##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934.
 For the fiscal year ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OR
1934.
 For the transition period from ___to ___
 Commission File Number 1-12193
 ARDEN REALTY, INC.
  Maryland
    
    95-4578533(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 11601 Wilshire Boulevard, 4th Floor
Los Angeles, California 90025-1740
 Registrants telephone number, including area code: (310) 966-2600
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, $0.01 par value
    
    New York Stock ExchangePreferred Stock Purchase Rights
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: None
 þ o
 o þ
 þ o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
 o þ




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##### 



ARDEN REALTY, INC.
TABLE OF CONTENTS
 ITEM NO.
    
    
    
    PAGE NO.PART I1.
    
    Business
    
    
    31A.
    
    Risk Factors
    
    
    71B.
    
    Unresolved Staff Comments
    
    
    152.
    
    Properties
    
    
    163.
    
    Legal Proceedings
    
    
    284.
    
    Submission of Matters to a Vote of Security Holders
    
    
    28PART II5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
    
    
    296.
    
    Selected Financial Data
    
    
    307.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    327A.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    498.
    
    Financial Statements and Supplementary Data
    
    
    509.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    519A.
    
    Controls and Procedures
    
    
    519B.
    
    Other Information
    
    
    51PART III10.
    
    Directors and Executive Officers of the Registrant
    
    
    5211.
    
    Executive Compensation
    
    
    5512.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    6013.
    
    Certain Relationships and Related Transactions
    
    
    6314.
    
    Principal Accountant Fees and Services
    
    
    63PART IV15.
    
    Exhibits and Financial Statement Schedules
    
    
    64Signatures
    
    
    72Exhibit 10.64Exhibit 12.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 Forward-Looking Statements
  
 ITEM 1. BUSINESS
 (a) GENERAL
  (b) INDUSTRY SEGMENTS
  (c) DESCRIPTION OF BUSINESS
  
 Proposed Merger
    3




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Portfolio Management
    Business Strategies
   
    
    using integrated decision making to provide proactive solutions to the space
needs of tenants in the markets where we have extensive real estate expertise and
relationships;
    
    emphasizing quality service, tenant satisfaction and retention;
· employing intensive property marketing and leasing programs; and
    
    implementing cost control management techniques and systems that capitalize
on economies of scale and concentration arising from the size and geographic focus of
our portfolio and our technical expertise in reducing energy consumption expenses.
  Integrated Decision Making
  4




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Quality Service and Tenant Satisfaction
  Proactive Marketing and Leasing
  Cost Control and Operating Efficiencies
  Operating Strategies
  
    
    the broad diversification and balance of the Southern California economy and
our tenant base minimizes our dependence on any one industry segment or limited group of
tenants;
    
    the relative resiliency of the Southern California real estate market, as
measured by lower vacancy rates compared to the national average and flat or increasing
rental rates in our key submarkets compared to the average decreases in rates reported
for the nation since the beginning of the office real estate sector downturn in 2001;
and
    
    the limited construction of new office properties in the Southern California
region due to substantial building construction limitations and a minimal amount of
developable land in many key submarkets.
 Internal Operating Strategy
  
    
    stabilizing occupancy throughout our portfolio and by increasing rental rates, as market conditions permit;
    
    maintaining or increasing the retention rate of expiring leases;
    
    capitalizing on economies of scale and concentration due to the size and geographic focus of our portfolio;
    
    controlling operating expenses through active cost control management techniques and systems; and
    
    sourcing new and innovative revenue streams while providing high quality services to our tenants.Stabilizing Occupancy and Increasing Rental Rates
  5




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Retaining Existing Tenants
  Capitalizing on Economies of Scale and Concentration
  Cost Control Management Techniques and Systems
  
    
    lighting retrofits;
    
    replacement of inefficient heating, ventilation and air conditioning systems;
    
    computer-driven energy management systems that monitor and react to the
climatic requirements of individual properties;
    
    automated and roving security systems that allow us to provide security services to our tenants at a lower cost;
    
    online competitive bid purchasing of supplies, building materials and construction services;
    
    enhancement of billing systems, which enables us to more efficiently recover
operating expenses from our tenants; and
    
    on-going preventive maintenance programs to operate our building systems
efficiently, thereby reducing operating costs.Sourcing Additional Revenue While Providing High Quality Services to Tenants
   External Operating Strategy
   
    
    low vacancy rates;
    
    opportunities for rising rents due to employment growth and population movements;
 6




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
    
    a minimal amount of developable land; and
    
    significant barriers to entry due to constraints on new development,
including strict entitlement processes, height and density restrictions or other
governmental requirements.
 Competition
  California Electric Utility Deregulation
   Employees
  Available Information
 www.sec.gov www.ardenrealty.com
 (d) FOREIGN OPERATIONS
  
 ITEM 1A. RISK FACTORS
  Risks Related to the Proposed Merger
  Failure to complete the merger could negatively impact our stock price and our future business
and financial results.
  7




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
    
    being required, under certain circumstances, including if we sign a definitive agreement
with respect to a superior proposal from another potential buyer, to pay a termination fee
of $100.0 million;
    
    being required, under certain circumstances, including if we breach the merger
agreement, to reimburse GECC for up to $10.0 million of its costs and expenses in
connection with the merger agreement;
    
    having incurred certain costs relating to the proposed merger that are payable whether
or not the merger is completed, including legal, accounting, financial advisor and printing
fees; and
    
    having had the focus of management directed toward the proposed merger and integration
planning instead of on our core business and other opportunities that could have been
beneficial to us.
  Provisions of the merger agreement may deter alternative business combinations and could
negatively impact our stock price if the merger agreement is terminated in certain circumstances.
  Our stock price and businesses may be adversely affected if the merger is not completed.
  Uncertainty regarding the merger may cause tenants, vendors and others to delay or defer
decisions concerning their business with our company, which may harm our results of operations
going forward if the merger is not completed.
  If the planned merger were not completed, we could suffer a number of consequences that may
adversely affect our business, results of operations and stock price, including the following:
 
    
    activities relating to the merger and related uncertainties may lead to a loss of
revenue that we may not be able to regain if the merger does not occur;
    
    the market price of our common stock could decline following an announcement that the
merger has been abandoned, to the extent that the current market price reflects a market
assumption that the merger will be completed;
    
    we would remain liable for our costs related to the merger, such as legal fees and a
portion of the investment banking fees;
    
    we may not be able to continue our present level of operations and therefore would have
to scale back our present level of business and consider additional reductions; and
    
    we may not be able to take advantage of alternative business opportunities or
effectively respond to competitive pressures.
 8




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Real Estate Investment Risks
 An inability to retain tenants or rent space upon lease expirations may adversely affect our
revenues and our ability to service our debt.
  Percentage of
    
    
    Percentage ofNumber of
    
    
    Aggregate Portfolio
    
    
    Aggregate PortfolioYear
    
    Leases Expiring
    
    
    Leased Square Feet
    
    
    Annualized Base RentMonth-to-Month
    
    
    135
    
    
    
    2.1
    %
    
    
    1.8
    %2006
    
    
    593
    
    
    
    14.0
    %
    
    
    13.4
    %2007
    
    
    576
    
    
    
    14.3
    %
    
    
    13.4
    %2008
    
    
    593
    
    
    
    17.4
    %
    
    
    17.2
    %2009
    
    
    395
    
    
    
    13.1
    %
    
    
    12.6
    %2010
    
    
    375
    
    
    
    14.3
    %
    
    
    13.9
    %
  Lack of non-farm job growth in Southern California or a deterioration of the local and
national economy will adversely affect our operating results.
  Competition affects occupancy levels, rents and cost of land which could adversely affect our
revenues.
  The financial condition and solvency of our tenants may reduce our cash flow.
  Because real estate investments are illiquid, we may not be able to sell properties when
appropriate.
  Rising energy costs and power outages in California may have an adverse effect on our
operations and revenue.
  9




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Increases in taxes and regulatory compliance costs may reduce our revenue.
  We may acquire properties through partnerships or joint ventures with third parties that could
result in financial dependency and management conflicts.
  
    
    our partners or co-venturers might become bankrupt;
    
    our partners or co-venturers might at any time have economic or other
business interests or goals which are inconsistent with our business interests or goals;
and
    
    our partners or co-venturers may be in a position to take action contrary to
our instructions or requests contrary to our policies or objectives.
  We may not be able to successfully integrate or finance our acquisitions.
  Our acquisitions and renovations may not perform as expected.
  10




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Our development activities may be more expensive than anticipated and may not yield our
anticipated results.
    
    
    abandonment of development opportunities due to a lack of financing or other reasons;
    
    construction costs of a property exceeding original estimates, possibly making the property uneconomical;
    
    occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable;
    
    construction and lease-up may not be completed on schedule, resulting in
increased debt service expense and construction costs; and
    
    development activities would also be subject to risks relating to the
inability to obtain, or delays in obtaining, all necessary zoning, land-use, building,
occupancy and other required governmental permits and authorizations.
 We are not subject to any limit on the amount or percentage of our assets that may be invested
in any single property or any single geographic area.
  We may not be able to expand into new markets successfully.
  Financing Risks
 Our amount of debt could limit our operational flexibility or otherwise adversely affect our
financial condition.
   
    
    require us to dedicate a substantial portion of our cash flow to pay our
debt, thereby reducing the availability of our cash flow to fund distributions, working
capital, capital expenditures, acquisition and development activity and other business
purposes;
    
    make it more difficult for us to satisfy our debt obligations;
    
    limit our ability to refinance our debt and obtain additional debt financing; and
    
    increase our vulnerability to general adverse economic and real estate
industry conditions and limit our flexibility in planning for, or reacting to, changes
in our business and the real estate industry.
 11




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Scheduled debt payments could adversely affect our financial condition.
  Rises in interest rates could adversely affect our financial condition.
  Many of our properties are subject to mortgage financing which could result in foreclosure if
we are unable to pay or refinance the mortgages when due.
  Tax Risks
 Our desire to qualify as a REIT restricts our ability to accumulate cash that might be used in
future periods to make debt payments or to fund future growth.
  Our operating partnership intends to qualify as a partnership, but we cannot guarantee that it
will qualify.
  12




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We may suffer adverse tax consequences and be unable to attract capital if we fail to qualify
as a REIT.
    Other Risks
 We are subject to agreements and policies that may deter change in control offers that might
be attractive to our stockholders.
  
    
    deter tender offers for our common stock, which offers may be attractive to
the stockholders; and
    
    deter purchases of large blocks of common stock, thereby limiting the
opportunity for stockholders to receive a premium for their common stock over
then-prevailing market prices.
   13




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Losses in excess of our insurance coverage or uninsured losses could adversely affect our cash
flow.
  Lack of availability of insurance coverage for biological, chemical or nuclear terrorist
attacks could adversely affect our financial condition.
  An earthquake could adversely affect our business.
  Our properties may be subject to environmental liabilities.
    14




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We may incur increased costs as a result of enacted and proposed changes in laws and
regulations.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  15




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ITEM 2. PROPERTIES
 Existing Portfolio
   Property OperatingResults(1), (2)Number of
    
    
    
    
    
    
    
    
    
    
    Approximate Net
    
    
    For the Year EndedLocation
    
    Properties
    
    
    Number of Buildings
    
    
    Rentable Square Feet
    
    
    December 31, 2005($000s and unaudited)Total
    
    
    % of Total
    
    
    Total
    
    
    % of Total
    
    
    Total
    
    
    % of Total
    
    
    Total
    
    
    % of TotalLos Angeles County:West(3)
    
    
    30
    
    
    
    26
    %
    
    
    32
    
    
    
    16
    %
    
    
    5,415,813
    
    
    
    29
    %
    
    $
    115,240
    
    
    
    39
    %North
    
    
    29
    
    
    
    25
    %
    
    
    46
    
    
    
    24
    %
    
    
    3,573,218
    
    
    
    20
    %
    
    
    53,883
    
    
    
    18
    %South
    
    
    11
    
    
    
    9
    %
    
    
    15
    
    
    
    8
    %
    
    
    2,454,951
    
    
    
    13
    %
    
    
    30,978
    
    
    
    11
    %Subtotal
    
    
    70
    
    
    
    60
    %
    
    
    93
    
    
    
    48
    %
    
    
    11,443,982
    
    
    
    62
    %
    
    
    200,101
    
    
    
    68
    %Orange County
    
    
    18
    
    
    
    16
    %
    
    
    50
    
    
    
    26
    %
    
    
    3,215,415
    
    
    
    17
    %
    
    
    38,133
    
    
    
    13
    %San Diego County
    
    
    24
    
    
    
    21
    %
    
    
    36
    
    
    
    19
    %
    
    
    3,308,843
    
    
    
    18
    %
    
    
    47,480
    
    
    
    16
    %Ventura County
    
    
    4
    
    
    
    3
    %
    
    
    13
    
    
    
    7
    %
    
    
    576,260
    
    
    
    3
    %
    
    
    7,556
    
    
    
    3
    %Total
    
    
    116
    
    
    
    100
    %
    
    
    192
    
    
    
    100
    %
    
    
    18,544,500
    
    
    
    100
    %
    
    $
    293,270
    
    
    
    100
    %
 
 (1)
    
    Property Operating Results is a non-GAAP measure of performance. Property
Operating Results is used by investors and our management to evaluate and compare the
performance of our office properties and to determine trends in earnings and to compute
the fair value of our properties as it is not affected by (1) the cost of funds of the
property owner, (2) the impact of depreciation and amortization expenses as well as gains
or losses from the sale of operating real estate assets that are included in net income
computed in accordance with Generally Accepted Accounting Principles, or GAAP, or (3)
general and administrative expenses and other specific costs such as permanent impairments
to carrying costs. The cost of funds is eliminated from net income because it is specific
to the particular financing capabilities and constraints of the owner. The cost of funds
is also eliminated because it is dependent on historical interest rates and other costs of
capital as well as past decisions made by us regarding the appropriate mix of capital
which may have changed or may change in the future. Depreciation and amortization
expenses as well as gains or losses from the sale of operating real estate assets are
eliminated because they may not accurately represent the actual change in value in our
office properties that result from use of the properties or changes in market conditions.
While certain aspects of real property do decline in value over time in a manner that is
reasonably captured by depreciation and amortization, the value of the properties as a
whole have historically increased or decreased in value as a result of changes in overall
economic conditions instead of from actual use of the property or the passage of time.
Gains and losses from the sale of real property vary from property to property and are
affected by market conditions at the time of sale which will usually change from period to
period. These gains and losses can create distortions when comparing one period to
another or when comparing our operating results to the operating results of other real
estate companies that have not made similarly timed purchases or sales. We believe that
eliminating these costs from net income is useful because the resulting measure captures
the actual revenue generated and actual expenses incurred in operating our office
properties as well as trends in occupancy rates, rental rates and operating costs.However, the usefulness of Property Operating Results is limited because it excludes general
and administrative costs, interest expense, interest income, depreciation and amortization
expense and gains or losses from the sale of properties, changes in value in our real estate
properties that result from use or permanent impairment to carrying costs as stipulated by
GAAP, the level of capital expenditures and leasing costs necessary to maintain the
operating performance of our properties, all of which are significant economic costs.
Property Operating Results may fail to capture significant trends in these components of net
income which further limits its usefulness.Property Operating Results is a measure of the operating performance of our office
properties but does not measure our performance as a whole. Property Operating Results is
therefore not a substitute for net income as computed in accordance with GAAP. This measure
should be analyzed in conjunction with net income computed in accordance with GAAP and
discussions elsewhere in Managements Discussion and Analysis of Financial Condition and
Results of Operations regarding the components of net income that are eliminated in the
calculation of Property Operating Results. Other companies may use different methods for
calculating Property Operating Results or similarly entitled measures and, accordingly, our
Property Operating Results may not be comparable to similarly entitled measures reported by
other companies that do not define the measure exactly as we do. 16




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Year Ended December 31,2005
    
    
    2004
    
    
    2003Net Income
    
    $
    65,499
    
    
    $
    73,775
    
    
    $
    58,509Add:General and administrative expense
    
    
    33,571
    
    
    
    19,503
    
    
    
    16,931Interest expense
    
    
    98,184
    
    
    
    88,502
    
    
    
    92,736Depreciation and amortization
    
    
    137,385
    
    
    
    115,806
    
    
    
    106,893Minority interest
    
    
    570
    
    
    
    5,159
    
    
    
    5,231Interest and other loss
    
    
    1,593
    
    
    
    509
    
    
    
    403Impairment on investment in securities
    
    
    
    
    
    
    2,700
    
    
    
    Loss from debt defeasance related to sale of discontinued properties
    
    
    835
    
    
    
    
    
    
    
    Less:Gain on sale of discontinued properties
    
    
    (40,653
    )
    
    
    (30,473
    )
    
    
    (5,937
    )Discontinued operations, net of minority interest
    
    
    (3,714
    )
    
    
    (10,304
    )
    
    
    (18,310
    )Property Operating Results
    
    $
    293,270
    
    
    $
    265,177
    
    
    $
    256,456
 
 (2)
    
    Excludes the operating results of one property sold during the first quarter of
2005, one property sold during the second quarter of 2005 and six properties sold during
the third quarter of 2005. The operating results for these properties are reported as
part of discontinued operations in our consolidated statements of income.(3)
    
    Includes a retail property with approximately 37,000 net rentable square feet.  Percent
    
    
    Percent
    
    
    Annualized Base RentLocation
    
    Occupied
    
    
    Leased
    
    
    Per Leased Square Foot(1)Portfolio
    
    
    Full ServiceTotal
    
    
    Gross Leases(2)Los Angeles County:West
    
    
    95.0
    %
    
    
    95.8
    %
    
    $
    28.25
    
    
    $
    28.27North
    
    
    92.4
    %
    
    
    95.1
    %
    
    
    22.79
    
    
    
    23.46South
    
    
    90.6
    %
    
    
    92.3
    %
    
    
    19.24
    
    
    
    20.75Subtotal/Weighted Average
    
    
    93.3
    %
    
    
    94.8
    %
    
    
    24.66
    
    
    
    25.42Orange County
    
    
    93.5
    %
    
    
    95.0
    %
    
    
    19.80
    
    
    
    22.48San Diego County
    
    
    85.0
    %
    
    
    86.3
    %
    
    
    22.84
    
    
    
    25.44Ventura County
    
    
    94.3
    %
    
    
    94.3
    %
    
    
    19.32
    
    
    
    19.32Total/Weighted Average
    
    
    91.9
    %
    
    
    93.3
    %
    
    $
    23.33
    
    
    $
    24.76
 
 (1)
    
    Based on monthly contractual base rent under existing leases as of December 31,
2005, multiplied by 12 and divided by leased net rentable square feet; for those leases
where rent has not yet commenced or which are in a free rent period, the first month in
which rent is to be received is used to determine annualized base rent.(2)
    
    Excludes 26 properties and approximately 2.9 million square feet under triple net
and modified gross leases.    17




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Dispositions
  Gross SalesDate of

    
    
    
    
    
    
    
    
    
    PriceProperty
    
    County
    
    Submarket
    
    Sale
    
    Property Type
    
    Square Feet
    
    
    ($000s)Activity Business Center
    
    San Diego
    
    Miramar
    
    January 5, 2005
    
    Office
    
    
    167,170
    
    
    $
    16,6505832 Bolsa
    
    Orange
    
    West County
    
    June 29, 2005
    
    Office
    
    
    49,355
    
    
    
    8,6704900 California
    
    Kern
    
    Bakersfield
    
    August 4, 2005
    
    Office
    
    
    153,181
    
    
    
    (A
    )Parkway Center
    
    Kern
    
    Bakersfield
    
    August 4, 2005
    
    Office
    
    
    60,885
    
    
    
    (A
    )100 W. Broadway
    
    Los Angeles
    
    Downtown Long Beach
    
    August 4, 2005
    
    Office
    
    
    192,975
    
    
    
    (A
    )145 S. Fairfax
    
    Los Angeles
    
    Miracle Mile
    
    August 11, 2005
    
    Office
    
    
    55,181
    
    
    
    12,000Irvine Corporate Center
    
    Orange
    
    Greater Airport
    
    September 28, 2005
    
    Office
    
    
    127,561
    
    
    
    17,840
    (1)Oceangate Tower
    
    Los Angeles
    
    Downtown Long Beach
    
    September 28, 2005
    
    Office
    
    
    211,620
    
    
    
    38,000
    (1)Sub-total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,017,928
    
    
    
    93,160(A) Portfolio sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,600
    (2)1,017,928
    
    
    $
    148,760
 
 (1)
    
    The net proceeds from these dispositions of approximately $54.6 million are currently held
in escrow accounts for potential like-kind exchanges and are included as part of restricted
cash in our consolidated balance sheet at December 31, 2005.(2)
    
    Approximately $22.5 million of this amount was used to acquire Agoura Hills Business Park as
part of a like-kind exchange. Acquisitions
  GrossPurchaseDate of

    
    
    
    
    
    
    
    
    
    PriceProperty
    
    County
    
    Submarket
    
    Purchase
    
    Property Type
    
    Square Feet
    
    
    ($000s)707 Broadway
    
    San Diego
    
    Downtown
    
    January 5, 2005
    
    Office
    
    
    169,536
    
    
    $
    48,000
    (1)Arden Towers at Sorrento
    
    San Diego
    
    Sorrento Mesa
    
    March 22, 2005
    
    Office/Retail
    
    
    608,253
    
    
    
    184,8505670 Wilshire Boulevard
    
    Los Angeles
    
    Miracle Mile
    
    April 8, 2005
    
    Office
    
    
    409,118
    
    
    
    92,650
    (2)Agoura Hills Business Park
    
    Los Angeles
    
    Agoura Hills
    
    August 5, 2005
    
    Office
    
    
    115,227
    
    
    
    23,1751,302,134
    
    
    $
    348,675
 
 (1)
    
    Approximately $2.0 million of the acquisition price was funded through the issuance of
54,950 OP units at an average price of $37.27 per unit.(2)
    
    The gross acquisition price includes the assumption of a $51.5 million mortgage loan payable
secured by the property. In addition, approximately $12.5 million of the acquisition price
was funded from an escrow account to complete a like-kind exchange for a property sold in
December 2004. This amount has been included as part of restricted cash in our consolidated
balance sheet at December 31, 2004. 18




---



##### Table of Contents



AnnualizedPercentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Base Rentof Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    per LeasedYear(s)
    
    
    Approximate
    
    
    Portfolio Net
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    Net RentableBuilt/
    
    
    Net Rentable
    
    
    Rentable
    
    
    Percent
    
    
    Base Rent
    
    
    Number of
    
    
    SquareProperty Name
    
    Major Area
    
    Submarket
    
    Renovated
    
    
    Square Feet
    
    
    Square Feet
    
    
    Leased
    
    
    ($000s)
    
    
    Leases
    
    
    Feet(1)Los Angeles CountyLos Angeles West6100 Wilshire
    
    Hollywood/Wilshire Corridor
    
    Miracle Mile
    
    
    1986
    
    
    
    207,658
    
    
    
    1.1
    %
    
    
    97.0
    %
    
    $
    4,957
    
    
    
    51
    
    
    $
    24.625670 Wilshire Boulevard
    
    Hollywood/Wilshire Corridor
    
    Miracle Mile
    
    
    1964/91
    
    
    
    409,118
    
    
    
    2.2
    
    
    
    91.5
    
    
    $
    9,898
    
    
    
    65
    
    
    
    26.44120 S. Spalding
    
    West Los Angeles
    
    Beverly Hills Triangle
    
    
    1984
    
    
    
    63,276
    
    
    
    0.3
    
    
    
    100.0
    
    
    
    2,784
    
    
    
    15
    
    
    
    44.009665 Wilshire
    
    West Los Angeles
    
    Beverly Hills Triangle
    
    
    1972/92-93
    
    
    
    160,502
    
    
    
    0.9
    
    
    
    100.0
    
    
    
    5,861
    
    
    
    21
    
    
    
    36.528383 Wilshire
    
    West Los Angeles
    
    Beverly Hills
    
    
    1971/93
    
    
    
    417,459
    
    
    
    2.2
    
    
    
    91.1
    
    
    
    10,085
    
    
    
    131
    
    
    
    26.519100 Wilshire
    
    West Los Angeles
    
    Beverly Hills
    
    
    1971/90
    
    
    
    327,697
    
    
    
    1.8
    
    
    
    96.2
    
    
    
    8,729
    
    
    
    77
    
    
    
    27.68Beverly Atrium
    
    West Los Angeles
    
    Beverly Hills
    
    
    1989
    
    
    
    59,542
    
    
    
    0.3
    
    
    
    91.8
    
    
    
    1,688
    
    
    
    12
    
    
    
    30.89Wilshire Pacific Plaza
    
    West Los Angeles
    
    Brentwood
    
    
    1976/87
    
    
    
    103,529
    
    
    
    0.6
    
    
    
    100.0
    
    
    
    2,694
    
    
    
    45
    
    
    
    26.03World Savings Center (2)
    
    West Los Angeles
    
    Brentwood
    
    
    1983
    
    
    
    469,710
    
    
    
    2.5
    
    
    
    98.6
    
    
    
    14,686
    
    
    
    64
    
    
    
    31.72400 Corporate Pointe
    
    West Los Angeles
    
    Culver City/Fox Hills
    
    
    1987
    
    
    
    165,989
    
    
    
    0.9
    
    
    
    90.0
    
    
    
    2,796
    
    
    
    14
    
    
    
    18.71600 Corporate Pointe
    
    West Los Angeles
    
    Culver City/Fox Hills
    
    
    1989
    
    
    
    276,516
    
    
    
    1.5
    
    
    
    96.2
    
    
    
    5,736
    
    
    
    22
    
    
    
    21.566060 Center Drive
    
    West Los Angeles
    
    Culver City/Fox Hills
    
    
    2000
    
    
    
    256,739
    
    
    
    1.4
    
    
    
    99.1
    
    
    
    8,467
    
    
    
    8
    
    
    
    33.286080 Center Drive
    
    West Los Angeles
    
    Culver City/Fox Hills
    
    
    2001
    
    
    
    286,210
    
    
    
    1.5
    
    
    
    90.0
    
    
    
    9,573
    
    
    
    16
    
    
    
    37.186100 Center Drive
    
    West Los Angeles
    
    Culver City/Fox Hills
    
    
    2002
    
    
    
    285,516
    
    
    
    1.5
    
    
    
    99.5
    
    
    
    8,376
    
    
    
    25
    
    
    
    29.49Bristol Plaza
    
    West Los Angeles
    
    Culver City/Fox Hills
    
    
    1982
    
    
    
    84,565
    
    
    
    0.5
    
    
    
    98.3
    
    
    
    1,746
    
    
    
    29
    
    
    
    21.00Howard Hughes Spectrum Club
    
    West Los Angeles
    
    Culver City/Fox Hills
    
    
    1993
    
    
    
    36,959
    
    
    
    0.2
    
    
    
    100.0
    
    
    
    967
    
    
    
    1
    
    
    
    26.16Howard Hughes Tower
    
    West Los Angeles
    
    Culver City/Fox Hills
    
    
    1987
    
    
    
    317,729
    
    
    
    1.7
    
    
    
    99.2
    
    
    
    8,695
    
    
    
    38
    
    
    
    27.60Northpoint
    
    West Los Angeles
    
    Culver City/Fox Hills
    
    
    1991
    
    
    
    103,015
    
    
    
    0.6
    
    
    
    100.0
    
    
    
    2,520
    
    
    
    9
    
    
    
    24.461919 Santa Monica
    
    West Los Angeles
    
    Santa Monica
    
    
    1991
    
    
    
    43,628
    
    
    
    0.2
    
    
    
    100.0
    
    
    
    1,158
    
    
    
    9
    
    
    
    26.532001 Wilshire Blvd.
    
    West Los Angeles
    
    Santa Monica
    
    
    1980
    
    
    
    104,528
    
    
    
    0.6
    
    
    
    96.7
    
    
    
    2,601
    
    
    
    23
    
    
    
    25.732730 Wilshire
    
    West Los Angeles
    
    Santa Monica
    
    
    1985
    
    
    
    57,141
    
    
    
    0.3
    
    
    
    96.8
    
    
    
    1,545
    
    
    
    25
    
    
    
    27.932800 28th Street
    
    West Los Angeles
    
    Santa Monica
    
    
    1979
    
    
    
    108,007
    
    
    
    0.6
    
    
    
    95.4
    
    
    
    2,674
    
    
    
    42
    
    
    
    25.96Westwood Center
    
    West Los Angeles
    
    Westwood
    
    
    1965/2000
    
    
    
    313,304
    
    
    
    1.7
    
    
    
    99.7
    
    
    
    11,100
    
    
    
    43
    
    
    
    35.5210350 Santa Monica
    
    West Los Angeles
    
    West Los Angeles
    
    
    1979
    
    
    
    42,967
    
    
    
    0.2
    
    
    
    90.8
    
    
    
    926
    
    
    
    16
    
    
    
    23.7510351 Santa Monica
    
    West Los Angeles
    
    West Los Angeles
    
    
    1984
    
    
    
    97,169
    
    
    
    0.5
    
    
    
    90.2
    
    
    
    2,109
    
    
    
    14
    
    
    
    24.07Century Park Center
    
    West Los Angeles
    
    West Los Angeles
    
    
    1972/94
    
    
    
