exceeds
estimated fair value of the property. As of December 31, 2001 and 2000, none of
the Company's real estate assets was considered impaired. The carrying values of
real estate investments are classified as properties held for sale when
management has decided to sell the properties and the properties are actively
marketed for sale. Depreciation of these properties is discontinued at that
time, but operating revenues, interest and other operating expenses continue to
be recognized until the date of sale. If active marketing ceases, the properties
are reclassified as operating and depreciation is resumed effective with the
date the property


                                       F6
<PAGE>

was originally presented as held for sale.

Rental Income Recognition

Base rental income is recognized on a straight-line basis over the terms of the
respective lease agreements. Differences between rental income recognized and
amounts contractually due under the lease agreements are credited or charged, as
applicable, to straight-line rent receivable. The excess of straight-line rental
income over contractual rental income increased revenue by $1,055,000,
$2,597,000, and $2,797,000 for 2001, 2000, and 1999, respectively. Straight-line
rent receivable is included in other assets in the accompanying consolidated
balance sheets and is charged against income upon early termination of a lease
or as a reduction of gain on sale upon the sale of the property. Rental payments
received before they are recognized as income are recorded as prepaid income.
Leases for both industrial and office space generally contain provisions under
which the tenants reimburse the Company for a portion of property operating
expenses and real estate taxes and other recoverable costs incurred by the
Company. These reimbursable expenses are recorded as revenue by the Company when
incurred. The Company must make estimates of the uncollectibility of its
accounts receivable related to minimum rent, straight-line rent receivable,
expense reimbursements and other revenue or income. We specifically analyze
accounts receivable and historical bad debts, tenant concentrations, tenant
credit worthiness, tenant security deposits, letters of credit and lease
guarantees provided by the tenant, current economic trends and changes in our
tenant payment terms when evaluating the adequacy of the allowance for doubtful
accounts receivable.

Gain on Sales of Real Estate Investments

Gains from sales of real estate investments are recognized using the full
accrual method provided that various criteria relating to the terms of the
transactions and any subsequent involvement by the Company with the properties
sold are met. Gains or revenues relating to transactions which do not meet the
established criteria would be deferred and recognized when the criteria are met
or using the installment or cost recovery methods, as appropriate in the
circumstances.

Deferred Financing and Leasing Costs

Costs incurred for debt financing and property leasing are capitalized as
deferred costs. Deferred loan costs include amounts paid to lenders to obtain
financing. Such costs are amortized on a straight-line basis, which approximates
the interest method, over the term of the related loan. Amortization of deferred
financing costs is included in interest expense in the Company's income
statement. Deferred leasing costs include leasing commissions that are amortized
using the straight-line method over the term of the related lease. Unamortized
deferred leasing costs are included with the basis when a property is sold and
therefore reduce the gain on sale. Unamortized financing and leasing costs are
charged to expense in the event of prepayment of the debt or early termination
of the lease.

Federal Income Taxes

The Company has elected to be taxed as a real estate investment trust under
Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the
"Code"). A real estate investment trust is generally not subject to federal
income tax on that portion of its real estate investment trust taxable income
("Taxable Income") that is distributed to its stockholders, provided that at
least 90% of Taxable Income is distributed and other requirements are met. The
Company believes it is in compliance with the Code.

As of December 31, 2001, for federal income tax purposes, the Company had an
ordinary loss carry forward of approximately $19 million. As the Company does
not expect to incur income tax liabilities, there may be little or no value
realized from such carryforwards.

For federal income tax purposes, dividend distributions made for 2001 were
classified 80% as ordinary, 3% as unrecaptured section 1250 gain, and 17%
capital gain; dividend distributions made for 2000 were classified 2% as
ordinary, 19% as unrecaptured section 1250 gain, and 79% as capital gain;
dividend distributions made for 1999 were classified 97% as ordinary and 3% as
capital gain. The determination of the tax treatment for dividend distributions
is based on the Company's earnings and profits. Income reported for financial
reporting purposes will differ from earnings and profits for federal income tax
purposes primarily due to differences in the estimated lives used to calculate
depreciation.

Derivative Instruments and Hedging Activities

Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133 (SFAS


                                       F7
<PAGE>

133), "Accounting for Derivative Instruments and Hedging Activities," as
amended. SFAS 133, as amended, establishes accounting and reporting standards
for derivative financial instruments. Specifically, SFAS 133 requires an entity
to recognize all derivatives as either assets or liabilities in the statement of
financial position and to measure those instruments at fair value. Additionally,
the fair value adjustments will affect either other comprehensive income or net
income depending on whether the derivative instrument qualifies as a hedge for
accounting purposes and, if so, the nature of the hedging activity. The adoption
of SFAS 133 did not have a material impact on the Company's financial statements
(see Note 9).

The Company believes that its hedging derivative instruments are effective in
reducing the interest rate risk exposure that they are designated to hedge. This
effectiveness is essential for qualifying for hedge accounting. Instruments that
meet the hedging criteria are formally designated as hedges at the inception of
the derivative contract and changes in the fair value of the instrument are
included in other comprehensive income until the instrument matures. When the
terms of an underlying transaction are modified, or when the underlying hedged
item ceases to exist, all changes in the fair value of the instrument are
included in net income each period until the instrument matures. Any derivative
instrument used for risk management that does not meet the hedging criteria is
marked-to-market with changes in value included in net income for each period.

Stock-Based Compensation

The Company measures compensation expense for its employee stock-based
compensation plans using the intrinsic value method and has provided in Note 6
pro forma disclosures of the effect on net income and earnings per share as if
the fair value-based method had been applied in measuring compensation expense.

Per Share Data

Per share data are based on the weighted average number of common shares
outstanding during the year. Stock options issued under the Company's stock
option plans, non-vested restricted stock, and the limited partnership units of
Bedford Realty Partners, L.P. are included in the calculation of diluted per
share data if, upon exercise or vestiture, they would have a dilutive effect.

Cash and Cash Equivalents

The Company considers all demand deposits, money market accounts and temporary
cash investments to be cash equivalents. The Company maintains its cash and cash
equivalents at financial institutions. The combined account balances at each
institution periodically exceed the Federal Depository Insurance Corporation
("FDIC") insurance coverage, and, as a result, there is a concentration of
credit risk related to amounts on deposit in excess of FDIC insurance coverage.
The Company believes that the risk is not significant, as the Company does not
anticipate their non-performance.

Recent Accounting Pronouncements

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB Opinion No. 17,
"Intangible Assets." The Company will adopt SFAS No. 142 effective January 1,
2002. The Company has determined that the adoption of SFAS No. 142 will not have
a material impact on the Company's financial statements.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 supercedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." SFAS No. 144 applies to all long-lived assets (including
discontinued operations). SFAS No. 144 requires that long-lived assets that are
to be disposed of by sale be measured at the lower of book value or fair value
less cost to sell. The Company will adopt SFAS No. 144 effective January 1,
2002. The Company has determined that the adoption of SFAS No. 144 will not have
a material impact on the Company's financial statements.

Reclassifications

Certain prior year accounts have been reclassified to conform to the current
year presentation.


                                       F8
<PAGE>

Note 2 - Restatement

Effective July 1, 2002, the Company corrected its accounting treatment for fees
incurred under its contractual relationship with Bedford Acquisitions, Inc.
("BAI") (see Note 6), commencing in the fourth quarter of 1997 and continuing
through the quarter ended June 30, 2002. This new treatment was based on the
Company's independent auditors' advice that they would no longer support the
prior method of accounting for BAI. The Company has been advised by its
independent auditors that the correction of the accounting treatment for fees
paid to BAI did not arise from any change in the operations of BAI or the
Company or the discovery of any new facts relating to these operations. The
Company's transactions with BAI and the effects of those transactions have been
disclosed in detail in each Form 10- K, Form 10-Q, and Proxy Statement the
Company filed with the SEC for all periods affected. The Company has evaluated
its independent auditors' recommendation and agrees that, according to generally
accepted accounting principles, a change in accounting for transactions between
the Company and BAI is appropriate. Effective October 1, 1997, fees charged by
BAI should have been deemed internal costs and expensed to the extent that such
fees did not represent payments to BAI for direct and incremental development
costs or for independent third party costs incurred by BAI on the Company's
behalf. The Company has restated its financial statements for all quarters
commencing with the fourth quarter of 1997 through the first quarter of 2002 to
correct the accounting for these services. The previously reported amounts and
the restated amounts for the periods included in this report are as follows:

                                (Dollars in thousand, except per share amounts)

                                     December 31, 2001  December 31, 2000
                                -----------------------------------------------
Real estate investments (net of
    accumulated depreciation)
         As Reported                          $607,654           $611,444
         Restated                              605,078            608,511
Other Assets:
         As Reported                            22,728             19,562
         Restated                               20,215             19,179
Total Assets:
         As Reported                           635,894            634,166
         Restated                              630,805            630,850
Stockholders' equity:
         As Reported                           280,969            299,515
         Restated                              275,880            296,199


                                       F9
<PAGE>

<TABLE>
<CAPTION>
                                             Twelve months ended  Twelve months ended  Twelve months ended
                                                December 2001        December 2000      December 31, 1999
                                             -------------------------------------------------------------
<S>                                                <C>                  <C>                  <C>
Depreciation and amortization
    expense:
         As Reported                               $16,183              $13,812              $13,016
         Restated                                   16,134               13,762               12,968
General and administrative
    expenses:
         As Reported                                 4,063                4,209                3,561
         Restated                                    6,506                4,333                4,889
Interest expense:
         As Reported                                23,121               24,826               18,970
         Restated                                   22,538               24,765               18,939
Gain on sales of real estate investments, net:
         As Reported                                 5,938               38,171                7,743
         Restated                                    5,976               38,404                7,796
Net income:
         As Reported                                36,723               68,087               39,855
         Restated                                   34,950               68,307               38,659
Net income per share:
         As Reported:
              Basic                                $  2.19              $  3.73              $  1.87
              Diluted                              $  2.16              $  3.69              $  1.86
         Restated:
              Basic                                $  2.09              $  3.75              $  1.82
              Diluted                              $  2.06              $  3.70              $  1.81
</TABLE>

The 2002, 2001 and 1999 financial statements included herein and the
accompanying footnotes reflect these restated amounts.

