<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)

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


     FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

                                       OR

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


                       COMMISSION FILE NUMBER 33-98372-01


                            SPIEKER PROPERTIES, L.P.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


               CALIFORNIA                                       94-3188774
     -------------------------------                       -------------------
     (State or other jurisdiction of                          (IRS Employer
     incorporation or organization)                        Identification No.)


  2180 SAND HILL ROAD, MENLO PARK, CA                              94025
----------------------------------------                         ----------
(Address of principal executive offices)                         (Zip code)


                                 (650) 854-5600
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

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  [ ]









Page 1 of 25
Exhibit Index is located on Page 24.


<PAGE>   2



                            SPIEKER PROPERTIES, L.P.

            QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 1998

                                TABLE OF CONTENTS





<TABLE>
<CAPTION>
PART I.    FINANCIAL INFORMATION                                                       Page No.

<S>                                                                                        <C>
   Item 1. Financial Statements (unaudited).............................................   3

           Consolidated Balance Sheets as of September 30, 1998, and December 31, 1997..   4
           Consolidated Statements of Operations for the Three and Nine Months
             Ended September 30, 1998 and 1997..........................................   6
           Consolidated Statement of Partners' Capital for the Nine Months Ended
             September 30, 1998.........................................................   7
           Consolidated Statements of Cash Flows for the Nine Months Ended
             September 30, 1998 and 1997................................................   8
           Notes to Consolidated Financial Statements...................................   9

   Item 2. Management's Discussion and Analysis of Financial Condition and Results of
           Operations ..................................................................  17

PART II.   OTHER INFORMATION

   Item 2. Changes in Securities........................................................  24
   Item 6. Exhibits and Reports on Form 8-K.............................................  24
   Signatures...........................................................................  25
</TABLE>


                                       2
<PAGE>   3

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


Attached are the following unaudited financial statements of Spieker Properties
L.P. (the "Operating Partnership"):

    (i)   Consolidated Balance Sheets as of September 30, 1998, and December 31,
          1997

    (ii)  Consolidated Statements of Operations for the Three and Nine Months
          Ended September 30, 1998 and 1997

    (iii) Consolidated Statement of Partners' Capital for the Nine Months Ended
          September 30, 1998

    (iv)  Consolidated Statements of Cash Flows for the Nine Months Ended
          September 30, 1998 and 1997

    (v)   Notes to Consolidated Financial Statements

The financial statements referred to above should be read in conjunction with
the Operating Partnership's Annual Report on the Form 10-K for the year ended
December 31, 1997.


                                       3
<PAGE>   4

                            SPIEKER PROPERTIES, L.P.

                           CONSOLIDATED BALANCE SHEETS
                 AS OF SEPTEMBER 30, 1998, AND DECEMBER 31, 1997
                        (unaudited, dollars in thousands)

                                     ASSETS


<TABLE>
<CAPTION>
                                                              September 30, 1998    December 31, 1997
                                                              ------------------    -----------------
<S>                                                               <C>                  <C>        
INVESTMENTS IN REAL ESTATE
  Land, land improvements and leasehold interests                 $   915,697          $   694,621

  Buildings and improvements                                        2,879,165            2,159,581
  Construction in progress                                            209,490               89,509
                                                                  -----------          -----------
                                                                    4,004,352            2,943,711
  Less - Accumulated depreciation                                    (221,483)            (169,051)
                                                                  -----------          -----------
                                                                    3,782,869            2,774,660
  Investments in mortgages                                             33,105              271,675
  Property held for disposition, net                                   52,705               37,186
                                                                  -----------          -----------

     Net investments in real estate                                 3,868,679            3,083,521

CASH AND CASH EQUIVALENTS                                              19,270               22,628

ACCOUNTS RECEIVABLE, net of allowance for
  doubtful accounts of $595 and $260 as of
  September 30, 1998, and December 31, 1997, respectively               4,251                8,661


DEFERRED RENT RECEIVABLE                                               10,814                5,276

RECEIVABLE FROM AFFILIATES                                                 --                  294

DEFERRED FINANCING AND LEASING COSTS, net
  of accumulated amortization of $13,078
  and $10,036 as of September 30, 1998, and
  December 31, 1997, respectively                                      41,067               30,983

FURNITURE, FIXTURES AND EQUIPMENT, net                                  4,184                3,375

PREPAID EXPENSES AND OTHER ASSETS                                      13,332               50,892

INVESTMENT IN AFFILIATE                                                19,209               37,304
                                                                  -----------          -----------

                                                                  $ 3,980,806          $ 3,242,934
                                                                  ===========          ===========
</TABLE>


        The accompanying notes are an integral part of these statements.



                                       4


<PAGE>   5
                            SPIEKER PROPERTIES, L.P.

                           CONSOLIDATED BALANCE SHEETS
                 AS OF SEPTEMBER 30, 1998, AND DECEMBER 31, 1997
                        (unaudited, dollars in thousands)

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                            September 30, 1998  December 31, 1997
                                                            ------------------  -----------------
<S>                                                              <C>                <C>       
DEBT
  Unsecured notes                                                $1,436,500         $1,135,000
  Unsecured short-term borrowings                                   225,000            200,000
  Mortgage loans                                                    112,298             96,502
                                                                 ----------         ----------
     Total debt                                                   1,773,798          1,431,502
                                                                 ----------         ----------

ASSESSMENT BONDS PAYABLE                                             12,243             12,672
ACCOUNTS PAYABLE                                                     17,190              9,519
ACCRUED REAL ESTATE TAXES                                            13,135              1,003
ACCRUED INTEREST                                                     31,845             21,541
UNEARNED RENTAL INCOME                                               18,646             13,712
PARTNER DISTRIBUTIONS PAYABLE                                        44,717             41,110
OTHER ACCRUED EXPENSES AND LIABILITIES                               47,284             32,034
                                                                 ----------         ----------
  Total liabilities                                               1,958,858          1,563,093
                                                                 ----------         ----------

COMMITMENTS AND CONTINGENCIES                                            --                 --

PARTNERS' CAPITAL
  General Partner, including a liquidation preference of
   $381,250 and $131,250 at September 30, 1998 and 1997,
   respectively                                                   1,725,260          1,493,828

  Limited Partners                                                  296,688            186,013
                                                                 ----------         ----------
     Total Partners' Capital                                      2,021,948          1,679,841
                                                                 ----------         ----------

                                                                 $3,980,806         $3,242,934
                                                                 ==========         ==========
</TABLE>

        The accompanying notes are an integral part of these statements.