    245,381
    
    
    
    1.3
    
    
    
    89.1
    
    
    
    5,142
    
    
    
    93
    
    
    
    23.5310780 Santa Monica
    
    West Los Angeles
    
    West Los Angeles
    
    
    1984
    
    
    
    93,257
    
    
    
    0.5
    
    
    
    100.0
    
    
    
    2,361
    
    
    
    34
    
    
    
    25.311950 Sawtelle
    
    West Los Angeles
    
    West Los Angeles
    
    
    1988/95
    
    
    
    103,673
    
    
    
    0.6
    
    
    
    98.6
    
    
    
    2,443
    
    
    
    42
    
    
    
    23.9011075 Santa Monica
    
    West Los Angeles
    
    West Los Angeles
    
    
    1983
    
    
    
    35,822
    
    
    
    0.2
    
    
    
    95.0
    
    
    
    852
    
    
    
    7
    
    
    
    25.04Westwood Terrace
    
    West Los Angeles
    
    West Los Angeles
    
    
    1988
    
    
    
    139,207
    
    
    
    0.8
    
    
    
    94.8
    
    
    
    3,412
    
    
    
    28
    
    
    
    25.87Subtotal/Weighted Average  Los Angeles West
    
    
    
    
    
    
    
    
    5,415,813
    
    
    
    29.2
    %
    
    
    95.8
    %
    
    $
    146,581
    
    
    
    1,019
    
    
    $
    28.25
 19




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##### Table of Contents



AnnualizedPercentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Base Rentof Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    per LeasedYear(s)
    
    
    Approximate
    
    
    Portfolio Net
    
    
    
    
    
    
    Annualized
    
    
    Number
    
    
    Net RentableBuilt/
    
    
    Net Rentable
    
    
    Rentable
    
    
    Percent
    
    
    Base Rent
    
    
    of
    
    
    SquareProperty Name
    
    Major Area
    
    Submarket
    
    Renovated
    
    
    Square Feet
    
    
    Square Feet
    
    
    Leased
    
    
    ($000s)
    
    
    Leases
    
    
    Feet(1)Los Angeles North303 Glenoaks
    
    Glendale/Tri-Cities
    
    Burbank
    
    
    1983/96
    
    
    
    176,675
    
    
    
    1.0
    %
    
    
    98.1
    %
    
    $
    4,041
    
    
    
    27
    
    
    $
    23.32601 S. Glenoaks
    
    Glendale/Tri-Cities
    
    Burbank
    
    
    1990
    
    
    
    74,654
    
    
    
    0.4
    
    
    
    94.8
    
    
    
    1,474
    
    
    
    19
    
    
    
    20.84Burbank Executive Plaza
    
    Glendale/Tri-Cities
    
    Burbank
    
    
    1983
    
    
    
    62,717
    
    
    
    0.3
    
    
    
    100.0
    
    
    
    1,457
    
    
    
    19
    
    
    
    23.24333 N. Glenoaks
    
    Glendale/Tri-Cities
    
    Burbank
    
    
    1978/83
    
    
    
    84,263
    
    
    
    0.5
    
    
    
    88.9
    
    
    
    1,685
    
    
    
    17
    
    
    
    22.49425 West Broadway
    
    Glendale/Tri-Cities
    
    Glendale
    
    
    1984
    
    
    
    72,426
    
    
    
    0.4
    
    
    
    98.4
    
    
    
    1,526
    
    
    
    14
    
    
    
    21.41535 N. Brand Blvd.
    
    Glendale/Tri-Cities
    
    Glendale
    
    
    1973/92/99
    
    
    
    106,657
    
    
    
    0.6
    
    
    
    99.7
    
    
    
    2,269
    
    
    
    44
    
    
    
    21.335161 Lankershim
    
    Glendale/Tri-Cities
    
    North Hollywood
    
    
    1985/97
    
    
    
    181,757
    
    
    
    1.0
    
    
    
    100.0
    
    
    
    4,056
    
    
    
    9
    
    
    
    22.31150 East Colorado Boulevard
    
    Glendale/Tri-Cities
    
    Pasadena
    
    
    1979/97
    
    
    
    61,803
    
    
    
    0.3
    
    
    
    100.0
    
    
    
    1,467
    
    
    
    20
    
    
    
    23.73299 N. Euclid
    
    Glendale/Tri-Cities
    
    Pasadena
    
    
    1983/99
    
    
    
    74,689
    
    
    
    0.4
    
    
    
    100.0
    
    
    
    1,908
    
    
    
    4
    
    
    
    25.5470 South Lake
    
    Glendale/Tri-Cities
    
    Pasadena
    
    
    1982/94
    
    
    
    102,726
    
    
    
    0.6
    
    
    
    95.4
    
    
    
    2,596
    
    
    
    22
    
    
    
    26.49Agoura Hills Business Park
    
    San Fernando Valley
    
    Agoura Hills
    
    
    1988
    
    
    
    115,227
    
    
    
    0.6
    
    
    
    95.8
    
    
    
    2,589
    
    
    
    12
    
    
    
    23.47Calabasas Commerce Center
    
    San Fernando Valley
    
    Calabasas
    
    
    1990
    
    
    
    126,771
    
    
    
    0.7
    
    
    
    100.0
    
    
    
    2,396
    
    
    
    10
    
    
    
    18.90Calabasas Tech
    
    San Fernando Valley
    
    Calabasas
    
    
    1990/2001
    
    
    
    284,822
    
    
    
    1.5
    
    
    
    87.1
    
    
    
    4,856
    
    
    
    18
    
    
    
    19.5816000 Ventura
    
    San Fernando Valley
    
    Encino
    
    
    1980/96
    
    
    
    175,242
    
    
    
    0.9
    
    
    
    98.2
    
    
    
    3,974
    
    
    
    46
    
    
    
    23.08Noble Professional Center
    
    San Fernando Valley
    
    Sherman Oaks
    
    
    1985/93
    
    
    
    52,929
    
    
    
    0.3
    
    
    
    93.1
    
    
    
    1,157
    
    
    
    19
    
    
    
    23.4815250 Ventura
    
    San Fernando Valley
    
    Sherman Oaks
    
    
    1970/90-91
    
    
    
    112,838
    
    
    
    0.6
    
    
    
    100.0
    
    
    
    2,525
    
    
    
    43
    
    
    
    22.38Sunset Pointe Plaza
    
    San Fernando Valley
    
    Valencia
    
    
    1988
    
    
    
    59,258
    
    
    
    0.3
    
    
    
    75.6
    
    
    
    1,185
    
    
    
    27
    
    
    
    26.46Tourney Pointe
    
    San Fernando Valley
    
    Valencia
    
    
    1985/98-2000
    
    
    
    212,021
    
    
    
    1.1
    
    
    
    96.6
    
    
    
    4,410
    
    
    
    37
    
    
    
    21.53Westlake  5601 Lindero
    
    San Fernando Valley
    
    Westlake Village
    
    
    1989
    
    
    
    105,854
    
    
    
    0.6
    
    
    
    95.5
    
    
    
    1,774
    
    
    
    5
    
    
    
    17.54Homestore
    
    San Fernando Valley
    
    Westlake Village
    
    
    2000
    
    
    
    137,762
    
    
    
    0.7
    
    
    
    100.0
    
    
    
    3,158
    
    
    
    1
    
    
    
    22.92Clarendon Crest
    
    San Fernando Valley
    
    Woodland Hills
    
    
    1990
    
    
    
    44,317
    
    
    
    0.2
    
    
    
    100.0
    
    
    
    949
    
    
    
    18
    
    
    
    21.42Woodland Hills Financial Center
    
    San Fernando Valley
    
    Woodland Hills
    
    
    1972/95
    
    
    
    228,687
    
    
    
    1.2
    
    
    
    95.9
    
    
    
    5,108
    
    
    
    73
    
    
    
    23.29Warner Corporate Center
    
    San Fernando Valley
    
    Woodland Hills
    
    
    1988
    
    
    
    253,032
    
    
    
    1.4
    
    
    
    99.0
    
    
    
    6,644
    
    
    
    33
    
    
    
    26.53Los Angeles Corporate Center
    
    San Gabriel Valley
    
    Monterey Park
    
    
    1984/86
    
    
    
    390,028
    
    
    
    2.1
    
    
    
    88.3
    
    
    
    7,898
    
    
    
    46
    
    
    
    22.94Conejo Business Center
    
    Ventura
    
    Newbury Park/Thousand Oaks
    
    
    1991
    
    
    
    68,328
    
    
    
    0.4
    
    
    
    95.5
    
    
    
    1,469
    
    
    
    28
    
    
    
    22.52Hillside Corporate Center
    
    Ventura
    
    Newbury Park/Thousand Oaks
    
    
    1998
    
    
    
    60,803
    
    
    
    0.3
    
    
    
    100.0
    
    
    
    1,654
    
    
    
    11
    
    
    
    27.21Marin Corporate Center
    
    Ventura
    
    Newbury Park/Thousand Oaks
    
    
    1986
    
    
    
    50,656
    
    
    
    0.3
    
    
    
    70.1
    
    
    
    842
    
    
    
    25
    
    
    
    23.68Westlake Gardens
    
    Ventura
    
    Westlake Village
    
    
    1998
    
    
    
    47,440
    
    
    
    0.3
    
    
    
    100.0
    
    
    
    1,302
    
    
    
    19
    
    
    
    27.45Westlake Gardens II
    
    Ventura
    
    Westlake Village
    
    
    1999
    
    
    
    48,836
    
    
    
    0.3
    
    
    
    100.0
    
    
    
    1,104
    
    
    
    5
    
    
    
    22.61Subtotal/Weighted Average  Los Angeles North
    
    
    
    
    
    
    
    
    3,573,218
    
    
    
    19.3
    %
    
    
    95.1
    %
    
    $
    77,473
    
    
    
    671
    
    
    $
    22.79
 20




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##### Table of Contents



AnnualizedPercentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Base Rentof Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    per LeasedYear(s)
    
    
    Approximate
    
    
    Portfolio Net
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    Net RentableBuilt/
    
    
    Net Rentable
    
    
    Rentable
    
    
    Percent
    
    
    Base Rent
    
    
    Number of
    
    
    SquareProperty Name
    
    Major Area
    
    Submarket
    
    Renovated
    
    
    Square Feet
    
    
    Square Feet
    
    
    Leased
    
    
    ($000s)
    
    
    Leases
    
    
    Feet(1)Los Angeles SouthPacific Gateway
    
    South Bay
    
    190th Corridor
    
    
    1982/90
    
    
    
    229,505
    
    
    
    1.2
    %
    
    
    94.6
    %
    
    $
    4,579
    
    
    
    36
    
    
    $
    21.08South Bay Centre
    
    South Bay
    
    190th Corridor
    
    
    1984
    
    
    
    204,617
    
    
    
    1.1
    
    
    
    96.3
    
    
    
    4,079
    
    
    
    31
    
    
    
    20.71Gateway Towers
    
    South Bay
    
    190th Corridor
    
    
    1984/86
    
    
    
    439,084
    
    
    
    2.4
    
    
    
    94.7
    
    
    
    9,702
    
    
    
    75
    
    
    
    23.32Continental Grand Plaza
    
    South Bay
    
    El Segundo
    
    
    1986
    
    
    
    235,246
    
    
    
    1.3
    
    
    
    100.0
    
    
    
    5,773
    
    
    
    41
    
    
    
    24.55Grand Avenue Plaza
    
    South Bay
    
    El Segundo
    
    
    1980/98
    
    
    
    81,593
    
    
    
    0.4
    
    
    
    96.0
    
    
    
    1,574
    
    
    
    18
    
    
    
    20.105200 West Century
    
    South Bay
    
    LAX
    
    
    1982/98-99
    
    
    
    321,608
    
    
    
    1.7
    
    
    
    77.2
    
    
    
    4,418
    
    
    
    34
    
    
    
    17.79Skyview Center
    
    South Bay
    
    LAX
    
    
    1981/87/95
    
    
    
    399,318
    
    
    
    2.1
    
    
    
    84.0
    
    
    
    5,331
    
    
    
    65
    
    
    
    15.89Long Beach Airport Bldg D (2)
    
    South Bay
    
    Suburban Long Beach
    
    
    1987/95
    
    
    
    121,610
    
    
    
    0.7
    
    
    
    100.0
    
    
    
    1,167
    
    
    
    1
    
    
    
    9.60Long Beach Airport Bldg F & G (2)
    
    South Bay
    
    Suburban Long Beach
    
    
    1987/95
    
    
    
    150,403
    
    
    
    0.8
    
    
    
    100.0
    
    
    
    1,047
    
    
    
    1
    
    
    
    6.965000 East Spring (2)
    
    South Bay
    
    Suburban Long Beach
    
    
    1989/95
    
    
    
    167,149
    
    
    
    0.9
    
    
    
    97.2
    
    
    
    3,744
    
    
    
    44
    
    
    
    23.05Mariner Court
    
    South Bay
    
    Torrance
    
    
    1989
    
    
    
    104,818
    
    
    
    0.6
    
    
    
    100.0
    
    
    
    2,197
    
    
    
    38
    
    
    
    20.96Subtotal/Weighted Average  Los Angeles South
    
    
    
    
    
    
    
    
    
    
    2,454,951
    
    
    
    13.2
    %
    
    
    92.3
    %
    
    $
    43,611
    
    
    
    384
    
    
    $
    19.24
 21




---



##### Table of Contents



AnnualizedPercentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Base Rentof Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    per LeasedYear(s)
    
    
    Approximate
    
    
    Portfolio Net
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    Net RentableBuilt/
    
    
    Net Rentable
    
    
    Rentable
    
    
    Percent
    
    
    Base Rent
    
    
    Number of
    
    
    SquareProperty Name
    
    Major Area
    
    Submarket
    
    Renovated
    
    
    Square Feet
    
    
    Square Feet
    
    
    Leased
    
    
    ($000s)
    
    
    Leases
    
    
    Feet(1)Orange County1370 Valley Vista
    
    LA Central
    
    Diamond Bar
    
    
    1988
    
    
    
    86,298
    
    
    
    0.5
    %
    
    
    100.0
    %
    
    $
    1,859
    
    
    
    14
    
    
    $
    21.54City Centre I
    
    Orange County
    
    Central County
    
    
    1985/97
    
    
    
    146,698
    
    
    
    0.8
    
    
    
    100.0
    
    
    
    2,996
    
    
    
    34
    
    
    
    20.42Anaheim City Centre (2)
    
    Orange County
    
    Central County
    
    
    1986/91
    
    
    
    182,521
    
    
    
    1.0
    
    
    
    100.0
    
    
    
    3,607
    
    
    
    28
    
    
    
    19.76Orange Financial Center
    
    Orange County
    
    Central County
    
    
    1985/95
    
    
    
    310,020
    
    
    
    1.7
    
    
    
    99.8
    
    
    
    6,953
    
    
    
    42
    
    
    
    22.48Fountain Valley City Centre
    
    Orange County
    
    Greater Airport
    
    
    1982
    
    
    
    303,072
    
    
    
    1.6
    
    
    
    99.0
    
    
    
    6,747
    
    
    
    25
    
    
    
    22.48Fountain Valley Plaza
    
    Orange County
    
    Greater Airport
    
    
    1982
    
    
    
    107,498
    
    
    
    0.6
    
    
    
    66.6
    
    
    
    1,468
    
    
    
    7
    
    
    
    20.52Newport Irvine Center
    
    Orange County
    
    Greater Airport
    
    
    1981/97
    
    
    
    73,310
    
    
    
    0.4
    
    
    
    98.2
    
    
    
    1,800
    
    
    
    31
    
    
    
    25.00South Coast Executive Center
    
    Orange County
    
    Greater Airport
    
    
    1979/97
    
    
    
    61,994
    
    
    
    0.3
    
    
    
    95.8
    
    
    
    1,194
    
    
    
    25
    
    
    
    20.10Von Karman Corporate Center
    
    Orange County
    
    Greater Airport
    
    
    1981/84
    
    
    
    444,968
    
    
    
    2.4
    
    
    
    96.2
    
    
    
    9,325
    
    
    
    37
    
    
    
    21.78Centerpointe La Palma
    
    Orange County
    
    North County
    
    
    1986/88/90
    
    
    
    602,516
    
    
    
    3.2
    
    
    
    98.9
    
    
    
    11,582
    
    
    
    97
    
    
    
    19.43Savi Tech Center
    
    Orange County
    
    North County
    
    
    1989/2005
    
    
    
    372,119
    
    
    
    2.0
    
    
    
    80.5
    
    
    
    4,532
    
    
    
    4
    
    
    
    15.13Yorba Linda Business Park
    
    Orange County
    
    North County
    
    
    1988
    
    
    
    165,772
    
    
    
    0.9
    
    
    
    95.8
    
    
    
    1,508
    
    
    
    63
    
    
    
    9.50Crown Cabot Financial Center
    
    Orange County
    
    South County
    
    
    1989
    
    
    
    174,173
    
    
    
    0.9
    
    
    
    98.3
    
    
    
    4,941
    
    
    
    42
    
    
    
    28.865632 Bolsa
    
    Orange County
    
    West County
    
    
    1987
    
    
    
    21,568
    
    
    
    0.1
    
    
    
    100.0
    
    
    
    189
    
    
    
    1
    
    
    
    8.765672 Bolsa
    
    Orange County
    
    West County
    
    
    1987
    
    
    
    12,110
    
    
    
    0.1
    
    
    
    100.0
    
    
    
    106
    
    
    
    1
    
    
    
    8.765702 Bolsa
    
    Orange County
    
    West County
    
    
    1987/97
    
    
    
    27,731
    
    
    
    0.1
    
    
    
    100.0
    
    
    
    232
    
    
    
    2
    
    
    
    8.38Huntington Beach Plaza
    
    Orange County
    
    West County
    
    
    1984/96
    
    
    
    54,254
    
    
    
    0.3
    
    
    
    78.9
    
    
    
    787
    
    
    
    16
    
    
    
    18.39Huntington Commerce Center
    
    Orange County
    
    West County
    
    
    1987
    
    
    
    68,793
    
    
    
    0.4
    
    
    
    100.0
    
    
    
    662
    
    
    
    22
    
    
    
    9.63Subtotal/Weighted Average 
Orange County
    
    
    
    
    
    
    
    
    
    
    3,215,415
    
    
    
    17.3
    %
    
    
    95.0
    %
    
    $
    60,488
    
    
    
    491
    
    
    $
    19.80
 22




---



##### Table of Contents



AnnualizedPercentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Base Rentof Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    per LeasedYear(s)
    
    
    Approximate
    
    
    Portfolio Net
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    Net RentableBuilt/
    
    
    Net Rentable
    
    
    Rentable
    
    
    Percent
    
    
    Base Rent
    
    
    Number of
    
    
    SquareProperty Name
    
    Major Area
    
    Submarket
    
    Renovated
    
    
    Square Feet
    
    
    Square Feet
    
    
    Leased
    
    
    ($000s)
    
    
    Leases
    
    
    Feet(1)San Diego CountyCarlsbad Corporate Center
    
    San Diego County
    
    Carlsbad
    
    
    1996
    
    
    
    126,280
    
    
    
    0.7
    %
    
    
    42.0
    %
    
    $
    554
    
    
    
    1
    
    
    $
    10.44Carmel Valley Center
    
    San Diego County
    
    Del Mar Heights
    
    
    1987/89
    
    
    
    107,076
    
    
    
    0.6
    
    
    
    100.0
    
    
    
    3,529
    
    
    
    19
    
    
    
    32.96701 B Street(2)
    
    San Diego County
    
    Downtown
    
    
    1982/96
    
    
    
    548,370
    
    
    
    3.0
    
    
    
    86.5
    
    
    
    11,714
    
    
    
    79
    
    
    
    24.68707 Broadway(2)
    
    San Diego County
    
    Downtown
    
    
    1961/2001
    
    
    
    169,536
    
    
    
    0.9
    
    
    
    98.5
    
    
    
    3,652
    
    
    
    28
    
    
    
    21.885120 Shoreham
    
    San Diego County
    
    Governor Park
    
    
    1984
    
    
    
    38,060
    
    
    
    0.2
    
    
    
    79.7
    
    
    
    708
    
    
    
    6
    
    
    
    23.36Governor Executive Centre
    
    San Diego County
    
    Governor Park
    
    
    1988
    
    
    
    52,910
    
    
    
    0.3
    
    
    
    84.4
    
    
    
    1,177
    
    
    
    10
    
    
    
    26.34Governor Executive Centre II
    
    San Diego County
    
    Governor Park
    
    
    1989
    
    
    
    103,554
    
    
    
    0.6
    
    
    
    78.3
    
    
    
    2,416
    
    
    
    17
    
    
    
    29.81Governor Park Plaza
    
    San Diego County
    
    Governor Park
    
    
    1986
    
    
    
    104,254
    
    
    
    0.6
    
    
    
    79.7
    
    
    
    2,006
    
    
    
    17
    
    
    
    24.1310180 Scripps Ranch
    
    San Diego County
    
    Scripps Ranch
    
    
    1978/96
    
    
    
    43,560
    
    
    
    0.2
    
    
    
    0.0
    
    
    
    
    
    
    
    
    
    
    
    Balboa Corporate Center
    
    San Diego County
    
    Kearney Mesa
    
    
    1990
    
    
    
    69,734
    
    
    
    0.4
    
    
    
    100.0
    
    
    
    1,278
    
    
    
    3
    
    
    
    18.32Panorama Corporate Center
    
    San Diego County
    
    Kearney Mesa
    
    
    1991
    
    
    
    133,149
    
    
    
    0.7
    
    
    
    97.5
    
    
    
    2,469
    
    
    
    3
    
    
    
    19.02Ruffin Corporate Center
    
    San Diego County
    
    Kearney Mesa
    
    
    1990
    
    
    
    45,059
    
    
    
    0.2
    
    
    
    100.0
    
    
    
    405
    
    
    
    1
    
    
    
    9.00Skypark Office Plaza
    
    San Diego County
    
    Kearney Mesa
    
    
    1986
    
    
    
    203,739
    
    
    
    1.1
    
    
    
    100.0
    
    
    
    4,742
    
    
    
    24
    
    
    
    23.27Crossroads
    
    San Diego County
    
    Mission Valley
    
    
    1979
    
    
    
    134,688
    
    
    
    0.7
    
    
    
    80.7
    
    
    
    2,272
    
    
    
    11
    
    
    
    20.90Poway Industrial
    
    San Diego County
    
    Rancho Bernardo/Poway
    
    
    1991/96
    
    
    
    112,000
    
    
    
    0.6
    
    
    
    100.0
    
    
    
    672
    
    
    
    1
    
    
    
    6.00Bernardo Regency
    
    San Diego County
    
    Rancho Bernardo/Poway
    
    
    1986
    
    
    
    48,026
    
    
    
    0.3
    
    
    
    96.8
    
    
    
    1,217
    
    
    
    17
    
    
    
    26.18Carmel View Office Plaza
    
    San Diego County
    
    Rancho Bernardo/Poway
    
    
    1985
    
    
    
    77,732
    
    
    
    0.4
    
    
    
    76.6
    
    
    
    1,524
    
    
    
    15
    
    
    
    25.60Cymer Technology Center
    
    San Diego County
    
    Rancho Bernardo/Poway
    
    
    1986
    
    
    
    155,612
    
    
    
    0.8
    
    
    
    100.0
    
    
    
    1,981
    
    
    
    2
    
    
    
    12.73Foremost Professional Plaza
    
    San Diego County
    
    Rancho Bernardo/Poway
    
    
    1992
    
    
    
    59,681
    
    
    
    0.3
    
    
    
    76.2
    
    
    
    1,165
    
    
    
    33
    
    
    
    25.61Via Frontera
    
    San Diego County
    
    Rancho Bernardo/Poway
    
    
    1982/97
    
    
    
    78,819
    
    
    
    0.4
    
    
    
    100.0
    
    
    
    975
    
    
    
    6
    
    
    
    12.37Westridge
    
    San Diego County
    
    Sorrento Mesa
    
    
    1984/96
    
    
    
    48,955
    
    
    
    0.3
    
    
    
    35.2
    
    
    
    233
    
    
    
    2
    
    
    
    13.54Arden Towers at Sorrento
    
    San Diego County
    
    Sorrento Mesa
    
    
    1989/91/2001
    
    
    
    608,253
    
    
    
    3.3
    
    
    
    82.9
    
    
    
    14,369
    
    
    
    68
    
    
    
    28.49Torreyana Science Park
    
    San Diego County
    
    Torrey Pines
    
    
    1980/97
    
    
    
    81,204
    
    
    
    0.4
    
    
    
    100.0
    
    
    
    2,068
    
    
    
    1
    
    
    
    25.47Genesee Executive Plaza
    
    San Diego County
    
    University Towne Centre
    
    
    1984
    
    
    
    158,592
    
    
    
    0.9
    
    
    
    97.9
    
    
    
    4,045
    
    
    
    27
    
    
    
    26.04Subtotal/Weighted Average  San Diego County
    
    
    
    
    
    
    
    
    
    
    3,308,843
    
    
    
    17.9
    %
    
    
    86.3
    %
    
    $
    65,171
    
    
    
    391
    
    
    $
    22.84
 23




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##### Table of Contents



AnnualizedPercentage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Base Rentof Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    per LeasedYear(s)
    
    
    Approximate
    
    
    Portfolio Net
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    Net RentableBuilt/
    
    
    Net Rentable
    
    
    Rentable
    
    
    Percent
    
    
    Base Rent
    
    
    Number of
    
    
    SquareProperty Name
    
    Major Area
    
    Submarket
    
    Renovated
    
    
    Square Feet
    
    
    Square Feet
    
    
    Leased
    
    
    ($000s)
    
    
    Leases
    
    
    Feet(1)Ventura CountyCamarillo Business Park
    
    Ventura
    
    Camarillo
    
    
    1984/97
    
    
    
    152,969
    
    
    
    0.8
    %
    
    
    91.6
    %
    
    $
    2,961
    
    
    
    24
    
    
    $
    21.131000 Town Center
    
    Ventura
    
    Oxnard
    
    
    1989
    
    
    
    108,358
    
    
    
    0.6
    
    
    
    93.4
    
    
    
    1,905
    
    
    
    11
    
    
    
    18.81Solar Drive Business Center
    
    Ventura
    
    Oxnard
    
    
    1982
    
    
    
    137,181
    
    
    
    0.7
    
    
    
    98.9
    
    
    
    2,551
    
    
    
    36
    
    
    
    18.80Center Promenade
    
    Ventura
    
    Ventura
    
    
    1988
    
    
    
    177,752
    
    
    
    1.0
    
    
    
    93.7
    
    
    
    3,088
    
    
    
    63
    
    
    
    18.54Subtotal/Weighted Average  Ventura County
    
    
    
    
    
    
    
    
    
    
    576,260
    
    
    
    3.1
    %
    
    
    94.3
    %
    
    $
    10,505
    
    
    
    134
    
    
    $
    19.32Portfolio Total/ Weighted Average
    
    
    
    
    
    
    
    
    
    
    18,544,500
    
    
    
    100.0
    %
    
    
    93.3
    %
    
    $
    403,829
    
    
    
    3,090
    
    
    $
    23.33
 
 (1)
    
    Calculated as monthly contractual base rent under existing leases as of December
31, 2005, multiplied by 12 and divided by leased net rentable square feet, for those
leases where rent has not yet commenced or which are in a free rent period, the first
month in which rent is to be received is used to determine annualized base rent.(2)
    
    We lease the land underlying these properties or their parking structures pursuant
to long term ground leases. 24




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##### Table of Contents



Tenant Information
    Weighted
    
    
    Percentage of
    
    
    Percentage ofAverage
    
    
    Aggregate
    
    
    AggregateRemaining
    
    
    Portfolio
    
    
    Portfolio
    
    
    
    
    
    
    AnnualizedNumber of
    
    
    Lease Term
    
    
    Leased
    
    
    Annualized
    
    
    Net Rentable
    
    
    Base RentTenant
    
    Locations
    
    
    in Months
    
    
    Square Feet
    
    
    Base Rent(1)
    
    
    Square Feet
    
    
    (in thousands)(1)Vivendi Universal
    
    
    2
    
    
    
    33
    
    
    
    1.34
    %
    
    
    1.98
    %
    
    
    231,681
    
    
    $
    7,980State of California
    
    
    17
    
    
    
    40
    
    
    
    1.53
    
    
    
    1.46
    
    
    
    264,640
    
    
    
    5,886U.S. Government
    
    
    14
    
    
    
    46
    
    
    
    0.90
    
    
    
    1.08
    
    
    
    155,240
    
    
    
    4,360Ceridian Corporation
    
    
    2
    
    
    
    52
    
    
    
    0.88
    
    
    
    0.95
    
    
    
    152,612
    
    
    
    3,833Atlantic Richfield
    
    
    1
    
    
    
    9
    
    
    
    0.83
    
    
    
    0.88
    
    
    
    143,885
    
    
    
    3,551Pepperdine University
    
    
    1
    
    
    
    155
    
    
    
    0.65
    
    
    
    0.86
    
    
    
    113,488
    
    
    
    3,481Walt Disney Pictures andTelevision
    
    
    1
    
    
    
    31
    
    
    
    0.88
    
    
    
    0.85
    
    
    
    151,792
    
    
    
    3,443Westfield Corporation
    
    
    1
    
    
    
    87
    
    
    
    0.62
    
    
    
    0.80
    
    
    
    107,300
    
    
    
    3,249University of Phoenix
    
    
    4
    
    
    
    61
    
    
    
    0.81
    
    
    
    0.80
    
    
    
    140,839
    
    
    
    3,235Homestore, Inc.
    