Note 3 - Real Estate Investments

As of December 31, 2001, the Company's real estate investments were diversified
by property type as follows (dollars in thousands):

                                    Number of                Percent
                                   Properties        Cost   of Total
                                 --------------------------------------

Industrial buildings                       58     $303,169      46%
Office buildings                           29      326,459      50%
Operating properties held for sale          3       11,036       2%
Land held for development                  11       13,398       2%
                                 --------------------------------------

Total                                     101     $654,062     100%
                                 --------------------------------------


                                      F10
<PAGE>

Note 3 - Real Estate Investments (continued)

The following table sets forth the Company's real estate investments as of
December 31, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                                                     Less
                                                                    Development   Accumulated
                                                 Land     Building  In-Progress   Depreciation    Total
                                             -------------------------------------------------------------
<S>                                          <C>          <C>          <C>          <C>         <C>
Industrial buildings
--------------------
Northern California                          $ 43,459     $108,808     $ --         $14,809     $137,458
Arizona                                        18,676       53,509       --           5,880       66,305
Southern California                            19,092       45,425       --           5,450       59,067
Greater Seattle Area                            3,409       10,791       --           1,329       12,871
                                             -------------------------------------------------------------

Total industrial buildings                     84,636      218,533       --          27,468      275,701
                                             -------------------------------------------------------------

Office buildings
----------------
Northern California                             5,612       20,430       --           1,764       24,278
Arizona                                        10,588       25,480       --           2,142       33,926
Southern California                             9,340       22,001       --           2,367       28,974
Colorado                                       13,706       89,782       --           4,979       98,509
Greater Seattle Area                           16,669       99,897       --           8,337      108,229
Nevada                                          2,102       10,852       --           1,203       11,751
                                             -------------------------------------------------------------

Total office buildings                         58,017      268,442       --          20,792      305,667
                                             -------------------------------------------------------------

Operating properties held for sale
----------------------------------
Northern California                             1,810        9,226       --             724       10,312
                                             -------------------------------------------------------------

Total operating properties held for sale        1,810        9,226       --             724       10,312
                                             -------------------------------------------------------------

Land held for development
-------------------------
Northern California                             5,654         --         --            --          5,654
Arizona                                           637         --         --            --            637
Southern California                             3,168         --         --            --          3,168
Colorado                                        3,939         --         --            --          3,939
                                             -------------------------------------------------------------

Total land held for development                13,398         --         --            --         13,398
                                             -------------------------------------------------------------

Total as of December 31, 2001                $157,861     $496,201     $ --         $48,984     $605,078
                                             =============================================================

Total as of December 31, 2000                $160,495     $474,646     $9,191       $35,821     $608,511
                                             =============================================================
</TABLE>


                                      F11
<PAGE>

Company personnel directly manage all but one of the Company's properties from
regional offices in Lafayette, California; Tustin, California; Phoenix, Arizona;
Denver, Colorado; and Seattle, Washington. The Company has retained an outside
manager to assist in some of the management functions for the U.S. Bank Centre
in Reno, Nevada. All financial record-keeping is centralized at the Company's
corporate office in Lafayette, California.

Income from property operations for operating properties held for sale as of
December 31, 2001 was $1,110,000, $855,000, and $915,000 for the year ended
December 31, 2001, 2000, and 1999, respectively.

During 2001, 2000, and 1999, the Company capitalized interest costs relating to
properties under development totaling $1,303,000, $1,964,000, and $2,148,000,
respectively.

Note 4 - Consolidated Partnership

In December 1996, the Company formed Bedford Realty Partners, L.P. (the
"Operating Partnership"), with the Company as the sole general partner, for the
purpose of acquiring real estate. In exchange for contributing a property into
the Operating Partnership, the owners of the property received limited
partnership units ("OP Units"). A limited partner can seek redemption of the OP
Units at any time. The Company, at its option, may redeem the OP Units by either
(i) issuing common stock at the rate of one share of common stock for each OP
Unit, or (ii) paying cash to a limited partner based on the average trading
price of its common stock. Each OP Unit is allocated partnership income and cash
flow at a rate equal to the dividend being paid by the Company on a share of
common stock. Additional partnership income and cash flow is allocated
approximately 99% to the Company and 1% to the limited partners.

This acquisition strategy is referred to as a "Down REIT" transaction; as long
as certain tax attributes are maintained, the income tax consequences to a
limited partner are generally deferred until such time as the limited partner
redeems their OP Units.

On December 17, 1996, the Company acquired a $3.6 million industrial property
located in Modesto, California utilizing the Operating Partnership. The sellers
of the property received 108,497 OP Units. A director of the Company was a 9%
owner of the property, but did not participate in the approval of the
acquisition. In December 1999, the Modesto, California property was exchanged
for a property located in Phoenix, Arizona. As of December 31, 2001, the Company
has redeemed 36,437 OP Units for cash.

Effective January 15, 2002, the Company exercised its option to redeem the
remaining outstanding 72,060 OP Units of the limited partners of Bedford Realty
Partners, L.P. The OP Units were redeemed by either (i) issuing Company common
stock at the rate of one share of common stock for each OP Unit, or (ii) paying
cash to the limited partner based on the closing trading price of its common
stock, whichever the limited partner preferred. Effective January 15, 2002, the
operating property, Diablo Business Center, a nine building service center flex
complex which was held in the Bedford Realty Partners' partnership, is
wholly-owned by the Company.

Note 5 - Leases

Minimum future lease payments to be received as of December 31, 2001 are as
follows (in thousands):

                 2002                              $ 79,800
                 2003                                73,784
                 2004                                56,049
                 2005                                35,048
                 2006                                20,116
                 Thereafter                          38,561
                                                   --------
                                                   $303,358
                                                   ========

The total minimum future lease payments shown above do not include tenants'
obligations for reimbursement of operating expenses or taxes as provided by the
terms of certain leases.


                                      F12
<PAGE>

Note 6 - Related Party Transactions

Prior to July 1, 2002, the Company's activities relating to the acquisition of
new properties, sales of real estate, development of real property, and
financing arrangements were performed by Bedford Acquisitions, Inc. (BAI), a
corporation wholly owned by Peter Bedford, the Company's Chairman of the Board
and Chief Executive Officer. The Company uses the services of BAI for its
acquisition, disposition, financing and development activities because the
Company incurs expenses related only to those transactions which were
successfully completed. These services were provided pursuant to written
agreements (renewable annually since January 1, 1995), which provide that BAI
was obligated to provide services to the Company with respect to the Company's
acquisition, disposition, financing and development activities, and that BAI was
responsible for the payment of expenses incurred for these activities.

This arrangement provided that BAI earned a success fee in an amount equal to 1
1/2% of the purchase price of property acquisitions, 1 1/2% of the sale price of
dispositions, up to 1 1/2% of the amount of any loans secured (less third-party
commissions), and up to 7% of the development costs incurred. The total amount
of such fees payable to BAI by the Company was limited to the lesser of: (i) the
aggregate amount of such fees earned, or (ii) the aggregate amount of approved
expenses incurred by BAI through the time of such acquisition, disposition,
financing or development activity.

As discussed in Note 2, BAI fees incurred and reported as capitalized costs
during the period from October 1, 1997 through March 31, 2002 have been restated
in the prior periods and in the accompanying financial statements as expenses.

For the years ended December 31, 2001, 2000, and 1999, the Company paid BAI an
aggregate amount of approximately $2,816,000, $2,431,000 and $2,783,000,
respectively, for acquisition, disposition, financing, and development
activities performed pursuant to the foregoing arrangement. As of December 31,
2001 and 2000, the Company had an accrued liability of $1,945,000 and $866,000,
respectively, for fees earned by BAI in excess of amounts paid to BAI by the
Company under the agreement.

At December 31, 2001 and 2000, the Company did not have any other relationships
with unconsolidated entities or financial partnerships, including entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes. As such, the Company is not
materially exposed to any financing, liquidity, market or credit risk that could
arise if the Company had engaged in such relationships.

Martin I. Zankel, a member of the Board of Directors, and his associate provide
legal services to the Company in which his firm was paid, in the aggregate,
$3,315 in 2001, $5,854 in 2000 and $7,876 in 1999.