                                       5
<PAGE>   6

                            SPIEKER PROPERTIES, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 and 1997
             (unaudited, dollars in thousands, except unit amounts)


<TABLE>
<CAPTION>
                                                         Three Months Ended             Nine Months Ended
                                                            September 30                   September 30
                                                     -------------------------      -------------------------
                                                        1998           1997            1998           1997
                                                     ---------       ---------      ---------       ---------
<S>                                                <C>           <C>           <C>            <C>     
REVENUES
  Rental income                                      $ 143,139       $  82,504      $ 393,219       $ 221,424
  Interest and other income                              2,651           1,392         16,495           4,767
                                                     ---------       ---------      ---------       ---------
                                                       145,790          83,896        409,714         226,191
                                                     ---------       ---------      ---------       ---------
OPERATING EXPENSES
  Rental expenses                                       34,218          17,431         87,694          44,514
  Real estate taxes                                     11,076           6,038         30,726          17,077
  Interest expense, including amortization of
   finance costs                                        28,613          16,214         88,811          40,914
  Depreciation and amortization                         24,191          13,442         66,423          36,457
  General and administrative and other expenses          4,430           3,720         14,225          10,255
                                                     ---------       ---------      ---------       ---------
                                                       102,528          56,845        287,879         149,217
                                                     ---------       ---------      ---------       ---------
  Income from operations before
    disposition of property                             43,262          27,051        121,835          76,974
                                                     ---------       ---------      ---------       ---------

GAIN ON DISPOSITION OF PROPERTY                          1,417           3,937         17,132          18,117
                                                     ---------       ---------      ---------       ---------

  Net income                                            44,679          30,988        138,967          95,091
                                                     ---------       ---------      ---------       ---------

Preferred Operating Partnership Unit
  Distributions                                         (2,527)             --         (6,016)             --
                                                     ---------       ---------      ---------       ---------

Net income available to general
  and limited partners                               $  42,152       $  30,988      $ 132,951       $  95,091
                                                     =========       =========      =========       =========

General Partner                                      $  37,944       $  27,303      $ 119,719       $  83,587
                                                     ---------       ---------      ---------       ---------
Limited Partner                                          4,208           3,685         13,232          11,504
                                                     ---------       ---------      ---------       ---------
  Total                                              $  42,152       $  30,988      $ 132,951       $  95,091
                                                     =========       =========      =========       =========

NET INCOME PER OPERATING PARTNERSHIP UNIT
  Basic earnings                                     $     .58       $     .56      $    1.86       $    1.75
                                                     =========       =========      =========       =========
  Diluted earnings                                   $     .57       $     .55      $    1.84       $    1.72
                                                     =========       =========      =========       =========

DISTRIBUTION PER OPERATING PARTNERSHIP UNITS
  General Partner                                    $     .69       $     .52      $    2.03       $    1.45
                                                     =========       =========      =========       =========
  Limited Partners                                   $     .59       $     .47      $    2.43       $    1.41
                                                     =========       =========      =========       =========
</TABLE>


        The accompanying notes are an integral part of these statements.



                                       6


<PAGE>   7

                            SPIEKER PROPERTIES, L.P.

                   CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
                        (unaudited, dollars in thousands)




<TABLE>
<CAPTION>
                                              General          Limited
                                              Partner          Partner           General          Limited 
                                               Units            Units            Partner          Partners            Total
                                            -----------      -----------       -----------       -----------       -----------
<S>                                          <C>               <C>             <C>               <C>               <C>        
BALANCE AT DECEMBER 31, 1997                 60,700,260        7,322,126       $ 1,493,828       $   186,013       $ 1,679,841
 Contribution - Proceeds from sale
  of Common Stock                             2,659,468               --           102,534                --           102,534
 Contribution - Common Stock issued
  for property                                  165,985               --             6,900                --             6,900
 Contribution - Proceeds from sale
   of Preferred Operating Partnership
   Units                                             --               --                --            73,125            73,125

 Contribution - Proceeds from sale
   of Series E Preferred Stock                       --               --            96,401                --            96,401
 Contribution of property for
   Operating Partnership Units                       --        1,593,356                --            65,395            65,395
 Conversion of Preferred Operating
   Units to Common Stock                        259,694               --            10,096           (10,096)               --
 Conversion of Operating
   Partnership Units to Common Stock             80,032          (80,032)              743              (743)               --
 Restricted stock grant                         103,257               --                --                --                --
 Exercise of stock options                      306,750               --             6,406                --             6,406
 Amortization of deferred compensation               --               --               169                --               169
 Allocation from General Partner
  to Limited Partner                                 --               --            16,090           (16,090)               --

 Partner Distributions                               --               --          (127,625)          (20,164)         (147,789)
 Net Income                                          --               --           119,718            19,248           138,966
                                            -----------      -----------       -----------       -----------       -----------
BALANCE AT SEPTEMBER 30, 1998                64,275,446        8,835,450       $ 1,725,260       $   296,688       $ 2,021,948
                                            ===========      ===========       ===========       ===========       ===========
</TABLE>



        The accompanying notes are an integral part of these statements.



                                       7



<PAGE>   8




                            SPIEKER PROPERTIES, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 and 1997
                        (unaudited, dollars in thousands)

<TABLE>
<CAPTION>
                                                                              Nine Months
                                                                           Ended September 30
                                                                      -----------------------------
                                                                         1998              1997
                                                                      -----------       -----------
<S>                                                                   <C>               <C>        
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income                                                          $   138,967       $    95,091
  Adjustments to reconcile net income to net cash provided by
   operating activities-
  Depreciation and amortization                                            66,423            36,457
  Amortization of prepaid interest and deferred financing costs             1,675               848
  Non-cash compensation                                                        63               597
  Gain on disposition of property                                         (17,132)          (18,117)
  Increase in deferred rent receivable                                     (5,538)           (1,406)
  Decrease (increase) in accounts receivable                                4,410            (1,213)
  Decrease in receivable from affiliates                                      294                76
  Increase in prepaid expenses and other assets                            (3,222)          (11,973)
  Decrease in assessment bonds payable                                       (798)             (624)
  Increase in accounts payable                                              7,671             3,774
  Increase in accrued real estate taxes                                    12,132             5,883
  Increase in accrued interest                                             10,304             5,917
  Increase in other accrued expenses and liabilities                        8,438             9,184
  Increase in unearned rental income                                        4,934             3,918
                                                                      -----------       -----------
     Net cash provided by operating activities                            228,621           128,412
                                                                      -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Additions to properties                                              (1,039,222)         (872,246)
  Reductions to deposits on properties, net                                39,181                --
  Additions to investment in mortgages                                    (11,610)          (17,073)
  Additions to investment in affiliates                                    (8,574)               --
  Additions to leasing costs                                              (12,282)           (5,541)
  Proceeds from investment in mortgages                                   250,179                --
  Proceeds from investment in affiliate                                    31,670
  Proceeds from disposition of property                                    63,951           100,115
                                                                      -----------       -----------
     Net cash used for investing activities                              (686,707)         (794,745)
                                                                      -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from debt, net of financing fees                             1,018,254           699,138
  Payments on debt                                                       (697,809)         (321,986)
  Partner distributions                                                  (144,182)          (78,474)
  Capital contributions - Common Stock, net of issuance costs             102,534           374,835
  Capital contributions - Stock options exercised                           6,405             2,245
  Capital contributions - Preferred Stock, net of issuance costs           96,401                --
  Capital contributions - Preferred Operating Partnership Units            73,125                --
  Capital contributions - Operating Partnership Units                          --                25
                                                                      -----------       -----------
     Net cash provided by financing activities                            454,728           675,783
                                                                      -----------       -----------
     Net increase (decrease) in cash and cash equivalents                  (3,358)            9,450
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                           22,628            29,336
                                                                      -----------       -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $    19,270       $    38,786
                                                                      ===========       ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE
  Cash paid for interest                                                   76,831            38,416
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Liabilities assumed in relation to property acquisitions                   23,623            54,496
Limited Partnership interest recorded in relation to properties
     acquired                                                              65,395            26,072
Write-off of fully depreciated property                                     6,884             4,973
Write-off of fully amortized deferred financing and leasing
  costs                                                                     1,947             6,591
Increase in Investments in Real Estate                                      6,900                --
Conversion of operating partnership units into Common Stock
  with resulting reduction in minority interest and increase in
  additional paid-in-capital                                                   --               524
</TABLE>



        The accompanying notes are an integral part of these statements.