    
    1
    
    
    
    25
    
    
    
    0.80
    
    
    
    0.78
    
    
    
    137,762
    
    
    
    3,158Total/Weighted Average(2)
    
    
    44
    
    
    
    49
    
    
    
    9.24
    %
    
    
    10.44
    %
    
    
    1,599,239
    
    
    $
    42,176
 
 (1)
    
    Annualized base rent is calculated as monthly contractual base rent under existing
leases as of December 31, 2005, multiplied by 12; for those leases where rent has not yet
commenced or which are in a free rent period, the first month in which rent is to be
received is used to determine annualized base rent.(2)
    
    The weighted average calculation is based on net rentable square footage leased by
each tenant. 25




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##### Table of Contents



Percentage ofOccupied
    
    
    TotalNAICS
    
    
    Square
    
    
    OccupiedNorth American Industrial Classification System Description
    
    Code
    
    
    Feet
    
    
    PortfolioProfessional, Scientific, and Technical Services
    
    
    541
    
    
    
    4,286,195
    
    
    
    25.16
    %Finance and Insurance
    
    
    521-525
    
    
    
    3,052,141
    
    
    
    17.92
    %Information
    
    
    511-519
    
    
    
    1,836,169
    
    
    
    10.78
    %Manufacturing
    
    
    311-339
    
    
    
    1,601,997
    
    
    
    9.40
    %Health Care and Social Assistance
    
    
    621-624
    
    
    
    1,055,317
    
    
    
    6.19
    %Real Estate, Rental and Leasing
    
    
    531-533
    
    
    
    1,053,944
    
    
    
    6.19
    %Administrative and Support and Waste Management and Remediation Services
    
    
    561-562
    
    
    
    713,069
    
    
    
    4.19
    %Public Administration
    
    
    921-928
    
    
    
    691,051
    
    
    
    4.05
    %Educational Services
    
    
    611
    
    
    
    678,313
    
    
    
    3.99
    %Wholesale Trade
    
    
    423-425
    
    
    
    436,419
    
    
    
    2.56
    %Transportation and Warehousing
    
    
    481-493
    
    
    
    319,855
    
    
    
    1.88
    %Construction
    
    
    236-238
    
    
    
    316,738
    
    
    
    1.86
    %Other Services (except Public Administration)
    
    
    811-814
    
    
    
    236,792
    
    
    
    1.39
    %Arts, Entertainment, and Recreation
    
    
    711-713
    
    
    
    223,423
    
    
    
    1.31
    %Retail Trade
    
    
    441-454
    
    
    
    207,715
    
    
    
    1.22
    %Accommodation and Food Services
    
    
    721-722
    
    
    
    203,712
    
    
    
    1.20
    %Management of Companies and Enterprises
    
    
    551
    
    
    
    54,934
    
    
    
    0.32
    %Utilities
    
    
    221
    
    
    
    16,490
    
    
    
    0.10
    %Agriculture, Forestry, Fishing and Hunting
    
    
    111-115
    
    
    
    3,582
    
    
    
    0.02
    %Mining
    
    
    211-213
    
    
    
    2,894
    
    
    
    0.02
    %Other  Uncategorized
    
    
    
    
    
    
    42,954
    
    
    
    0.25
    %17,033,704
    
    
    
    100.00
    %
 26




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##### Table of Contents



Lease Distribution
  Percent of
    
    
    
    
    
    
    
    
    
    
    Percent ofAggregate
    
    
    Annualized
    
    
    Avg. Base
    
    
    AggregatePercent
    
    
    
    
    
    
    Portfolio
    
    
    Base Rent of
    
    
    Rent per
    
    
    PortfolioNumber
    
    
    of All
    
    
    Total Leased
    
    
    Leased
    
    
    Leases(1)
    
    
    Leased
    
    
    AnnualizedSquare Feet Under Lease
    
    of Leases
    
    
    Leases
    
    
    Square Feet
    
    
    Square Feet
    
    

(000s)
    
    
    Square Foot
    
    
    Base Rent(1)2,500 and under
    
    
    1,526
    
    
    
    49.38
    %
    
    
    2,182,471
    
    
    
    12.61
    %
    
    
    54,502
    
    
    $
    24.97
    
    
    
    12.40
    %2,501-5,000
    
    
    714
    
    
    
    23.11
    
    
    
    2,474,599
    
    
    
    14.30
    
    
    
    64,106
    
    
    
    25.91
    
    
    
    14.585,001-7,500
    
    
    301
    
    
    
    9.74
    
    
    
    1,829,632
    
    
    
    10.57
    
    
    
    48,986
    
    
    
    26.77
    
    
    
    11.147,501-10,000
    
    
    174
    
    
    
    5.63
    
    
    
    1,522,055
    
    
    
    8.80
    
    
    
    39,130
    
    
    
    25.71
    
    
    
    8.9010,001-20,000
    
    
    246
    
    
    
    7.96
    
    
    
    3,544,307
    
    
    
    20.48
    
    
    
    93,659
    
    
    
    26.43
    
    
    
    21.3120,001-40,000
    
    
    80
    
    
    
    2.59
    
    
    
    2,302,542
    
    
    
    13.30
    
    
    
    60,229
    
    
    
    26.16
    
    
    
    13.7040,001 and over
    
    
    49
    
    
    
    1.59
    
    
    
    3,451,072
    
    
    
    19.94
    
    
    
    78,975
    
    
    
    22.88
    
    
    
    17.97Total/Weighted
Average
    
    
    3,090
    
    
    
    100.00
    %
    
    
    17,306,678
    
    
    
    100.00
    %
    
    
    439,587
    
    
    $
    25.40
    
    
    
    100.00
    %
 
 (1)
    
    Base rent is determined as of the date of lease expiration, including all fixed
contractual base rent increases; increases tied to indices such as the Consumer Price
Index are not included. Lease Expirations
  AverageAnnualized
    
    
    Annualized
    
    
    Percentage ofSquare
    
    
    Percentage
    
    
    Base Rent
    
    
    Base Rent
    
    
    AggregateFootage
    
    
    of Aggregate
    
    
    of Expiring
    
    
    per Square Foot
    
    
    PortfolioNumber of
    
    
    of Expiring
    
    
    Leased
    
    
    Leases(1)
    
    
    of Expiring
    
    
    AnnualizedYear of Lease Expiration
    
    Leases Expiring
    
    
    Leases
    
    
    Square Feet
    
    
    ($000s)
    
    
    Leases
    
    
    Base Rent(1)Month-to-Month
    
    
    135
    
    
    
    355,091
    
    
    
    2.05
    %
    
    $
    8,073
    
    
    $
    22.74
    
    
    
    1.84
    %Q1 2006
    
    
    126
    
    
    
    502,542
    
    
    
    2.90
    
    
    
    12,147
    
    
    
    24.17
    
    
    
    2.76Q2 2006
    
    
    152
    
    
    
    583,695
    
    
    
    3.37
    
    
    
    12,581
    
    
    
    21.55
    
    
    
    2.86Q3 2006
    
    
    150
    
    
    
    709,215
    
    
    
    4.10
    
    
    
    18,860
    
    
    
    26.59
    
    
    
    4.29Q4 2006
    
    
    165
    
    
    
    620,783
    
    
    
    3.59
    
    
    
    15,392
    
    
    
    24.79
    
    
    
    3.502006 Sub-Total(2)
    
    
    593
    
    
    
    2,416,235
    
    
    
    13.96
    
    
    
    58,980
    
    
    
    24.41
    
    
    
    13.412007
    
    
    576
    
    
    
    2,466,134
    
    
    
    14.25
    
    
    
    58,971
    
    
    
    23.91
    
    
    
    13.422008
    
    
    593
    
    
    
    3,009,772
    
    
    
    17.39
    
    
    
    75,741
    
    
    
    25.16
    
    
    
    17.232009
    
    
    395
    
    
    
    2,270,358
    
    
    
    13.12
    
    
    
    55,478
    
    
    
    24.44
    
    
    
    12.622010
    
    
    375
    
    
    
    2,473,804
    
    
    
    14.29
    
    
    
    61,225
    
    
    
    24.75
    
    
    
    13.932011
    
    
    136
    
    
    
    1,073,165
    
    
    
    6.20
    
    
    
    29,871
    
    
    
    27.83
    
    
    
    6.802012
    
    
    93
    
    
    
    1,200,423
    
    
    
    6.94
    
    
    
    30,998
    
    
    
    25.82
    
    
    
    7.052013
    
    
    61
    
    
    
    727,839
    
    
    
    4.21
    
    
    
    21,325
    
    
    
    29.30
    
    
    
    4.852014
    
    
    36
    
    
    
    383,970
    
    
    
    2.22
    
    
    
    10,953
    
    
    
    28.53
    
    
    
    2.492015+
    
    
    97
    
    
    
    929,887
    
    
    
    5.37
    
    
    
    27,972
    
    
    
    30.08
    
    
    
    6.36Total/Weighted Average
    
    
    3,090
    
    
    
    17,306,678
    
    
    
    100.00
    %
    
    $
    439,587
    
    
    $
    25.40
    
    
    
    100.00
    %
 
 (1)
    
    Base rent is determined as of the date of lease expiration, including all fixed
contractual base rent increases; increases tied to indices such as the Consumer Price
Index are not included.(2)
    
    Excludes month-to-month leases. 
 27




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##### Table of Contents



ITEM 3. LEGAL PROCEEDINGS
 Charter Township of Clinton Police and Fire Retirement System v. Arden
Realty, Inc., et al.
 Dwyer v. Arden Realty, Inc., et al. Charter Township Dwyer
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  28




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##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  Per ShareCommon StockHigh
    
    Low
    
    Divdends Declared2004First Quarter
    
    $
    32.75
    
    
    $
    29.30
    
    
    $
    0.505Second Quarter
    
    $
    32.86
    
    
    $
    26.89
    
    
    $
    0.505Third Quarter
    
    $
    33.15
    
    
    $
    29.54
    
    
    $
    0.505Fourth Quarter
    
    $
    37.72
    
    
    $
    32.66
    
    
    $
    0.5052005First Quarter
    
    $
    37.00
    
    
    $
    33.16
    
    
    $
    0.505Second Quarter
    
    $
    37.28
    
    
    $
    33.01
    
    
    $
    0.505Third Quarter
    
    $
    41.17
    
    
    $
    36.10
    
    
    $
    0.505Fourth Quarter
    
    $
    47.12
    
    
    $
    39.43
    
    
    $
    0.505
   29




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
  Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in thousands, except ratio and per share amounts)Operating Data:Property revenues
    
    $
    441,903
    
    
    $
    393,001
    
    
    $
    376,791
    
    
    $
    357,976
    
    
    $
    366,125Interest and other (loss) income
    
    
    (1,593
    )
    
    
    (509
    )
    
    
    (403
    )
    
    
    2,044
    
    
    
    2,134Property operating expenses
    
    
    (148,633
    )
    
    
    (127,824
    )
    
    
    (120,335
    )
    
    
    (111,128
    )
    
    
    (104,724
    )General and administrative expense
    
    
    (33,571
    )
    
    
    (19,503
    )
    
    
    (16,931
    )
    
    
    (12,583
    )
    
    
    (11,497
    )Depreciation and amortization
    
    
    (137,385
    )
    
    
    (115,806
    )
    
    
    (106,893
    )
    
    
    (96,156
    )
    
    
    (89,496
    )Interest expense
    
    
    (98,184
    )
    
    
    (88,502
    )
    
    
    (92,736
    )
    
    
    (87,466
    )
    
    
    (85,586
    )Gain on sale of operating properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,967
    
    
    
    4,591Impairment on investment in securities
    
    
    
    
    
    
    (2,700
    )
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    (570
    )
    
    
    (5,159
    )
    
    
    (5,231
    )
    
    
    (5,660
    )
    
    
    (6,803
    )Income from continuing
operations
    
    
    21,967
    
    
    
    32,998
    
    
    
    34,262
    
    
    
    48,994
    
    
    
    74,744Discontinued operations, net of minority interest
(1)
    
    
    3,714
    
    
    
    10,304
    
    
    
    18,310
    
    
    
    21,181
    
    
    
    23,015Gain on sale of discontinued properties
    
    
    40,653
    
    
    
    30,473
    
    
    
    5,937
    
    
    
    
    
    
    
    Loss from
debt defeasance related to sale of discontinued properties
    
    
    (835
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    65,499
    
    
    $
    73,775
    
    
    $
    58,509
    
    
    $
    70,175
    
    
    $
    97,759Basic net income per common share:Income from continuing operations
    
    $
    0.33
    
    
    $
    0.51
    
    
    $
    0.54
    
    
    $
    0.76
    
    
    $
    1.17Income from discontinued operations
    
    
    0.65
    
    
    
    0.62
    
    
    
    0.38
    
    
    
    0.33
    
    
    
    0.36Net income per common share-basic
    
    $
    0.98
    
    
    $
    1.13
    
    
    $
    0.92
    
    
    $
    1.09
    
    
    $
    1.53Weighed average number of common shares-basic
    
    
    66,611
    
    
    
    65,372
    
    
    
    63,553
    
    
    
    64,151
    
    
    
    63,754Diluted net income per common share:Income from continuing operations
    
    $
    0.33
    
    
    $
    0.50
    
    
    $
    0.54
    
    
    $
    0.76
    
    
    $
    1.17Income from discontinued operations
    
    
    0.65
    
    
    
    0.62
    
    
    
    0.38
    
    
    
    0.33
    
    
    
    0.36Net income per common share-diluted
    
    $
    0.98
    
    
    $
    1.12
    
    
    $
    0.92
    
    
    $
    1.09
    
    
    $
    1.53Weighed average number of common
shares-diluted
    
    
    67,074
    
    
    
    65,740
    
    
    
    63,815
    
    
    
    64,351
    
    
    
    64,014Cash dividends declared per common share
    
    $
    2.02
    
    
    $
    2.02
    
    
    $
    2.02
    
    
    $
    2.02
    
    
    $
    2.02Other Data:Cash provided by operating activities
    
    $
    167,281
    
    
    $
    184,907
    
    
    $
    181,482
    
    
    $
    199,922
    
    
    $
    204,667Cash used in investing activities
    
    
    (290,614
    )
    
    
    (11,237
    )
    
    
    (20,355
    )
    
    
    (213,002
    )
    
    
    (115,854
    )Cash (used in) provided by financing activities
    
    
    110,932
    
    
    
    (165,337
    )
    
    
    (160,483
    )
    
    
    (19,898
    )
    
    
    (57,204
    )Funds from Operations(2)
    
    
    165,204
    
    
    
    171,777
    
    
    
    174,458
    
    
    
    181,549
    
    
    
    198,240
 
 Selected financial data continues on next page. 30




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##### Table of Contents



Year Ended December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001Balance Sheet Data:Net investment in real
estate
    
    $
    2,768,911
    
    
    $
    2,551,981
    
    
    $
    2,646,699
    
    
    $
    2,741,624
    
    
    $
    2,622,980Total assets
    
    $
    2,907,870
    
    
    $
    2,659,997
    
    
    $
    2,741,433
    
    
    $
    2,832,409
    
    
    $
    2,761,443Total indebtedness
    
    $
    1,623,821
    
    
    $
    1,326,084
    
    
    $
    1,349,781
    
    
    $
    1,402,304
    
    
    $
    1,251,483Other liabilities(3)
    
    $
    76,615
    
    
    $
    83,713
    
    
    $
    76,638
    
    
    $
    76,350
    
    
    $
    62,685Minority interests
    
    $
    20,368
    
    
    $
    20,414
    
    
    $
    72,194
    
    
    $
    74,571
    
    
    $
    78,661Total stockholders
equity
    
    $
    1,153,152
    
    
    $
    1,196,292
    
    
    $
    1,210,285
    
    
    $
    1,247,377
    
    
    $
    1,337,206
 
 (1)
    
    Beginning with the adoption of the Statement of Financial Accounting Standard No.
144 in 2002, the operating results and gains and losses of real estate properties
classified as held for disposition are included in discontinued
operations.(2)
    
    We believe that funds from operations, or FFO, is a useful supplemental measure of
our operating performance. We compute FFO in accordance with standards established by the
White Paper on FFO approved by the Board of Governors of the National Association of Real
Estate Investment Trusts, or NAREIT, in April 2002. The white paper defines FFO as net
income or loss computed in accordance with generally accepted accounting principles, or
GAAP, excluding extraordinary items, as defined by GAAP, and gains and losses from sales
of depreciable operating property plus real estate-related depreciation and amortization
and after adjustments for unconsolidated partnerships and joint ventures.We believe that FFO, by excluding depreciation costs, the gains or losses from the sale of
operating real estate properties and extraordinary items as defined by GAAP, provides an
additional perspective on our operating results. However, because these items have real
economic effect, FFO is a limited measure of performance.FFO captures trends in occupancy rates, rental rates and operating costs. FFO excludes
depreciation and amortization costs and it does not capture the changes in value in our
properties that result from use or changes in market conditions or the level of capital
expenditures and leasing costs necessary to maintain the operating performance of our
properties, all of which are significant economic costs. Therefore, its ability to measure
performance is limited.Because FFO excludes significant economic components of net income determined in accordance
with GAAP, FFO should be used as an adjunct to net income and not as an alternative to net
income. FFO should also not be used as an indicator of our financial performance, or as a
substitute for cash flow from operating activities determined in accordance with GAAP or as
a measure of our liquidity. FFO is not by itself indicative of funds available to fund our
cash needs, including our ability to pay dividends or service our debt. Therefore, FFO only
provides investors with an additional performance measure that when combined with measures
computed in accordance with GAAP such as net income, cash flow from operating activities,
investing activities and financing activities provides investors with an indication of our
ability to service debt and to fund acquisitions and other expenditures.FFO is used by investors to compare our performance with other REITs. Other REITs may use
different methodologies for calculating FFO and, accordingly, our FFO may not be comparable
to other REITs. See a reconciliation of FFO to Net income in Item 7 Managements
Discussion and Analysis of Financial Condition and Results of Operations of this report.(3)
    
    Excludes dividends payable. 31




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Overview
 The following discussion should be read in conjunction with Item 6, Selected Financial Data,
and our historical consolidated financial statements and related notes thereto included elsewhere
in this Form 10-K.
    Proposed Merger
     Critical Accounting Policies
  32




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##### Table of Contents



Revenue Recognition
  Allowance for Rents and Other Receivables
   Commercial Properties
 Impairment of Assets
    Property Acquisitions
 ,
  33




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##### Table of Contents



Qualification as a REIT
   Off-Balance Sheet Arrangements
  34




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##### Table of Contents



Results Of Operations
  Comparison of the year ended December 31, 2005 to the year ended December 31, 2004
(in thousands, except number of properties and percentages)
 Year Ended December 31,
    
    
    
    
    
    
    Percent2005
    
    
    2004
    
    
    Change
    
    
    ChangeRevenue from rental operations:Scheduled cash rents
    
    $
    381,495
    
    
    $
    338,381
    
    
    $
    43,114
    
    
    
    13
    %Straight-line rents
    
    
    2,029
    
    
    
    1,977
    
    
    
    52
    
    
    
    3Tenant reimbursements
    
    
    20,353
    
    
    
    18,926
    
    
    
    1,427
    
    
    
    8Parking, net of expense
    
    
    27,279
    
    
    
    23,319
    
    
    
    3,960
    
    
    
    17Other rental operations
    
    
    10,747
    
    
    
    10,398
    
    
    
    349
    
    
    
    3Total revenue from rental operations
    
    
    441,903
    
    
    
    393,001
    
    
    
    48,902
    
    
    
    12Property expenses:Repairs and maintenance
    
    
    51,944
    
    
    
    42,333
    
    
    
    9,611
    
    
    
    23Utilities
    
    
    35,430
    
    
    
    31,381
    
    
    
    4,049
    
    
    
    13Real estate taxes
    
    
    32,563
    
    
    
    29,540
    
    
    
    3,023
    
    
    
    10Insurance
    
    
    7,279
    
    
    
    7,142
    
    
    
    137
    
    
    
    2Ground rent
    
    
    1,199
    
    
    
    746
    
    
    
    453
    
    
    
    61Administrative
    
    
    20,218
    
    
    
    16,682
    
    
    
    3,536
    
    
    
    21Total property expenses
    
    
    148,633
    
    
    
    127,824
    
    
    
    20,809
    
    
    
    16Property operating results(1)
    
    
    293,270
    
    
    
    265,177
    
    
    
    28,093
    
    
    
    11General and administrative
    
    
    33,571
    
    
    
    19,503
    
    
    
    14,068
    
    
    
    72Interest expense
    
    
    98,184
    
    
    
    88,502
    
    
    
    9,682
    
    
    
    11Depreciation and amortization
    
    
    137,385
    
    
    
    115,806
    
    
    
    21,579
    
    
    
    19Interest and other loss
    
    
    1,593
    
    
    
    509
    
    
    
    1,084
    
    
    
    213Income from continuing operations before impairment on
investment in securities and minority interest
    
    $
    22,537
    
    
    $
    40,857
    
    
    $
    (18,320
    )
    
    
    (45
    )%Discontinued operations, net of minority interest
    
    $
    3,714
    
    
    $
    10,304
    
    
    $
    (6,590
    )
    
    
    (64
    )%Number of properties:Acquired during period
    
    
    4
    
    
    
    2Completed and placed in service during period
    
    
    
    
    
    
    1Disposed of during period
    
    
    (8
    )
    
    
    (12
    )Owned at end of period
    
    
    116
    
    
    
    120Net rentable square feet:Acquired during period
    
    
    1,302
    
    
    
    391Completed and placed in service during period
    
    
    51
    
    
    
    283Expansion space placed in service
    
    
    
    
    
    
    168Disposed of during period
    
    
    (1,018
    )
    
    
    (1,268
    )Owned at end of period
    
    
    18,545
    
    
    
    18,210Same Property Portfolio(2):Revenue from rental operations
    
    $
    390,003
    
    
    $
    382,723
    
    
    $
    7,280
    
    
    
    2
    %Property expenses
    
    
    131,792
    
    
    
    124,383
    
    
    
    7,409
    
    
    
    6$
    258,211
    
    
    $
    258,340
    
    
    $
    (129
    )
    
    
    
    %Straight-line rents
    
    $
    1,536
    
    
    $
    1,841Number of properties
    
    
    109
    
    
    
    109Number of buildings
    
    
    179
    
    
    
    179Average occupancy
    
    
    91.3
    %
    
    
    90.4
    %Net rentable square feet
    
    
    16,436
    
    
    
    16,436
 35




---



##### Table of Contents



(1)
    
    The components outlined above comprise our Property Operating Results. Property
Operating Results is a non-GAAP measure of performance. Property Operating Results is used
by investors and our management to evaluate and compare the performance of our office
properties and to determine trends in earnings. Property Operating Results is also
employed by investors as one of the components used to estimate the value of our
properties. Property Operating Results is used for the purposes noted above because it is
not affected by (1) the cost of funds of the property owner,  the impact of
depreciation and amortization expense as well as gains or losses from the sale of
operating real estate assets that are included in net income computed in accordance with
Generally Accepted Accounting Principles, or GAAP or (3) general and administrative
expenses and other specific costs such as permanent impairments to carrying costs. The
cost of funds is eliminated from net income because it is specific to the particular
financing capabilities and constraints of the owner. The cost of funds is also eliminated
because it is dependent on historical interest rates and other costs of capital as well as
past decisions made by us regarding the appropriate mix of capital, which may have changed
or may change in the future. Depreciation and amortization expenses as well as gains or
losses from the sale of operating real estate assets are eliminated because they may not
accurately represent the actual change in value in our office properties that result from
use of the properties or changes in market conditions. While certain aspects of real
property do decline in value over time in a manner that is reasonably captured by
depreciation and amortization, the value of the properties as a whole have historically
increased or decreased in value as a result of changes in overall economic conditions as
well as the actual use of the property or the passage of time. Gains and losses from the
sale of real property vary from property to property and are affected by market conditions
at the time of sale which will usually change from period to period. These gains and
losses can create distortions when comparing one period to another or when comparing our
operating results to the operating results of other real estate companies that have not
made similarly timed purchases and subsequent sales. General and administrative expenses
and other owner specific costs such as impairment losses are eliminated because these
costs are also in large part specific to the ownership structure and timing of purchases
of the owner. We believe that eliminating these costs from net income is useful because
the resulting measure captures the actual revenue generated and actual expenses incurred
in operating our office properties as well as trends in occupancy rates, rental rates and
operating costs.However, the usefulness of Property Operating Results is limited because it excludes general
and administrative costs, interest expense, interest income, depreciation and amortization
expense and gains or losses from the sale of properties, changes in value in our real estate
properties that result from use or permanent impairment to carrying costs as stipulated by
GAAP, the level of capital expenditures and leasing costs necessary to maintain the
operating performance of our properties, all of which are significant economic costs.
Property Operating Results may fail to capture significant trends in these components of net
income which further limits its usefulness.Property Operating Results is a measure of the operating performance of our office
properties but does not measure our performance as a whole. Property Operating Results is
therefore not a substitute for net income as computed in accordance with GAAP. This measure
should be analyzed in conjunction with net income computed in accordance with GAAP and
discussions elsewhere in Managements Discussion and Analysis of Financial Condition and
Results of Operations regarding the components of net income that are eliminated in the
calculation of Property Operating Results. Other companies may use different methods for
calculating Property Operating Results or similarly entitled measures and, accordingly, our
Property Operating Results may not be comparable to similarly entitled measures reported by
other companies that do not define the measure exactly as we do.The following is a reconciliation of Property Operating Results to net income computed in
accordance with GAAP (in thousands): Year Ended December 31,2005
    
    
    2004
    
    
    2003Net Income
    
    $
    65,499
    
    
    $
    73,775
    
    
    $
    58,509Add:General and
administrative
expense
    
    
    33,571
    
    
    
    19,503
    
    
    
    16,931Interest expense
    
    
    98,184
    
    
    
    88,502
    
    
    
    92,736Depreciation and
amortization
    
    
    137,385
    
    
    
    115,806
    
    
    
    106,893Minority interest
    
    
    570
    
    
    
    5,159
    
    
    
    5,231Interest and other
loss
    
    
    1,593
    
    
    
    509
    
    
    
    403Impairment on
investment in
securities
    
    
    
    
    
    
    2,700
    
    
    
    Loss from debt
defeasance related
to sale of
discontinued
properties
    
    
    835
    
    
    
    
    
    
    
    Less:Gain on sale of
discontinued
properties
    
    
    (40,653
    )
    
    
    (30,473
    )
    
    
    (5,937
    )Discontinued
operations, net of
minority interest
    
    
    (3,714
    )
    
    
    (10,304
    )
    
    
    (18,310
    )Property Operating
Results
    
    $
    293,270
    
    
    $
    265,177
    
    
    $
    256,456
 (2)
    
    Consists of non-development/renovation properties classified as part of continuing
and discontinued operations that were owned for the entirety of the periods presented. 36




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##### Table of Contents



VARIANCES FOR RESULTS OF OPERATIONS
  ,
 Revenue from Rental Operations
   Property Expenses
   General and Administrative
  Interest Expense
  37




---



##### Table of Contents



Depreciation and Amortization
  Interest and Other Loss
  Discontinued Operations
  Year Ended December 31,
    
    
    
    
    
    
    Percent2005
    
    
    2004
    
    
    Change
    
    
    ChangeDiscontinued Operations:Revenues
    
    $
    10,483
    
    
    $
    36,725
    
    
    $
    (26,242
    )
    
    
    (71
    )%Property operating
expenses
    
    
    (4,128
    )
    
    
    (13,592
    )
    
    
    9,464
    
    
    
    (70
    )Depreciation and
amortization
    
    
    (1,287
    )
    
    
    (10,776
    )
    
    
    9,489
    
    
    
    (88
    )Interest expense
    
    
    (245
    )
    
    
    (1,013
    )
    
    
    768
    
    
    
    (76
    )Minority interest
    
    
    (1,112
    )
    
    
    (1,043
    )
    
    
    (69
    )
    
    
    7Interest and other
income
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    Discontinued
operations, net of
minority interest
    
    $
    3,714
    
    
    $
    10,304
    
    
    $
    (6,590
    )
    
    
    (64
    )%Gain on sale of
discontinued properties
    
    $
    40,653
    
    
    $
    30,473
    
    
    $
    10,180
    
    
    
    33
    %
 38




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##### Table of Contents



Comparison of the year ended December 31, 2004 to the year ended December 31, 2003
(in thousands, except number of properties and percentages)
 Year Ended December 31,
    
    
    
    
    
    
    Percent2004
    
    
    2003
    
    
    Change
    
    
    ChangeRevenue from rental operations:Scheduled cash rents
    
    $
    338,381
    
    
    $
    324,214
    
    
    $
    14,167
    
    
    
    4
    %Straight-line rents
    
    
    1,977
    
    
    
    1,093
    
    
    
    884
    
    
    