                                      F13
<PAGE>

Note 7 - Stock Compensation Plans

Initially 900,000 shares of the Company's Common Stock were reserved for
issuance under the Employee Stock Option Plan (the "Employee Plan"). In May
1998, the shareholders approved an additional 2,100,000 shares. The Employee
Plan expires in 2003. The Employee Plan provides for non-qualified stock
options, incentive stock options, and grants of restricted stock.

The Employee Plan is administered by the Compensation Committee of the Board of
Directors, which determines the terms of options granted, including the exercise
price, the number of shares subject to the option, and the exercisability of the
options. Options granted to employees are exercisable upon vesting, and
typically vest over a four-year period.

The Employee Plan requires that the exercise price of incentive stock options be
at least equal to the fair market value of such shares on the date of grant and
that the exercise price of non-qualified stock options be equal to at least 85%
of the fair market value of such shares on the date of the grant. The maximum
term of options granted is ten years.

In September 1995, the Company established a Management Stock Acquisition
program which was subsequently modified by the Board in 1999. Under the program,
certain options may be exercised by option holders with a recourse note payable
to the Company. Such note bears interest at 7.5% which approximated the market
rate at the time of issuance. The note is due on the first of nine years and
nine months after the date of the grant or within ninety days from termination
of employment, with interest payable quarterly. From the beginning of the
program through December 31, 2001, options for 205,750 shares of Common Stock
were exercised in exchange for notes payable to the Company. The unpaid balance
of the notes was $1,230,000 and $2,150,000 at December 31, 2001 and 2000,
respectively, and is included in the accompanying consolidated balance sheets as
a reduction of additional paid-in capital.

In addition, the Company may grant restricted stock to employees pursuant to the
Employee Plan. These shares generally vest over five years and are subject to
forfeiture under certain conditions. From 1997 through December 31, 2001, the
Company has granted 510,382 shares of restricted stock net of forfeitures.
Deferred compensation associated with unvested restricted stock was $4,612,000
and $4,003,000 as of December 31, 2001 and 2000, respectively, and is included
in the accompanying consolidated balance sheets as a reduction of additional
paid-in capital.

Initially 250,000 shares of the Company's Common Stock were reserved for
issuance under the Directors' Stock Option Plan (the "Directors' Plan"). In May
1996 and 1998, the shareholders approved an additional 250,000 shares and
500,000 shares, respectively. The Directors' Plan expires in 2002. The
Directors' Plan provides for the grant of non-qualified stock options to
directors of the Company. The Directors' Plan contains an automatic grant
feature whereby a director receives a one-time "initial option" to purchase
25,000 shares upon a director's appointment to the Board of Directors and
thereafter receives automatic annual grants of options to purchase 10,000 shares
upon re-election to the Board of Directors. Options granted are generally
exercisable six months from the date of grant.

The Directors' Plan requires that the exercise price of options be equal to the
fair market value of the underlying shares on the date of grant. The maximum
term of options granted is ten years.

The Company records deferred compensation when it makes restricted stock awards
or compensatory stock option grants to employees or directors. In the case of
grants to employees, the amount of deferred compensation initially recorded is
the difference, if any, between the exercise price (zero in the case of
restricted stock awards) and fair market value of the common stock on the date
of grant. Such deferred compensation is fixed and remains unchanged for
subsequent increases or decreases in the market value of the Company's common
stock. In the case of options granted to non-employees, the amount of deferred
compensation recorded is the fair value of the stock options on the grant date
as determined using a Black-Scholes valuation model. The Company records
deferred compensation as a reduction to stockholders' equity and an offsetting
increase to additional paid-in capital, which are all netted for financial
statement purposes as additional paid-in capital. The Company then amortizes
deferred compensation into stock based compensation expense over the performance
period, which typically coincides with the vesting period of the stock-based
award of 5 years. Had compensation costs for the stock options granted to
employees been


                                      F14
<PAGE>

determined consistent with FASB Statement No. 123, the Company's net income and
earnings per share would have been reduced to the pro forma amounts as follows
(in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                             2001         2000         1999
                                          (Restated,   (Restated,   (Restated,
                                          see Note 2)  see Note 2)  see Note 2)
                                        ----------------------------------------
<S>                                        <C>          <C>          <C>
Net income:
     As reported                           $34,950      $68,307      $38,659
     Pro forma                              34,764       68,085       38,300

Earnings per share - basic:
     As reported                            $ 2.09       $ 3.75       $ 1.82
     Pro forma                                2.08         3.73         1.80

Earnings per share - diluted:
     As reported                            $ 2.06       $ 3.70       $ 1.81
     Pro forma                                2.05         3.69         1.79
</TABLE>


                                      F15
<PAGE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 2001, 2000 and 1999, respectively: dividend yield
of 9.0%, 9.2%, and 9.4%; expected volatility of 17.9%, 18.2% and 18.4%;
risk-free interest rates of 4.9%, 5.1% and 6.8%. The expected life for the
director's options is ten years for 2001 and 2000, and five years for 1999. The
expected life for the employee's options is ten years for each period.

A summary of the status of the Company's plans as of December 31, 2001, 2000 and
1999 and changes during the years ended on those dates is presented below:

<TABLE>
<CAPTION>
                                          2001                     2000                      1999
                                ----------------------------------------------------------------------------
                                              Weighted                 Weighted                   Weighted
                                               Average                  Average                    Average
                                              Exercise                 Exercise                   Exercise
                                   Shares       Price       Shares       Price        Shares        Price
                                ----------------------------------------------------------------------------
<S>                                <C>          <C>         <C>          <C>         <C>            <C>
Employee Plan
-------------
Outstanding at beginning
    of year                        475,250      $18.46      736,625      $17.72      1,117,250      $18.10
Granted                            123,000       18.87      127,000       17.94           --          --
Exercised                          (69,000)      17.32     (138,375)      13.26        (63,500)      13.66
Forfeited and cancelled               --          --       (250,000)      18.89       (317,125)      19.15
                                ----------------------------------------------------------------------------

Outstanding at end of year         529,250      $18.67      475,250      $18.46        736,625      $17.72
                                ============================================================================

Options exercisable                248,250                  141,250                    330,875
                                ============================================================================

Weighted average fair value
 of options granted during
 the year                                       $ 1.30                   $ 1.04                       --
                                ============================================================================

Directors' Plan
---------------
Outstanding at beginning
    of year                        240,000      $17.79      345,000      $16.33        310,000      $15.79
Granted                             50,000       18.87       50,000       17.94         70,000       17.72
Exercised                          (10,000)      14.22     (145,000)      14.24        (25,000)      12.97
Expired                               --          --        (10,000)      17.72        (10,000)      17.72
                                ----------------------------------------------------------------------------

Outstanding at end of year         280,000      $18.11      240,000      $17.79        345,000      $16.33
                                ============================================================================

Options exercisable                280,000                  240,000                    345,000
                                ============================================================================

Weighted average fair value
    of options granted during
    the year                                    $ 1.30                   $ 1.04                     $ 1.24
                                ============================================================================
</TABLE>


                                      F16
<PAGE>

The following table summarizes information about stock options outstanding on
December 31, 2001:

<TABLE>
<CAPTION>
                               Options Outstanding                        Options Exercisable
                   ----------------------------------------------    ----------------------------
                                   Weighted Avg.
  Range of            Number        Remaining       Weighted Avg.       Number      Weighted Avg.
Exercise Price     Outstanding   Contractual Life  Exercise Price    Exercisable   Exercise Price
--------------     -----------   ----------------  --------------    -----------   --------------
<S>                  <C>                <C>            <C>             <C>              <C>
Employee Plan
-------------
$17.63 to 17.94      226,250            7.0            $17.79          137,000          $17.69
 18.87 to 19.56      273,000            7.8             19.25           81,250           19.56
 20.06                30,000            5.9             20.06           30,000           20.06
                     -------            ---            ------          -------          ------
$17.63 to 20.06      529,250            7.3            $18.67          248,250          $18.59
                     =======            ===            ======          =======          ======

Directors' Plan
---------------
$14.22                30,000            4.8            $14.22           30,000          $14.22
 17.72                50,000            7.8             17.72           50,000           17.72
 17.94                50,000            8.8             17.94           50,000           17.94
 18.82                50,000            5.8             18.82           50,000           18.82
 18.87                50,000            9.8             18.87           50,000           18.87
 19.56                50,000            6.8             19.56           50,000           19.56
                     -------            ---            ------          -------          ------
$14.22 to 19.56      280,000            7.5            $18.11          280,000          $18.11
                     =======            ===            ======          =======          ======
</TABLE>

Note 8 - Bank Loan Payable

In May 2001, the Company renewed its revolving credit facility with a bank group
led by Bank of America. The facility, which matures on June 1, 2004, consists of
a $150 million secured line with an accordion feature which allows the Company
at its option to expand the facility to $175 million, if needed. Interest on the
facility is at a floating rate equal to either the lender's published "reference
rate" or LIBOR plus a margin ranging from 1.30% to 1.55% depending on the
Company's leverage level. As of December 31, 2001, the facility had an
outstanding balance of $80,925,000, with an interest rate of LIBOR plus 1.55%.
It is secured by 31 properties and interests in such properties, which
collectively accounted for approximately 33% of the Company's annualized base
rent and approximately 34% of the Company's total real estate assets as of
December 31, 2001.