                                       8



<PAGE>   9


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1998 and 1997
         (unaudited, in thousands, except unit and square footage data)



1.    ORGANIZATION AND BASIS OF PRESENTATION

      Spieker Properties, L.P.

      Spieker Properties, L.P. (the "Operating Partnership") was formed on
      November 10, 1993, and commenced operations on November 19, 1993, when
      Spieker Properties, Inc. (the "Company"), the general partner in the
      Operating Partnership, completed its initial public offering ("IPO") on
      November 18, 1993. The Company qualifies as a real estate investment trust
      ("REIT") under the Internal Revenue Code of 1986 (the "Code"), as amended.
      As of September 30, 1998, the Company owned an approximate 87.9 percent
      general and limited partnership interest in the Operating Partnership.


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Consolidation

      The Operating Partnership's consolidated financial statements include the
      consolidated financial position of the Operating Partnership and its
      subsidiaries as of September 30, 1998, and December 31, 1997, and its
      consolidated results of operations for the three and nine months ended
      September 30, 1998 and 1997 and its consolidated cash flows for the nine
      months ended September 30, 1998 and 1997. The Operating Partnership's
      investment in Spieker Northwest, Inc. (an unconsolidated Preferred Stock
      subsidiary) and its investment in Spieker Griffin/W9 Associates, LLC are
      accounted for under the equity method. All significant intercompany
      balances and transactions have been eliminated in the consolidated
      financial statements.

      Interim Financial Information

      The consolidated financial statements have been prepared pursuant to the
      rules and regulations of the Securities and Exchange Commission ("SEC")
      and, in management's opinion, include all adjustments necessary for a fair
      presentation of results for such interim periods. Certain information and
      note disclosures normally included in annual financial statements prepared
      in accordance with generally accepted accounting principles have been
      condensed or omitted pursuant to SEC rules or regulations; however, the
      Operating Partnership believes that adequate disclosures have been made.

      The interim results for the three and nine months ended September 30, 1998
      and 1997, are not necessarily indicative of results for the full year. It
      is suggested that these financial statements be read in conjunction with
      the consolidated financial statements and notes thereto included in the
      Operating Partnership's Annual Report on Form 10-K for the year ended
      December 31, 1997.

      Land

      The Operating Partnership has costs related to land parcels that are
      either held for investment or are in a design and approval process in the
      amounts of $119.4 million at September 30, 1998 and $20.9 million at
      December 31, 1997. There were no material Construction in process costs
      associated with these land parcels.




                                       9

<PAGE>   10


      Properties

      Properties are recorded at cost and are depreciated using the
      straight-line method over the estimated useful lives of the properties.
      The estimated lives are as follows:

<TABLE>
<S>                                                 <C>
      Land improvements and leasehold interests     18 to 40 years
      Buildings and improvements                    10 to 40 years
      Tenant improvements                           Term of the related lease
</TABLE>



      The cost of buildings and improvements includes the purchase price of the
      property or interests in property, legal fees, acquisition costs,
      capitalized interest, property taxes and other costs incurred during the
      period of construction. All acquisitions are recorded using the purchase
      method of accounting.

      Expenditures for maintenance and repairs are charged to operations as
      incurred. Significant renovations or betterments which extend the economic
      useful life of assets are capitalized.

      Investments in real estate are stated at the lower of depreciated cost or
      estimated fair value. Fair value for financial reporting purposes is
      evaluated periodically by the Operating Partnership on a property by
      property basis using undiscounted cash flow. If a potential impairment is
      identified, it is measured by the property's fair value based on either
      sales comparables or the net cash expected to be generated by the
      property, less estimated carrying costs (including interest) throughout
      the anticipated holding period, plus the estimated cash proceeds from the
      ultimate disposition of the property. To the extent that the carrying
      value exceeds the estimated fair value, a provision for decrease in net
      realizable value is recorded. Estimated fair value is not necessarily an
      indication of a property's current value or the amount that will be
      realized upon the ultimate disposition of the property. As of September
      30, 1998, and December 31, 1997, none of the carrying values of the
      properties exceeded their estimated fair values. As of September 30, 1998,
      and December 31, 1997, the properties are located primarily in California,
      Oregon and Washington. As a result of this geographic concentration, the
      operations of these properties could be adversely affected by a recession
      or general economic downturn in the areas where these properties are
      located.

      The Operating Partnership owns mortgage loans that are secured by real
      estate. Certain loans are with an affiliate of the Operating Partnership
      (see note 4 - Investments in Mortgages). The Operating Partnership
      assesses possible impairment of these loans by reviewing the fair value of
      the underlying real estate. As of September 30, 1998, the estimated fair
      value of the underlying real estate was in excess of the Operating
      Partnership's book value of the mortgage loans.

      Construction in Progress

      Project costs clearly associated with the development and construction of
      a real estate project are capitalized as construction in progress. In
      addition, interest, real estate taxes and other costs are capitalized
      during the period in which the property is under construction and until
      all costs related to the property's development are complete.

      Cash and Cash Equivalents

      Highly liquid investments with an original maturity of three months or
      less when purchased are classified as cash equivalents.

      Deferred Financing and Leasing Costs

      Costs incurred in connection with financing or leasing are capitalized and
      amortized on a straight-line basis over the term of the related loan or
      lease. Unamortized financing and leasing costs are charged to expense upon
      the early termination of the lease or upon the early payment of financing.



                                       10

<PAGE>   11


      Fair Value of Financial Instruments

      Based on the borrowing rates currently available to the Operating
      Partnership, the carrying amount of debt approximates fair value. Cash and
      cash equivalents consist of demand deposits, certificates of deposit, and
      overnight repurchase agreements, with financial institutions. The carrying
      amount of cash and cash equivalents approximates fair value.

      Revenues

      All leases are classified as operating leases. Rental income is recognized
      on the straight-line basis over the terms of the leases. Deferred rent
      receivable represents the excess of rental revenue recognized on a
      straight-line basis over cash received under the applicable lease
      provisions.

      Interest and Other Income

      Interest and other income includes interest income on cash, cash
      equivalents, investments in mortgages and management fee income.

      Net Income Per Unit

      Per unit amounts for the Operating Partnership are computed using the
      weighted average units outstanding during the period. The diluted weighted
      average general partner units and limited partner units outstanding
      include the dilutive effect of stock options. The basic and diluted
      weighted average common units outstanding for the three and nine months
      ended September 30, 1998 and 1997, are as follows:

<TABLE>
<CAPTION>
                              Basic Weighted Average   Diluted Weighted Average
                              General Partner Units     General Partner Units
                              ----------------------   -----------------------
      <S>                             <C>                     <C>
      Three months ended: 
        September 30, 1998            64,194,243              64,811,864
        September 30, 1997            48,491,890              49,258,379

      Nine months ended:
        September 30, 1998            63,006,427              63,837,310
        September 30, 1997            47,220,261              47,986,750
</TABLE>



<TABLE>
<CAPTION>
                              Basic Weighted Average   Diluted Weighted Average
                              General Partner Units     General Partner Units
                              ----------------------   -----------------------
      <S>                             <C>                     <C>
      Three months ended:
        September 30, 1998             8,827,375               8,827,375
        September 30, 1997             7,200,585               7,200,585

      Nine months ended:
        September 30, 1998             8,283,704               8,283,704
        September 30, 1997             7,150,682               7,150,682
</TABLE>



      Reclassifications

      Certain items in the 1997 financial statements have been reclassified to
      conform to the 1998 presentation.