    81Tenant reimbursements
    
    
    18,926
    
    
    
    21,835
    
    
    
    (2,909
    )
    
    
    (13
    )Parking, net of expense
    
    
    23,319
    
    
    
    20,984
    
    
    
    2,335
    
    
    
    11Other rental operations
    
    
    10,398
    
    
    
    8,665
    
    
    
    1,733
    
    
    
    20Total revenue from rental operations
    
    
    393,001
    
    
    
    376,791
    
    
    
    16,210
    
    
    
    4Property expenses:Repairs and maintenance
    
    
    42,333
    
    
    
    38,847
    
    
    
    3,486
    
    
    
    9Utilities
    
    
    31,381
    
    
    
    30,864
    
    
    
    517
    
    
    
    2Real estate taxes
    
    
    29,540
    
    
    
    27,171
    
    
    
    2,369
    
    
    
    9Insurance
    
    
    7,142
    
    
    
    7,526
    
    
    
    (384
    )
    
    
    (5
    )Ground rent
    
    
    746
    
    
    
    961
    
    
    
    (215
    )
    
    
    (22
    )Administrative
    
    
    16,682
    
    
    
    14,966
    
    
    
    1,716
    
    
    
    11Total property expenses
    
    
    127,824
    
    
    
    120,335
    
    
    
    7,489
    
    
    
    6Property operating results(1)
    
    
    265,177
    
    
    
    256,456
    
    
    
    8,721
    
    
    
    3General and administrative
    
    
    19,503
    
    
    
    16,931
    
    
    
    2,572
    
    
    
    15Interest
    
    
    88,502
    
    
    
    92,736
    
    
    
    (4,234
    )
    
    
    (5
    )Depreciation and amortization
    
    
    115,806
    
    
    
    106,893
    
    
    
    8,913
    
    
    
    8Interest and other loss
    
    
    509
    
    
    
    403
    
    
    
    106
    
    
    
    26Income from continuing operations before impairment on
investments in securities and minority
interest
    
    $
    40,857
    
    
    $
    39,493
    
    
    $
    1,364
    
    
    
    3
    %Discontinued operations, net of minority
interest
    
    $
    10,304
    
    
    $
    18,310
    
    
    $
    (8,006
    )
    
    
    (44
    )%Number of properties:Acquired during period
    
    
    2
    
    
    
    1Completed and placed in service during
period
    
    
    1
    
    
    
    Disposed of during period
    
    
    (12
    )
    
    
    (8
    )Owned at end of period
    
    
    120
    
    
    
    129Net rentable square feet:Acquired during period
    
    
    391
    
    
    
    101Completed and placed in service during
period
    
    
    283
    
    
    
    Expansion space placed in service
    
    
    168
    
    
    
    Disposed of during period
    
    
    (1,268
    )
    
    
    (598
    )Owned at end of period
    
    
    18,210
    
    
    
    18,636Same Property Portfolio(2):Revenue from rental operations
    
    $
    397,842
    
    
    $
    394,449
    
    
    $
    3,393
    
    
    
    1
    %Property expenses
    
    
    129,822
    
    
    
    125,953
    
    
    
    3,869
    
    
    
    3$
    268,020
    
    
    $
    268,496
    
    
    $
    (476
    )
    
    
    
    %Straight-line rents
    
    $
    315
    
    
    $
    592Number of properties
    
    
    116Number of buildings
    
    
    192Average occupancy
    
    
    90.0
    %
    
    
    89.3
    %Net rentable square feet
    
    
    17,334
 39




---



##### Table of Contents



(1)
    
    The components outlined above comprise our Property Operating Results. Property
Operating Results is a non-GAAP measure of performance. Property Operating Results is used
by investors and our management to evaluate and compare the performance of our office
properties and to determine trends in earnings. Property Operating Results is also
employed by investors as one of the components used to estimate the value of our
properties. Property Operating Results is used for the purposes noted above because it is
not affected by (1) the cost of funds of the property owner, (2) the impact of
depreciation and amortization expense as well as gains or losses from the sale of
operating real estate assets that are included in net income computed in accordance with
Generally Accepted Accounting Principles, or GAAP or (3) general and administrative
expenses and other specific costs such as permanent impairments to carrying costs. The
cost of funds is eliminated from net income because it is specific to the particular
financing capabilities and constraints of the owner. The cost of funds is also eliminated
because it is dependent on historical interest rates and other costs of capital as well as
past decisions made by us regarding the appropriate mix of capital, which may have changed
or may change in the future. Depreciation and amortization expenses as well as gains or
losses from the sale of operating real estate assets are eliminated because they may not
accurately represent the actual change in value in our office properties that result from
use of the properties or changes in market conditions. While certain aspects of real
property do decline in value over time in a manner that is reasonably captured by
depreciation and amortization, the value of the properties as a whole have historically
increased or decreased in value as a result of changes in overall economic conditions as
well as the actual use of the property or the passage of time. Gains and losses from the
sale of real property vary from property to property and are affected by market conditions
at the time of sale which will usually change from period to period. These gains and
losses can create distortions when comparing one period to another or when comparing our
operating results to the operating results of other real estate companies that have not
made similarly timed purchases and subsequent sales. General and administrative expenses
and other owner specific costs such as impairment losses are eliminated because these
costs are also in large part specific to the ownership structure and timing of purchases
of the owner. We believe that eliminating these costs from net income is useful because
the resulting measure captures the actual revenue generated and actual expenses incurred
in operating our office properties as well as trends in occupancy rates, rental rates and
operating costs.However, the usefulness of Property Operating Results is limited because it excludes general
and administrative costs, interest expense, interest income, depreciation and amortization
expense and gains or losses from the sale of properties, changes in value in our real estate
properties that result from use or permanent impairment to carrying costs as stipulated by
GAAP, the level of capital expenditures and leasing costs necessary to maintain the
operating performance of our properties, all of which are significant economic costs.
Property Operating Results may fail to capture significant trends in these components of net
income which further limits its usefulness.Property Operating Results is a measure of the operating performance of our office
properties but does not measure our performance as a whole. Property Operating Results is
therefore not a substitute for net income as computed in accordance with GAAP. This measure
should be analyzed in conjunction with net income computed in accordance with GAAP and
discussions elsewhere in Managements Discussion and Analysis of Financial Condition and
Results of Operations regarding the components of net income that are eliminated in the
calculation of Property Operating Results. Other companies may use different methods for
calculating Property Operating Results or similarly entitled measures and, accordingly, our
Property Operating Results may not be comparable to similarly entitled measures reported by
other companies that do not define the measure exactly as we do.The following is a reconciliation of Property Operating Results to net income computed in
accordance with GAAP (in thousands): Year Ended December 31,2004
    
    
    2003
    
    
    2002Net Income
    
    $
    73,775
    
    
    $
    58,509
    
    
    $
    70,175Add:General and
administrative
expense
    
    
    19,503
    
    
    
    16,931
    
    
    
    12,583Interest expense
    
    
    88,502
    
    
    
    92,736
    
    
    
    87,466Depreciation and
amortization
    
    
    115,806
    
    
    
    106,893
    
    
    
    96,156Interest and other
loss
    
    
    509
    
    
    
    403
    
    
    
    Minority interest
    
    
    5,159
    
    
    
    5,231
    
    
    
    5,660Impairment on
investment in
securities
    
    
    2,700
    
    
    
    
    
    
    
    Less:Interest and other
income
    
    
    
    
    
    
    
    
    
    
    2,044Discontinued
operations, net of
minority interest
    
    
    10,304
    
    
    
    18,310
    
    
    
    21,181Gain on sale of
discontinued
properties
    
    
    30,473
    
    
    
    5,937
    
    
    
    Gain on sale of
operating
properties
    
    
    
    
    
    
    
    
    
    
    1,967Property Operating
Results
    
    $
    265,177
    
    
    $
    256,456
    
    
    $
    246,848
 (2)
    
    Consists of non-development/renovation properties classified as part of continuing
and discontinued operations that were owned for the entirety of the periods presented. 40




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##### Table of Contents



VARIANCES FOR RESULTS OF OPERATIONS
  ,
 Revenue from Rental Operations
   Property Expenses
   General and Administrative
  Interest Expense
  Depreciation and Amortization
  41




---



##### Table of Contents



Discontinued Operations
  Year Ended December 31,
    
    
    
    
    
    
    Percent2004
    
    
    2003
    
    
    Change
    
    
    ChangeDiscontinued Operations:Revenues
    
    $
    36,725
    
    
    $
    50,767
    
    
    $
    (14,042
    )
    
    
    (28
    )%Property operating
expenses
    
    
    (13,592
    )
    
    
    (17,355
    )
    
    
    3,763
    
    
    
    (22
    )Depreciation and
amortization
    
    
    (10,776
    )
    
    
    (13,431
    )
    
    
    2,655
    
    
    
    (20
    )Interest expense
    
    
    (1,013
    )
    
    
    (1,031
    )
    
    
    18
    
    
    
    (2
    )Minority interest
    
    
    (1,043
    )
    
    
    (643
    )
    
    
    (400
    )
    
    
    62Interest and other
income
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    Discontinued
operations, net of
minority interest
    
    $
    10,304
    
    
    $
    18,310
    
    
    $
    (8,006
    )
    
    
    (44
    )%Gain on sale of
discontinued properties
    
    $
    30,473
    
    
    $
    5,937
    
    
    $
    24,536
    
    
    
    413
    %
 42




---



##### Table of Contents



Liquidity and Capital Resources
 Cash Flows
    Cash Balances and Available Borrowings
   Capital Recycling Program
  Debt Summary
  Year
    
    Amount2006
    
    $
    34,106
    (1)2007
    
    
    172,2812008
    
    
    281,5062009
    
    
    358,936
    (2)2010
    
    
    149,9442011
    
    
    200,1632012
    
    
    125,3932013
    
    
    4532014
    
    
    520Thereafter
    
    
    300,519Total
    
    $
    1,623,821
 
 (1)
    
    Includes $25 million outstanding on our Wells Fargo bridge loan.(2)
    
    Includes $247 million outstanding on our Wells Fargo unsecured line of
credit. 43




---



##### Table of Contents



Unsecured and Secured Debt:
 Weighted Average
    
    
    Weighted AverageBalance
    
    
    Percent
    
    
    Interest Rate(1)
    
    
    Maturity (in years)(000s)Unsecured Debt
    
    $
    1,204,171
    
    
    
    74
    %
    
    
    6.00
    %
    
    
    7.3Secured Debt
    
    
    419,650
    
    
    
    26
    
    
    
    6.86
    
    
    
    2.5Total Debt
    
    $
    1,623,821
    
    
    
    100
    %
    
    
    6.23
    %
    
    
    4.8
 Floating and Fixed Rate Debt:
 Weighted Average
    
    
    Weighted AverageBalance
    
    
    Percent
    
    
    Interest Rate(1)
    
    
    Maturity (in years)(000s)Floating Rate Debt
    
    $
    234,500
    
    
    
    14
    %
    
    
    5.12
    %
    
    
    2.9Fixed Debt(2)
    
    
    1,389,321
    
    
    
    86
    
    
    
    6.30
    
    
    
    5.1Total Debt
    
    $
    1,623,821
    
    
    
    100
    %
    
    
    6.23
    %
    
    
    4.8
 
 (1)
    
    Includes amortization of prepaid financing costs.(2)
    
    Includes $175 million of floating rate debt that has been fixed through interest
rate swap agreements. Interest Incurred:
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Total interest incurred(1)
    
    $
    98,989
    
    
    $
    89,438
    
    
    $
    95,232Amount capitalized
    
    
    (805
    )
    
    
    (936
    )
    
    
    (2,496
    )Amount expensed(1)
    
    $
    98,184
    
    
    $
    88,502
    
    
    $
    92,736
 
 (1)
    
    Excludes interest expense for loans secured by two properties sold during 2005
which are classified as part of discontinued operations. Consolidated Income Available for Debt Service and Compliance with Principal Financial
Covenants
    44




---



##### Table of Contents



Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Net cash provided
by operating
activities
    
    $
    167,281
    
    
    $
    184,907
    
    
    $
    181,482
    
    
    $
    199,922
    
    
    $
    204,667Add:Interest expense
    
    
    98,184
    
    
    
    88,502
    
    
    
    92,736
    
    
    
    87,466
    
    
    
    85,586Interest expense
from discontinued
operations
    
    
    245
    
    
    
    1,013
    
    
    
    1,031
    
    
    
    1,050
    
    
    
    (1,391
    )Loss from debt
defeasance
related to sales
of discontinued properties
    
    
    835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on repayment
on mortgage note
receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750
    
    
    
    Less:Amortization of
loan costs and
fees
    
    
    (3,389
    )
    
    
    (3,801
    )
    
    
    (3,972
    )
    
    
    (3,807
    )
    
    
    (3,568
    )Straight-line
rent
    
    
    (1,536
    )
    
    
    (1,841
    )
    
    
    (1,732
    )
    
    
    (5,465
    )
    
    
    (9,208
    )Changes in
operating assets
and
liabilities:Rent and other
receivables
    
    
    1,429
    
    
    
    2,265
    
    
    
    771
    
    
    
    (6,768
    )
    
    
    (3,775
    )Deferred rent
    
    
    1,616
    
    
    
    1,015
    
    
    
    557
    
    
    
    4,657
    
    
    
    7,401Prepaid financing
costs, expenses
and other assets
    
    
    1,941
    
    
    
    4,783
    
    
    
    1,494
    
    
    
    2,997
    
    
    
    4,366Accounts payable
and accrued
expenses
    
    
    2,782
    
    
    
    (3,338
    )
    
    
    2,365
    
    
    
    (9,729
    )
    
    
    (4,388
    )Security deposits
    
    
    (948
    )
    
    
    (3,285
    )
    
    
    (1,676
    )
    
    
    (962
    )
    
    
    (213
    )Consolidated Income
Available for Debt
Service
    
    $
    268,440
    
    
    $
    270,220
    
    
    $
    273,056
    
    
    $
    270,111
    
    
    $
    279,477
 Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Net Income
    
    $
    65,499
    
    
    $
    73,775
    
    
    $
    58,509
    
    
    $
    70,175
    
    
    $
    97,759Add:Interest expense
    
    
    98,184
    
    
    
    88,502
    
    
    
    92,736
    
    
    
    87,466
    
    
    
    85,586Interest expense
from discontinued
operations
    
    
    245
    
    
    
    1,013
    
    
    
    1,031
    
    
    
    1,050
    
    
    
    (1,391
    )Depreciation and
amortization
    
    
    137,385
    
    
    
    115,806
    
    
    
    106,893
    
    
    
    96,156
    
    
    
    89,496Minority interest
    
    
    570
    
    
    
    5,159
    
    
    
    5,231
    
    
    
    5,660
    
    
    
    6,803Minority interest
from discontinued
operations
    
    
    1,116
    
    
    
    1,043
    
    
    
    643
    
    
    
    576
    
    
    
    762Loss from debt
defeasance
related to sales
of discontinued properties
    
    
    835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-cash
compensation
expense
    
    
    5,508
    
    
    
    3,760
    
    
    
    2,251
    
    
    
    1,199
    
    
    
    1,938Depreciation from
discontinued
operations
    
    
    1,287
    
    
    
    10,776
    
    
    
    13,431
    
    
    
    15,261
    
    
    
    12,323Impairment on
investment in
securities
    
    
    
    
    
    
    2,700
    
    
    
    
    
    
    
    
    
    
    
    Less:Gain on sale of
discontinued
properties
    
    
    (40,653
    )
    
    
    (30,473
    )
    
    
    (5,937
    )
    
    
    
    
    
    
    Gain on sale of
operating
properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,967
    )
    
    
    (4,591
    )Straight-line
rent
    
    
    (1,536
    )
    
    
    (1,841
    )
    
    
    (1,732
    )
    
    
    (5,465
    )
    
    
    (9,208
    )Consolidated Income
Available for Debt
Service
    
    $
    268,440
    
    
    $
    270,220
    
    
    $
    273,056
    
    
    
    270,111
    
    
    $
    279,477
   45




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##### Table of Contents



Net investment in real estate
    
    $
    2,768,911Cash and cash equivalents
    
    
    639Restricted cash
    
    
    69,703Accumulated depreciation and amortization
    
    
    555,191Total Gross Assets
    
    $
    3,394,444Gross Value of Unencumbered Assets
    
    $
    2,289,860Mortgage loans payable(1)
    
    $
    419,650Unsecured lines of credit
    
    
    259,500Unsecured loans
    
    
    150,000Unsecured senior notes, net of discount
    
    
    794,671Total Outstanding Debt
    
    $
    1,623,821Consolidated Income Available for Debt Service(2)
    
    $
    268,440Interest incurred(2)
    
    $
    99,234Loan fee amortization(2)
    
    
    (2,586
    )Debt Service(2)
    
    $
    96,648
 Senior Unsecured Notes Covenant Ratios
    
    Test
    
    ActualRatio of Consolidated Income Available for Debt Servce to Debt Service
    
    Greater than 1.5
    
    
    2.8Total Outstanding Debt/Total Gross Assets
    
    Less than 60%
    
    
    48
    %Secured Debt/Total Gross Assets
    
    Less than 40%
    
    
    12
    %Gross Value of Unencumbered Assets/Unsecured Debt
    
    Greater than 150%
    
    
    190
    %
 Wells Fargo Unsecured Line of Credit Covenant Ratios
    
    Test
    
    ActualRatio of Consolidated Income Available for Debt Servce to fixed charges(3)
    
    Greater than 1.50
    
    
    2.0
 
 (1)
    
    Represents eight secured loans that are secured by 47 properties in our
portfolio.(2)
    
    Represents amounts for the most recent four consecutive
quarters. Loan fee amortization excludes discount amortization on senior
unsecured notes.(3)
    
    Fixed charges consist of interest costs, whether expensed or
capitalized, principal payments on all debt, an amount equal to $0.3125
per quarter multiplied by the weighted average gross leaseable square feet
of the portfolio at the end of the period and preferred unit
distributions. Future Capital Resources
   46




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##### Table of Contents



Contractual Obligations
  Payments Due by PeriodTotal
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter(in thousands)Contractual Obligations:Long-term debt:Mortgage debt
    
    $
    419,650
    
    
    $
    9,839
    
    
    $
    11,043
    
    
    $
    282,176
    
    
    $
    112,606
    
    
    $
    570
    
    
    $
    3,416Unsecured senior notes(1)
    
    
    800,000
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    500,000Unsecured loans
    
    
    150,000
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,000Unsecured line of credit
    
    
    259,500
    
    
    
    
    
    
    
    12,500
    
    
    
    
    
    
    
    247,000
    
    
    
    
    
    
    
    Ground leases
    
    
    142,534
    
    
    
    2,187
    
    
    
    2,212
    
    
    
    2,212
    
    
    
    2,212
    
    
    
    2,212
    
    
    
    131,499Operating leases
    
    
    14,880
    
    
    
    1,240
    
    
    
    1,240
    
    
    
    1,240
    
    
    
    1,240
    
    
    
    1,240
    
    
    
    8,680Capital commitments
    
    
    28,306
    
    
    
    28,306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Termination fee(2)
    
    
    100,000
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Total Contractual Obligations
    
    $
    1,914,870
    
    
    $
    166,572
    
    
    $
    176,995
    
    
    $
    285,628
    
    
    $
    363,058
    
    
    $
    154,022
    
    
    $
    868,595
 
 (1)
    
    Excludes discount on unsecured senior notes.(2)
    
    Represents fee which will be paid to GECC under certain limited circumstances described in
the merger agreement. 47




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##### Table of Contents



Funds From Operations
  Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in thousands, except ratio and per share amounts)Funds from Operations(1)Net income
    
    $
    65,499
    
    
    $
    73,775
    
    
    $
    58,509
    
    
    $
    70,175
    
    
    $
    97,759Depreciation and minority interest from discontinued operations
    
    
    2,403
    
    
    
    11,819
    
    
    
    14,074
    
    
    
    15,837
    
    
    
    13,085Gain on sale of discontinued properties
    
    
    (40,653
    )
    
    
    (30,473
    )
    
    
    (5,937
    )
    
    
    
    
    
    
    Depreciation and amortization
    
    
    137,385
    
    
    
    115,806
    
    
    
    106,893
    
    
    
    96,156
    
    
    
    89,496Gain on sale of operating properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,967
    )
    
    
    (4,591
    )Minority interest
    
    
    570
    
    
    
    4,084
    (2)
    
    
    5,231
    
    
    
    5,660
    
    
    
    6,803Income allocated to Preferred Operating Partnership Units
    
    
    
    
    
    
    (3,234
    )(2)
    
    
    (4,312
    )
    
    
    (4,312
    )
    
    
    (4,312
    )Funds from Operations(3)
    
    
    165,204
    
    
    
    171,777
    
    
    
    174,458
    
    
    
    181,549
    
    
    
    198,240Arden Realtys percentage share (4)
    
    
    97.5
    %
    
    
    97.5
    %
    
    
    97.4
    %
    
    
    97.3
    %
    
    
    96.8
    %Arden Realtys share of Funds from Operations
    
    $
    161,074
    
    
    $
    167,483
    
    
    $
    169,922
    
    
    $
    176,647
    
    
    $
    191,896Weighted average common shares and operating
partnership units outstanding  Diluted
    
    
    68,786
    
    
    
    67,415
    
    
    
    65,513
    
    
    
    66,098
    
    
    
    66,132
 
 (1)
    
    We believe that funds from operations, or FFO, is a useful supplemental measure of
our operating performance. We compute FFO in accordance with standards established by the
White Paper on FFO approved by the Board of Governors of the National Association of Real
Estate Investment Trusts, or NAREIT, in April 2002. The White Paper defines FFO as net
income or loss computed in accordance with generally accepted accounting principles, or
GAAP, excluding extraordinary items, as defined by GAAP, and gains and losses from sales
of depreciable operating property plus real estate-related depreciation and amortization
and after adjustments for unconsolidated partnerships and joint ventures.We believe that FFO, by excluding depreciation costs, the gains or losses from the sale of
operating real estate properties and the extraordinary items as defined by GAAP, provides an
additional perspective on our operating results. However, because these excluded items have
a real economic effect, FFO is a limited measure of performance.FFO captures trends in occupancy rates, rental rates and operating costs. FFO excludes
depreciation and amortization costs and it does not capture the changes in value in our
properties that result from use or changes in market conditions or the level of capital
expenditures and leasing costs necessary to maintain the operating performance of our
properties, all of which are significant economic costs. Therefore, its ability to measure
performance is limited.Because FFO excludes significant economic components of net income determined in accordance
with GAAP, FFO should be used as an adjunct to net income and not as an alternative to net
income. FFO should also not be used as an indicator of our financial performance, or as a
substitute for cash flow from operating activities determined in accordance with GAAP or as
a measure of our liquidity. FFO is not by itself indicative of funds available to fund our
cash needs, including our ability to pay dividends or service our debt. Therefore, FFO only
provides investors with an additional performance measure that when combined with measures
computed in accordance with GAAP such as net income, cash flow from operating activities,
investing activities and financing activities provides investors with an indication of our
ability to service debt and to fund acquisitions and other expenditures.FFO is used by investors to compare our performance with other REITs. Other REITs may use
different methods for calculating FFO and, accordingly, our FFO may not be comparable to
other REITs.(2)
    
    Excludes approximately $1.1 million of original issuance costs expensed in
conjunction with the redemption of our Preferred operating
partnership units on September 28, 2004.(3)
    
    Includes approximately $5.5 million, $3.8 million, $2.2 million, $1.2 million and
$1.9 million in non-cash compensation expense for the years ended December 31, 2005, 2004,
2003, 2002 and 2001, respectively.(4)
    
    Represents Arden Realtys weighted average ownership percentage during the
respective 12-month period. Current Economic Climate
   48




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
          49




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  Report of Independent Registered Public Accounting Firm
 The
Board of Directors and Stockholders of Arden Realty, Inc.
     .
     50




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting
  Internal Control-Integrated Framework
  
 ITEM 9B. OTHER INFORMATION
  51




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 EXECUTIVE OFFICERS
  Richard S. Ziman.
 Victor J. Coleman.
 Richard S. Davis.
 Robert C. Peddicord.
 David A. Swartz.
 Howard S. Stern
 52




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##### Table of Contents



DIRECTORS
  Leslie E. Bider
 Carl D. Covitz.
 Larry S. Flax.
 Steven C. Good.
 Alan I. Rothenberg.
 53




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##### Table of Contents



AUDIT COMMITTEE
   CODE OF ETHICS
  SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
  54




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##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION
  Summary Compensation Table
 Long-TermAnnual Compensation
    
    Compensation AwardsOther Annual
    
    Options
    
    Restricted
    
    All OtherName and Title
    
    Year
    
    Salary($)
    
    Bonus($)
    
    Compensation($)(1)
    
    Granted (#)
    
    Stock($)(2)
    
    Compensation($)(3)Richard S. Ziman
    
    
    2005
    
    
    
    770,000
    
    
    
    968,700
    
    
    
    42,700
    
    
    
    
    
    
    
    5,801,900
    (4)
    
    
    320,500Chairman of the Board and
    
    
    2004
    
    
    
    736,000
    
    
    
    896,700
    
    
    
    59,000
    
    
    
    
    
    
    
    1,162,700
    (5)
    
    
    303,700Chief Executive Officer
    
    
    2003
    
    
    
    670,000
    
    
    
    735,000
    
    
    
    22,000
    
    
    
    101,600
    
    
    
    2,163,200
    (6)
    
    
    252,600Victor J. Coleman
    
    
    2005
    
    
    
    613,000
    
    
    
    781,200
    
    
    
    44,600
    
    
    
    
    
    
    
    2,752,700
    (4)
    
    
    73,000President, Chief Operating
    
    
    2004
    
    
    
    526,000
    
    
    
    640,500
    
    
    
    59,900
    
    
    
    
    
    
    
    702,200
    (5)
    
    
    62,200Officer and Director
    
    
    2003
    
    
    
    497,000
    
    
    
    525,000
    
    
    
    54,400
    
    
    
    55,300
    
    
    
    1,307,000
    (6)
    
    
    56,300Richard S. Davis
    
    
    2005
    
    
    
    431,000
    
    
    
    517,500
    
    
    
    7,200
    
    
    
    
    
    
    
    1,399,700
    (4)
    
    
    46,500Executive Vice President 
    
    
    2004
    
    
    
    342,000
    
    
    
    418,700
    
    
    
    7,200
    
    
    
    
    
    
    
    336,400
    (5)
    
    
    44,100Chief Financial Officer
    
    
    2003
    
    
    
    299,000
    
    
    
    330,000
    
    
    
    7,200
    
    
    
    35,600
    
    
    
    682,500
    (6)
    
    
    36,000Robert C. Peddicord
    
    
    2005
    
    
    
    358,000
    
    
    
    414,000
    
    
    
    7,200
    
    
    
    
    
    
    
    1,399,700
    (4)
    
    
    46,500Executive Vice President 
    
    
    2004
    
    
    
    342,000
    
    
    
    418,700
    
    
    
    7,200
    
    
    
    
    
    
    
    336,400
    (5)
    
    
    44,100Leasing and Property Operations
    
    
    2003
    
    
    
    299,000
    
    
    
    330,000
    
    
    
    7,200
    
    
    
    35,600
    
    
    
    682,500
    (6)
    
    
    36,000Howard Stern
    
    
    2005
    
    
    
    299,000
    
    
    
    345,000
    
    
    
    9,600
    
    
    
    
    
    
    
    1,049,700
    (4)
    
    
    40,500Senior Vice President and
    
    
    2004
    
    
    
    248,000
    
    
    
    250,000
    
    
    
    8,500
    
    
    
    
    
    
    
    79,000
    (5)
    
    
    34,700Chief Investment Officer
    
    
    2003
    
    
    
    217,000
    
    
    
    100,000
    
    
    
    6,000
    
    
    
    
    
    
    
    75,000
    (6)
    
    
    22,100
 
 (1)
    
    The amounts in this column include perquisites and other personal benefits. The
perquisites and other personal benefits are valued on the basis of the aggregate incremental
costs to Arden. The total represents amounts for annual auto allowances and the personal use
of aircraft hours. The amounts for personal use of aircraft hours reflect the incremental
cost after the amounts reimbursed to Arden using the Standard Industrial Fare Level formula
established by the Internal Revenue Service. Auto
    
    Personal UseYear
    
    Allowances ($)
    
    of Aircraft ($)Richard S. Ziman
    
    
    2005
    
    
    
    14,400
    
    
    
    28,3002004
    
    
    
    14,400
    
    
    
    44,6002003
    
    
    
    14,400
    
    
    
    7,600Victor J. Coleman
    
    
    2005
    
    
    
    14,400
    
    
    
    30,2002004
    
    
    
    14,400
    
    
    
    45,5002003
    
    
    
    14,400
    
    
    
    40,000Richard S. Davis
    
    
    2005
    
    
    
    7,200
    
    
    
    2004
    
    
    
    7,200
    
    
    
    2003
    
    
    
    7,200
    
    
    
    Robert C. Peddicord
    
    
    2005
    
    
    
    7,200
    
    
    
    2004
    
    
    
    7,200
    
    
    
    2003
    
    
    
    7,200
    
    
    
    Howard S. Stern
    
    
    2005
    
    
    
    9,600
    
    
    