The credit facility contains various restrictive covenants including, among
other things, a covenant limiting quarterly dividends to 95% of average Funds
>From Operations. The Company was in compliance with the covenants and
requirements of its revolving credit facility during the year ended December 31,
2001.

The daily weighted average amount owed to the bank was $92,183,000 and
$116,683,000 for the twelve months ended December 31, 2001 and 2000,
respectively. The weighted average annual interest rates in each of these
periods was 6.13% and 7.75%, respectively. The effective interest rate at
December 31, 2001 was 4.99%.

Note 9 - Mortgage Loans Payable

In August 2001, the Company obtained $18 million of mortgage financing from
Washington Mutual Bank. The loan has a 10-year term and bears interest at a
floating rate of a trailing one-year treasury rate plus 2.60% (an effective rate
of 7.92% as of December 31, 2001). The trailing one-year treasury rate, which is
calculated by averaging the previous 12 months' rates, is adjusted every six
months with a minimum and maximum 1% change over the previous six month rate.
Proceeds from the loan were used to pay down a portion of the outstanding
balance of the $150 million line of credit.

In November 2001, the Company obtained $21,819,000 of new first mortgage
financing from Union Bank of


                                      F17
<PAGE>

California. The financing, a renewal of an existing mortgage with the same
lender, consists of a three-year loan, bearing interest at a floating rate of
LIBOR plus 1.60% (an effective rate of 4.02% as of December 31, 2001). The old
loan, which had an outstanding balance of approximately $14 million and a
maturity date of January 2, 2002, carried a fixed interest of 7.50%. The
$21,819,000 mortgage is collaterized by the same property pool as the expiring
loan, namely nine properties located in California. Proceeds of the new mortgage
loan were used to pay off the expiring mortgage and to pay down a portion of the
outstanding balance of the Company's credit facility.

Mortgage loans payable at December 31, 2001 and 2000 consist of the following
(dollars in thousands):

    Maturity Date         Interest Rate as of 12-31-01        2001        2000
    -------------         ----------------------------        ----        ----

    January 1, 2002       N/A                              $   --      $ 14,321
    March 15, 2003        7.02%                              18,550      18,916
    November 19, 2004     current rate of 4.02%(1)           21,774        --
    January 1, 2005       current rate of 6.00%(2)            4,481       4,553
    June 1, 2005          7.17%                              26,275      26,727
    August 1, 2005        current rate of 5.55%(3)            3,547       7,444
    August 1, 2005        current rate of 5.55%(3)           22,878      23,316
    July 31, 2006         8.90%                               8,143       8,336
    July 31, 2006         6.91%                              19,526      19,920
    December 1, 2006      7.95%                              21,541      21,858
    June 1, 2007          7.17%                              35,736      36,353
    June 1, 2009          7.17%                              41,740      42,461
    August 1, 2011        current rate of 7.918%(4)          17,875        --
                                                           --------    --------
    Total                                                  $242,066    $224,205
                                                           ========    ========

(1)  Floating rate based on LIBOR plus 1.60%.
(2)  Floating rate based on 3 month LIBOR plus 2.50% (adjusted quarterly).
(3)  Floating rate based on fixed rate on interest swap agreements. See Note 9.
(4)  Floating rate based on a 12-month average of U.S. Treasury Security Yields
     plus 2.60% (adjusted semi-annually).

The mortgage loans are collaterized by 49 properties and interests in such
properties, which collectively accounted for approximately 62% of the Company's
annualized base rents and approximately 56% of the Company's total real estate
assets as of December 31, 2001. The Company was in compliance with the covenants
and requirements of its various mortgages during the year ended December 31,
2001.

The following table presents scheduled principal payments on mortgage loans as
of December 31, 2001 (in thousands):

         Twelve month period ending December 31, 2002          $  5,048
         Twelve month period ending December 31, 2003            23,118
         Twelve month period ending December 31, 2004            25,383
         Twelve month period ending December 31, 2005            56,552
         Twelve month period ending December 31, 2006            47,270
         Total thereafter                                        84,695
                                                               --------
                                                               $242,066
                                                               ========

Note 10 - Derivative Instruments and Hedging Activities

In the normal course of business, the Company is exposed to the effect of
interest rate changes. The Company limits these risks by following established
risk management policies and procedures including the use of derivatives. For
interest rate exposures, interest rate swaps are used primarily to hedge the
cash flow risk of variable rate borrowing obligations.

The Company does not use derivatives for trading or speculative purposes.
Further, the Company has a policy of


                                      F18
<PAGE>

only entering into contracts with major financial institutions. When viewed in
conjunction with the underlying and offsetting exposure that the derivatives are
designed to hedge, the Company has not sustained a material loss from those
instruments, nor does it anticipate any material adverse effect on its net
income or financial position in the future from the use of derivatives.

Interest rate swaps that convert variable payments to fixed payments are cash
flow hedges. Hedging relationships that are fully effective have no effect on
net income or FFO. The unrealized gains and losses in the fair value of these
interest rate swaps are reported on the balance sheet, as a component of other
assets or other liabilities as appropriate, with a corresponding adjustment to
accumulated other comprehensive income (loss).

On June 18, 2001, the Company entered into interest swap agreements with United
California Bank. The swap agreements allow the Company to hedge its exposure to
variable interest rates on two mortgages with remaining principal balances
totaling $26,425,000 by effectively paying a fixed rate of interest over the
term of the swap agreement. Interest rate pay differentials that arise under
these swap agreements are recognized in interest expense over the term of the
contracts. These interest rate swap agreements were considered to be fully
effective in hedging the variable rate risk associated with the two mortgages.

The following summarizes the principal value and fair value of the Company's
interest swap contracts. The principal value at December 31, 2001 provides an
indication of the extent of the Company's involvement in these contracts but
does not represent exposure to credit, interest rate or market risks (dollars in
thousands):

                                                                Approximate
       Principal     Fixed     Contract     Cumulative          Liability at
         Amount      Rate      Maturity    Cash Paid, Net   December 31, 2001(1)
       ---------    ------     --------    --------------   --------------------

        $22,878      5.55%   July 1, 2002      $128                 $268
          3,547      5.55%   July 1, 2002        29                   42
        -------                                ----                 ----
        $26,425                                $157                 $310
        =======                                ====                 ====

(1)  Represents the approximate amount which the Company would have paid as of
     December 31, 2001 if the swap contracts were terminated.

To determine the fair values of derivative instruments in accordance with SFAS
133, the Company uses the discounted cash flow method, which requires the use of
assumptions about market conditions and risks existing at the balance sheet
date. Considerable judgment is required in interpreting market data to develop
estimates of market value. Accordingly, estimated fair value is a general
approximation of value, and such value may or may not actually be realized.

At December 31, 2001, $310,000 is included in other liabilities and accumulated
other comprehensive loss, a stockholders' equity account, reflecting the
estimated market value of the swap contract obligations at that date.

Note 11 - Repurchases of Common Stock

In July 1998, the Company's board of directors approved a share repurchase
program of 3 million shares which was increased first to 4.5 million shares in
September 1999, then to 8 million shares in September 2000 and later to 10
million shares in January 2002. Since November 1998, the Company has repurchased
and retired 7.1 million shares at an average price of $17.90 per share. This
represents 31% of the shares outstanding at November 30, 1998 when the Company
began implementing its share repurchase program.


                                      F19
<PAGE>

Note 12 - Segment Disclosure

The Company has five reportable segments organized by the region in which they
operate: Northern California (Northern California and Nevada), Southwest
(Arizona and greater Austin, Texas), Southern California, Northwest (greater
Portland, Oregon and greater Seattle, Washington) and Colorado. During the year
ended December 31, 2000, the Midwest portfolio (greater Kansas City,
Kansas/Missouri, and greater Dallas, Texas) and the properties located in
Austin, Texas were sold; therefore, the Midwest segment and the properties
located in Austin are not reported for the year ended December 31, 2001.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performance
based upon income from real estate from the combined properties in each segment.

<TABLE>
<CAPTION>
                                     For the year ended December 31, 2001 (Restated, see Note 2) (dollars in thousands)
                                  ---------------------------------------------------------------------------------------
                                   Northern                  Southern                           Corporate
                                  California   Southwest    California   Northwest   Colorado    & Other     Consolidated
                                  ----------   ---------    ----------   ---------   --------    -------     ------------
<S>                                <C>         <C>           <C>         <C>         <C>         <C>          <C>
Rental income                      $ 35,416    $  16,759     $ 14,231    $ 18,658    $ 14,885    $   --       $  99,949
Operating expenses and
  real estate taxes                   7,433        4,648        2,726       5,339       5,185        --          25,331
Depreciation and
  amortization                        5,100        2,985        1,948       3,767       2,334        --          16,134
                                  ---------------------------------------------------------------------------------------

Income from property
  operations                       $ 22,883    $   9,126     $  9,557    $  9,552    $  7,366    $   --       $  58,484

Percent of income from
  property operations                    39%          16%          16%         16%         13%          0%          100%

General and administrative
  expenses                             --           --           --          --          --        (6,506)       (6,506)
Interest income(1)                       26            4         --            13        --           159           202
Interest expense                       --           --           --          --          --       (22,538)      (22,538)
Other expense                          --           --           --          --          --          (526)         (526)
                                  ---------------------------------------------------------------------------------------

Income (loss) before gain on
 sales and minority interest         22,909        9,130        9,557       9,565       7,366     (29,411)       29,116

Gain on sales of real estate
 investments                           --          2,207         --          --         3,769        --           5,976
Minority interest                      --           --           --          --          --          (142)         (142)
                                  ---------------------------------------------------------------------------------------

Net income (loss)                  $ 22,909    $  11,337     $  9,557    $  9,565    $ 11,135    $(29,553)    $  34,950
                                  =======================================================================================

Real estate investments            $207,953    $ 108,890     $ 99,026    $130,766    $107,427    $   --       $ 654,062
                                  =======================================================================================

Additions (dispositions) of real
  estate investments               $  7,573    $  (7,753)    $  3,120    $  1,033    $  5,757    $   --       $   9,730
                                  =======================================================================================

Total assets                       $218,681    $ 105,193     $110,193    $116,440    $ 79,220    $  1,078     $ 630,805
                                  =======================================================================================
</TABLE>

(1)  The interest income in Northern California, Southwest, and Northwest
     segments represents interest earned from tenant notes receivable.