                                       11

<PAGE>   12


      Use of Estimates

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



                                       12

<PAGE>   13


3.    ACQUISITIONS AND DISPOSITIONS

      The Operating Partnership acquired the following properties (the "1998
      Acquisitions") during the nine months ended September 30, 1998:


<TABLE>
<CAPTION>
                                                                    Property   Total Rentable                           
      Project Name                            Location               Type(1)     Square Feet       Cost(2)
      --------------------------------        ------------------    --------   --------------    ----------
      <S>                                     <C>                      <C>         <C>            <C>
      The Concourse                           San Jose, CA              O          540,224       $172,421(4)
      Koll Bellefield Center                  Bellefield, WA            O           65,946         10,324
      Santa Monica Business Park(3)           Santa Monica, CA          O          960,081        105,649
      Marina Business Center(3)               Marina Del Rey, CA        O          261,966         21,613
      The City Office Portfolio               Orange, CA                O          409,492         97,306(5)
      Skyport Plaza                           San Jose, CA              O          359,600         56,873(6)
      Hayward Business Park                   Hayward, CA               I          630,944         33,610
      Commerce Park West I, II and III        Sacramento, CA            I          579,945         26,202(7)
      Brea Park Center - Building C           Brea, CA                  O           26,856          2,297
      Allegiance Center                       Ontario, CA               O           73,778          5,191
      Ontario Corporate Center                Ontario, CA               O           97,703         10,479
      2600 Michelson(3)                       Irvine, CA                O          391,166         64,287
      Cerritos Towne Center(3)                Cerritos, CA              O          332,608         41,531
      Metro Center(3)                         San Mateo, CA             O          711,584        131,058
      Biltmore Commerce Center(3)             Phoenix, AZ               O          262,875         41,786
      Benjamin Franklin Plaza                 Portland, OR              O          273,239         50,047
      SAN MATEO BAY CENTER III                SAN MATEO, CA             O           62,869         16,007
</TABLE>


      (1)   "O" indicates office property; "I" indicates industrial property.

      (2)   Represents the initial acquisition costs of the properties excluding
            any additional repositioning costs.

      (3)   Previously identified as a part of the TDC Portfolio.

      (4)   Includes approximately $22.1 million allocated to 6.6 acres of land
            held for future development.

      (5)   Includes approximately $3.5 million allocated to 11.5 acres of land
            held for future development and $35.6 million allocated to a
            property currently under redevelopment.

      (6)   Includes approximately $23.1 million allocated to 19.0 acres of land
            held for future development.

      (7)   Previously identified as Enterprise Business Park II. Includes
            approximately $2.0 million allocated to 11.5 acres of land held for
            future development.

      The Operating Partnership disposed of the following properties (the "1998
      Dispositions") during the nine months ended September 30, 1998:


<TABLE>
<CAPTION>
                                                       Property       Total Rentable                           
      Project Name                  Location             Type(1)       Square Feet       Cost(2)
      -------------------------     --------------     --------       --------------    ---------
      <S>                                   <C>                       <C>               <C>
      Rose Pavilion                 Pleasanton, CA     Retail            292,902        $40,928
      Camino West Business Park     Carlsbad, CA       Office             44,574          2,750
      Fresno Warehouse II           Fresno, CA         Industria1        122,000          3,934
      Fresno Warehouse III          Fresno, CA         Industria1        100,200          3,653
      Fresno Associates I           Fresno, CA         Industria1        175,900          6,463
      McArthur Park                 Santa Ana, CA      Office             94,023          7,800
</TABLE>



      During the nine months ended September 30, 1998, the Operating Partnership
      acquired twelve parcels of land for development. The total initial cost of
      these twelve parcels was $62,430.




                                       13


<PAGE>   14




4.    TRANSACTIONS WITH AFFILIATES

      Revenues and Expenses

      The Operating Partnership received $2,197 and $538 for nine months ended
      September 30, 1998, and 1997, respectively, for management services
      provided to certain properties that are controlled and operated by either
      Spieker Northwest, Inc., Spieker Griffin/W9 Associates, LLC or Spieker
      Partners related entities (collectively, "Spieker Partners"). Certain
      officers of Spieker Properties, Inc. are partners in Spieker Partners.

      Receivable From Affiliates

      The receivable from affiliates at September 30, 1998, and December 31,
      1997, represents management fees and reimbursements due from Spieker
      Northwest, Inc., Spieker Griffin/W9 Associates, LLC and Spieker Partners.

      Investments in Mortgages

      Included in Investments in Mortgages are $18,700 at September 30, 1998 and
      $257,294 at December 31, 1997, of loans to Spieker Northwest, Inc. The
      loans are secured by deeds of trust on real property, bear interest at
      8.5%, and mature in 2012. Interest income of $1,160 and $10,369 is
      included in interest and other income for the three and the nine months
      ended September 30, 1998.

      Investment in Affiliate

      The investment in affiliate represents an investment in Spieker Northwest,
      Inc. ("SNI"). The Operating Partnership owns 95% of the Preferred Stock of
      SNI. Certain senior officers of the Company own 100% of the voting stock
      of SNI. SNI owns 226,785 square feet of office and industrial property
      located in various states. In addition, SNI owns one parcel of land
      totaling 20.0 acres. The entire portfolio of property is held for sale at
      September 30, 1998. In addition to property ownership, SNI provides
      property management services to certain properties owned by Spieker
      Partners.

      Additionally, investment in affiliates represents the 12.5% interest in
      Spieker Griffin/W9 Associates, LLC. Spieker Griffin/W9 Associates, LLC
      purchased in April 1998 a 535,000 square foot office complex, which is
      managed by the Company, located in Orange County, California for an
      initial cost of $100,000.


5.    PROPERTY HELD FOR DISPOSITION

      The Operating Partnership has determined to focus exclusively on
      properties that meet its long-term strategic objectives. The Operating
      Partnership has therefore decided to divest itself of certain properties.
      Included in property held for disposition of $52,705 at September 30,
      1998, is one industrial property located in Washington and one industrial
      property and one land parcel located in Southern California and one office
      property in Arizona. The divestiture of these properties is subject to
      identification of a purchaser, negotiation of acceptable terms and other
      customary conditions.


6.    DEBT

      Unsecured Notes

      As of September 30, 1998, the Operating Partnership has outstanding
      $1,436,500 in investment grade rated unsecured debt securities with
      interest rates ranging from 6.65% to 8.0% payable semi-annually. The debt
      securities mature on various dates from 2000 to 2027.



                                       14


<PAGE>   15


      Unsecured Short-Term Borrowings

      The Operating Partnership has an Unsecured Line of Credit facility. The
      maximum amount available under the facility is $250,000. The facility
      carries interest at LIBOR (London Interbank Offered Rates) plus 0.80%,
      matures in August 2001, includes an annual administrative fee of $50 and
      an annual facility fee of .20%. As of September 30, 1998, the amount drawn
      on the facility was $25,000. In addition, the Operating Partnership has a
      $200,000 short-term bank facility outstanding at September 30, 1998. This
      short-term facility carries interest at LIBOR plus .65% and matures
      November 1999.

      Mortgage Loans

      Mortgage loans of $112,298 as of September 30, 1998, are secured by deeds
      of trust on related properties. The mortgage loans carry interest rates
      ranging from 7.37% to 9.88%, require monthly principal and interest
      payments, and mature on various dates from 1998 to 2013.


7.    PARTNER DISTRIBUTIONS PAYABLE

      The partners distributions payable at September 30, 1998, and December 31,
      1997, represent amounts payable to partners for the quarter then ended.