    2004
    
    
    
    8,550
    
    
    
    2003
    
    
    
    6,000
    
    
    
    
 
 (2)
    
    Restricted stock is awarded pursuant to our Long-Term Incentive Program. All restricted stock
awards granted under our Long-Term Incentive Program are made in accordance with the
provisions of the 1996 Stock Option and Incentive Plan of Arden Realty, Inc. and Arden Realty
Limited Partnership. The amounts shown reflect the market value of the restricted stock awards
on the date of grant. The restriction on these awards prohibits the sale or transfer of such
shares until vested. The named executive officers are entitled to receive dividends in respect
of such restricted stock, whether vested or unvested.As of December 31, 2005, Messrs. Ziman, Coleman, Davis, Peddicord and Stern held a total of
304,307, 178,882, 80,187, 80,187 and 27,455 shares of unvested restricted stock awards,
respectively. Based on the December 30, 2005 closing price of $44.83 per share of our common
stock, as reported by the New York Stock Exchange, the total value of these awards was
$13,642,100, $8,019,300, $3,594,800, $3,594,800 and $1,230,800, respectively. 55




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##### Table of Contents



(3)
    
    Represents amounts we contributed pursuant to our deferred compensation and 401(k) plans. DeferredYear
    
    Compensation ($)
    
    401(k) ($)Richard S. Ziman
    
    
    2005
    
    
    
    310,000
    
    
    
    10,5002004
    
    
    
    294,000
    
    
    
    9,7002003
    
    
    
    243,600
    
    
    
    9,000Victor J. Coleman
    
    
    2005
    
    
    
    62,500
    
    
    
    10,5002004
    
    
    
    52,500
    
    
    
    9,7002003
    
    
    
    47,300
    
    
    
    9,000Richard S. Davis
    
    
    2005
    
    
    
    36,000
    
    
    
    10,5002004
    
    
    
    34,300
    
    
    
    9,7002003
    
    
    
    27,000
    
    
    
    9,000Robert C. Peddicord
    
    
    2005
    
    
    
    36,000
    
    
    
    10,5002004
    
    
    
    34,300
    
    
    
    9,7002003
    
    
    
    27,000
    
    
    
    9,000Howard S. Stern
    
    
    2005
    
    
    
    30,000
    
    
    
    10,5002004
    
    
    
    25,000
    
    
    
    9,7002003
    
    
    
    13,100
    
    
    
    9,000
 
 (4)
    
    Of these restricted stock awards, 69,498, 33,517, 16,637, 16,637 and 12,477 of the restricted
stock awards granted in 2005 to Messrs. Ziman, Coleman, Davis, Peddicord and Stern,
respectively, are performance benchmark restricted stock awards. The common stock associated
with these grants will be issued if Ardens total return to shareholders exceeds certain
performance measurements. The remainder of the restricted stock awards granted in 2005 vest
equally on the anniversary date of the awards over five years.(5)
    
    These restricted stock awards vest equally on the anniversary date of the awards over three
years.(6)
    
    Of these restricted stock awards, 12,500, 7,000, 4,500 and 4,500 of the restricted stock
awards granted in 2003 to Messrs. Ziman, Coleman, Davis and Peddicord, respectively, cliff
vest on the third anniversary date of the award. The remainder of the restricted stock awards
granted in 2003 vest equally on the anniversary date of the award over a period ranging from
three-to-five years. Compensation of Directors
      56




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Number ofSharesUnderlying
    
    Exercise
    
    
    
    
    
    Number of SecuritiesOptions
    
    Price per
    
    Expiration
    
    Underlying Unexercised Options
    
    RestrictedName
    
    Year
    
    Granted (#)
    
    Share
    
    Date
    
    Exercisable
    
    Unexercisable
    
    Stock ($)(1)Leslie E. Bider
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    86,1002004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    139,200Carl D. Covitz
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    86,1002004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47,5002003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,0002002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    25,1002001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,2002000
    
    
    
    50,000
    
    
    $
    25.50
    
    
    
    7/27/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1999
    
    
    
    10,000
    
    
    $
    19.25
    
    
    
    11/30/09
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1998
    
    
    
    40,000
    
    
    $
    22.50
    
    
    
    12/15/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1997
    
    
    
    10,000
    
    
    $
    32.25
    
    
    
    10/15/07
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    1996
    
    
    
    10,000
    
    
    $
    20.00
    
    
    
    10/4/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Larry S. Flax
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    86,1002004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47,5002003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,0002002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    25,1002001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,2002000
    
    
    
    50,000
    
    
    $
    25.50
    
    
    
    7/27/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1999
    
    
    
    10,000
    
    
    $
    19.25
    
    
    
    11/30/09
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    1998
    
    
    
    40,000
    
    
    $
    22.50
    
    
    
    12/15/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1997
    
    
    
    10,000
    
    
    $
    32.25
    
    
    
    10/15/07
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    1997
    
    
    
    10,000
    
    
    $
    27.00
    
    
    
    2/13/07
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    Steven C. Good
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    86,1002004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47,5002003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,0002002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    25,1002001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    40,2002000
    
    
    
    50,000
    
    
    $
    25.50
    
    
    
    7/27/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1999
    
    
    
    10,000
    
    
    $
    19.25
    
    
    
    11/30/09
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1998
    
    
    
    40,000
    
    
    $
    22.50
    
    
    
    12/15/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1997
    
    
    
    10,000
    
    
    $
    32.25
    
    
    
    10/15/07
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1996
    
    
    
    10,000
    
    
    $
    20.00
    
    
    
    10/4/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Alan I. Rothenberg
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    86,1002004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    139,200
 Employment Agreements
     57




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##### Table of Contents



Option Grants in Last Fiscal Year
  Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
  Number ofSecurities Underlying
    
    Value of UnexercisedShares
    
    
    
    
    
    Unexercised Options
    
    In-the-Money Options atAcquired on
    
    Value
    
    At December 31, 2005
    
    December 31, 2005(1)Name
    
    Exercise (#)
    
    Realized ($)
    
    Exercisable
    
    Unexercisable
    
    Exercisable
    
    UnexercisableRichard S. Ziman
    
    
    200,000
    
    
    $
    1,990,000
    
    
    
    607,140
    
    
    
    60,960
    
    
    $
    11,607,000
    
    
    $
    1,464,000Victor J. Coleman
    
    
    313,500
    
    
    $
    2,967,000
    
    
    
    97,120
    
    
    
    33,180
    
    
    $
    1,884,000
    
    
    $
    797,000Richard S. Davis
    
    
    24,240
    
    
    $
    307,000
    
    
    
    
    
    
    
    21,360
    
    
    $
    
    
    
    $
    513,000Robert C. Peddicord
    
    
    17,120
    
    
    $
    197,000
    
    
    
    
    
    
    
    21,360
    
    
    $
    
    
    
    $
    513,000Howard S. Stern
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Based on the December 30, 2005 closing price of $44.83 per share of our common
stock, as reported by the New York Stock Exchange. Deferred Compensation Plan
    58




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##### Table of Contents



Compensation Committee Interlocks and Insider Participation.
  Compensation Committee.
  
    
    establish, review, modify, and adopt compensation plans and arrangements for
our employees and consultants; and
    
    review, determine and establish the compensation including salaries,
bonuses, stock option grants and restricted stock awards for our officers.
 www.ardenrealty.com
  59




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##### Table of Contents



ITEM 12. SECURITY AND OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTS
 Equity Compensation Plan Information
  Number of shares of commonNumber of shares of common
    
    
    Weighted-average exercise
    
    
    stock remaining available forstock to be issued upon
    
    
    price of outstanding
    
    
    future issuance under equityexercise of outstanding
    
    
    options, warrants and
    
    
    compensation plans (excludingoptions, warrants and rights
    
    
    rights
    
    
    shares reflected in column (a))(1)Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity
Compensation plans
approved by
shareholders
    
    
    900
    
    
    $
    24.96
    
    
    
    2,341Equity
Compensation plans
not approved by
shareholders
    
    
    30
    (2)
    
    
    27.92
    
    
    
    Total
    
    
    930
    
    
    $
    25.05
    
    
    
    2,341
 
 (1)
    
    Includes shares available for issuance under restricted stock grants.(2)
    
    On October 15, 1997, 10,000 options with an exercise price of $32.25, on December 15,
1998, 40,000 options with an exercise price of $22.50, and on November 30, 1999, 10,000
options with an exercise price of $19.25 were granted to each of our non-employee directors:
Carl D. Covitz, Larry S. Flax and Steven C. Good. All of these options were granted with an
exercise price equal to fair market value on the date of grant, vest during the non-employee
directors continued service with Arden Realty over a three-year period, with one third of the
options vesting on each anniversary of the grant date and expire ten years from the
anniversary of the grant date, subject to earlier termination upon the happening of certain
events. From these grants, Mr. Good exercised 40,000 options during 2003. Mr. Covitz, Mr.
Flax and Mr. Good exercised 50,000, 40,000 and 20,000 options, respectively, during 2004. 60




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##### Table of Contents



Number of Shares of
    
    Percentage of Common StockName and Address (1)
    
    Common Stock (2)
    
    OutstandingCohen & Steers, Inc.757 Third AvenueNew York, NY 10017
    
    
    8,454,828
    (3)
    
    
    12.56
    %(3)Morgan Stanley Dean Witter1585 BroadwayNew York, NY 10036
    
    
    5,130,273
    (4)
    
    
    7.62
    %(4)Credit SuisseEleven Madison AvenueNew York, NY 10010
    
    
    4,423,725
    (5)
    
    
    6.57
    %(5)Security Capital Research & Management Incorporated10 South Dearborn Street, Suite 1400Chicago, IL 60603
    
    
    3,711,697
    (6)
    
    
    5.51
    %(6)Richard S. Ziman
    
    
    2,324,131
    (7)
    
    
    3.45
    %(7)Victor J. Coleman
    
    
    1,012,831
    (8)
    
    
    1.50
    %(8)Richard S. Davis
    
    
    121,682
    (9)
    
    
    *Robert C. Peddicord
    
    
    106,774
    (10)
    
    
    *Howard S. Stern
    
    
    29,954
    (11)
    
    
    *Leslie E. Bider
    
    
    10,000
    (12)
    
    
    *Carl D. Covitz
    
    
    20,200
    (13)
    
    
    *Larry S. Flax
    
    
    52,000
    (14)
    
    
    *Steven C. Good
    
    
    12,600
    (15)
    
    
    *Alan I. Rothenberg
    
    
    10,000
    (16)
    
    
    *All directors and officers as a group (11 persons)
    
    
    3,754,525
    (17)
    
    
    5.58
    %(17)
 
 *
    
    Less than one percent.(1)
    
    Unless otherwise indicated, the address for each of the persons listed is 11601
Wilshire Boulevard, Fourth Floor, Los Angeles, CA 90025.(2)
    
    The number of shares of common stock beneficially owned is based on the
Securities and Exchange Commission regulations regarding the beneficial ownership of
securities. The number of shares of common stock beneficially owned by a person assumes
that all OP units held by the person are
exchanged for shares of common stock, that none of the OP units held by other
persons are so exchanged, that all options and warrants exercisable within 60 days of
February 28, 2006 to acquire shares of common stock held by the person are exercised,
that no options or warrants to acquire shares of common stock held by other persons are
exercised and that all restricted stock awards are fully vested.(3)
    
    Represents the number of shares of common stock owned pursuant to a Form 13G/A
filed with the Securities and Exchange Commission on February 10, 2006. According to
such Form 13G/A, Cohen & Steers, Inc. has sole voting power with respect to 8,105,623
shares and sole dispositive power with respect to 8,420,823 shares. The shares of common
stock owned are held for the benefit of its clients by its separate accounts, externally
managed accounts, registered investment companies, subsidiaries and/or other affiliates.
Therefore, this stockholder does not violate the ownership limits set forth in our
charter. This stockholder is reporting the combined holdings of the entities for the
purpose of administrative convenience.(4)
    
    Represents the number of shares of common stock owned pursuant to a Form 13G/A
filed with the Securities and Exchange Commission on February 15, 2006. According to
such Form 13G/A, Morgan Stanley Dean Witter has sole voting power with respect to
4,336,424 shares and sole dispositive power with respect to 4,336,424 shares. The shares
of common stock owned are held for the benefit of its clients by its separate accounts,
externally managed accounts, registered investment companies, subsidiaries and/or other
affiliates. Therefore, this stockholder does not violate the ownership limits set forth
in our charter. This stockholder is reporting the combined holdings of the entities for
the purpose of administrative convenience. 61




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##### Table of Contents



(5)
    
    Represents the number of shares of common stock owned pursuant to a Form 13D
filed with the Securities and Exchange Commission on January 17, 2006. According to such
Form 13D, Credit Suisse has shared voting power with respect to all 4,423,725 shares and
shared dispositive power with respect to all 4,423,725 shares. The shares of common
stock owned are held for the benefit of its clients by its separate accounts, externally
managed accounts, registered investment companies, subsidiaries and/or other affiliates.
Therefore, this stockholder does not violate the ownership limits set forth in our
charter. This stockholder is reporting the combined holdings of the entities for the
purpose of administrative convenience(6)
    
    Represents the number of shares of common stock owned pursuant to a Form 13G
filed with the Securities and Exchange Commission on February 15, 2006. According to
such Form 13G, Security Capital Research & Management Incorporated has sole voting power
with respect to 2,577,177 shares and sole dispositive power with respect to all
3,711,697 shares. The shares of common stock owned are held for the benefit of its
clients by its separate accounts, externally managed accounts, registered investment
companies, subsidiaries and/or other affiliates. Therefore, this stockholder does not
violate the ownership limits set forth in our charter. This stockholder is reporting
the combined holdings of the entities for the purpose of administrative convenience(7)
    
    Represents (a) 68,342 OP units owned by
Mr. Ziman, (b) 353,212 OP units
owned by entities which are 100% owned by Mr. Ziman,
(c) 136,674 OP units owned by a
family partnership, in which Mr. Ziman has shared voting and investment power and of
which Mr. Ziman is a 20% general partner and disclaims beneficial ownership of the
remaining 80% in which he has no pecuniary interests, (d) 282,707 shares related to
unvested restricted stock awards, (e) 765,736 shares of common stock owned by Mr. Ziman,
(f) 2,000 shares of common stock and 88,000 OP units owned by an entity in which Mr.
Ziman has sole voting and investment power and of which Mr. Ziman is a 2% general
partner and disclaims beneficial ownership of the remaining 98% in which he has no
pecuniary interest and (g) 627,460 shares of common stock related to exercisable stock
options.(8)
    
    Represents (a) 277,188 OP units owned by a family trust of which Mr. Coleman
is the trustee with sole voting and dispositive power,
(b) 99,458 OP units owned by
an entity which is 100% owned by Mr. Coleman, (c) 165,882 shares related to unvested
restricted stock awards, (d) 362,123 shares of common stock owned by family trusts of
which Mr. Coleman is the trustee with sole voting and dispositive power and (e) 108,180
shares of common stock related to exercisable stock options.(9)
    
    Represents 72,887 shares related to unvested restricted stock awards and 41,675
shares of common stock owned.(10)
    
    Represents 72,887 shares related to unvested restricted stock awards and 26,767
shares of common stock owned.(11)
    
    Represents 26,622 shares related to unvested restricted stock awards and 3,332
shares of common stock owned.(12)
    
    Represents 8,500 shares related to unvested restricted stock awards and 1,500
shares of common stock owned.(13)
    
    Represents 7,700 shares related to unvested restricted stock awards, 2,500 shares
of common stock owned and 10,000 shares related to exercisable stock options.(14)
    
    Represents 7,700 shares related to unvested restricted stock awards, 14,300
shares of common stock owned and 30,000 shares related to exercisable stock options.(15)
    
    Represents 7,700 shares related to unvested restricted stock awards and 4,900
shares of common stock owned.(16)
    
    Represents 8,500 shares related to unvested restricted stock awards 1,500 shares
of common stock owned.(17)
    
    Includes 705,428 shares related to unvested restricted stock awards and 789,880
shares related to exercisable stock options. 62




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##### Table of Contents



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
   
    
    4,900 square feet of office space is leased to Wetherly Capital Group, LLC. 50%
of Wetherly Capital, LLC is owned by Upstream Partners, LLC, of which Messrs. Ziman,
Coleman, Davis, Peddicord, Swartz and Stern have a 77% investment interest. The total
annual rents from this lease are approximately $120,000.
    
    2,400 square feet of office space is leased to Rexford Industrial, LLC, of which
Messrs. Ziman and Coleman have a 40% investment interest. The total annual rents from
this lease are approximately $59,000.
    
    5,000 square feet of office space is leased to Brentwood Capital Partners, LLC,
of which Messrs. Ziman and Coleman have a combined 40% investment interest. The total
annual rents from this lease are approximately $151,000.
   
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   2005
    
    
    2004Audit fees
    
    $
    715,000
    
    
    $
    721,000Audit-related fees(1)
    
    
    27,000
    
    
    
    Tax fees(2)
    
    
    498,000
    
    
    
    197,000$
    1,240,000
    
    
    $
    918,000
 
 (1)
    
    Consists of audit fees incurred in connection with the pending merger
agreement with General Electric Capital Corporation.(2)
    
    Consists of tax compliance and tax planning services, including $278,000
in tax planning fees incurred in connection with the merger agreement
with General Electric Capital Corporation. 63




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 (a) Financial Statements
  PAGE NO.Report of Independent Auditors
    
    F-1Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    F-2Consolidated Statements of Income for the years ended December 31, 2005, 2004 and 2003
    
    F-3Consolidated Statements of Stockholders Equity for the years ended December 31, 2005, 2004 and
2003
    
    F-4Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003
    
    F-5Notes to Financial Statements
    
    F-6
  (b) Exhibits
 ExhibitNumber
    
    Description2.1*
    
    Agreement and Plan of Merger by and
among Arden Realty, Inc., Arden Realty Limited Partnership, General
Electric Capital Corporation, Trizec Properties Inc., Trizec Holdings
Operating LLC, Atlas Merger Sub, Inc., and Atlas Partnership Merger
Sub, Inc. dated as of December 21, 2005, incorporated herein by
reference to Item 1.01 of the Registrants current report on
Form 8-K filed with the Commission on December 28, 2005.3.1*
    
    Amended and Restated Articles of Incorporation as filed as an
exhibit to Arden Realtys registration statement on Form S-11 (No.
333-08163).3.2*
    
    Articles Supplementary of Class A Junior Participating Preferred
Stock as filed as an exhibit to the current report on Form 8-K,
dated August 26, 1998.3.3*
    
    Articles Supplementary of the 8 5/8 Series B Cumulative Redeemable
Preferred Stock dated September 7, 1999, filed as an exhibit to
Arden Realtys annual report on Form 10-K dated March 27, 2000.3.4*
    
    Bylaws of Registrant as filed as an exhibit to Arden Realtys
registration statement on Form S-11 (No. 333-08163).3.5*
    
    Certificate of Amendment of the Bylaws of Arden Realty dated July
14, 1998, filed as an exhibit to Arden Realtys quarterly report on
Form 10-Q dated August 14, 1998.3.6*
    
    Certificate of Amendment of the Bylaws of Arden Realty dated March
17, 2000, filed as an exhibit on Arden Realtys quarterly report on
Form 10-Q dated May 11, 2000.4.1*
    
    Rights Agreement, dated August 14, 1998, between Arden Realty and
The Bank of New York, as filed as an exhibit to Arden Realtys
current report on Form 8-K dated August 26, 1998.4.2*
    
    Indenture between Arden Realty Limited Partnership and The Bank of
New York, as trustee, dated March 14, 2000 as filed as an exhibit to
Arden Realty Limited Partnerships registration statement on Form
S-4 (No. 333-35406).4.3*
    
    Form of Arden Realty Limited Partnerships unsecured 8.875% senior
note due 2005, dated March 17, 2000 filed as an exhibit to Arden
Realty Limited Partnerships registration statement on Form S-4 (No.
333-35406).
 64




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##### Table of Contents



ExhibitNumber
    
    Description4.4*
    
    Form of Arden Realty Limited Partnerships unsecured 9.150% senior
note due 2010, dated March 17, 2000 filed as an exhibit to Arden
Realty Limited Partnerships registration statement on Form S-4 (No.
333-35406).4.5*
    
    Form of Arden Realty Limited Partnerships unsecured 8.50% senior
note due 2010, dated November 20, 2000 as filed as an exhibit to
Arden Realty Limited Partnerships registration statement on Form
S-4 (No. 333-53376).4.6*
    
    Form of Arden Realty Limited Partnerships 7.00% Note due 2007,
dated November 9, 2002 as filed as an exhibit to Arden Realty
Limited Partnerships current report on Form 8-K filed on November
9, 2001.4.7*
    
    Officers certificate dated March 17, 2000 with respect to the terms
of Arden Realty Limited Partnerships 8.875% senior note due 2005
and 9.150% Senior Notes due 2010 as filed as an exhibit to Arden
Realtys annual report on Form 10-K filed on April 1, 2002.4.8*
    
    Officers certificate dated November 20, 2000 with respect to the
terms of Arden Realty Limited Partnerships 8.50% Senior Notes due
2010 as filed as an exhibit to Arden Realtys annual report on Form
10-K filed on April 1, 2002.4.9*
    
    Officers certificate dated November 9, 2001 with respect to the
terms of Arden Realty Limited Partnerships 7.00% Note due 2007,
filed as an exhibit to Arden Realty Limited Partnerships current
report on Form 8-K filed on November 9, 2001.4.10*
    
    Second Amendment to Rights Agreement, dated as of June 19, 2003,
between Arden Realty and the Bank of New York, as filed as an
exhibit to Arden Realtys current report on From 8-K dated July 1,
2003.4.11*
    
    Amendment No. 3 to Term Loan Agreement between Arden Realty Limited
Partnership and Wells Fargo Bank, National Association, as
administrative agent, sole lead arranger and lender, relating to the
$75 million term loan, dated as of February 14, 2005, incorporated
herein by reference to Exhibit 10.1 to Arden Realty Limited
Partnerships current report on Form 8-K filed with the Commission
on February 18, 2005.4.12*
    
    Amendment No. 3 to Term Loan Agreement between Arden Realty Limited
Partnership and Wells Fargo Bank, National Association, as
administrative agent, sole lead arranger and lender and Wachovia
Bank, N.A., as lender, relating to the $50 million term loan, dated
as of February 14, 2005, incorporated herein by reference to Exhibit
10.2 to Arden Realty Limited Partnerships current report on Form
8-K filed with the Commission on February 18, 2005.4.13*
    
    Form of Arden Realty Limited Partnerships 5.25% Note due 2015,
dated February 28, 2005, incorporated herein by reference to Exhibit
4.1 to Arden Realty Limited Partnerships current report on Form 8-K
filed on March 1, 2005.4.14*
    
    Officers certificate dated February 28, 2005 with respect to the
terms of Arden Realty Limited Partnerships 5.25% Note due 2015,
incorporated herein by reference to Exhibit 4.2 to Arden Realty
Limited Partnerships current report on Form 8-K filed with the
Commission on March 1, 2005.10.1*^
    
    1996 Stock Option and Incentive Plan of Arden Realty, Inc. and Arden
Realty Limited Partnership as filed as an exhibit to Arden Realtys
registration statement on Form S-11 (No. 333-08163).10.2*^
    
    Amendment Number 1 to the 1996 Stock Option and Incentive Plan of
Arden Realty, Inc. and Arden Realty Limited Partnership as filed as
an exhibit to Arden Realtys Schedule 14A filed on June 23, 1998.
 65




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##### Table of Contents



ExhibitNumber
    
    Description10.3*^
    
    Form of Officers and Directors Indemnification Agreement as filed as
an exhibit to Arden Realtys registration statement on Form S-11
(No. 333-08163).10.4*
    
    Loan Agreement dated June 8, 1998 by and between Arden Realty
Finance III, L.L.C., a Delaware limited liability company and Lehman
Brothers Realty Corporation, a Delaware corporation filed as an
exhibit to Arden Realtys quarterly report on Form 10-Q filed on
August 14, 1998.10.5*
    
    Mortgage Note, dated June 8, 1998 for $136,100,000 by and between
Arden Realty Finance III, L.L.C., a Delaware limited liability
company, and Lehman Brothers Realty Corporation, a Delaware
corporation. (Exhibit B. to Exhibit 10.4 above).10.6*
    
    Tenant Estoppel Certificate (Exhibit C. to Exhibit 10.4 above).10.7*
    
    Subordination, Non-Disturbance and Attornment Agreement (Exhibit D.
to Exhibit 10.4 above).10.8*
    
    Deed of Trust, Assignment of Rents and Leases, Security Agreement,
and Fixture Filing dated as of June 8, 1998 made by Arden Realty
Finance III, L.L.C. as Grantor, to Commonwealth Land Title Company
as Trustee for the benefit of Lehman Brothers Realty Corporation as
Beneficiary, filed as an exhibit to Arden Realtys quarterly report
on Form 10-Q filed on August 14, 1998.10.9*
    
    Assignment of Leases and Rents dated June 8, 1998, by and between
Arden Realty Finance III, L.L.C., a Delaware limited liability
company and Lehman Brothers Realty Corporation, a Delaware
corporation, its successors and assigns filed as an exhibit to Arden
Realtys quarterly report on Form 10-Q filed on August 14, 1998.10.10*
    
    Collateral Assignment of Management Agreement and Subordination
Agreement dated as of June 8, 1998 among Arden Realty Finance III,
L.L.C., a Delaware limited liability company (Borrower), Lehman
Brothers Realty Corporation, a Delaware corporation, (Lender), and
Arden Realty Limited Partnership, a Maryland limited partnership
(Manager), filed as an exhibit to Arden Realtys quarterly report
on Form 10-Q filed on August 14, 1998.10.11*
    
    Security Agreement entered into as of June 8, 1998 by and between
Arden Realty Finance III, L.L.C., a Delaware limited liability
company and Lehman Brothers Realty Corporation, a Delaware
corporation, filed as an exhibit to Arden Realtys quarterly report
on Form 10-Q filed on August 14, 1998.10.12*
    
    Environmental Indemnity Agreement dated June 8, 1998 by Arden Realty
Finance III, L.L.C., a Delaware limited liability company, in favor
of Lehman Brothers Realty Corporation, a Delaware corporation, filed
as an exhibit to Arden Realtys quarterly report on Form 10-Q filed
on August 14, 1998.10.13*
    
    Letter Agreement dated June 8, 1998 between Lehman Brothers Realty
Corporation, Arden Realty Finance III, L.L.C., Arden Realty and
Arden Realty Limited Partnership, filed as an exhibit to Arden
Realtys quarterly report on Form 10-Q filed on August 14, 1998.10.14*
    
    Loan Agreement by and between Arden Realty Finance IV, LLC, a
Delaware limited liability company and Lehman Brothers Realty
Corporation, a Delaware corporation, filed as an exhibit to Arden
Realtys quarterly report on Form 10-Q filed on August 14, 1998.10.15*
    
    Mortgage Note, dated June 8, 1998 for $100,600,000 by and between
Arden Realty Finance IV, L.L.C., a Delaware limited liability
company (Maker), and Lehman Brothers Realty Corporation, a
Delaware corporation (Exhibit B to Exhibit 10.14 above).
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ExhibitNumber
    
    Description10.16*
    
    Tenant Estoppel Certificate (Exhibit C. to Exhibit 10.14 above).10.17*
    
    Subordination, Non-Disturbance and Attornment Agreement (Exhibit D.
to Exhibit 10.14 above).10.18*
    
    Deed of Trust, Assignment of Rents and Leases, Security Agreement,
and Fixture Filing dated as of June 8, 1998 made by Arden Realty
Finance IV, L.L.C. as Grantor, to Commonwealth Land Title Company as
Trustee for the benefit of Lehman Brothers Realty Corporation as
Beneficiary, filed as an exhibit to Arden Realtys quarterly report
on Form 10-Q filed on August 14, 1998.10.19*
    
    Assignment of Leases and Rents dated June 8, 1998, by and between
Arden Realty Finance IV, L.L.C., a Delaware limited liability
company (Assignor), and Lehman Brothers Realty Corporation, a
Delaware corporation, its successors and assigns (Assignee), filed
as an exhibit to Arden Realtys quarterly report on Form 10-Q filed
on August 14, 1998.10.20*
    
    Collateral Assignment of Management Agreement and Subordination
Agreement dated as of June 8, 1998 among Arden Realty Finance IV,
L.L.C., a Delaware limited liability company (Borrower), Lehman
Brothers Realty Corporation, a Delaware corporation, (Lender), and
Arden Realty Limited Partnership, filed as an exhibit to Arden
Realtys quarterly report on Form 10-Q filed on August 14, 1998.10.21*
    
    Security Agreement entered into as of June 8, 1998 by and between
Arden Realty Finance IV, L.L.C., a Delaware limited liability
company (Debtor), and Lehman Brothers Realty Corporation, a
Delaware corporation (Secured Party), filed as an exhibit to Arden
Realtys quarterly report on Form 10-Q filed on August 14, 1998.10.22*
    
    Environmental Indemnity Agreement dated June 8, 1998 by Arden Realty
Finance IV, L.L.C., a Delaware limited liability company
(Indemnitor), in favor of Lehman Brothers Realty Corporation, a
Delaware corporation (Lender), filed as an exhibit to Arden
Realtys quarterly report on Form 10-Q filed on August 14, 1998.10.23*
    