                                      F20
<PAGE>

<TABLE>
<CAPTION>
                                          For the year ended December 31, 2000 (Restated, see Note 2) (dollars in thousands)
                                ----------------------------------------------------------------------------------------------------
                                 Northern                  Southern                                          Corporate
                                California    Southwest    California   Northwest     Midwest    Colorado     & Other   Consolidated
                                ----------    ---------    ----------   ---------     -------   ----------   ---------  ------------
<S>                             <C>           <C>           <C>         <C>           <C>         <C>         <C>         <C>
Rental income                   $  33,438     $  18,497     $ 13,788    $  18,755     $  3,628    $  9,412    $    --     $  97,518
Operating expenses and
  real estate taxes                 7,368         5,264        2,656        5,769        1,238       3,439         --        25,734
Depreciation and
  amortization                      4,856         2,582        1,909        3,284          (86)      1,217         --        13,762
                                ----------------------------------------------------------------------------------------------------

Income from property
  operations                    $  21,214     $  10,651     $  9,223    $   9,702     $  2,476    $  4,756    $    --     $  58,022

Percent of income from
  property operations                  37%           18%          16%          17%           4%          8%           0%        100%

General and administrative
  expenses                           --            --           --           --           --          --         (4,333)     (4,333)
Interest income(1)                     26             4         --              1            1        --            468         500
Interest expense                     --            --           --           --           --          --        (24,765)    (24,765)
Other income                         --             615         --           --           --          --           --           615
                                ----------------------------------------------------------------------------------------------------

Income (loss) before gain
 (loss) on sales and minority
 interest                          21,240        11,270        9,223        9,703        2,477       4,756      (28,630)     30,039

Gain (loss) on sales of real
 estate investments, net           26,174         2,940           11        5,431        3,848        --           --        38,404
Minority interest                    --            --           --           --           --          --           (136)       (136)
                                ----------------------------------------------------------------------------------------------------

Net income (loss)               $  47,414     $  14,210     $  9,234    $  15,134     $  6,325    $  4,756    $ (28,766)  $  68,307
                                ====================================================================================================

Real estate investments         $ 200,378     $ 116,643     $ 95,908    $ 129,733     $   --      $101,670   $    --       $644,332
                                ====================================================================================================

(Dispositions) additions of
  real estate investments       $  (4,506)    $ (16,331)    $  1,712    $ (19,500)    $(30,220)   $ 36,610    $    --     $ (32,235)
                                ====================================================================================================

Total assets                    $ 210,153     $ 108,496     $105,527    $ 115,297     $  7,378    $ 83,673    $     326   $ 630,850
                                ====================================================================================================
</TABLE>

(1)  The interest income in Northern California, Southwest, Northwest, and
     Midwest segments represents interest earned from tenant notes receivable.


                                      F21
<PAGE>

<TABLE>
<CAPTION>
                                        For the year ended December 31, 1999 (Restated, see Note 2) (dollars in thousands)
                                ---------------------------------------------------------------------------------------------------
                                 Northern                  Southern                                        Corporate
                                California    Southwest   California   Northwest     Midwest    Colorado    & Other    Consolidated
                                ----------    ---------   ----------   ---------     -------   ----------  ---------   ------------
<S>                              <C>          <C>         <C>          <C>          <C>          <C>        <C>         <C>
Rental income                    $ 32,900     $ 15,726    $ 12,382     $ 15,528     $  5,363     $ 8,628    $   --       $ 90,527
Operating expenses and
  real estate taxes                 7,193        4,274       2,481        3,944        1,509       2,947         276       22,624
Depreciation and
  amortization                      4,618        2,080       1,765        2,492          872       1,141        --         12,968
                                 --------------------------------------------------------------------------------------------------

Income from property
  operations                     $ 21,089     $  9,372    $  8,136     $  9,092     $  2,982     $ 4,540    $   (276)    $ 54,935

Percent of income from
  property operations                  38%          17%         15%          17%           6%          8%         (1)%        100%

General and administrative
  expenses                           --           --          --           --           --          --        (4,889)      (4,889)
Interest income(1)                     24            3        --              4         --          --           151          182
Interest expense                     --           --          --           --           --          --       (18,939)     (18,939)
                                 --------------------------------------------------------------------------------------------------

Income (loss) before gain (loss)
  on sales and minority
  interest                         21,113        9,375       8,136        9,096        2,982       4,540     (23,953)      31,289

Gain (loss) on sales of real
  estate investments, net           7,756         --            50         --            (10)       --          --          7,796
Minority interest                    --           --          --           --           --          --          (128)        (128)
                                 --------------------------------------------------------------------------------------------------

Income (loss) before
  extraordinary item               28,869        9,375       8,186        9,096        2,972       4,540     (24,081)      38,957

Loss on early
  extinguishment  of debt            (298)        --          --           --           --          --          --           (298)
                                 --------------------------------------------------------------------------------------------------

Net income (loss)                $ 28,571     $  9,375    $  8,186     $  9,096     $  2,972     $ 4,540    $(24,081)    $ 38,659
                                 ==================================================================================================

Real estate investments          $204,884     $132,974    $ 94,196     $149,233     $ 30,220     $65,060    $   --       $676,567
                                 ==================================================================================================

(Dispositions) additions of real
  estate investments             $ (4,352)    $ 23,945    $ 16,879     $ 36,724     $ (1,892)    $ 7,652    $   --       $ 78,956
                                 ==================================================================================================

Total assets                     $212,622     $123,422    $101,551     $134,871     $ 29,713     $64,352    $  1,343     $667,874
                                 ==================================================================================================
</TABLE>

(1)  The interest income in Northern California, Southwest, and Northwest
     segments represents interest earned from tenant notes receivable.


                                      F22
<PAGE>

Note 13 - Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, trade accounts payable and
receivables approximate fair value due to the short-term maturity of these
instruments. Management has determined that the market value of the $171,934,000
fixed rate debt at December 31, 2001 is approximately $181,813,000 based on the
terms of existing debt compared to those available in the marketplace. At
December 31, 2000, the fixed rate debt of $188,892,000 had an approximate market
value of $189,452,000. The carrying value of variable rate debt approximates
fair value, as the interest rates and other terms are comparable to current
market terms.


                                      F23
<PAGE>

Note 14 - Earnings per Share

Following is a reconciliation of earnings per share:
(in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                                          (Restated, see Note 2)
                                                                          ----------------------

                                                                      2001           2000            1999
                                                                      ----           ----            ----
<S>                                                               <C>            <C>            <C>
Basic:
     Income before extraordinary item                             $    34,950    $    68,307    $     38,957
     Extraordinary item - loss on early
         extinguishment of debt                                          --             --              (298)
                                                                  ------------------------------------------
     Net income                                                   $    34,950    $    68,307    $     38,659
                                                                  ==========================================
     Weighted average number of shares - basic                     16,747,498     18,236,512      21,267,088
                                                                  ==========================================
     Earnings per share:
            Income before extraordinary item                      $      2.09    $      3.75    $       1.83
            Extraordinary item - loss on early
                extinguishment of debt                                   --             --             (0.01)
                                                                  ------------------------------------------
            Earnings per share                                    $      2.09    $      3.75    $       1.82
                                                                  ==========================================

Diluted:
     Income before extraordinary item                             $    34,950    $    68,307    $     38,957
     Add: Minority interest                                               142            136             128
     Extraordinary item - loss on early extinguishment of debt           --             --              (298)
                                                                  ------------------------------------------
     Net income for diluted earnings per share                    $    35,092    $    68,443    $     38,787
                                                                  ==========================================
     Weighted average number of shares                             16,747,498     18,236,512      21,267,088
     Weighted average shares
            of dilutive stock options using average
            period stock price under the treasury
            stock method                                               75,229         52,958          62,196
     Weighted average shares issuable upon the
            conversion of operating partnership units                  77,423         77,992          82,402
     Weighted average shares of non-vested restricted
            stock using average period stock
            price under the treasury stock method                     145,343        134,443          65,327
                                                                  ------------------------------------------
     Weighted average number of shares -
            diluted                                                17,045,493     18,501,905      21,477,013
                                                                  ==========================================
     Earnings per share:
            Income before extraordinary item                      $      2.06    $      3.70    $       1.82
            Extraordinary item - loss on early
                extinguishment of debt                                   --             --             (0.01)
                                                                  ------------------------------------------
            Earnings per share                                    $      2.06    $      3.70    $       1.81
                                                                  ==========================================
</TABLE>

Since their effect would have been antidilutive, 280,000 and 817,000 of the
Company's stock options have been excluded from diluted earnings per share for
the years ended December 31, 2000 and 1999, respectively.