8.    PARTNERS' CAPITAL

      Equity Offerings and Common Stock Conversion

      In July 1998, the Company issued 173,664 shares of Common Stock at $39.17
      per share in a direct placement. Net proceeds of approximately $6,667 were
      contributed to the Operating Partnership for 173,664 units and were used
      to repay borrowings on the unsecured line of credit.

      In November, 1997, the Operating Partnership issued limited partners'
      interest of 2,007,495 Preferred Operating Partnership Units in connection
      with the acquisition of property. Preferred Operating Partnership Units
      are convertible into 1,824,994 Operating Partnership Units at the
      discretion of the holder subsequent to May 3, 1998, or they may be
      redeemable for cash at the discretion of the Operating Partnership
      subsequent to December 3, 2002. Preferred Operating Partnership Units are
      paid distributions quarterly in the amount of $.63 per share. For the nine
      months ended September 30, 1998, 285,664 Preferred Operating Partnership
      Units have been converted into 259,694 shares of Common Stock, held by the
      general partner as Operating Partnership Units. There were no conversions
      during the quarter ended September 30, 1998.

      Series D Cumulative Redeemable Preferred Units

      In April 1998, the Operating Partnership sold 1,500,000 Series D
      Cumulative Redeemable Preferred Units (the "Series D Preferred Units") to
      an institutional investor for $50.00 per unit. Dividends are payable at an
      annual rate of 7.6875%. The Series D Preferred Units are exchangeable for
      the Series D Cumulative Redeemable Preferred Stock of the Company on or
      after April 20, 2008.

      Series E Cumulative Redeemable Preferred Stock

      In June 1998, the Company sold 4,000,000 shares of Series E Cumulative
      Redeemable Preferred Stock for $25.00 per share through an underwritten
      public offering. Dividends are payable at an annual rate of 8.00% of the
      liquidation preference of $100.0 million. The proceeds were contributed to
      the Operating Partnership for 4,000,000 preferred units with identical
      terms to the Series E Cumulative Redeemable Preferred Stock. The shares
      are redeemable solely at the option of the Company.



                                       15

<PAGE>   16



 9.   COMMITMENTS AND CONTINGENCIES

      The land on which three of the Operating Partnership's properties are
      located is owned by Stanford University and is subject to ground leases.
      The ground leases expire in 2039 or 2040 and, unless the leases are
      extended, the use of the land, together with all improvements, will revert
      back to Stanford University. The former owners of the three properties
      prepaid the ground leases through 2011, 2012 and 2017; thereafter, the
      Operating Partnership will be responsible for the ground lease payments,
      as defined under the terms of the leases. These ground lease payments have
      been segregated from the total purchase price of the properties,
      capitalized as leasehold interests in the accompanying consolidated
      balance sheet, and are being amortized ratably over the terms of the
      related original prepayment periods (18 to 24 years).

      In addition, the Operating Partnership has entered into operating ground
      leases on certain land parcels with periods ranging from 16 to 53 years.
      Certain ground leases contain purchase options. Payments for the ground
      leases for 1998 are $5,937.

10.   GAIN ON DISPOSITION OF PROPERTY

      Gain on disposition of property for the nine months ended September 30,
      1998, represents the gain on dispositions of one retail property located
      in Pleasanton, California, two office properties located in Carlsbad and
      Santa Ana, California and three industrial buildings located in Fresno,
      California.

11.   SUBSEQUENT EVENTS

      Subsequent to September 30, 1998, the Operating Partnership acquired one
      property totaling approximately 51,431 square feet at a total initial
      acquisition cost of $4,900 located in Ontario, California. This
      acquisition was funded with proceeds from property dispositions.




                                       16


<PAGE>   17




ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Statements contained in this Item 2, "Management's Discussion and Analysis of
Financial Conditions and Results of Operations," and elsewhere in this Quarterly
Report on Form 10-Q which are not historical facts may be 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 risks and special considerations set forth in the
Operating Partnership's other SEC filings. Readers are cautioned not to place
undue reliance on these forward-looking statements which speak only as of the
date hereof. The Operating Partnership undertakes no obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

RESULTS OF OPERATIONS

The following comparison is of the Operating Partnership's consolidated
operations for the three and nine month periods ended September 30, 1998, as
compared to the corresponding periods ended September 30, 1997.

Rental revenues for the third quarter of 1998 increased by $60.6 million or
73.5% to $143.1 million, as compared with $82.5 million for the quarter ended
September 30, 1997. Of this increase, $27.5 million was generated by properties
acquired during the first nine months of 1998 (the "1998 Acquisitions"). In the
third quarter of 1998 the Operating Partnership acquired one property totaling
63 thousand square feet for a total investment of $16.3 million. As used herein,
the terms "invested" and "total investment" represent the initial purchase price
of acquisitions, plus projected cost of certain repositioning and rehab capital
expenditures anticipated at the time of purchase. The property acquired in the
third quarter was acquired at the midpoint of the quarter and, as such, a full
quarter's revenue and expense was not recognized during the quarter.

$28.4 million of the rental revenue increase in the third quarter of 1998 was
generated by properties acquired during 1997. During 1997, the Operating
Partnership invested $1.5 billion to acquire properties totaling 12.5 million
square feet (the "1997 Acquisitions").

$2.8 million of the increase in rental revenues is attributable to revenue
increases in properties owned at January 1, 1997, and still owned at September
30, 1998 (the "Core Portfolio"). This increase in the Core Portfolio is due to
increased rental rates realized on the renewal and re-leasing of
second-generation space and contractual rent increases in existing leases.
During the quarter ended September 30, 1998, the Operating Partnership completed
343 lease transactions for the renewal or re-leasing of 2.4 million square feet
of second-generation space. On average, for the quarter, the new effective rates
were 40.5% higher than the expiring coupon rent.

$5.5 million of the rental revenue increase in the third quarter of 1998 was
generated by properties developed by the Operating Partnership (the
"Developments"). The Developments include both properties completed and added to
the Operating Partnership's portfolio of stabilized properties during 1997 and
1998, as well as properties currently under development. During the nine months
ended September 30, 1998, five properties totaling 812,651 square feet were
completed for an estimated final cost of $50,673 million and were added to the
Operating Partnership's portfolio of stabilized properties. Properties are
considered stabilized when either a 95.0% occupancy rate has been achieved or
eighteen months after shell completion, whichever is sooner. The Operating
Partnership also has a current development pipeline of 3.4 million square feet
representing a total projected cost of $376.9 million. Certain of the properties
in the development pipeline are shell complete and partially occupied but are
not considered stabilized.

The increases in rental revenue are partially offset by a decrease of $3.6
million attributable to the disposition of properties which were owned by the
Operating Partnership during the quarter ended September 30, 1997 and sold
subsequent to the end of such quarter (the "Property Dispositions").




                                       17

<PAGE>   18


Rental revenues for the nine month period ended September 30, 1998, increased by
$171.8 million or 77.6% to $393.2 million as compared to $221.4 million for the
same period ended September 30, 1997. $58.2 million and $103.7 million of this
increase was attributable to the 1998 and 1997 Acquisitions, $8.1 million
relates to the Core Portfolio, $13.6 million is attributable to the
Developments, with the remainder attributable to an $11.8 million decrease from
Property Dispositions.

As a result of the 1998 Acquisitions, the 1997 Acquisitions, and the
Developments, the Operating Partnership's rentable square footage, not including
retail properties and properties sold, increased by 12.3 million square feet or
43.3% to 40.7 million square feet on September 30, 1998, from 28.4 million on
September 30, 1997. At September 30, 1998, the portfolio of stabilized
properties was 96.3% occupied. By property type, the office portfolio was 94.8%
occupied and the industrial portfolio was 97.7% occupied.