    Letter Agreement dated June 8, 1998 between Lehman Brothers Realty
Corporation, Arden Realty Finance IV, L.L.C., Arden Realty and Arden
Realty Limited Partnership, filed as an exhibit to Arden Realtys
quarterly report on Form 10-Q filed on August 14, 1998.10.24*^
    
    Amended and Restated Employment Agreement dated January 1, 1999,
between Arden Realty and Mr. Robert Peddicord, filed as a exhibit to
Arden Realtys quarterly report on Form 10-Q filed on August 8,
2000.10.25*
    
    Miscellaneous Rights Agreement among Arden Realty, Arden Realty
Limited Partnership, NAMIZ, Inc. and Mr. Ziman, filed as an exhibit
to Arden Realtys registration statement on Form S- 11 (No.
333-08163).10.26*
    
    Credit Facility documentation consisting of Second Amended and
Restated Revolving Credit Agreement by and among Arden Realty
Limited Partnership and a group of banks led by Wells Fargo Bank as
filed as an exhibit to Arden Realtys quarterly report on Form 10-Q
filed on May 12, 2000.10.27*
    
    Mortgage Financing documentation consisting of Loan Agreement by and
between Arden Realtys special purpose financing subsidiary and
Lehman Brothers Realty Corporation (the Loan Agreement includes the
Mortgage Note, Deed of Trust, and form of Tenant Estoppel
Certificate and Agreement as exhibits) as filed as an exhibit to
Arden Realtys registration statement on Form S-11 (No. 333-30059).
 67




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##### Table of Contents



ExhibitNumber
    
    Description10.28*
    
    Promissory Note, dated as of March 30, 1999, between Massachusetts
Mutual Life Insurance Company and Arden Realty Finance V, L.L.C.
filed as an exhibit to Arden Realtys current report on Form 8-K
filed on April 20, 1999.10.29*
    
    Deed of Trust and Security Agreement, dated as of March 30, 1999,
with Arden Realty Finance V, L.L.C. as the Trustor and Massachusetts
Mutual Life Insurance Company as the Beneficiary filed as an exhibit
to Arden Realtys current report on Form 8-K filed on April 20,
1999.10.30*
    
    Assignment of Leases and Rents, dated as of March 30, 1999, between
Massachusetts Mutual Life Insurance Company and Arden Realty Finance
V, L.L.C. filed as an exhibit to Arden Realtys current report on
Form 8-K filed on April 20, 1999.10.31*
    
    Subordination of Management Agreement, dated as of March 30, 1999,
between Massachusetts Mutual Life Insurance Company and Arden Realty
Finance V. L.L.C. filed as an exhibit to Arden Realtys current
report on Form 8-K filed on April 20, 1999.10.32*
    
    Environmental Indemnification and Hold Harmless Agreement, dated as
of March 30, 1999, between Massachusetts Mutual Life Insurance
Company and Arden Realty Finance V, L.L.C. filed as an exhibit to
Arden Realtys current report on Form 8-K filed on April 20, 1999.10.33*^
    
    Amended and Restated Employment Agreement dated May 27, 1999,
between Arden Realty and Mr. Randy J. Noblitt as filed as an exhibit
to Arden Realty Limited Partnerships registration statement on Form
S-4 (No. 333-53376).10.34*^
    
    Amended and Restated Employment Agreement dated July 27, 2000, by
and between Arden Realty and Mr. Richard S. Ziman as filed as an
exhibit to Arden Realty Limited Partnerships registration statement
on Form S-4 (No. 333-53376).10.35*^
    
    Amended and Restated Employment Agreement dated July 27, 2000, by
and between Arden Realty and Mr. Victor J. Coleman as filed as an
exhibit to Arden Realty Limited Partnerships registration statement
on Form S-4 (No. 333-53376).10.36*^
    
    Amendment to the 1996 Stock Option and Incentive Plan of Arden
Realty, Inc. and Arden Realty Limited Partnership as filed as an
exhibit to Arden Realtys Schedule 14A filed on April 25, 2000.10.37*^
    
    Second Amended and Restated 1996 Stock Option and Incentive Plan of
Arden Realty, Inc. and Arden Realty Limited Partnership dated
September 20, 2001 as filed as an exhibit to Arden Realty, Inc.s
quarterly report on Form 10-Q filed on November 14, 2001.10.38*^
    
    Form of Promissory Note entered on July 19, 2001 and September 28,
2001 between Arden Realty Limited Partnership and Andrew Sobel and
Robert Peddicord, respectively, as filed as an exhibit to Arden
Realty Limited Partnerships quarterly report on Form 10-Q filed on
November 14, 2001.10.39*^
    
    Amended and Restated Employment Agreement dated June 2, 1999,
between Arden Realty and Mr. Richard Davis as filed on an exhibit to
Arden Realty Limited Partnerships annual report on Form 10-K filed
on April 1, 2002.10.40*^
    
    Amended and Restated Employment Agreement dated March 29, 2002,
between Mr. Andrew Sobel and Arden Realty, Inc. as filed as an
exhibit to Arden Realty, Inc.s quarterly report on Form 10-Q filed
on August 14, 2002.10.41*^
    
    Form of Promissory Note entered into on February 18, 2002 between
Arden Realty, Inc. and Mr. Andrew Sobel as filed as on exhibit to
Arden Realty, Inc.s quarterly report on Form 10-Q filed on August
14, 2002.10.42*
    
    Term Loan Agreement between Arden Realty Limited Partnership and
Wells
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##### Table of Contents



ExhibitNumber
    
    DescriptionFargo Bank, National Association dated as of June 12, 2002 as
filed as an exhibit to Arden Realty Limited Partnerships quarterly
report on Form 10-Q filed on August 14, 2002.10.43*
    
    Third Amended and Restated Revolving Credit Agreement between Arden
Realty Limited Partnership and a group of lenders led by Wells Fargo
Bank dated as of August 9, 2002 as filed as an exhibit to Arden
Realty Limited Partnerships quarterly report on Form 10-Q filed on
November 12, 2002.10.44*
    
    Amendment to Term Loan Agreement between Arden Realty Limited
Partnership and Wells Fargo Bank, National Association dated as of
September 19, 2002 as filed as an exhibit to Arden Realty Limited
Partnerships quarterly report on Form 10-Q filed on November 12,
2002.10.45*^
    
    Amended and Restated Employment Agreement dated May 27, 1999, by and
between Arden Realty Limited Partnership and Mr. David Swartz as
filed as an exhibit to Arden Realty Limited Partnerships annual
report on Form 10-K filed on March 27, 2003.10.46*
    
    Second Amended and Restated Agreement of Limited Partnership of
Arden Realty Limited Partnership, dated September 7, 1999, filed as
an exhibit to Arden Realtys quarterly report on Form 10-Q filed
with the Commission on November 15, 1999.10.47*
    
    Admission of New Partners and Amendment to Limited Partnership
Agreement entered into as of the 20th day of December,
2000, by and between Arden Realty Limited Partnership and the
persons identified as the New Partners therein, filed as an
exhibit to Arden Realty Limited Partnerships annual report on Form
10-K filed with the Commission on March 30, 2001.10.48*
    
    Second Amendment to Limited Partnership Agreement entered into as of
September 13, 2003, by Arden Realty Limited Partnership, filed as an
exhibit to Arden Realty Limited Partnerships quarterly report on
Form 10-Q filed with the Commission on November 13, 2003.10.49*
    
    Confidential Resignation Agreement and General Release dated as of
March 4, 2005 by and between Arden Realty, Inc. and Arden Realty
Limited Partnership and Andrew J. Sobel.10.50*
    
    Summary of Cash Bonus Plan available to certain senior executives of
the Registrant, incorporated herein by reference to Item 1.01 of the
Registrants current report on Form 8-K filed with the Commission on
February 22, 2005.10.51*
    
    Form of Restricted Stock Agreement under the Second Amended and
Restated 1996 Stock Option and Incentive Plan of the Registrant and
Arden Realty, Inc., incorporated herein by reference to Exhibit 10.1
to the Registrants current report on Form 8-K filed with the
Commission on February 22, 2005.10.52*
    
    Confidential Resignation Agreement and General Release dated as of
March 4, 2005 by and between Arden Realty, Inc. and Arden Realty
Limited Partnership and Andrew J. Sobel, incorporated herein by
reference to Exhibit 10.49 to Arden Realty, Inc.s annual report on
Form 10-K filed with the Commission on March 14, 2005.10.53*
    
    Summary of Director Restricted Stock Awards, incorporated herein by
reference to Item 1.01 of the Registrants current report on Form
8-K filed with the Commission on April 15, 2005.10.54*
    
    Summary of Increase in Director Retainer, incorporated herein by
reference to Item 1.01 of the Registrants current report on Form
8-K filed with the Commission on April 15, 2005.
 69




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ExhibitNumber
    
    Description10.55*
    
    Summary of Increase in Director Fees, incorporated herein by
reference to Item 1.01 of the Registrants current report on Form
8-K filed with the Commission on April 15, 2005.10.56*
    
    Summary of Establishment of Fiscal 2005 Base Salaries for certain
senior executives of the Registrant, incorporated herein by
reference to Item 1.01 of the Registrants current report on Form
8-K filed with the Commission on April 15, 2005.10.57*
    
    Summary of Executive Restricted Stock Awards for certain senior
executives of the Registrant, incorporated herein by reference to
Item 1.01 of the Registrants current report on Form 8-K filed with
the Commission on April 15, 2005.10.58*
    
    Description of the Outperformance Plan, incorporated herein by
reference to Item 1.01 of the Registrants current report on Form
8-K filed with the Commission on April 15, 2005.10.59*
    
    Form of Restricted Stock Agreement, incorporated herein by reference
to Exhibit 10.1 to the Registrants current report on Form 8-K filed
with the Commission on April 15, 2005.10.60*
    
    Form of Performance-Based Restricted Stock Agreement, incorporated
herein by reference to Exhibit 10.2 to the Registrants current
report on Form 8-K filed with the Commission on April 15, 2005.10.61*
    
    Amended and Restated Arden Realty Limited Partnership Deferred
Compensation Plan, dated July 1, 2005, incorporated herein by
reference to Exhibit 10.1 to the Registrants current report on Form
8-K filed with the Commission on May 24, 2005.10.62*
    
    Fourth Amended and Restated Revolving Credit Agreement dated July 7,
2005, incorporated herein by reference to Item 10.1 of the
Registrants current Report on Form 8-K filed with the Commission on
July 13, 2005.10.63*
    
    Summary of Increase of Fiscal 2005 Base Salary of Richard S. Davis,
Executive Vice President and Chief Financial Officer, incorporated
herein by reference to Item 1.01(B) of the Registrants current
Report on Form 8-K filed with the Commission on July 13, 2005.10.64
    
    Arden Realty, Inc. 2005-2009 Outperformance Plan dated April 1, 2005.10.65*
    
    Summary of Establishment of Fiscal 2006 Base Salaries for certain
senior executives of the Registrant, incorporated herein by
reference to Item 1.01 of the Registrants current report on Form
8-K filed with the Commission on December 5, 2005.10.66*
    
    Summary of Executive Restricted Stock Awards for certain senior
executives of the Registrant, incorporated herein by reference to
Item 1.01 of the Registrants current report on Form 8-K filed with
the Commission on December 5, 2005.
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##### Table of Contents



ExhibitNumber
    
    Description12.1
    
    Statement regarding computation of ratios.21.1*
    
    Subsidiaries of Arden Realty Limited Partnership as filed as an
exhibit to Arden Realty Limited Partnerships annual report on Form
10-K filed on March 27, 2003 are incorporated here by reference and
in addition, Arden Realty Limited Partnership is included herein as
a subsidiary of Arden Realty, Inc.23.1
    
    Consent of independent auditors.31.1
    
    Certification of Chief Executive Officer, pursuant to Rule 13a-14
promulgated under the Exchange Act, as created by Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer, pursuant to Rule 13a-14
promulgated under the Exchange Act, as created by Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer, pursuant to 18 U.S.C.
Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of
2002.32.2
    
    Certification of Chief Financial Officer, pursuant to 18 U.S.C.
Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of
2002.
 
 (*)
    
    Incorporated by reference.(^)
    
    Management contract or compensatory plan or arrangement required to be identified by Item 15(a)3. 71




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##### Table of Contents



SIGNATURES
  ARDEN REALTY, INC.By:       /s/ Richard S. ZimanRichard S. ZimanChairman of the BoardAnd Chief Executive Officer
  Name
    
    Title
    
    Date/s/ RICHARD S. ZIMAN
    
    Chairman of the Board,
    
    March 15, 2006Richard S. Ziman
    
    Chief Executive Officer and Director/s/ VICTOR J. COLEMAN
    
    President, Chief Operating
    
    March 15, 2006Victor J. Coleman
    
    Officer and Director/s/ RICHARD S. DAVIS
    
    Executive Vice President and
    
    March 15, 2006Richard S. Davis
    
    Chief Financial Officer/s/ ROBERT C. PEDDICORD
    
    Executive Vice President 
    
    March 15, 2006Robert C. Peddicord
    
    Leasing and Property Operations/s/ LESLIE E. BIDER
    
    Director
    
    March 15, 2006Leslie E. Bider/s/ CARL D. COVITZ
    
    Director
    
    March 13, 2006Carl D. Covitz/s/ LARRY S. FLAX
    
    Director
    
    March 15, 2006Larry S. Flax/s/ STEVEN C. GOOD
    
    Director
    
    March 13, 2006Steven C. Good/s/ ALAN I. ROTHENBERG
    
    Director
    
    March 13, 2006Alan I. Rothenberg




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Board of Directors and Stockholders
Arden Realty, Inc.
    Internal
Control-Integrated Framework
 Ernst & Young LLP




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##### Table of Contents



ARDEN REALTY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 December 31,2005
    
    
    2004AssetsInvestment in real estate:Land
    
    $
    495,155
    
    
    $
    432,291Buildings and improvements
    
    
    2,409,879
    
    
    
    2,097,058Tenant improvements and leasing commissions
    
    
    394,165
    
    
    
    347,6403,299,199
    
    
    
    2,876,989Less: accumulated depreciation and amortization
    
    
    (555,191
    )
    
    
    (468,716
    )2,744,008
    
    
    
    2,408,273Properties under development or renovation
    
    
    
    
    
    
    16,295Land available for development
    
    
    24,903
    
    
    
    23,795Properties held for disposition, net
    
    
    
    
    
    
    103,618Net investment in real estate
    
    
    2,768,911
    
    
    
    2,551,981Cash and cash equivalents
    
    
    639
    
    
    
    13,040Restricted cash
    
    
    69,703
    
    
    
    27,285Rent and other receivables, net of allowance of $4,139 and $3,748 at December 31, 2005 and
2004 respectively
    
    
    7,382
    
    
    
    5,953Deferred rent, net of allowance of $1,439 and $1,933 at December 31, 2005 and 2004
respectively
    
    
    38,149
    
    
    
    42,886Prepaid financing costs, expenses and other assets, net of accumulated amortization of
$12,068 and $13,244 at December 31, 2005 and 2004 respectively
    
    
    23,086
    
    
    
    18,852Total assets
    
    $
    2,907,870
    
    
    $
    2,659,997LiabilitiesMortgage loans payable
    
    $
    419,650
    
    
    $
    371,548Mortgage loan payable  properties held for disposition
    
    
    
    
    
    
    11,091Unsecured lines of credit
    
    
    259,500
    
    
    
    121,500Unsecured term loan
    
    
    150,000
    
    
    
    125,000Unsecured senior notes, net of discount
    
    
    794,671
    
    
    
    696,945Accounts payable and accrued expenses
    
    
    50,968
    
    
    
    58,215Security deposits
    
    
    25,647
    
    
    
    25,498Dividends payable
    
    
    33,914
    
    
    
    33,494Total liabilities
    
    
    1,734,350
    
    
    
    1,443,291Minority interest
    
    
    20,368
    
    
    
    20,414Stockholders EquityPreferred stock, $.01 par value, 20,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $.01 par value, 100,000,000 shares authorized, 67,157,295 and 66,325,709
issued and outstanding at December 31, 2005 and 2004 respectively
    
    
    670
    
    
    
    664Additional paid-in capital
    
    
    1,159,976
    
    
    
    1,212,508Deferred compensation
    
    
    (9,340
    )
    
    
    (12,830
    )Accumulated other comprehensive income (loss)
    
    
    1,846
    
    
    
    (4,050
    )Total stockholders equity
    
    
    1,153,152
    
    
    
    1,196,292Total liabilities and stockholders equity
    
    $
    2,907,870
    
    
    $
    2,659,997
 See accompanying notes to financial statements.
 F-2




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##### Table of Contents



ARDEN REALTY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Property revenues
    
    $
    441,903
    
    
    $
    393,001
    
    
    $
    376,791Property operating expenses
    
    
    (148,633
    )
    
    
    (127,824
    )
    
    
    (120,335
    )293,270
    
    
    
    265,177
    
    
    
    256,456General and administrative expenses
    
    
    (33,571
    )
    
    
    (19,503
    )
    
    
    (16,931
    )Interest expense
    
    
    (98,184
    )
    
    
    (88,502
    )
    
    
    (92,736
    )Depreciation and amortization
    
    
    (137,385
    )
    
    
    (115,806
    )
    
    
    (106,893
    )Interest and other loss
    
    
    (1,593
    )
    
    
    (509
    )
    
    
    (403
    )Impairment on investment in securities
    
    
    
    
    
    
    (2,700
    )
    
    
    Minority interest
    
    
    (570
    )
    
    
    (5,159
    )
    
    
    (5,231
    )Income from continuing operations
    
    
    21,967
    
    
    
    32,998
    
    
    
    34,262Discontinued operations, net of minority interest
    
    
    3,714
    
    
    
    10,304
    
    
    
    18,310Gain on sale of discontinued properties
    
    
    40,653
    
    
    
    30,473
    
    
    
    5,937Loss from debt defeasance related to sale of discontinued properties
    
    
    (835
    )
    
    
    
    
    
    
    Net income
    
    $
    65,499
    
    
    $
    73,775
    
    
    $
    58,509Basic net income per common share:Income from continuing operations
    
    $
    0.33
    
    
    $
    0.51
    
    
    $
    0.54Income from discontinued operations
    
    
    0.65
    
    
    
    0.62
    
    
    
    0.38Net income per common share  basic
    
    $
    0.98
    
    
    $
    1.13
    
    
    $
    0.92Weighted average number of common shares  basic
    
    
    66,611
    
    
    
    65,372
    
    
    
    63,553Diluted net income per common share:Income from continuing operations
    
    $
    0.33
    
    
    $
    0.50
    
    
    $
    0.54Income from discontinued operations
    
    
    0.65
    
    
    
    0.62
    
    
    
    0.38Net income per common share  diluted
    
    $
    0.98
    
    
    $
    1.12
    
    
    $
    0.92Weighted average number of common shares  diluted
    
    
    67,074
    
    
    
    65,740
    
    
    
    63,815Dividends declared per common share
    
    $
    2.02
    
    
    $
    2.02
    
    
    $
    2.02
 See accompanying notes to financial statements.
 F-3




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##### Table of Contents



ARDEN REALTY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(in thousands, except share amounts)
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Paid In
    
    
    Retained
    
    
    Deferred
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Compensation
    
    
    Income (Loss)
    
    
    EquityBalance at January 1, 2003
    
    
    62,984,217
    
    
    $
    631
    
    
    $
    1,260,773
    
    
    $
    
    
    
    $
    (11,259
    )
    
    $
    (2,768
    )
    
    $
    1,247,377OP units converted
    
    
    29,076
    
    
    
    
    
    
    
    495
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    495Stock options exercised
    
    
    1,162,523
    
    
    
    12
    
    
    
    27,934
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,946Stock option expense
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41Stock compensation
    
    
    252,500
    
    
    
    3
    
    
    
    6,276
    
    
    
    
    
    
    
    (6,279
    )
    
    
    
    
    
    
    Amortization of stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,545
    
    
    
    
    
    
    
    2,545Forfeiture of stock compensation
    
    
    (2,866
    )
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    Unrealized loss on interest rate hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (155
    )
    
    
    (155
    )Reclassification adjustment for losses included in earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,322
    
    
    
    2,322Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,509
    
    
    
    
    
    
    
    
    
    
    
    58,509Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,676Dividends declared and payable
    
    
    
    
    
    
    
    
    
    
    (70,286
    )
    
    
    (58,509
    )
    
    
    
    
    
    
    
    
    
    
    (128,795
    )Balance at December 31, 2003
    
    
    64,425,450
    
    
    $
    646
    
    
    $
    1,225,192
    
    
    $
    
    
    
    $
    (14,952
    )
    
    $
    (601
    )
    
    $
    1,210,285OP units converted
    
    
    16,000
    
    
    
    
    
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285Stock options exercised
    
    
    1,750,592
    
    
    
    18
    
    
    
    42,727
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,745Stock option expense
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44Stock compensation
    
    
    136,500
    
    
    
    
    
    
    
    1,596
    
    
    
    
    
    
    
    (1,596
    )
    
    
    
    
    
    
    Amortization of stock compensation
    
    
    
    
    
    
    
    
    
    
    665
    
    
    
    
    
    
    
    3,641
    
    
    
    
    
    
    
    4,306Forfeiture of stock compensation
    
    
    (2,833
    )
    
    
    
    
    
    
    (77
    )
    
    
    
    
    
    
    77
    
    
    
    
    
    
    
    Write-off of
preferred OP units original issuance costs
    
    
    
    
    
    
    
    
    
    
    1,075
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,075Unrealized loss on interest rate hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,156
    )
    
    
    (6,156
    )Reclassification adjustment for losses included in earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,707
    
    
    
    2,707Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,775
    
    
    
    
    
    
    
    
    
    
    
    73,775Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,326Dividends declared and payable
    
    
    
    
    
    
    
    
    
    
    (58,999
    )
    
    
    (73,775
    )
    
    
    
    
    
    
    
    
    
    
    (132,774
    )Balance at December 31, 2004
    
    
    66,325,709
    
    
    $
    664
    
    
    $
    1,212,508
    
    
    $
    
    
    
    $
    (12,830
    )
    
    $
    (4,050
    )
    
    $
    1,196,292OP units converted
    
    
    23,406
    
    
    
    
    
    
    
    345
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    345Stock options exercised
    
    
    571,734
    
    
    
    6
    
    
    
    14,565
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,571Stock option expense
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44Stock compensation
    
    
    256,046
    
    
    
    
    
    
    
    654
    
    
    
    
    
    
    
    (654
    )
    
    
    
    
    
    
    Amortization of stock compensation
    
    
    
    
    
    
    
    
    
    
    2,336
    
    
    
    
    
    
    
    3,693
    
    
    
    
    
    
    
    6,029Forfeiture of stock compensation
    
    
    (19,600
    )
    
    
    
    
    
    
    (694
    )
    
    
    
    
    
    
    451
    
    
    
    
    
    
    
    (243
    )Unrealized gains on interest rate hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,610
    
    
    
    5,610Reclassification adjustment for losses included in earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    286
    
    
    
    286Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,499
    
    
    
    
    
    
    
    
    
    
    
    65,499Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,395Dividends declared and payable
    
    
    
    
    
    
    
    
    
    
    (69,782
    )
    
    
    (65,499
    )
    
    
    
    
    
    
    
    
    
    
    (135,281
    )Balance at December 31, 2005
    
    
    67,157,295
    
    
    $
    670
    
    
    $
    1,159,976
    
    
    $
    
    
    
    $
    (9,340
    )
    
    $
    1,846
    
    
    $
    1,153,152
 See accompanying notes to financial statements.
 F-4




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##### Table of Contents



ARDEN REALTY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Operating Activities:Net income
    
    $
    65,499
    
    
    $
    73,775
    
    
    $
    58,509Adjustments to reconcile net income to net cash provided by operating activities:Minority interest, including discontinued operations
    
    
    1,686
    
    
    
    6,202
    
    
    
    5,873Depreciation and amortization, including discontinued operations
    
    
    138,672
    
    
    
    126,582
    
    
    
    120,316Amortization of loan costs and fees
    
    
    3,389
    
    
    
    3,801
    
    
    
    3,972Gain on sale of discontinued properties
    
    
    (40,653
    )
    
    
    (30,473
    )
    
    
    (5,937
    )Impairment on investment in securities
    
    
    
    
    
    
    2,700
    
    
    
    Non-cash compensation expense
    
    
    5,508
    
    
    
    3,760
    
    
    
    2,251Changes in operating assets and liabilities:Rent and other receivables
    
    
    (1,429
    )
    
    
    (2,265
    )
    
    
    (771
    )Deferred rent
    
    
    (1,616
    )
    
    
    (1,015
    )
    
    
    (557
    )Prepaid financing costs, expenses and other assets
    
    
    (1,941
    )
    
    
    (4,783
    )
    
    
    (1,494
    )Accounts payable and accrued expenses
    
    
    (2,782
    )
    
    
    3,338
    
    
    
    (2,356
    )Security deposits
    
    
    948
    
    
    
    3,285
    
    
    
    1,676Net cash provided by operating activities
    
    
    167,281
    
    
    
    184,907
    
    
    
    181,482Investing Activities:Acquisitions and improvements to commercial properties
    
    
    (358,915
    )
    
    
    (198,309
    )
    
    
    (111,365
    )Proceeds from sales of properties
    
    
    68,301
    
    
    
    187,072
    
    
    
    91,010Net cash used in investing activities
    
    
    (290,614
    )
    
    
    (11,237
    )
    
    
    (20,355
    )Financing Activities:Repayments of mortgage loans
    
    
    (20,228
    )
    
    
    (182,190
    )
    
    
    (5,825
    )Proceeds from unsecured lines of credit and unsecured loans
    
    
    408,000
    
    
    
    465,500
    
    
    
    102,500Repayments of unsecured lines of credit
    
    
    (245,000
    )
    
    
    (505,000
    )
    
    
    (150,086
    )Proceeds from issuances of unsecured senior notes, net of discount and other
issuance costs
    
    
    293,216
    
    
    
    197,033
    
    
    
    Repayment of unsecured senior notes
    
    
    (200,000
    )
    
    
    
    
    
    
    Decrease (increase) in restricted cash
    
    
    (623
    )
    
    
    5,012
    
    
    
    804Proceeds from issuance of common stock
    
    
    14,329
    
    
    
    42,745
    
    
    
    27,946Termination of fair value hedges
    
    
    (466
    )
    
    
    
    
    
    
    Distributions to minority interests
    
    
    (3,435
    )
    
    
    (3,388
    )
    
    
    (3,443
    )Distributions to preferred operating partnership unit holders
    
    
    
    
    
    
    (3,234
    )
    
    
    (4,312
    )Redemption of preferred operating partnership units
    
    
    
    
    
    
    (50,000
    )
    
    
    Dividends paid
    
    
    (134,861
    )
    
    
    (131,815
    )
    
    
    (128,067
    )Net cash provided by (used in) financing activities
    
    
    110,932
    
    
    
    (165,337
    )
    
    
    (160,483
    )Net (decrease) increase in cash and cash equivalents
    
    
    (12,401
    )
    
    
    8,333
    
    
    
    644Cash and cash equivalents at beginning of period
    
    
    13,040
    
    
    
    4,707
    
    
    
    4,063Cash and cash equivalents at end of period
    
    $
    639
    
    
    $
    13,040
    
    
    $
    4,707Supplemental Disclosure of Cash Flow Information:Cash paid during the period for interest, net of amount capitalized
    
    $
    99,569
    
    
    $
    87,572
    
    
    $
    94,007
 Non-cash transactions
 See accompanying notes to financial statements.
 F-5




---



##### Table of Contents



ARDEN REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Business
 Description of Business
   Organization and Formation of the Company
  Proposed Merger
     2. Basis of Presentation and Summary of Significant Accounting Policies
 Basis of Presentation
   F-6




---



##### Table of Contents



Risks and Uncertainties
   Segment Information
  Commercial Properties
        F-7




---



##### Table of Contents



Depreciation
   Cash Equivalents
  Restricted Cash
  Prepaid Financing Costs
  Revenue Recognition
   Allowance for Rents and Other Receivables
  Income Taxes
   F-8




---



##### Table of Contents



Fair Value of Financial Instruments
    December 31, 2005
    
    
    December 31, 2004Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueMortgage loans payable
    
    $
    419,650
    
    
    $
    434,276
    
    
    $
    382,639
    
    
    $
    389,755Unsecured senior notes
    
    $
    794,671
    
    
    $
    799,700
    
    
    $
    696,945
    
    
    $
    712,137
  Interest Rate Hedge Agreements
        F-9




---



##### Table of Contents



New Accounting Standards
  Reclassifications
 F-10
    Table of Contents  3. Commercial Properties
 Property Dispositions
 Gross SalesDate of
    
    
    
    
    
    
    
    PriceProperty
    
    County
    
    Submarket
    
    Sale
    
    Property Type
    
    Square Feet
    
    
    ($000s)Activity Business Center
    
    San Diego
    
    Miramar
    
    January 5, 2005
    
    Office
    
    
    167,170
    
    
    $
    16,6505832 Bolsa
    
    Orange
    
    West County
    
    June 29, 2005
    
    Office
    
    
    49,355
    
    
    