                                      F24
<PAGE>

Note 15 - Quarterly Financial Data-Unaudited

The following is a summary of quarterly results of operations for 2001 and 2000
(in thousands, except per share amounts):

<TABLE>
<CAPTION>
2001 Quarters Ended                             3/31       6/30       9/30      12/31
-----------------------------------------------------------------------------------------
<S>                                           <C>        <C>        <C>        <C>
Rental income                                 $24,390    $25,033    $25,211    $25,315

Income from property operations:
         As Reported                                                 14,852     14,528
         Restated                              14,511     14,569     14,864     14,540

Income before gain on sales of real estate
  investments and minority interest:
         As Reported                                                  8,132      7,347
         Restated                               7,742      5,857      8,390      7,127

Net income:
         As Reported                                                  8,094     13,251
         Restated                               7,707      5,822      8,352     13,069

Earnings per share - basic:
         As Reported                                                $  0.49    $  0.82
         Restated                             $  0.44    $  0.34    $  0.50    $  0.81

Earnings per share - diluted:
         As Reported                                                $  0.48    $  0.80
         Restated                             $  0.44    $  0.34    $  0.49    $  0.79
=========================================================================================

2000 Quarters Ended                              3/31       6/30       9/30      12/31
-----------------------------------------------------------------------------------------

Rental income                                 $24,392    $24,957    $24,662    $23,507

Income from property operations:
         As Reported                           14,941     14,708     14,942     13,380
         Restated                              14,953     14,720     14,954     13,395

Income before gain on sales of real estate
  investments and minority interest:
         As Reported                            8,030      7,550      7,689      6,781
         Restated                               8,122      7,632      7,815      6,470

Net income:
         As Reported                           23,231      7,511     27,854      9,490
         Restated                              23,323      7,610     28,147      9,227

Earnings per share - basic:
         As Reported                          $  1.20    $  0.41    $  1.54    $  0.55
         Restated                             $  1.21    $  0.42    $  1.56    $  0.53

Earnings per share - diluted:
         As Reported                          $  1.19    $  0.41    $  1.52    $  0.54
         Restated                             $  1.20    $  0.41    $  1.53    $  0.52
=========================================================================================
</TABLE>


                                      F25
<PAGE>

Note 16 - Commitments and Contingencies

As of December 31, 2001, the Company has contractual construction commitments
relating to its properties under development of approximately $17 million of
which $15 million has been paid. The Company had outstanding undrawn letters of
credit against its Credit Facility of approximately $2.1 million at December 31,
2001.

From time to time, the Company is subject to legal claims in the ordinary course
of business. As of December 31, 2001, the Company recorded on its balance sheet
an accrued liability for potential uninsured loss. The Company is not aware of
any other legal proceedings or claims that it believes will have, individually
or in the aggregate, a material adverse effect on its business, prospects,
financial condition, operating results or cash flows.

Note 17 - Subsequent Events

In the second quarter of 2002, the Company sold four industrial properties in
Vista, California and one industrial property in Scottsdale, Arizona for a total
sale price of approximately $19,081,000, resulting in a gain of approximately
$1,798,000.

In July 2002, the Company purchased a 214,000 square foot research and
development property in Phoenix, Arizona for a purchase price of approximately
$24,300,000. This acquisition was funded with proceeds from the sale of the five
operating properties in the second quarter of 2002 and additional borrowings
from the Company's line of credit.

On August 2, 2002 the Company obtained from its bank group a $40,000,000
commitment for an unsecured bridge facility that is to be funded upon the
acquisition of additional real estate.

On August 14, 2002 the Company announced that effective July 1, 2002, it was
terminating its agreement with BAI and had hired its former employees.

On August 16, 2002, the Company purchased a 112,000 square foot service flex
complex in South San Francisco, California for $22,000,000. The acquisition was
funded from borrowings on the Company's credit facility.


                                      F26
<PAGE>

                BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 2001
  (Restated, see Note 2 to the accompanying consolidated financial statements)
                            (in thousands of dollars)

<TABLE>
<CAPTION>
                          Initial Cost to Company           Cost        Gross Amount                                       Depreci-
                          -----------------------    Capitalized  Carried at Close of Period               Date                able
                                      Buildings &  Subsequent to  -------------------------- Accumulated   Const-      Date    Life
Description                     Land  Improvement    Acquisition  Land    Building    Total  Depreciation  ructed  Acquired  (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>          <C>         <C>      <C>         <C>     <C>            <C>       <C>      <C>        <C>
Industrial buildings:
---------------------
Northern California
Building #3 at Contra Costa
  Diablo Industrial Park,
  Concord*                    $  495       $1,159      $   61   $  495      $1,220  $ 1,715        $  310    1983     12/90       45
Building #8 at Contra Costa
  Diablo Industrial Park,
  Concord*                       877        1,548         205      877       1,753    2,630           524    1981     12/90       45
Building #18 at Mason
  Industrial Park, Concord*      610        1,265         141      610       1,406    2,016           352    1984     12/90       45
Milpitas Town Center,
  Milpitas*                    1,400        4,421         149    1,400       4,570    5,970           763    1983      8/94       45
598 Gibraltar Drive,
  Milpitas*                      535        2,522        --        535       2,522    3,057         1,088    1996      5/96       45
Auburn Court, Fremont*         1,391        2,473         395    1,415       2,844    4,259           450    1983     12/95       45
47650 Westinghouse Drive,
  Fremont*                       267          893          59      271         948    1,219           127    1982     12/95       45
410 Allerton, South
  San Francisco*               1,333          889          40    1,356         906    2,262           122    1970     12/95       45
400 Grandview, South
  San Francisco*               3,246        3,517       1,681    3,300       5,144    8,444           576    1976     12/95       45
342 Allerton, South
  San Francisco*               2,516        1,542         448    2,558       1,948    4,506           282    1969     12/95       45
301 East Grand, South
  San Francisco*               2,036          959         200    2,070       1,125    3,195           163    1974     12/95       45
Fourier Avenue, Fremont*       2,120        7,018        --      2,120       7,018    9,138           871    1982      5/96       45
Lundy Avenue, San Jose*        2,055        2,184         268    2,055       2,452    4,507           306    1982      7/96       45
115 Mason Circle, Concord*       697          854          93      697         947    1,644           141    1971      9/96       45
47600 Westinghouse Drive,
  Fremont*                       356        1,067          43      356       1,110    1,466           131    1982      9/96       45
860-870 Napa Valley
 Corporate Way, Napa*            933        3,515         729      933       4,244    5,177           592    1984      9/96       45
47633 Westinghouse Drive,
  Fremont*                     1,051        3,239         252    1,051       3,491    4,542           401    1983     10/96       45
47513 Westinghouse Drive,
  Fremont*                     1,624         --         4,093    1,625       4,092    5,717           947    1998     10/96       45
Bordeaux Centre, Napa*         1,151         --         6,714    1,151       6,714    7,865         1,301    1998     12/96       45
O'Toole Business Park,
  San Jose*                    3,933        5,748         606    3,934       6,353   10,287           765    1984     12/96       45
6500 Kaiser Drive, Fremont*    1,556        6,411          29    1,556       6,440    7,996           715    1990      1/97       45
Bedford Fremont Business
  Center, Fremont*             3,598        9,004         254    3,598       9,258   12,856         1,067    1990      3/97       45
Spinnaker Court, Fremont*      2,548        5,989         387    2,549       6,375    8,924           664    1986      5/97       45
</TABLE>

                                                                     (Continued)


                                      F27
<PAGE>

<TABLE>
<CAPTION>
                          Initial Cost to Company           Cost        Gross Amount                                       Depreci-
                          -----------------------    Capitalized  Carried at Close of Period               Date                able
                                      Buildings &  Subsequent to  -------------------------- Accumulated   Const-      Date    Life
Description                     Land  Improvement    Acquisition  Land    Building    Total  Depreciation  ructed  Acquired  (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>          <C>         <C>      <C>         <C>     <C>            <C>       <C>      <C>        <C>
Industrial buildings
--------------------
  (continued):
Northern California
  (continued)
2277 Pine View Way,
  Petaluma*                    1,861        7,074           3    1,862       7,076    8,938           721    1989      6/97       45
Mondavi Building, Napa*        1,315        5,214        --      1,315       5,214    6,529           492    1985      9/97       45
Parkpoint Business Center,
  Santa Rosa*                  1,956        4,432         572    1,957       5,003    6,960           465    1981      2/98       45
2180 S. McDowell Blvd.,
  Petaluma*                      769        2,989         142      770       3,130    3,900           265    1990      7/98       45
2190 S. McDowell Blvd.,
  Petaluma*                      584        2,270           1      585       2,270    2,855           177    1996      7/98       45
Carneros Commons Phase II,
  Napa                           461         --         3,233      461       3,233    3,694            30    2001     12/96       45