Interest and other income increased by $1.2 million and $11.7 million or 85.7%
and 243.8% for the three and nine month periods ended September 30, 1998, over
the same periods ended September 30, 1997. The net increase in interest and
other income is due to interest income from mortgage loans made to Spieker
Northwest, Inc. (SNI), an affiliate of Spieker Properties, Inc., in relation to
SNI's acquisition of non-core assets in the WCB Portfolio. Refer to footnote (4)
Transactions with Affiliates--"Investment in Affiliate" for further explanation.

Rental expenses increased by $16.7 million or 95.4% for the quarter ended
September 30, 1998, as compared with the same period in 1997. Real estate taxes
increased by $5.1 million or 85.0% in 1998, as compared to $6.0 million in 1997.
The overall increase in rental expenses and real estate taxes (collectively
referred to as "property operating expenses") is primarily a result of the
growth in the total square footage of the Operating Partnership's portfolio of
properties. Of the total $21.8 million increase in property operating expenses,
$9.1 million is attributable to the 1997 Acquisitions, $10.9 million is
attributable to the 1998 Acquisitions, $1.8 million is attributable to the
Developments, and $1.0 million is attributable to the Core Portfolio offset by a
$1.0 million decrease attributable to the Property Dispositions. On a percentage
basis, property operating expenses were 31.7% and 28.5% of rental revenues for
the quarter ended September 30, 1998, and September 30, 1997, respectively. The
increase in property operating expenses as a percentage of rental revenues is
attributable to the increased percentage of office properties in the Operating
Partnership's portfolio. For the quarter ended September 30, 1998, 69.0% of the
Operating Partnership's net operating income (rental revenues less property
operating expenses) was generated by office properties as compared with 62.0%
during 1997.

In relation to the Operating Partnership's decision to divest itself of certain
properties, the following analysis is presented: Rental revenues net of property
operating expenses (referred to as "property operating income") increased by
$41.4 million or 73.4% to $97.8 million, as compared to $56.4 million for the
quarter ended September 30, 1997. Of this increase, $16.6 million and $19.3
million relates to the 1998 and 1997 Acquisitions, $1.8 million is attributable
to the Core Portfolio, and $3.7 million is attributable to the Developments. For
the nine month period ended September 30, 1998, property operating income
increased by $123.5 million or 82.5% from $149.7 million to $273.2 million at
September 30, 1998. $35.4 million and $72.4 million related to the 1998 and 1997
Acquisitions, $6.5 million is related to the Core Portfolio, and $9.2 million is
attributed to the Developments.

For the nine month period ended September 30, 1998, rental expenses increased by
$43.2 million from $44.5 million for the nine months ended September 30, 1997.
This represents a 97.1% increase year over year. Real estate taxes increased by
$13.6 million or 79.5% to $30.7 million for the first three quarters of 1998 as
compared to $17.1 million for the same period in 1997. Of the total $56.8
million increase in property operating expenses, $31.3 million is attributable
to the 1997 Acquisitions, $22.8 million is for the 1998 Acquisitions, $4.4
million relates to the Developments, $1.6 million is attributed to the Core
Portfolio, and a $3.3 reduction attributable to the Property Dispositions. On a
percentage basis property operating expenses were 30.1% and 27.8% of rental
revenues for the nine months ended September 30, 1998, and 1997, respectively.



                                       18

<PAGE>   19


Interest expense increased by $12.4 million or 76.5% to $28.6 million for the
three months ended September 30, 1998, from $16.2 million for the same period in
1997. For the nine month period ended September 30, 1998, interest expense
increased by $47.9 million or 117.1% to $88.8 million from $40.9 million for the
same period in 1997. These increases in interest expense are due to increases in
the total average outstanding debt balances. The average outstanding debt for
the three months ended September 30, 1998, and 1997 was $1.8 billion and $981.3
million respectively. The average balance outstanding for the nine months ended
September 30, 1998, was $1.8 billion and $823.6 million for the same period in
1997. The increases in the average outstanding debt balances are consistent with
the increases in the size of the Operating Partnership's portfolio of
properties.

Depreciation and amortization expenses increased by $10.7 million and $29.9
million or 79.9% and 81.9% for the three and nine month periods ended September
30, 1998, respectively, as compared with the same periods in 1997, due to the
1998 and 1997 Acquisitions and the completed Developments.

General and administrative expenses and other expenses increased by $0.7 million
and $4.0 million for the three and nine month periods ended September 30, 1998
as compared with the same periods in 1997, primarily as a result of the growth
in the portfolio. On a percentage basis, general and administrative expenses
were 3.1% and 3.6% of rental revenues for the three and nine month periods ended
September 30, 1998, respectively, as compared with 4.5% and 4.6% for the same
periods in 1997.

During the third quarter of 1998, the Operating Partnership disposed of
properties resulting in a gain on disposition of $1.4 million. This brings the
total gain on disposition of property for the first three quarters of 1998 to
$17.1 million on the disposition of six properties.

Net income before minority interests and disposition of property increased by
$16.2 million or 59.8% to $43.3 million for the three month period ended
September 30, 1998, from $27.1 million for the same period in 1997. For the nine
month period ended September 30, 1998, net income before minority interests and
disposition of property increased by $44.8 million or 58.2% to $121.8 million,
from $77.0 million for the same period in 1997. The increase in net income is
principally due to the 1998 and 1997 Acquisitions and revenue growth in the
Company's Core Portfolio.

LIQUIDITY AND CAPITAL RESOURCES

For the quarter ended September 30, 1998, cash provided by operating activities
increased by $100.2 million, or 78.0%, to $228.6 million, as compared to $128.4
million for 1997. The increase is primarily due to the increase in net operating
income resulting from the 1997 and 1998 Acquisitions, the Developments,
increased rental income generated by the Core Portfolio and is partially offset
by an increase in interest expense and property dispositions. Cash used for
investing activities decreased by $108.0 million, or 13.6%, to $686.7 million
for the first nine months of 1998, as compared to $794.7 million for the first
nine months of 1997. The decrease is attributable to the net effect of the
Operating Partnership's ongoing acquisition and development of office and
industrial properties offset by proceeds from investments in mortgages and
dispositions. Cash provided by financing activities decreased by $221.1 million,
or 32.7%, to $454.7 million for the first nine months of 1998, as compared to
$675.8 million for the same period in 1997. During the first nine months of
1998, cash provided by financing activities consisted primarily of $272.1
million in net proceeds from the sale of Common and Preferred Stock and
Preferred Operating Partnership Units, $301.5 million in gross proceeds from the
issuance of unsecured notes (see below), net borrowings of $25.0 million on the
Facility (as defined below) and a net decrease of $2.8 million in payments of
mortgage loans. Additionally, payments of distributions increased by $65.7
million to $144.2 million for the first nine months of 1998, as compared with
$78.5 million for the same period in 1997. The distribution payment increase is
due to the greater number of shares outstanding and a 21.3% increase in the
distribution rate of $1.14 per share for the first nine months of 1998 from $.94
per share in 1997.




                                       19

<PAGE>   20


The principal sources of funding for acquisitions, development, expansion and
renovation of the properties are unsecured short-term borrowings, public and
privately placed equity financing, public unsecured debt financing, the issuance
of partnership units in the Operating Partnership, the assumption of secured
debt on properties acquired and cash flow provided by operations. The Operating
Partnership believes that its liquidity and its ability to access capital are
adequate to continue to meet liquidity requirements for the foreseeable future.