    8,6704900 California
    
    Kern
    
    Bakersfield
    
    August 4, 2005
    
    Office
    
    
    153,181
    
    
    
    (A
    )Parkway Center
    
    Kern
    
    Bakersfield
    
    August 4, 2005
    
    Office
    
    
    60,885
    
    
    
    (A
    )100 W. Broadway
    
    Los Angeles
    
    Downtown Long Beach
    
    August 4, 2005
    
    Office
    
    
    192,975
    
    
    
    (A
    )145 S. Fairfax
    
    Los Angeles
    
    Miracle Mile
    
    August 11, 2005
    
    Office
    
    
    55,181
    
    
    
    12,000Irvine Corporate Center
    
    Orange
    
    Greater Airport
    
    September 28, 2005
    
    Office
    
    
    127,561
    
    
    
    17,840
    (1)Oceangate Tower
    
    Los Angeles
    
    Downtown Long Beach
    
    September 28, 2005
    
    Office
    
    
    211,620
    
    
    
    38,000
    (1)Sub-total
    
    
    
    
    
    
    
    
    
    
    1,017,928
    
    
    
    93,160(A) Portfolio sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,600
    (2)1,017,928
    
    
    $
    148,760
 
 (1)
    
    The net proceeds from these dispositions of approximately $54.6 million are currently held
in escrow accounts for potential like-kind exchanges and are included as part of restricted
cash in our consolidated balance sheet at December 31 2005.(2)
    
    Approximately $22.5 million of this amount was used to acquire Agoura Hills Business Park as
part of a like-kind exchange. Property Acquisitions
 GrossPurchaseDate of
    
    
    
    
    
    
    
    PriceProperty
    
    County
    
    Submarket
    
    Purchase
    
    Property Type
    
    Square Feet
    
    
    ($000s)707 Broadway
    
    San Diego
    
    Downtown
    
    January 5, 2005
    
    Office
    
    
    169,536
    
    
    $
    48,000
    (1)Arden Towers at Sorrento
    
    San Diego
    
    Sorrento Mesa
    
    March 22, 2005
    
    Office/Retail
    
    
    608,253
    
    
    
    184,8505670 Wilshire Boulevard
    
    Los Angeles
    
    Miracle Mile
    
    April 8, 2005
    
    Office
    
    
    409,118
    
    
    
    92,650
    (2)Agoura Hills Business Park
    
    Los Angeles
    
    Agoura Hills
    
    August 5, 2005
    
    Office
    
    
    115,227
    
    
    
    23,1751,302,134
    
    
    $
    348,675
 
 (1)
    
    Approximately $2.0 million of the acquisition price was funded through the issuance of
54,950 OP units at an average price of $37.27 per unit.(2)
    
    The gross acquisition price includes the assumption of a $51.5 million mortgage loan payable
secured by the property. In addition, approximately $12.5 million of the acquisition price
was funded from an escrow account to complete a like-kind exchange for a property sold in
December 2004. This amount has been included as part of restricted cash in our consolidated
balance sheet at December 31, 2004.  F-11
    Table of Contents  Discontinued Operations and Properties held for Disposition
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Discontinued Operations:Revenues
    
    $
    10,483
    
    
    $
    36,725
    
    
    $
    50,767Property operating expenses
    
    
    (4,128
    )
    
    
    (13,592
    )
    
    
    (17,355
    )Depreciation and amortization
    
    
    (1,287
    )
    
    
    (10,776
    )
    
    
    (13,431
    )Interest expense
    
    
    (245
    )
    
    
    (1,013
    )
    
    
    (1,031
    )Minority interest
    
    
    (1,112
    )
    
    
    (1,043
    )
    
    
    (643
    )Interest and other income
    
    
    3
    
    
    
    3
    
    
    
    3Discontinued operations, net of minority interest
    
    $
    3,714
    
    
    $
    10,304
    
    
    $
    18,310Gain on sale of discontinued properties
    
    $
    40,653
    
    
    $
    30,473
    
    
    $
    5,937
 Capitalized Interest
   Year Ended December 31,2005
    
    
    2004
    
    
    2003Total interest incurred
    
    $
    99,234
    
    
    $
    90,451
    
    
    $
    96,263Interest expensed as part of discontinued operations
    
    
    (245
    )
    
    
    (1,013
    )
    
    
    (1,031
    )Amount capitalized
    
    
    (805
    )
    
    
    (936
    )
    
    
    (2,496
    )Amount expensed
    
    $
    98,184
    
    
    $
    88,502
    
    
    $
    92,736
 Future Minimum Lease Payments
  2006
    
    $
    359,0532007
    
    
    302,9302008
    
    
    239,6962009
    
    
    177,4672010
    
    
    122,785Thereafter
    
    
    232,320Total
    
    $
    1,434,251
   2006
    
    $
    2,1872007
    
    
    2,2122008
    
    
    2,2122009
    
    
    2,2122010
    
    
    2,212Thereafter
    
    
    131,499Total
    
    $
    142,534
 F-12
    Table of Contents  4. Mortgage Loans and Unsecured Indebtedness
  Number ofAnnual Interest
    
    
    
    PropertiesDecember 31,
    
    
    December 31,
    
    
    Rate at
    
    Fixed/Floating
    
    Securing
    
    
    MaturityType of Debt
    
    2005
    
    
    2004
    
    
    December 31, 2005
    
    Rate
    
    Loan
    
    
    Date(in thousands)Mortgage Loans Payable:Mortgage Financing III(1)
    
    $
    129,919
    
    
    $
    132,323
    
    
    6.74%
    
    Fixed
    
    
    21
    
    
    
    4/08Mortgage Financing IV(1)
    
    
    106,283
    
    
    
    108,194
    
    
    6.61%
    
    Fixed
    
    
    8
    
    
    
    4/08Mortgage Financing V(1)
    
    
    100,912
    
    
    
    103,504
    
    
    6.94%
    
    Fixed
    
    
    12
    
    
    
    4/09Mortgage Financing VI(1)
    
    
    21,048
    
    
    
    21,325
    
    
    7.54%
    
    Fixed
    
    
    3
    
    
    
    4/095670 Wilshire(1), (2)
    
    
    55,655
    
    
    
    
    
    
    5.02%
    
    Fixed
    
    
    1
    
    
    
    9/28Activity Business Center(1), (3)
    
    
    
    
    
    
    7,222
    
    
    
    
    
    
    
    
    
    
    
    145 South Fairfax(1), (4)
    
    
    
    
    
    
    3,869
    
    
    
    
    
    
    
    
    
    
    
    Marin Corporate Center(1)
    
    
    2,434
    
    
    
    2,585
    
    
    9.00%
    
    Fixed
    
    
    1
    
    
    
    7/15Conejo Business Center(1)
    
    
    2,381
    
    
    
    2,531
    
    
    8.75%
    
    Fixed
    
    (Note 5)
    
    
    7/15Conejo Business Center(1)
    
    
    1,018
    
    
    
    1,086
    
    
    7.88%
    
    Fixed
    
    (Note 5)
    
    
    7/15419,650
    
    
    
    382,639Unsecured Lines of Credit:Wells Fargo  $310 mm(6)
    
    
    247,000
    
    
    
    111,500
    
    
    5.13%
    
    LIBOR +0.85% (Notes 7, 8)
    
    
    
    
    
    
    4/09City National Bank  $20 mm(6)
    
    
    12,500
    
    
    
    10,000
    
    
    5.16%
    
    LIBOR + 0.85%
    
    
    
    
    
    
    8/07259,500
    
    
    
    121,500Unsecured Loans:Wells Fargo Term Loan  $125 mm(6)
    
    
    125,000
    
    
    
    125,000
    
    
    5.67%
    
    Fixed (Note 9)
    
    
    
    
    
    
    2/12Wells Fargo Bridge Loan  $25 mm(6)
    
    
    25,000
    
    
    
    
    
    
    5.49%
    
    LIBOR + 1.05%
    
    
    
    
    
    
    4/06150,000
    
    
    
    125,000Unsecured Senior Notes:2005 Notes(10)
    
    
    
    
    
    
    199,974
    
    
    
    
    
    
    
    
    
    
    
    2007 Notes(11)
    
    
    149,347
    
    
    
    149,395
    
    
    7.00%
    
    Fixed
    
    
    
    
    
    
    11/072010 Notes(11)
    
    
    49,826
    
    
    
    49,785
    
    
    9.15%
    
    Fixed
    
    
    
    
    
    
    3/102010 Notes(11)
    
    
    99,596
    
    
    
    99,513
    
    
    8.50%
    
    Fixed
    
    
    
    
    
    
    11/102011 Notes(11)
    
    
    198,536
    
    
    
    198,278
    
    
    5.20%
    
    Fixed
    
    
    
    
    
    
    9/112015 Notes(11)
    
    
    297,366
    
    
    
    
    
    
    5.25%
    
    Fixed
    
    
    
    
    
    
    3/15794,671
    
    
    
    696,945Total Debt
    
    $
    1,623,821
    
    
    $
    1,326,084
 
 (1)
    
    Requires monthly payments of principal and interest.(2)
    
    In April 2005, we assumed this mortgage loan in conjunction with the acquisition of
an office building (5670 Wilshire). The stated interest rate of this loan is 8.50% and the
balance is approximately $51.1 million at December 31, 2005. This loan was recorded at its
fair market value at the date of acquisition and can be prepaid without penalty beginning
September 2008.(3)
    
    This loan was repaid in full on January 3, 2005.(4)
    
    This loan was repaid in full on August 11, 2005.(5)
    
    Both mortgage loans are secured by the Conejo Business Center property.(6)
    
    Requires monthly payments of interest only, with outstanding principal balance due
upon maturity.(7)
    
    This line of credit also has an annual 20 basis point facility fee on the entire
$310 million commitment amount.(8)
    
    We have entered into interest rate swap agreements that fixed the interest rate on
$50 million of the outstanding balance on this line of credit at 3.95% through April 2006.(9)
    
    We have entered into interest rate swap agreements that fixed the interest rate on
this loan at 4.55% in 2005, 4.70% from January through June 2006, 5.29% from June 2006
through May 2007, 5.55% from June 2007 to November 2008, 5.76% from December 2008 to May
2010 and 5.99% from June 2010 through February 2012.(10)
    
    These senior unsecured notes were redeemed on March 1, 2005.(11)
    
    Requires semi-annual interest payments only, with the principal balance due upon
maturity. F-13
    Table of Contents  Year
    
    Amount2006
    
    $
    34,1062007
    
    
    172,2812008
    
    
    281,5062009
    
    
    358,9362010
    
    
    149,944Thereafter
    
    
    627,048Total
    
    $
    1,623,821
 5. Stockholders Equity
        F-14
    Table of Contents  6. Commitments and Contingencies
 Capital Commitments
  Litigation
 Charter Township of Clinton Police and Fire Retirement System v. Arden
Realty, Inc., et al.
 Dwyer v. Arden Realty, Inc., et al. Charter Township Dwyer
   Concentration of Credit Risk
   7. Related Party Transactions
  F-15
    Table of Contents  8. Earnings Per Share
  2005
    
    
    2004
    
    
    2003Income from continuing operations
    
    $
    21,967
    
    
    $
    32,998
    
    
    $
    34,262Discontinued operations, net of minority interest
    
    
    3,714
    
    
    
    10,304
    
    
    
    18,310Loss from debt defeasance related to sales of discontinued properties
    
    
    (835
    )
    
    
    
    
    
    
    Gain on sale of discontinued properties
    
    
    40,653
    
    
    
    30,473
    
    
    
    5,937Net income
    
    $
    65,499
    
    
    $
    73,775
    
    
    $
    58,509Weighted average shares  basic
    
    
    66,611
    
    
    
    65,372
    
    
    
    63,553Weighted average diluted stock options and restricted stock
    
    
    463
    
    
    
    368
    
    
    
    262Weighted average shares  diluted
    
    
    67,074
    
    
    
    65,740
    
    
    
    63,815Basic net income per common share:Income from continuing operations
    
    $
    0.33
    
    
    $
    0.51
    
    
    $
    0.54Income from discontinued operations
    
    
    0.65
    
    
    
    0.62
    
    
    
    0.38Net income per common share  basic
    
    $
    0.98
    
    
    $
    1.13
    
    
    $
    0.92Diluted net income per common share:Income from continuing operations
    
    $
    0.33
    
    
    $
    0.50
    
    
    $
    0.54Income from discontinued operations
    
    
    0.65
    
    
    
    0.62
    
    
    
    0.38Net income per common share  diluted
    
    $
    0.98
    
    
    $
    1.12
    
    
    $
    0.92
  9. Income (Loss) from Taxable REIT Subsidiary
  2005
    
    
    2004
    
    
    2003Net loss from Next>edge
    
    $
    (2,293
    )
    
    $
    (960
    )
    
    $
    (1,135
    )Interest and other income
    
    
    700
    
    
    
    451
    
    
    
    732Interest income and other (loss)
    
    $
    (1,593
    )
    
    $
    (509
    )
    
    $
    (403
    )
 10. Stock Option Plan
  F-16
    Table of Contents  2005
    
    
    2004
    
    
    2003Weighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageOptions
    
    
    Exercise
    
    
    Options
    
    
    Exercise
    
    
    Options
    
    
    Exercise(000s)
    
    
    Price
    
    
    (000s)
    
    
    Price
    
    
    (000s)
    
    
    PriceOutstanding, beginning of period
    
    
    1,636
    
    
    $
    25.06
    
    
    
    3,426
    
    
    $
    24.77
    
    
    
    4,479
    
    
    $
    24.91Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268
    
    
    
    20.81Exercised
    
    
    (572
    )
    
    
    25.49
    
    
    
    (1,750
    )
    
    
    24.42
    
    
    
    (1,162
    )
    
    
    24.04Forfeited
    
    
    (134
    )
    
    
    23.33
    
    
    
    (40
    )
    
    
    28.12
    
    
    
    (159
    )
    
    
    27.37Outstanding at end of year
    
    
    930
    
    
    
    25.05
    
    
    
    1,636
    
    
    
    25.06
    
    
    
    3,426
    
    
    
    24.77Exercisable at end of the period
    
    
    793
    
    
    $
    25.78
    
    
    
    1,366
    
    
    $
    25.71
    
    
    
    2,952
    
    
    $
    25.03Weighted-average fair value of options granted
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    0.49
      2005
    
    
    2004
    
    
    2003Net income available to common stockholders, as reported
    
    $
    65,499
    
    
    $
    73,775
    
    
    $
    58,509Stock based employee compensation costs for options granted prior to 2003
assuming fair value method
    
    
    (11
    )
    
    
    (201
    )
    
    
    (843
    )Net income available to common stockholders, as adjusted
    
    $
    65,488
    
    
    $
    73,574
    
    
    $
    57,666Earnings per share:Basic as reported
    
    $
    0.98
    
    
    $
    1.13
    
    
    $
    0.92Basic as adjusted
    
    $
    0.98
    
    
    $
    1.13
    
    
    $
    0.91Diluted as reported
    
    $
    0.98
    
    
    $
    1.12
    
    
    $
    0.92Diluted as adjusted
    
    $
    0.98
    
    
    $
    1.12
    
    
    $
    0.90
 11. Employee Retirement Savings Plan
 4 01(k) Plan
  F-17
    Table of Contents  Deferred Compensation Plan
   12. Quarterly Results  unaudited
  For the Quarter Ended (in thousands, except per share amounts)March 31, 2005
    
    
    June 30, 2005
    
    
    September 30, 2005
    
    
    December 31, 2005Revenue
    
    $
    103,261
    
    
    $
    109,728
    
    
    $
    114,599
    
    
    $
    114,315Property operating expenses
    
    
    (34,066
    )
    
    
    (36,945
    )
    
    
    (39,771
    )
    
    
    (37,851
    )General and administrative
    
    
    (8,245
    )
    
    
    (7,560
    )
    
    
    (7,101
    )
    
    
    (10,665
    )Interest expense
    
    
    (22,926
    )
    
    
    (24,913
    )
    
    
    (25,030
    )
    
    
    (25,315
    )Depreciation and amortization
    
    
    (31,013
    )
    
    
    (35,880
    )
    
    
    (34,331
    )
    
    
    (36,161
    )Interest and other loss
    
    
    (251
    )
    
    
    (893
    )
    
    
    (289
    )
    
    
    (160
    )Minority interest
    
    
    (171
    )
    
    
    (89
    )
    
    
    (201
    )
    
    
    (109
    )Discontinued operations, net of minority interest
    
    
    952
    
    
    
    2,682
    
    
    
    80
    
    
    
    Gain on sale of discontinued properties
    
    
    2,057
    
    
    
    4,319
    
    
    
    33,923
    
    
    
    354Loss from debt defeasance related to sale of discontinued
properties
    
    
    (557
    )
    
    
    
    
    
    
    (278
    )
    
    
    Net Income
    
    $
    9,041
    
    
    $
    10,449
    
    
    $
    41,601
    
    
    $
    4,408Net income per share:Basic
    
    $
    0.14
    
    
    $
    0.16
    
    
    $
    0.62
    
    
    $
    0.07Diluted
    
    $
    0.14
    
    
    $
    0.16
    
    
    $
    0.62
    
    
    $
    0.07
 For the Quarter Ended (in thousands, except per share amounts)March 31, 2004
    
    
    June 30, 2004
    
    
    September 30, 2004
    
    
    December 31, 2004Revenue
    
    
    95,422
    
    
    
    96,296
    
    
    
    99,561
    
    
    
    101,722Property operating expenses
    
    
    (30,988
    )
    
    
    (31,152
    )
    
    
    (33,124
    )
    
    
    (32,560
    )General and administrative
    
    
    (4,484
    )
    
    
    (4,665
    )
    
    
    (4,823
    )
    
    
    (5,531
    )Interest expense
    
    
    (23,058
    )
    
    
    (20,931
    )
    
    
    (21,264
    )
    
    
    (23,249
    )Depreciation and amortization
    
    
    (27,426
    )
    
    
    (28,617
    )
    
    
    (29,414
    )
    
    
    (30,349
    )Interest and other income (loss)
    
    
    765
    
    
    
    (435
    )
    
    
    (179
    )
    
    
    (660
    )Impairment on investment in securities
    
    
    
    
    
    
    (2,700
    )
    
    
    
    
    
    
    Minority interest
    
    
    (1,311
    )
    
    
    (1,245
    )
    
    
    (2,398
    )
    
    
    (205
    )Discontinued operations, net of minority interest
    
    
    3,512
    
    
    
    2,176
    
    
    
    1,880
    
    
    
    2,736Gain on sale of discontinued properties
    
    
    6,429
    
    
    
    400
    
    
    
    937
    
    
    
    22,707Net Income
    
    
    18,861
    
    
    
    9,127
    
    
    
    11,176
    
    
    
    34,611Net income per share:Basic
    
    $
    0.29
    
    
    $
    0.14
    
    
    $
    0.17
    
    
    $
    0.53Diluted
    
    $
    0.29
    
    
    $
    0.14
    
    
    $
    0.17
    
    
    $
    0.52
  F-18
    Table of Contents  13. Schedule of Commercial Properties and Accumulated Depreciation
December 31, 2005
(in thousands, except square foot data)
 Initial Costs
    
    
    Basis Step Up
    
    
    Costs
    
    Total CostsCapitalizedSquare
    
    
    
    
    
    
    Buildings and
    
    
    
    
    
    
    Buildings and
    
    
    Subsequent to
    
    
    
    
    
    
    Buildings and
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    Year Built/Footage
    
    
    Land
    
    
    Improvements
    
    
    Land
    
    
    Improvements
    
    
    Acquisition(2)
    
    
    Land
    
    
    Improvements
    
    
    Total
    
    
    Depreciation
(1)
    
    
    Encumbrances
    
    
    Renovated(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (unaudited)Century Park Center
    
    
    245,381
    
    
    $
    7,190
    
    
    $
    17,262
    
    
    $
    
    
    
    $
    
    
    
    $
    12,523
    
    
    $
    7,190
    
    
    $
    29,785
    
    
    $
    36,975
    
    
    $
    9,393
    
    
    $
    13,000
    (3)
    
    1972/94Beverly Atrium
    
    
    59,542
    
    
    
    4,127
    
    
    
    11,524
    
    
    
    117
    
    
    
    326
    
    
    
    2,871
    
    
    
    4,244
    
    
    
    14,721
    
    
    
    18,965
    
    
    
    4,590
    
    
    
    
    
    
    1989Woodland Hills Financial Center
    
    
    228,687
    
    
    
    6,566
    
    
    
    14,765
    
    
    
    365
    
    
    
    880
    
    
    
    8,192
    
    
    
    6,931
    
    
    
    23,837
    
    
    
    30,768
    
    
    
    8,252
    
    
    
    
    
    
    1972/95Anaheim City Centre
    
    
    182,521
    
    
    
    515
    
    
    
    11,208
    
    
    
    94
    
    
    
    2,075
    
    
    
    4,577
    
    
    
    609
    
    
    
    17,860
    
    
    
    18,469
    
    
    
    5,748
    
    
    
    
    
    
    1986/91425 West Broadway
    
    
    72,426
    
    
    
    1,500
    
    
    
    4,462
    
    
    
    305
    
    
    
    918
    
    
    
    2,026
    
    
    
    1,805
    
    
    
    7,406
    
    
    
    9,211
    
    
    
    2,106
    
    
    
    
    
    
    19841950 Sawtelle
    
    
    103,673
    
    
    
    1,988
    
    
    
    7,268
    
    
    
    
    
    
    
    
    
    
    
    2,825
    
    
    
    1,988
    
    
    
    10,093
    
    
    
    12,081
    
    
    
    3,115
    
    
    
    6,552
    (3)
    
    1988/95Bristol Plaza
    
    
    84,565
    
    
    
    1,820
    
    
    
    3,381
    
    
    
    257
    
    
    
    485
    
    
    
    2,354
    
    
    
    2,077
    
    
    
    6,220
    
    
    
    8,297
    
    
    
    1,693
    
    
    
    
    
    
    198216000 Ventura
    
    
    175,242
    
    
    
    1,700
    
    
    
    17,145
    
    
    
    185
    
    
    
    1,929
    
    
    
    5,151
    
    
    
    1,885
    
    
    
    24,225
    
    
    
    26,110
    
    
    
    7,075
    
    
    
    11,119
    (3)
    
    1980/965000 East Spring
    
    
    167,149
    
    
    
    
    
    
    
    10,903
    
    
    
    
    
    
    
    424
    
    
    
    6,679
    
    
    
    
    
    
    
    18,006
    
    
    
    18,006
    
    
    
    5,605
    
    
    
    
    
    
    1989/9570 South Lake
    
    
    102,726
    
    
    
    1,360
    
    
    
    9,086
    
    
    
    
    
    
    
    
    
    
    
    2,951
    
    
    
    1,360
    
    
    
    12,037
    
    
    
    13,397
    
    
    
    3,332
    
    
    
    
    
    
    1982/94Westwood Terrace
    
    
    139,207
    
    
    
    2,103
    
    
    
    16,888
    
    
    
    
    
    
    
    
    
    
    
    4,121
    
    
    
    2,103
    
    
    
    21,009
    
    
    
    23,112
    
    
    
    5,874
    
    
    
    
    
    
    1988Westlake  5601 Lindero
    
    
    105,854
    
    
    
    2,576
    
    
    
    7,747
    
    
    
    
    
    
    
    
    
    
    
    3,582
    
    
    
    2,576
    
    
    
    11,329
    
    
    
    13,905
    
    
    
    3,672
    
    
    
    
    
    
    19896100 Wilshire
    
    
    207,658
    
    
    
    1,200
    
    
    
    19,886
    
    
    
    
    
    
    
    
    
    
    
    7,248
    
    
    
    1,200
    
    
    
    27,134
    
    
    
    28,334
    
    
    
    8,601
    
    
    
    
    
    
    1986Calabasas Commerce Center
    
    
    126,771
    
    
    
    1,262
    
    
    
    9,721
    
    
    
    
    
    
    
    
    
    
    
    3,060
    
    
    
    1,262
    
    
    
    12,781
    
    
    
    14,043
    
    
    
    3,837
    
    
    
    7,733
    (3)
    
    1990Long Beach Airport BldgD
    
    
    121,610
    
    
    
    
    
    
    
    14,457
    
    
    
    
    
    
    
    
    
    
    
    1,374
    
    
    
    
    
    
    
    15,831
    
    
    
    15,831
    
    
    
    3,781
    
    
    
    
    
    
    1987/95Long Beach Airport BldgF&G
    
    
    150,403
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    951
    
    
    
    
    
    
    
    951
    
    
    
    951
    
    
    
    95
    
    
    
    
    
    
    1987/95Skyview Center
    
    
    399,318
    
    
    
    6,514
    
    
    
    33,696
    
    
    
    
    
    
    
    
    
    
    
    10,411
    
    
    
    6,514
    
    
    
    44,107
    
    
    
    50,621
    
    
    
    12,100
    
    
    
    
    
    
    1981/87/95400 Corporate Pointe
    
    
    165,989
    
    
    
    3,383
    
    
    
    17,779
    
    
    
    74
    
    
    
    391
    
    
    
    6,750
    
    
    
    3,457
    
    
    
    24,920
    
    
    
    28,377
    
    
    
    6,477
    
    
    
    
    
    
    19879665 Wilshire
    
    
    160,502
    
    
    
    6,697
    
    
    
    22,574
    
    
    
    139
    
    
    
    473
    
    
    
    11,353
    
    
    
    6,836
    
    
    
    34,400
    
    
    
    41,236
    
    
    
    9,328
    
    
    
    
    
    
    1972/92/93701 B Street
    
    
    548,370
    
    
    
    3,722
    
    
    
    35,662
    
    
    
    64
    
    
    
    626
    
    
    
    15,820
    
    
    
    3,786
    
    
    
    52,108
    
    
    
    55,894
    
    
    
    14,221
    
    
    
    
    
    
    1982/96303 Glenoaks
    
    
    176,675
    
    
    
    6,500
    
    
    
    18,132
    
    
    
    
    
    
    
    
    
    
    
    6,887
    
    
    
    6,500
    
    
    
    25,019
    
    
    
    31,519
    
    
    
    6,906
    
    
    
    
    
    
    1983/9610351 Santa Monica
    
    
    97,169
    
    
    
    3,080
    
    
    
    8,014
    
    
    
    
    
    
    
    
    
    
    
    2,134
    
    
    
    3,080
    
    
    
    10,148
    
    
    
    13,228
    
    
    
    2,585
    
    
    
    5,290
    (3)
    
    19842730 Wilshire
    
    
    57,141
    
    
    
    3,515
    
    
    
    4,413
    
    
    
    
    
    
    
    
    
    
    
    1,454
    
    
    
    3,515
    
    
    
    5,867
    
    
    
    9,382
    
    
    
    1,544
    
    
    
    4,366
    (3)
    
    1985Grand Avenue Plaza
    
    
    81,593
    
    
    
    620
    
    
    
    2,909
    
    
    
    
    
    
    
    
    
    
    
    4,280
    
    
    
    620
    
    
    
    7,189
    
    
    
    7,809
    
    
    
    1,764
    
    
    
    5,601
    (3)
    
    1980/98Burbank Executive Plaza
    
    
    62,717
    
    
    
    1,100
    
    
    
    4,418
    
    
    
    
    
    
    
    
    
    
    
    3,033
    
    
    
    1,100
    
    
    
    7,451
    
    
    
    8,551
    
    
    
    2,378
    
    
    
    
    
    
    1983333 N. Glenoaks
    
    
    84,263
    
    
    
    1,500
    
    
    
    5,976
    
    
    
    
    
    
    
    
    
    
    
    3,095
    
    
    
    1,500
    
    
    
    9,071
    
    
    
    10,571
    
    
    
    2,594
    
    
    
    
    
    
    1978/83Center Promenade
    
    
    177,752
    
    
    
    2,310
    
    
    
    9,296
    
    
    
    
    
    
    
    
    
    
    
    3,554
    
    
    
    2,310
    
    
    
    12,850
    
    
    
    15,160
    
    
    
    3,447
    
    
    
    
    
    
    1988Los Angeles Corporate Center
    
    
    390,028
    
    
    
    26,781
    
    
    
    15,165
    
    
    
    
    
    
    
    
    
    
    
    10,628
    
    
    
    26,781
    
    
    
    25,793
    
    
    
    52,574
    
    
    
    7,560
    
    
    
    
    
    
    1984/865200 West Century
    
    
    321,608
    
    
    
    2,080
    
    
    
    9,510
    
    
    
    
    
    
    
    
    
    
    
    15,425
    
    
    
    2,080
    
    
    
    24,935
    
    
    
    27,015
    
    
    
    5,078
    
    
    
    
    
    
    1982/98/9915250 Ventura
    
    
    112,838
    
    
    
    2,560
    
    
    
    10,313
    
    
    
    
    
    
    
    
    
    
    
    4,261
    
    
    
    2,560
    
    
    
    14,574
    
    
    
    17,134
    
    
    
    3,978
    
    
    
    
    
    
    1970/90-9110350 Santa Monica
    
    
    42,967
    
    
    
    860
    
    
    
    3,458
    
    
    
    
    
    
    
    
    
    
    
    859
    
    
    
    860
    
    
    
    4,317
    
    
    