Arizona
Westech Business Center,
  Phoenix*                     3,531        4,422         714    3,531       5,136    8,667           906    1985      4/96       45
Westech II, Phoenix*           1,033         --         3,958    1,033       3,958    4,991         1,087    1998      7/96       45
2601 W. Broadway, Tempe*       1,127        2,348         102    1,127       2,450    3,577           239    1977      7/97       45
Building #2 at Phoenix
  Airport Center, Phoenix*       723        3,278          30      723       3,308    4,031           323    1990      7/97       45
Building #3 at Phoenix
  Airport Center, Phoenix*       682        3,163          26      682       3,189    3,871           311    1990      7/97       45
Building #4 at Phoenix
  Airport Center, Phoenix*       517        1,732          18      517       1,750    2,267           170    1990      7/97       45
Building #5 at Phoenix
  Airport Center, Phoenix*     1,507        3,860          32    1,507       3,892    5,399           379    1990      7/97       45
Butterfield Business
  Center, Tucson*                905        4,211         128      905       4,339    5,244           403    1986     11/97       45
Butterfield Tech Center II,
  Tucson*                        100         --         1,815      100       1,815    1,915           337    1999     11/97       45
Greystone Business Park,
  Tempe*                       1,216         --         4,589    1,217       4,588    5,805           524    1999     12/97       45
Cimarron Business Park,
  Scottsdale*                  1,762        4,436         272    1,764       4,706    6,470           424 1979-85      3/98       45
Rio Salado Corporate
  Center, Tempe                1,704        2,850       1,709    1,704       4,559    6,263           145 1982-84      7/98       45
Phoenix Tech Center,
  Phoenix*                     1,314          939         882    1,314       1,821    3,135           244    1985      8/98       45
The Adams Brothers
  Building, Phoenix*           1,561        1,602          49    1,561       1,651    3,212            95 1988-95      6/99       45
Bedford Realty Partners,
  L.P., Phoenix*                 991        6,242         106      991       6,348    7,339           294    1986     12/99       45

Southern California
Dupont Industrial Center,
  Ontario*                     3,588        6,162         275    3,588       6,437   10,025         1,202    1989      5/94       45
3002 Dow Business Center,
  Tustin*                      4,209        7,291       1,375    4,305       8,570   12,875         1,588 1987-89     12/95       45
Carroll Tech I, San Diego*       511        1,372         187      511       1,559    2,070           234    1984     10/96       45
Vista I, Vista                   646        2,135          64      646       2,199    2,845           250    1990     10/96       45
Vista II, Vista                  566        1,832          (1)     566       1,831    2,397           210    1990     10/96       45
Signal Systems Building,
 San Diego*                    2,228        7,264        --      2,228       7,264    9,492           807    1990     12/96       45
</TABLE>

                                                                     (Continued)


                                      F28
<PAGE>

<TABLE>
<CAPTION>
                          Initial Cost to Company           Cost        Gross Amount                                       Depreci-
                          -----------------------    Capitalized  Carried at Close of Period               Date                able
                                      Buildings &  Subsequent to  -------------------------- Accumulated   Const-      Date    Life
Description                     Land  Improvement    Acquisition  Land    Building    Total  Depreciation  ructed  Acquired  (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>         <C>      <C>         <C>     <C>            <C>       <C>      <C>       <C>
Industrial buildings
--------------------
  (continued):
Southern California
  (continued)
Carroll Tech II, San Diego*    1,022        2,129        --      1,022       2,129    3,151           248    1984     10/96       45
2230 Oak Ridge Way, Vista*       678        2,172           1      679       2,172    2,851           215    1997     10/97       45
6960 Flanders Drive, San
  Diego*                         856        2,566          (3)     856       2,563    3,419           200    1989      6/98       45
Canyon Vista Center, San
  Diego*                       1,647        4,598         227    1,647       4,825    6,472           303    1986      4/99       45
6325 Lusk Blvd., San Diego*    2,202        3,444           9    2,202       3,453    5,655           192    1991      7/99       45
Jurupa Business Center
  Phase I, Ontario               841         --         2,424      841       2,424    3,265          --      2001     12/00       45

Greater Seattle Area
Highlands Campus
  Building B, Bothell*         1,762         --         5,858    1,762       5,858    7,620           912    1999      6/98       45
Highlands Campus
  Building C, Bothell*         1,646         --         4,934    1,646       4,934    6,580           417    2000      6/98       45

Office buildings:
-----------------
Northern California
Village Green, Lafayette*        547        1,245         646      743       1,695    2,438           317    1983      7/94       45
Carneros Commons Phase I,
  Napa                           500         --         3,043      500       3,043    3,543            52    2000     12/96       45
Canyon Park, San Ramon*        1,916        3,072       3,650    1,917       6,721    8,638           564 1971-72     12/97       45
Crow Canyon Centre,
  San Ramon*                     767         --         5,266      767       5,266    6,033           543    1999     12/97       45
3380 Cypress Drive,
  Petaluma*                    1,684        3,704           2    1,685       3,705    5,390           288    1989      7/98       45

Arizona
Executive Center at
  Southbank, Phoenix*          4,943        7,134         186    4,943       7,320   12,263           795    1989      3/97       45
Building #1 at Phoenix
  Airport Center, Phoenix*       944        1,541         132      944       1,673    2,617           157    1990      7/97       45
Phoenix Airport Center
  Parking, Phoenix*            1,369           81        --      1,369          81    1,450             8    1990      7/97       45
Cabrillo Executive Center,
  Phoenix*                       475        5,552         515      475       6,067    6,542           541    1983      2/98       45
Mountain Pointe Office
  Park, Phoenix*                 834         --         4,954      834       4,954    5,788           332    1999      2/98       45
1355 S. Clearview Avenue,
  Mesa*                        2,023        5,383           2    2,023       5,385    7,408           309    1998      6/99       45

Southern California
Laguna Hills Square,
  Laguna*                      2,436        3,655       1,137    2,436       4,792    7,228           748    1983      3/96       45
Building #3 at Carroll Tech
  Center, San Diego*             716        1,400          59      716       1,459    2,175           172    1984     10/96       45
Scripps Wateridge, San
  Diego*                       4,160       12,472          12    4,160      12,484   16,644         1,248    1990      6/97       45
Building #4 at Carroll Tech
  Center, San Diego*           2,028        3,192          74    2,028       3,266    5,294           199    1986      3/99       45
</TABLE>

                                                                     (Continued)


                                      F29
<PAGE>

<TABLE>
<CAPTION>
                          Initial Cost to Company           Cost        Gross Amount                                       Depreci-
                          -----------------------    Capitalized  Carried at Close of Period               Date                able
                                      Buildings &  Subsequent to  -------------------------- Accumulated   Const-      Date    Life
Description                     Land  Improvement    Acquisition  Land    Building    Total  Depreciation  ructed  Acquired  (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>         <C>      <C>         <C>     <C>            <C>       <C>      <C>       <C>
Office buildings
----------------
  (continued):
Colorado
Oracle Building, Denver*       1,838       13,094         106    1,839      13,199   15,038         1,233    1996     10/97       45
Texaco Building, Denver*       3,648       31,193       1,648    3,649      32,840   36,489         2,542    1981      5/98       45
WaterPark @ Briarwood
  Building 1, Englewood          271         --         2,822      271       2,822    3,093           231    2000      4/99       45
Belleview Corporate
  Plaza II Office, Denver      2,533         --         9,113    2,472       9,174   11,646            36    2001     10/98       45
WaterPark @ Briarwood
  Building 2, Englewood          716         --         5,811      716       5,811    6,527           314    2000      4/99       45
WaterPark @ Briarwood
  Building 3, Englewood          716         --         5,399      716       5,399    6,115             9    2001      4/99       45
WaterPark @ Briarwood
  Building 4, Englewood          285         --         3,119      285       3,119    3,404           187    2001      4/99       45
Bedford Center at Rampart,
  Englewood*                   3,757       17,777        (359)   3,757      17,418   21,175           428    1998     11/00       45

Greater Seattle Area
Orillia Office Park,
  Renton*                     10,021       22,975        --     10,021      22,975   32,996         2,298    1986      7/97       45
Adobe Systems Bldg. 1,
  Seattle*                      --         22,032       3,930     --        25,962   25,962         2,017    1998      3/98       45
Adobe Systems Bldg. 2,
  Seattle*                      --         18,618       3,358     --        21,976   21,976         1,735    1998      3/98       45
Highlands Campus,
  Building A, Bothell*         1,989         --         7,811    1,989       7,811    9,800         1,183    1999      6/98       45
The Federal Way Building,
    Federal Way*               2,178        6,915          29    2,179       6,943    9,122           396    1999      6/99       45
Federal Way II, Federal Way*   2,465       14,105         140    2,480      14,230   16,710           708    1999      9/99       45

Nevada
U.S. Bank Centre, Reno*        2,102       10,264         588    2,102      10,852   12,954         1,202    1989      5/97       45

Operating properties held
-------------------------
  for sale:
  ---------
Building #1 at Monterey
  Commerce Center,
  Monterey*                      609        5,243         242      609       5,485    6,094           449    1990     12/97       45
Building #2 at Monterey
  Commerce Center,
  Monterey*                      604        1,813        --        604       1,813    2,417           131    1990     12/97       45
Building #3 at Monterey
  Commerce Center,
  Monterey*                      597        1,792         135      597       1,927    2,524           145    1990     12/97       45
</TABLE>