At September 30, 1998, Operating Partnership the had no material commitments for
capital expenditures related to the renewal or re-leasing of space. The
Operating Partnership believes that the cash provided by operations and its line
of credit provide sufficient sources of liquidity to fund capital expenditure
costs associated with the renewal or re-leasing of space.

In January 1997, the Company sold 11,500,000 shares of Common Stock (including
1,500,000 shares sold to the underwriters in the exercise of their
over-allotment option in February 1997) through an underwritten public offering
at $34.50 per share. The net proceeds of $374.8 million were used to purchase
properties during the first quarter of 1997, many of which were under contract
or letter of intent at the time of the offering, and to repay indebtedness.
Also, in January 1997, the Company and the Operating Partnership filed a shelf
registration statement with the SEC which registered $500.0 million of equity
securities of the Company and $500.0 million of debt securities of the Operating
Partnership and became effective in January 1997.

In September 1997, the Company and the Operating Partnership filed a shelf
registration statement (the "September 1997 Shelf Registration Statement") with
the SEC which registered $500.0 million of equity securities of the Company and
$500.0 million of debt securities of the Operating Partnership which became
effective in October 1997.

On October 10, 1997, the Company sold 6,000,000 shares of Series C Cumulative
Redeemable Preferred Stock for $25.00 per share. Dividends are payable at an
annual rate of 7.875% of the liquidation preference of $150.0 million. Net
proceeds of $146.0 million were used principally to repay borrowings on the
unsecured line of credit and to fund the ongoing acquisition and development of
property.

In November 1997, the Company sold 11,500,000 shares of Common Stock (including
1,500,000 shares sold to the underwriters in the exercise of their
over-allotment option) through an underwritten public offering at $38.875 per
share. The net proceeds of $425.0 million were used to repay indebtedness and to
purchase properties which were under contract at the time of the offering.

In December 1997, the Company placed 573,134 shares of Common Stock in a
Registered Unit Investment Trust at $41.875 per share together with other
publicly traded REITs. The net proceeds of $22.8 million were used to repay
borrowings on the unsecured line of credit and to fund the ongoing acquisition
and development of properties.

In February, March and April 1998, the Company placed 710,832 shares and 608,828
shares and 1,166,144 shares, respectively, of Common Stock at prices of $42.25,
$41.06 and $39.88 in Unit Investment Trusts along with other publicly traded
REITs. The net proceeds of $96.3 million were used to paydown borrowings on the
line of credit and to fund the ongoing acquisition and development of
properties.

In April 1998, the Company sold 1,500,000 Series D Cumulative Redeemable
Preferred Units (the "Series D Preferred Units") to an institutional investor
for $50.00 per unit. Dividends are payable at an annual rate of 7.6875%. The
Series D Preferred Units may be called by the Company at par on or after April
20, 2003, and have no stated maturity or mandatory redemption. The Series D
Preferred Units are exchangeable for the Series D Cumulative Redeemable
Preferred Stock of the Company on or after April 20, 2008. The net proceeds of
$73.1 million for the Series D Preferred Units were used to paydown the line of
credit and fund future growth of the Operating Partnership.



                                       20

<PAGE>   21


In June 1998, the Company sold 4,000,000 shares of Series E Cumulative
Redeemable Preferred Stock for $25.00 per share. These shares are redeemable at
the option of the Company. Dividends are payable at an annual rate of 8.00% of
the redeemable liquidation preference of $100.0 million. Net proceeds of $96.8
million were used principally to repay borrowings on the unsecured line of
credit and to fund the ongoing acquisition and development of property.

In July 1998, the Company issued 173,664 shares of Common Stock at $39.17 per
share in a direct placement. Net proceeds of approximately $6,667 were used to
repay borrowings on the unsecured line of credit.

In 1997 the Operating Partnership issued $500.0 million of investment grade
rated debt in three tranches as follows: On July 14, 1997, the Operating
Partnership issued $150.0 million of investment grade rated unsecured notes. The
notes carry an interest rate of 7.125%, were priced to yield 7.183%, and mature
on July 1, 2009. On September 29, 1997, the Operating Partnership issued $150.0
million of investment grade rated unsecured debentures. The debentures carry an
interest rate of 7.5%, were priced to yield 7.57% and mature on October 1, 2027.
On December 8, 1997, the Operating Partnership issued $200.0 million of 7.35%
debentures, priced to yield 7.37%, and mature on December 1, 2017. Net proceeds
from the July 1997, September 1997 and December 1997 unsecured debt securities
of $489.0 million were used to repay borrowings on the unsecured line of credit
and to fund the ongoing acquisition and development of properties.

During the first nine months of 1998 the Operating Partnership issued $301.5
million of investment grade rated unsecured notes in four tranches as follows:
$150.0 million of 6.75% notes due January 15, 2008; $125.0 million of 6.875%
notes due February 1, 2005; $1.5 million of 7.0% notes due February 2, 2007 and
$25.0 million of 6.875% notes due April 30, 2007. Net proceeds of $299.1 million
were used to repay borrowings on the unsecured line of credit and to fund the
acquisition and development of properties.

As of September 30, 1998, the Operating Partnership had $1.4 billion of
investment grade rated unsecured debt securities outstanding. The debt
securities have interest rates which vary from 6.65% to 8.0%, and maturity dates
which range from 2000 to 2027.

The Operating Partnership has a $250.0 million unsecured line of credit facility
(the "Facility") with interest at London Interbank Offered Rates ("LIBOR") plus
 .80%. The Facility matures in August 2001. This facility has a competitive bid
option that allows the Operating Partnership to request bids from the Lenders
for advances up to $150.0 million. At September 30, 1998, the Operating
Partnership had $25.0 million as such $225.0 remains available under the
Facility as of September 30, 1998. In addition, the Operating Partnership had
$200.0 million outstanding under a separate short-term bank facility. This
short-term facility carries interest at LIBOR plus 0.65% and matures in November
1999.

In addition to the unsecured debt securities, the Facility and the short-term
facility, the Operating Partnership has $112.3 million of secured indebtedness
(the "Mortgages") at September 30, 1998. The Mortgages have interest rates
varying from 10.0% to 7.4% and maturity dates from 1998 to 2013. The Mortgages
are secured by a first or second deed of trust on the related properties and
generally require monthly principal and interest payments. The Company also has
$12.2 million of assessment bonds outstanding as of September 30, 1998.

In addition, the Company and Operating Partnership filed a shelf registration
statement (the "May 1998 Shelf Registration Statement") with SEC which
registered $500.0 million of equity securities of the Company and $500.0 million
of debt securities of the Operating Partnership, which became effective in May
1998.

After completion of the equity and debt offerings, the Company has the capacity
pursuant to a shelf registration statement declared effective in September 1997
(the "September 1997 Registration Statement") and the May 1998 Shelf
Registration Statement to issue up to approximately $770.5 million in equity
securities and the Operating Partnership has the capacity pursuant to the
September 1997 Registration Statement and the May 1998 Shelf Registration
Statement to issue up to $813.5 million in debt securities.



                                       21

<PAGE>   22
YEAR 2000 COMPLIANCE

The Company utilizes information technology (IT) systems such as computer
hardware, software, and operating systems which are used for its financial and
accounting business systems, as well as for property management and
administrative functions. The Company also utilizes non-IT systems, such as
electrical and mechanical systems, within its real estate facilities.

To evaluate the impact of Year 2000 compliance on its operations, the Company
established a Year 2000 task force ("Task Force"). The Task Force consulted with
the Company's IT department, the Company's regional facilities managers, and an
outside consulting group to determine the impact to the IT and non-IT systems
within its facilities. Based upon their findings, a course of action was
developed, and the results are outlined below.

The Company's IT department inventoried all IT hardware and software to assess
the business risk of each item. Manufacturers and/or suppliers were contacted to
determine Year 2000 compliance. Hardware and software with high business risk,
based on the manufacturers and/or suppliers assurances, do not appear to present
Year 2000 issues with the exception of the Company's payroll system. The upgrade
that will put the payroll software into compliance will be installed by December
31, 1998. Items with medium or low risk factors will be phased out or upgraded.
None of the above upgrades constitutes a material capital expense for the
Company.

The Company's primary business is owning and managing real estate, therefore any
non-IT Year 2000 issues would reside in the Company's facilities. The Task
Force, together with the regional facilities managers, is in the process of
examining each building for electrical and mechanical systems that may contain
date sensitive software and/or date sensitive imbedded microprocessors. To date,
90 percent of the facilities have been examined. Manufacturers and/or suppliers
have been contacted to determine which such systems are Year 2000 compliant.
Where non-compliance was detected, recommendations for solutions to potential
problems were requested. Tests have been run, where possible, to determine which
of the systems are Year 2000 compliant. Based on these evaluations, it is
estimated that little modification work is required, and as a whole these
modifications should not constitute a material capital expense. The modification
work that is required should be completed in the first six months of 1999.

In the event of unforeseen failure of any facility-related mechanical system,
due to a Year 2000 issue, contingency plans include the deployment of teams
consisting of regional facility managers, building engineers and customer
service personnel which would manually override any such building systems in a
timely manner.

In addition to the "due diligence" being performed at the facility level, other
steps have been taken to attempt to minimize the Company's Year 2000 exposure:
i) The Company's third party "critical" vendors (utility providers, banks, etc.)
have been contacted to determine their state of Year 2000 preparedness; and the
Company is currently in the process of receiving their responses; ii) the Task
Force has attended Year 2000 seminars and has consulted with external legal
counsel and consultants regarding potential issues facing the Company; and iii)
an in-house database has been established to track building and vendor
compliance, as well as tenant requests and the Company's corresponding
responses.

Based on the Company's assessments to date and the proposed modifications, the
Company believes that there should not be a material impact on the Company's IT
and non-IT systems. No assurances, however, can be given that any or all of the
Company's systems will be Year 2000 compliant, or that compliance will not have
a material adverse effect on results of operations.

                                       22




<PAGE>   23
FUNDS FROM OPERATIONS

The Operating Partnership considers Funds from Operations to be a useful
financial measure of the operating performance of an equity REIT because,
together with net income and cash flows, Funds from Operations provides
investors with an additional basis to evaluate the ability of a REIT to incur
and service debt and to fund acquisitions, developments, and other capital
expenditures. Funds from Operations does not represent net income or cash flows
from operations as defined by generally accepted accounting principles ("GAAP")
and Funds from Operations should not be considered as an alternative to net
income as an indicator of the Company's operating performance or as an
alternative to cash flows as a measure of liquidity. Funds from Operations does
not measure whether cash flow is sufficient to fund all of the Operating
Partnership's cash needs including principal amortization, capital improvements,
and distributions to stockholders. Funds from Operations does not represent cash
flows from operating, investing, or financing activities as defined by GAAP.
Further, Funds from Operations as disclosed by other REITs may not be comparable
to the Operating Partnership's calculation of Funds from Operations, as
described below.

Pursuant to the National Association of Real Estate Investment Trusts ("NAREIT")
revised definition of Funds from Operations, the Operating Partnership
calculates Funds from Operations by adjusting net income before minority
interest, calculated in accordance with GAAP, for certain non-cash items,
principally the amortization and depreciation of real property and for dividends
on shares and other equity interests that are not convertible into shares of
Common Stock. The Operating Partnership does not add back the depreciation of
corporate items, such as computers or furniture and fixtures, or the
amortization of deferred financing costs or debt discount. However, the
Operating Partnership eliminates the effect of straight-lined rents, as defined
under GAAP, in its FFO calculation, as management believes this presents a more
meaningful picture of rental income over the reporting period.

Funds from Operations per share is calculated based on weighted average shares
outstanding, assuming the conversion of all Series A Preferred Stock, Class B
and Class C Common Stock and all Operating Partnership units outstanding into
shares of Common Stock and including the dilutive effect of stock option
equivalents computed using the Treasury Stock method.


                              STATEMENT OF FUNDS FROM OPERATIONS
                                    (dollars in thousands)


<TABLE>
<CAPTION>
                                      Three Months Ended                 Nine Months Ended
                                ------------------------------     -------------------------------
                                September 30,    September 30,     September 30,     September 30,
                                -------------    -------------     -------------     -------------
                                    1998             1997              1998              1997
                                 ---------         ---------         ---------         ---------
<S>                              <C>               <C>               <C>               <C>      
Income from Operations
  before disposition of
  property                       $  43,262         $  27,051         $ 121,835         $  76,974
Adjustments:
Dividends on Series B
  Preferred Stock                   (2,510)           (2,510)           (7,530)           (7,530)
Dividends on Series C
  Preferred Stock                   (2,953)               --            (8,859)               --
Dividends on Series E
  Preferred Stock                   (2,000)               --            (2,600)               --
Distributions on
  Preferred Operating
  Partnership Units                 (2,527)               --            (6,016)               --
Depreciation and
  Amortization                      23,924            13,282            65,699            36,036
Other, net                             105               186                76               560
Straight-lined rent                 (2,408)             (624)           (5,556)           (1,200)
                                 ---------         ---------         ---------         ---------
    Funds from Operations        $  54,893         $  37,385         $ 157,049         $ 104,840
                                 =========         =========         =========         =========
</TABLE>




                                       23
<PAGE>   24



PART II. OTHER INFORMATION

Item 2. Changes in Securities

On September 30, 1998, the Company paid a dividend of one right for each
outstanding share of common stock of the Company held of record at the close of
business on September 30, 1998 or issued thereafter prior to the Separation Time
(as defined in the Rights Agreement referred to below). The rights were issued
pursuant to the Stockholder's Protection Rights Agreement, dated as of September
10, 1998 (the "Rights Agreement"), between the Company and The Bank of New York,
as Rights Agent.

Item 6. Exhibits and Reports on Form 8-K

(A) Exhibits

      The exhibits listed below are filed as part of this quarterly report on
Form 10-Q.


<TABLE>
<CAPTION>
       Exhibit
       Number
       -------
<S>     <C>
        27.1  Article 5 Financial Data Schedule (EDGAR Filing Only)
</TABLE>



(B)   Reports on Form 8-K

(i)   The Company filed a current report on Form 8-K dated July 1, 1998, which
      included certain audited historical and unaudited pro forma financial
      information concerning the TDC Portfolio.

(ii)  The Company filed a current report on Form 8-K dated September 9, 1998,
      which described the Rights Agreement.



                                       24


<PAGE>   25



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.




                                       Spieker Properties, L.P.
                                       (Registrant)




Dated: November 16, 1998               /s/  ELKE STRUNKA
      -----------------------------    -----------------------------------------
                                       Elke Strunka
                                       Vice President and
                                       Principal Accounting Officer


                                       25

<PAGE>   26
                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit #                 Description
---------                 -----------
<S>                       <C>
27.1                      Financial Data Schedule
</TABLE>