                                                                     (Continued)


                                      F30
<PAGE>

<TABLE>
<CAPTION>
                          Initial Cost to Company           Cost        Gross Amount                                       Depreci-
                          -----------------------    Capitalized  Carried at Close of Period               Date                able
                                      Buildings &  Subsequent to  -------------------------- Accumulated   Const-      Date    Life
Description                     Land  Improvement    Acquisition  Land    Building    Total  Depreciation  ructed  Acquired  (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>          <C>        <C>        <C>        <C>      <C>            <C>         <C>    <C>         <C>
Land held for development:
--------------------------
Scripps Land, San Diego, CA      622         --            88       710      --         710           --      N/A      6/97       45
Mondavi Land, Napa Lot 12G,
  Northern CA                  1,137         --            22     1,159      --       1,159           --      N/A      3/98       45
West Tempe Lots 30 and 31,
  Tempe, AZ                      543         --            94       637      --         637           --      N/A      7/98       45
210 Lafayette Circle,
  Northern CA                    513         --             8       521      --         521           --      N/A     11/98       45
Belleview Corporate
  Plaza III, IV, Denver, CO    2,094         --            18     2,112      --       2,112           --      N/A     10/99       45
Belleview Corporate
  Plaza, V, Denver, CO         1,561         --           267     1,828      --       1,828           --      N/A     10/98       45
Napa Lots 9B & 8D, Napa, CA    2,133         --            31     2,164      --       2,164           --      N/A     11/00       45
Jurupa Business Center
  Phase II, Ontario, CA          889         --            72       961      --         961           --      N/A     12/00       45
Jurupa Business Center
  Phase III, Ontario, CA         558         --             5       563      --         563           --      N/A     12/00       45
Jurupa Business Center
  Phase IV, Ontario, CA          928         --             6       934      --         934           --      N/A     12/00       45
Napa Lot 10C, Napa, CA         1,809         --          --       1,809      --       1,809           --      N/A     10/01       45
                          ----------------------------------------------------------------------------------------------------------

                            $156,807     $382,496    $114,759  $157,861  $496,201  $654,062       $48,984
                          ==========================================================================================================
                                                                                        (A)           (A)
</TABLE>

* Property is encumbered, see footnotes 8 and 9 to the consolidated financial
statements.

See accompanying independent auditors' report.


                                      F31
<PAGE>

                             NOTES TO SCHEDULE III
                             (Restated, see Note 2)
                            (in thousands of dollars)

(A) An analysis of the activity in real estate investments for the years ended
December 31, 2001, 2000, and 1999 is presented below in accordance with
accounting principles generally accepted in the United States of America:

<TABLE>
<CAPTION>
                                                                         Investment                  Accumulated Depreciation
                                                               --------------------------------    -----------------------------
                                                                 2001        2000        1999       2001       2000       1999
                                                                 ----        ----        ----       ----       ----       ----
<S>                                                            <C>         <C>         <C>         <C>        <C>        <C>
BALANCE AT BEGINNING OF YEAR                                   $644,332    $676,567    $597,612    $35,821    $28,617    $18,491
Add (deduct):
     Acquisition of Carroll Tech IV                                --          --         5,220       --         --         --
     Acquisition of Canyon Vista Center                            --          --         6,245       --         --         --
     Acquisition of WaterPark at Briarwood                         --          --         1,989       --         --         --
     Acquisition of 1355 S. Clearview Avenue                       --          --         7,406       --         --         --
     Acquisition of The Adams Brothers Building                    --          --         3,163       --         --         --
     Acquisition of The Federal Way Building                       --          --         9,093       --         --         --
     Acquisition of 6325 Lusk Blvd                                 --          --         5,646       --         --         --
     Acquisition of Panorama III                                   --          --         2,634       --         --         --
     Acquisition of Federal Way II                                 --          --        16,570       --         --         --
     Acquisition of Belleview Corporate Plaza                      --          --         6,188       --         --         --
     Sale of 417 Eccles (B)                                        --          --        (1,200)      --         --          (37)
     Sale of Woodlands Tower II (C)                                --          --        (6,963)      --         --       (1,031)
     Sale of Oak Ridge Land (C)                                    --          --          (373)      --         --         --
     Sale of Doherty Avenue (D)                                    --          --        (3,909)      --         --         (152)
     Sale of Continental Can (E)                                   --          --        (4,966)      --         --         (122)
     Acquisition of Bedford Center at Rampart                      --        21,534        --         --         --         --
     Acquisition of Napa Land Lots 9B & 8D                         --         2,133        --         --         --         --
     Acquisition of Jurupa Land                                    --         3,216        --         --         --         --
     Sale of 350 E. Plumeria (F)                                   --        (8,570)       --         --         (373)      --
     Sale of Twin Oaks Technology Center (F)                       --        (6,904)       --         --         (620)      --
     Sale of Twin Oaks Business Center (F)                         --        (4,617)       --         --         (380)      --
     Sale of 5502 Oberlin Drive (G)                                --        (2,171)       --         --          (28)      --
     Sale of 100 View Street (H)                                   --        (4,636)       --         --         (365)      --
     Sale of Kenyon Center (I)                                     --       (15,075)       --         --         (677)      --
     Sale of 99th Street #1 (I)                                    --        (2,276)       --         --         (159)      --
     Sale of 99th Street #2 (I)                                    --          (828)       --         --          (54)      --
     Sale of 99th Street #3 (I)                                    --        (2,718)       --         --         (505)      --
     Sale of 99th Street #4 (I)                                    --        (3,723)       --         --         (391)      --
     Sale of Lackman Business Center (I)                           --        (2,517)       --         --         (245)      --
     Sale of Panorama (I)                                          --        (4,125)       --         --         (289)      --
     Sale of Panorama III (I)                                      --        (2,625)       --         --          (22)      --
     Sale of Overland Park Land (I)                                --            (1)       --         --         --         --
     Sale of 6600 College Blvd. (I)                                --        (6,619)       --         --         (382)      --
     Sale of Austin Braker 2 (I)                                   --        (2,256)       --         --          (58)      --
     Sale of Austin Rutland (I)                                    --        (3,232)       --         --          (93)      --
     Sale of Austin SouthPark(I)                                   --        (5,745)       --         --         (158)      --
     Sale of Didde Building (J)                                    --        (2,218)       --         --          (58)      --
     Sale of Great Hills Trail (J)                                 --        (9,859)       --         --         (394)      --
     Sale of Ferrell Drive (J)                                     --        (2,750)       --         --          (72)      --
     Sale of Ferrell Drive Land (J)                                --          (185)       --         --         --         --
     Acquisition of Napa Lot 10C                                  1,809        --          --         --         --         --
     Sale of Bryant Street Quad (K)                              (3,752)       --          --         (269)      --         --
     Sale of Bryant Street Annex (K)                             (1,480)       --          --         (130)      --         --
     Sale of Expressway Corporate Center (K)                     (4,828)       --          --         (304)      --         --
     Sale of Troika Building (L)                                 (4,017)       --          --         (262)      --         --
     Capitalized costs                                           21,998      34,532      32,212       --         --         --
     Depreciation                                                  --          --          --       14,128     12,527     11,468
                                                               --------------------------------    -----------------------------

BALANCE AT END OF YEAR                                         $654,062    $644,332    $676,567    $48,984    $35,821    $28,617
                                                               ================================    =============================

AGGREGATE COST FOR FEDERAL
     INCOME TAX PURPOSES                                       $479,505    $467,618    $509,328
                                                               ================================
</TABLE>


                                      F32
<PAGE>

<TABLE>
<S>                                            <C>
(B)  The property was sold in March 1999.      (H)  The property was sold in August 2000.
(C)  The properties were sold in June 1999.    (I)  The properties were sold in September 2000.
(D)  The property was sold in August 1999.     (J)  The properties were sold in October 2000.
(E)  The property was sold in December 1999.   (K)  The properties were sold in October 2001.
(F)  The properties were sold in March 2000.   (L)  The property was sold in November 2001.
(G)  The property was sold in June 2000.
</TABLE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                            BEDFORD PROPERTY INVESTORS, INC.


                            By: /s/ Peter B. Bedford
                                --------------------------------
                                Peter B. Bedford
                                Chairman of the Board and
                                Chief Executive Officer

Dated: August 23, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacity and on the date indicated.


/s/ Peter B. Bedford                                        August 23, 2002
---------------------------------------------
Peter B. Bedford, Chairman of the Board
and Chief Executive Officer


/s/ Anthony Downs                                           August 23, 2002
---------------------------------------------
Anthony Downs, Director


/s/ Anthony M. Frank                                        August 23, 2002
---------------------------------------------
Anthony M. Frank, Director


/s/ Martin I. Zankel                                        August 23, 2002
---------------------------------------------
Martin I. Zankel, Director


/s/ Thomas H. Nolan, Jr.                                    August 23, 2002
---------------------------------------------
Thomas H. Nolan, Jr., Director


/s/ Hanh Kihara                                             August 23, 2002
---------------------------------------------
Hanh Kihara
Senior Vice President and
Chief Financial Officer


/s/ Krista K. Rowland                                       August 23, 2002
---------------------------------------------
Krista K. Rowland, Vice President and
Controller


                                      F33