    5,177
    
    
    
    1,106
    
    
    
    
    
    
    1979535 N. Brand Blvd.
    
    
    106,657
    
    
    
    1,600
    
    
    
    8,427
    
    
    
    
    
    
    
    
    
    
    
    11,981
    
    
    
    1,600
    
    
    
    20,408
    
    
    
    22,008
    
    
    
    3,946
    
    
    
    
    
    
    1973/92/9910780 Santa Monica
    
    
    93,257
    
    
    
    2,625
    
    
    
    7,531
    
    
    
    
    
    
    
    
    
    
    
    2,965
    
    
    
    2,625
    
    
    
    10,496
    
    
    
    13,121
    
    
    
    3,128
    
    
    
    
    
    
    1984Clarendon Crest
    
    
    44,317
    
    
    
    1,300
    
    
    
    3,741
    
    
    
    
    
    
    
    
    
    
    
    1,528
    
    
    
    1,300
    
    
    
    5,269
    
    
    
    6,569
    
    
    
    1,421
    
    
    
    3,066
    (3)
    
    1990Noble Professional Center
    
    
    52,929
    
    
    
    1,657
    
    
    
    4,817
    
    
    
    
    
    
    
    
    
    
    
    1,340
    
    
    
    1,657
    
    
    
    6,157
    
    
    
    7,814
    
    
    
    1,630
    
    
    
    3,418
    (3)
    
    1985/93South Bay Centre
    
    
    204,617
    
    
    
    4,775
    
    
    
    13,646
    
    
    
    
    
    
    
    
    
    
    
    5,661
    
    
    
    4,775
    
    
    
    19,307
    
    
    
    24,082
    
    
    
    5,302
    
    
    
    12,109
    (3)
    
    19848383 Wilshire
    
    
    417,459
    
    
    
    13,570
    
    
    
    43,213
    
    
    
    
    
    
    
    
    
    
    
    14,586
    
    
    
    13,570
    
    
    
    57,799
    
    
    
    71,369
    
    
    
    14,994
    
    
    
    
    
    
    1971/93Centerpointe La Palma
    
    
    602,516
    
    
    
    16,011
    
    
    
    60,874
    
    
    
    
    
    
    
    
    
    
    
    13,182
    
    
    
    16,011
    
    
    
    74,056
    
    
    
    90,067
    
    
    
    18,326
    
    
    
    32,336
    (3)
    
    1986/88/90299 N. Euclid
    
    
    74,689
    
    
    
    1,050
    
    
    
    5,738
    
    
    
    
    
    
    
    
    
    
    
    5,826
    
    
    
    1,050
    
    
    
    11,564
    
    
    
    12,614
    
    
    
    3,271
    
    
    
    
    
    
    1983/992800 28th Street
    
    
    108,007
    
    
    
    2,938
    
    
    
    8,425
    
    
    
    
    
    
    
    
    
    
    
    4,128
    
    
    
    2,938
    
    
    
    12,553
    
    
    
    15,491
    
    
    
    3,393
    
    
    
    
    
    
    19791000 Town Center
    
    
    108,358
    
    
    
    2,800
    
    
    
    10,638
    
    
    
    
    
    
    
    
    
    
    
    2,966
    
    
    
    2,800
    
    
    
    13,604
    
    
    
    16,404
    
    
    
    3,173
    
    
    
    
    
    
    1989Mariner Court
    
    
    104,818
    
    
    
    2,350
    
    
    
    9,176
    
    
    
    
    
    
    
    
    
    
    
    1,591
    
    
    
    2,350
    
    
    
    10,767
    
    
    
    13,117
    
    
    
    2,702
    
    
    
    6,493
    (3)
    
    1989Pacific Gateway
    
    
    229,505
    
    
    
    6,288
    
    
    
    18,417
    
    
    
    
    
    
    
    
    
    
    
    7,305
    
    
    
    6,288
    
    
    
    25,722
    
    
    
    32,010
    
    
    
    5,645
    
    
    
    
    
    
    1982/90Crown Cabot Financial Center
    
    
    174,173
    
    
    
    7,056
    
    
    
    20,667
    
    
    
    
    
    
    
    
    
    
    
    9,334
    
    
    
    7,056
    
    
    
    30,001
    
    
    
    37,057
    
    
    
    8,098
    
    
    
    
    
    
    1989120 S. Spalding
    
    
    63,276
    
    
    
    2,775
    
    
    
    8,287
    
    
    
    
    
    
    
    
    
    
    
    5,032
    
    
    
    2,775
    
    
    
    13,319
    
    
    
    16,094
    
    
    
    3,744
    
    
    
    7,744
    (3)
    
    19841370 Valley Vista
    
    
    86,298
    
    
    
    2,698
    
    
    
    7,900
    
    
    
    
    
    
    
    
    
    
    
    1,711
    
    
    
    2,698
    
    
    
    9,611
    
    
    
    12,309
    
    
    
    2,411
    
    
    
    5,281
    (3)
    
    1988Foremost Professional Plaza
    
    
    59,681
    
    
    
    2,049
    
    
    
    6,001
    
    
    
    
    
    
    
    
    
    
    
    1,077
    
    
    
    2,049
    
    
    
    7,078
    
    
    
    9,127
    
    
    
    1,684
    
    
    
    8,506
    
    
    1992
 F-19
    Table of Contents  Initial Costs
    
    
    Basis Step Up
    
    
    Costs
    
    
    Total CostsCapitalizedSquare
    
    
    
    
    
    
    Buildings and
    
    
    
    
    
    
    Buildings and
    
    
    Subsequent to
    
    
    
    
    
    
    Buildings and
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    Year Built/Footage
    
    
    Land
    
    
    Improvements
    
    
    Land
    
    
    Improvements
    
    
    Acquisition(2)
    
    
    Land
    
    
    Improvements
    
    
    Total
    
    
    Deorecuation(1)
    
    
    Encumbrances
    
    
    Renovated(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (unaudited)Northpoint
    
    
    103,015
    
    
    $
    1,800
    
    
    $
    19,022
    
    
    $
    
    
    
    $
    
    
    
    $
    4,737
    
    
    $
    1,800
    
    
    $
    23,759
    
    
    $
    25,559
    
    
    $
    5,372
    
    
    $
    
    
    
    1991Conejo Business Center
    
    
    68,328
    
    
    
    2,489
    
    
    
    6,960
    
    
    
    
    
    
    
    
    
    
    
    1,907
    
    
    
    2,489
    
    
    
    8,867
    
    
    
    11,356
    
    
    
    2,284
    
    
    
    3,399
    (3)
    
    1991Marin Corporate Center
    
    
    50,656
    
    
    
    1,956
    
    
    
    5,589
    
    
    
    
    
    
    
    
    
    
    
    1,321
    
    
    
    1,956
    
    
    
    6,910
    
    
    
    8,866
    
    
    
    1,359
    
    
    
    2,434
    (3)
    
    1986Bernardo Regency
    
    
    48,026
    
    
    
    1,625
    
    
    
    4,764
    
    
    
    
    
    
    
    
    
    
    
    1,777
    
    
    
    1,625
    
    
    
    6,541
    
    
    
    8,166
    
    
    
    1,723
    
    
    
    
    
    
    1986Fountain Valley City Centre
    
    
    303,072
    
    
    
    8,250
    
    
    
    23,513
    
    
    
    
    
    
    
    
    
    
    
    9,757
    
    
    
    8,250
    
    
    
    33,270
    
    
    
    41,520
    
    
    
    7,382
    
    
    
    
    
    
    1982Wilshire Pacific Plaza
    
    
    103,529
    
    
    
    3,750
    
    
    
    10,996
    
    
    
    
    
    
    
    
    
    
    
    4,238
    
    
    
    3,750
    
    
    
    15,234
    
    
    
    18,984
    
    
    
    3,993
    
    
    
    
    
    
    1976/87World Savings Center
    
    
    469,710
    
    
    
    
    
    
    
    106,259
    
    
    
    
    
    
    
    
    
    
    
    32,996
    
    
    
    
    
    
    
    139,255
    
    
    
    139,255
    
    
    
    30,993
    
    
    
    
    
    
    1983Sunset Point Plaza
    
    
    59,258
    
    
    
    2,075
    
    
    
    6,077
    
    
    
    
    
    
    
    
    
    
    
    1,187
    
    
    
    2,075
    
    
    
    7,264
    
    
    
    9,339
    
    
    
    1,606
    
    
    
    3,299
    (3)
    
    1988Westlake Gardens
    
    
    47,440
    
    
    
    1,831
    
    
    
    5,405
    
    
    
    
    
    
    
    
    
    
    
    2,067
    
    
    
    1,831
    
    
    
    7,472
    
    
    
    9,303
    
    
    
    2,159
    
    
    
    
    
    
    19989100 Wilshire
    
    
    327,697
    
    
    
    16,250
    
    
    
    47,593
    
    
    
    
    
    
    
    
    
    
    
    12,870
    
    
    
    16,250
    
    
    
    60,463
    
    
    
    76,713
    
    
    
    14,508
    
    
    
    
    
    
    1971/90Westwood Center
    
    
    313,304
    
    
    
    3,159
    
    
    
    24,374
    
    
    
    
    
    
    
    
    
    
    
    85,921
    
    
    
    3,159
    
    
    
    110,295
    
    
    
    113,454
    
    
    
    16,346
    
    
    
    
    
    
    1965/20001919 Santa Monica
    
    
    43,628
    
    
    
    2,580
    
    
    
    7,623
    
    
    
    
    
    
    
    
    
    
    
    1,700
    
    
    
    2,580
    
    
    
    9,323
    
    
    
    11,903
    
    
    
    2,014
    
    
    
    3,554
    (3)
    
    1991600 Corporate Pointe
    
    
    276,516
    
    
    
    8,575
    
    
    
    34,632
    
    
    
    
    
    
    
    
    
    
    
    8,385
    
    
    
    8,575
    
    
    
    43,017
    
    
    
    51,592
    
    
    
    10,021
    
    
    
    16,910
    (3)
    
    1989150 East Colorado Boulevard
    
    
    61,803
    
    
    
    1,988
    
    
    
    5,880
    
    
    
    
    
    
    
    
    
    
    
    2,637
    
    
    
    1,988
    
    
    
    8,517
    
    
    
    10,505
    
    
    
    2,354
    
    
    
    4,519
    (3)
    
    1979/975161 Lankershim
    
    
    181,757
    
    
    
    5,016
    
    
    
    24,908
    
    
    
    
    
    
    
    
    
    
    
    4,632
    
    
    
    5,016
    
    
    
    29,540
    
    
    
    34,556
    
    
    
    6,719
    
    
    
    12,956
    (3)
    
    1985/97Huntington Beach Plaza
    
    
    54,254
    
    
    
    1,109
    
    
    
    3,284
    
    
    
    
    
    
    
    
    
    
    
    1,366
    
    
    
    1,109
    
    
    
    4,650
    
    
    
    5,759
    
    
    
    1,275
    
    
    
    
    
    
    1984/96Fountain Valley Plaza
    
    
    107,498
    
    
    
    2,949
    
    
    
    8,728
    
    
    
    
    
    
    
    
    
    
    
    4,283
    
    
    
    2,949
    
    
    
    13,011
    
    
    
    15,960
    
    
    
    2,710
    
    
    
    4,614
    (3)
    
    1982Newport Irvine Center
    
    
    73,310
    
    
    
    2,215
    
    
    
    6,554
    
    
    
    
    
    
    
    
    
    
    
    1,915
    
    
    
    2,215
    
    
    
    8,469
    
    
    
    10,684
    
    
    
    1,957
    
    
    
    3,096
    (3)
    
    1981/97Von Karman Corporate Center
    
    
    444,968
    
    
    
    11,513
    
    
    
    34,077
    
    
    
    
    
    
    
    
    
    
    
    15,450
    
    
    
    11,513
    
    
    
    49,527
    
    
    
    61,040
    
    
    
    11,534
    
    
    
    18,263
    (3)
    
    1981/84South Coast Executive Center
    
    
    61,994
    
    
    
    1,563
    
    
    
    4,526
    
    
    
    
    
    
    
    
    
    
    
    1,391
    
    
    
    1,563
    
    
    
    5,917
    
    
    
    7,480
    
    
    
    1,360
    
    
    
    2,159
    (3)
    
    1979/97City Centre I
    
    
    146,698
    
    
    
    4,792
    
    
    
    14,172
    
    
    
    
    
    
    
    
    
    
    
    4,584
    
    
    
    4,792
    
    
    
    18,756
    
    
    
    23,548
    
    
    
    4,336
    
    
    
    6,735
    (3)
    
    1985/97Orange Financial Center
    
    
    310,020
    
    
    
    10,379
    
    
    
    34,714
    
    
    
    
    
    
    
    
    
    
    
    11,029
    
    
    
    10,379
    
    
    
    45,743
    
    
    
    56,122
    
    
    
    11,343
    
    
    
    17,358
    (3)
    
    1985/95Carlsbad Corporate Center
    
    
    126,280
    
    
    
    3,722
    
    
    
    12,104
    
    
    
    
    
    
    
    
    
    
    
    8,027
    
    
    
    3,722
    
    
    
    20,131
    
    
    
    23,853
    
    
    
    4,048
    
    
    
    8,904
    (3)
    
    1996Balboa Corporate Center
    
    
    69,734
    
    
    
    2,759
    
    
    
    7,884
    
    
    
    
    
    
    
    
    
    
    
    1,968
    
    
    
    2,759
    
    
    
    9,852
    
    
    
    12,611
    
    
    
    1,948
    
    
    
    5,440
    (3)
    
    1990Panorama Corporate Center
    
    
    133,149
    
    
    
    6,512
    
    
    
    19,249
    
    
    
    
    
    
    
    
    
    
    
    4,397
    
    
    
    6,512
    
    
    
    23,646
    
    
    
    30,158
    
    
    
    5,334
    
    
    
    12,381
    (3)
    
    1991Ruffin Corporate Center
    
    
    45,059
    
    
    
    1,766
    
    
    
    5,222
    
    
    
    
    
    
    
    
    
    
    
    71
    
    
    
    1,766
    
    
    
    5,293
    
    
    
    7,059
    
    
    
    1,080
    
    
    
    3,247
    (3)
    
    1990Skypark Office Plaza
    
    
    203,739
    
    
    
    5,733
    
    
    
    21,047
    
    
    
    
    
    
    
    
    
    
    
    7,485
    
    
    
    5,733
    
    
    
    28,532
    
    
    
    34,265
    
    
    
    6,993
    
    
    
    
    
    
    1986Governor Park Plaza
    
    
    104,254
    
    
    
    3,382
    
    
    
    10,005
    
    
    
    
    
    
    
    
    
    
    
    3,329
    
    
    
    3,382
    
    
    
    13,334
    
    
    
    16,716
    
    
    
    3,591
    
    
    
    4,804
    (3)
    
    19865120 Shoreham
    
    
    38,060
    
    
    
    1,224
    
    
    
    3,621
    
    
    
    
    
    
    
    
    
    
    
    634
    
    
    
    1,224
    
    
    
    4,255
    
    
    
    5,479
    
    
    
    919
    
    
    
    2,830
    (3)
    
    1984Torreyana Science Park
    
    
    81,204
    
    
    
    5,035
    
    
    
    14,878
    
    
    
    
    
    
    
    
    
    
    
    678
    
    
    
    5,035
    
    
    
    15,556
    
    
    
    20,591
    
    
    
    3,236
    
    
    
    9,069
    (3)
    
    1980/97Camarillo Business Park
    
    
    152,969
    
    
    
    3,522
    
    
    
    10,427
    
    
    
    
    
    
    
    
    
    
    
    3,290
    
    
    
    3,522
    
    
    
    13,717
    
    
    
    17,239
    
    
    
    3,405
    
    
    
    7,897
    (3)
    
    1984/975702 Bolsa
    
    
    27,731
    
    
    
    589
    
    
    
    1,745
    
    
    
    
    
    
    
    
    
    
    
    173
    
    
    
    589
    
    
    
    1,918
    
    
    
    2,507
    
    
    
    443
    
    
    
    899
    (3)
    
    1987/975672 Bolsa
    
    
    12,110
    
    
    
    254
    
    
    
    753
    
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    254
    
    
    
    816
    
    
    
    1,070
    
    
    
    183
    
    
    
    315
    (3)
    
    19875632 Bolsa
    
    
    21,568
    
    
    
    458
    
    
    
    1,358
    
    
    
    
    
    
    
    
    
    
    
    88
    
    
    
    458
    
    
    
    1,446
    
    
    
    1,904
    
    
    
    313
    
    
    
    807
    (3)
    
    1987Huntington Commerce Center
    
    
    68,793
    
    
    
    992
    
    
    
    2,941
    
    
    
    
    
    
    
    
    
    
    
    543
    
    
    
    992
    
    
    
    3,484
    
    
    
    4,476
    
    
    
    811
    
    
    
    
    
    
    1987Savi Tech Center
    
    
    372,119
    
    
    
    8,280
    
    
    
    24,512
    
    
    
    
    
    
    
    
    
    
    
    15,044
    
    
    
    8,280
    
    
    
    39,556
    
    
    
    47,836
    
    
    
    7,130
    
    
    
    14,060
    (3)
    
    1989/2005Yorba Linda Business Park
    
    
    165,772
    
    
    
    2,629
    
    
    
    7,796
    
    
    
    
    
    
    
    
    
    
    
    1,414
    
    
    
    2,629
    
    
    
    9,210
    
    
    
    11,839
    
    
    
    2,172
    
    
    
    
    
    
    1988Cymer Technology Center
    
    
    155,612
    
    
    
    5,446
    
    
    
    16,109
    
    
    
    
    
    
    
    
    
    
    
    2,818
    
    
    
    5,446
    
    
    
    18,927
    
    
    
    24,373
    
    
    
    3,790
    
    
    
    10,422
    (3)
    
    1986Poway Industrial
    
    
    112,000
    
    
    
    1,876
    
    
    
    5,561
    
    
    
    
    
    
    
    
    
    
    
    391
    
    
    
    1,876
    
    
    
    5,952
    
    
    
    7,828
    
    
    
    1,221
    
    
    
    
    
    
    1991/9610180 Scripps Ranch
    
    
    43,560
    
    
    
    1,165
    
    
    
    3,448
    
    
    
    
    
    
    
    
    
    
    
    472
    
    
    
    1,165
    
    
    
    3,920
    
    
    
    5,085
    
    
    
    780
    
    
    
    1,906
    (3)
    
    1978/96Via Frontera
    
    
    78,819
    
    
    
    1,792
    
    
    
    5,306
    
    
    
    
    
    
    
    
    
    
    
    1,245
    
    
    
    1,792
    
    
    
    6,551
    
    
    
    8,343
    
    
    
    1,657
    
    
    
    
    
    
    1982/97Westridge
    
    
    48,955
    
    
    
    1,807
    
    
    
    5,345
    
    
    
    
    
    
    
    
    
    
    
    619
    
    
    
    1,807
    
    
    
    5,964
    
    
    
    7,771
    
    
    
    1,319
    
    
    
    2,837
    (3)
    
    1984/966060 Center Drive
    
    
    256,739
    
    
    
    4,299
    
    
    
    48,725
    
    
    
    
    
    
    
    
    
    
    
    14,354
    
    
    
    4,299
    
    
    
    63,079
    
    
    
    67,378
    
    
    
    8,630
    
    
    
    
    
    
    2000Howard Hughes  Spectrum
Club
    
    
    36,959
    
    
    
    2,500
    
    
    
    7,500
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    2,500
    
    
    
    7,530
    
    
    
    10,030
    
    
    
    1,464
    
    
    
    
    
    
    19936080 Center Drive
    
    
    286,210
    
    
    
    5,082
    
    
    
    49,882
    
    
    
    
    
    
    
    
    
    
    
    24,636
    
    
    
    5,082
    
    
    
    74,518
    
    
    
    79,600
    
    
    
    10,287
    
    
    
    
    
    
    20016100 Center Drive
    
    
    285,516
    
    
    
    2,513
    
    
    
    56,850
    
    
    
    
    
    
    
    
    
    
    
    25,130
    
    
    
    2,513
    
    
    
    81,980
    
    
    
    84,493
    
    
    
    6,633
    
    
    
    
    
    
    2002
 F-20
    Table of Contents  Initial Costs
    
    
    Basis Step Up
    
    
    Costs
    
    
    Total CostsCapitalizedSquare
    
    
    
    
    
    
    Buildings and
    
    
    
    
    
    
    Buildings and
    
    
    Subsequent to
    
    
    
    
    
    
    Buildings and
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    Year Built/Footage
    
    
    Land
    
    
    Improvements
    
    
    Land
    
    
    Improvements
    
    
    Acquisition(2)
    
    
    Land
    
    
    Improvements
    
    
    Total
    
    
    Deorecuation(1)
    
    
    Encumbrances
    
    
    Renovated(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (unaudited)11075 Santa Monica
    
    
    35,822
    
    
    $
    1,225
    
    
    $
    3,588
    
    
    $
    
    
    
    $
    
    
    
    $
    1,403
    
    
    $
    1,225
    
    
    $
    4,991
    
    
    $
    6,216
    
    
    $
    1,438
    
    
    $
    
    
    
    1983Continental Grand Plaza
    
    
    235,246
    
    
    
    7,125
    
    
    
    39,416
    
    
    
    
    
    
    
    
    
    
    
    9,375
    
    
    
    7,125
    
    
    
    48,791
    
    
    
    55,916
    
    
    
    11,321
    
    
    
    25,360
    (3)
    
    1986Calabasas Tech
    
    
    284,822
    
    
    
    11,513
    
    
    
    32,696
    
    
    
    
    
    
    
    
    
    
    
    8,181
    
    
    
    11,513
    
    
    
    40,877
    
    
    
    52,390
    
    
    
    9,904
    
    
    
    
    
    
    1990/2001Genesee Executive Plaza
    
    
    158,592
    
    
    
    6,750
    
    
    
    19,691
    
    
    
    
    
    
    
    
    
    
    
    6,373
    
    
    
    6,750
    
    
    
    26,064
    
    
    
    32,814
    
    
    
    6,550
    
    
    
    15,510
    (3)
    
    1984Solar Drive Business
Center
    
    
    137,181
    
    
    
    4,250
    
    
    
    12,447
    
    
    
    
    
    
    
    
    
    
    
    2,083
    
    
    
    4,250
    
    
    
    14,530
    
    
    
    18,780
    
    
    
    3,173
    
    
    
    
    
    
    1982601 S. Glenoaks
    
    
    74,654
    
    
    
    2,450
    
    
    
    7,132
    
    
    
    
    
    
    
    
    
    
    
    2,124
    
    
    
    2,450
    
    
    
    9,256
    
    
    
    11,706
    
    
    
    1,898
    
    
    
    5,397
    (3)
    
    1990Tourney Pointe
    
    
    212,021
    
    
    
    6,047
    
    
    
    20,312
    
    
    
    
    
    
    
    
    
    
    
    12,344
    
    
    
    6,047
    
    
    
    32,656
    
    
    
    38,703
    
    
    
    7,520
    
    
    
    
    
    
    1985/98/2000Hillside Corporate Center
    
    
    60,803
    
    
    
    2,213
    
    
    
    7,336
    
    
    
    
    
    
    
    
    
    
    
    2,280
    
    
    
    2,213
    
    
    
    9,616
    
    
    
    11,829
    
    
    
    2,162
    
    
    
    
    
    
    1998Westlake Gardens II
    
    
    48,836
    
    
    
    1,831
    
    
    
    5,493
    
    
    
    
    
    
    
    
    
    
    
    1,603
    
    
    
    1,831
    
    
    
    7,096
    
    
    
    8,927
    
    
    
    1,679
    
    
    
    
    
    
    1999Howard Hughes Tower
    
    
    317,729
    
    
    
    5,830
    
    
    
    44,839
    
    
    
    
    
    
    
    
    
    
    
    14,157
    
    
    
    5,830
    
    
    
    58,996
    
    
    
    64,826
    
    
    
    13,582
    
    
    
    
    
    
    19872001 Wilshire Blvd
    
    
    104,528
    
    
    
    5,006
    
    
    
    14,540
    
    
    
    
    
    
    
    
    
    
    
    1,986
    
    
    
    5,006
    
    
    
    16,526
    
    
    
    21,532
    
    
    
    3,053
    
    
    
    
    
    
    1980Carmel Valley Centre
    
    
    107,076
    
    
    
    4,900
    
    
    
    23,336
    
    
    
    
    
    
    
    
    
    
    
    3,082
    
    
    
    4,900
    
    
    
    26,418
    
    
    
    31,318
    
    
    
    2,224
    
    
    
    
    
    
    1987/89Carmel View Office Plaza
    
    
    77,732
    
    
    
    3,100
    
    
    
    9,342
    
    
    
    
    
    
    
    
    
    
    
    1,338
    
    
    
    3,100
    
    
    
    10,680
    
    
    
    13,780
    
    
    
    1,066
    
    
    
    
    
    
    1985Crossroads
    
    
    134,688
    
    
    
    3,950
    
    
    
    12,810
    
    
    
    
    
    
    
    
    
    
    
    3,405
    
    
    
    3,950
    
    
    
    16,215
    
    
    
    20,165
    
    
    
    1,700
    
    
    
    
    
    
    1979Governor Executive Centre
    
    
    52,910
    
    
    
    1,500
    
    
    
    9,670
    
    
    
    
    
    
    
    
    
    
    
    1,053
    
    
    
    1,500
    
    
    
    10,723
    
    
    
    12,223
    
    
    
    833
    
    
    
    
    
    
    1988Gateway Towers
    
    
    439,084
    
    
    
    5,585
    
    
    
    56,892
    
    
    
    
    
    
    
    
    
    
    
    6,040
    
    
    
    5,585
    
    
    
    62,932
    
    
    
    68,517
    
    
    
    5,466
    
    
    
    
    
    
    1984/86Governor Executive Centre
II
    
    
    103,554
    
    
    
    1,959
    
    
    
    17,958
    
    
    
    
    
    
    
    
    
    
    
    2,545
    
    
    
    1,959
    
    
    
    20,503
    
    
    
    22,462
    
    
    
    2,218
    
    
    
    
    
    
    1989Homestore
    
    
    137,762
    
    
    
    9,128
    
    
    
    19,253
    
    
    
    
    
    
    
    
    
    
    
    3,804
    
    
    
    9,128
    
    
    
    23,057
    
    
    
    32,185
    
    
    
    1,913
    
    
    
    
    
    
    2000Warner Corporate Center
    
    
    253,032
    
    
    
    2,860
    
    
    
    53,732
    
    
    
    
    
    
    
    
    
    
    
    8,689
    
    
    
    2,860
    
    
    
    62,421
    
    
    
    65,281
    
    
    
    4,094
    
    
    
    
    
    
    1988707 Broadway
    
    
    169,536
    
    
    
    6,700
    
    
    
    37,016
    
    
    
    
    
    
    
    
    
    
    
    8,071
    
    
    
    6,700
    
    
    
    45,087
    
    
    
    51,787
    
    
    
    2,838
    
    
    
    
    
    
    1961/2001Arden Towers at Sorrento
    
    
    608,253
    
    
    
    29,451
    
    
    
    144,314
    
    
    
    
    
    
    
    
    
    
    
    14,377
    
    
    
    29,451
    
    
    
    158,691
    
    
    
    188,142
    
    
    
    5,516
    
    
    
    
    
    
    1989/91/20015670 Wilshire Boulevard
    
    
    409,118
    
    
    
    18,100
    
    
    
    68,717
    
    
    
    
    
    
    
    
    
    
    
    12,776
    
    
    
    18,100
    
    
    
    81,493
    
    
    
    99,593
    
    
    
    3,068
    
    
    
    55,655
    (3)
    
    1964/91Agoura Hills Business Park
    
    
    115,227
    
    
    
    6,210
    
    
    
    14,938
    
    
    
    
    
    
    
    
    
    
    
    2,835
    
    
    
    6,210
    
    
    
    17,773
    
    
    
    23,983
    
    
    
    537
    
    
    
    
    
    
    198818,544,500
    
    
    $
    493,555
    
    
    $
    2,071,902
    
    
    $
    1,600
    
    
    $
    8,527
    
    
    $
    723,615
    
    
    $
    495,155
    
    
    $
    2,804,044
    
    
    $
    3,299,199
    
    
    $
    555,191
    
    
    $
    419,650
 
 (1)
    
    The depreciable lives for buildings and improvements and furniture, fixtures and equipment
range from five to forty seven years. Tenant improvements and leasing costs are depreciated
over the remaining term of the lease.(2)
    
    Amounts shown net of write-offs of fully depreciated assets and include total capitalized
interest of $55.4 million.(3)
    
    All of these properties are collateral for our $419.6 million mortgage financings. The
encumbrance allocated to an individual property is based on the related individual release
price. F-21
    Table of Contents  ARDEN REALTY, INC.
 13. Schedule of Commercial Properties and Accumulated Depreciation (continued)
  Arden Realty, Inc.For the Years Ended December 31,2005
    
    
    2004
    
    
    2003Commercial Properties:Balance at beginning of period
    
    $
    3,003,333
    
    
    $
    3,008,081
    
    
    $
    3,045,208Improvements
    
    
    96,268
    
    
    
    93,811
    
    
    
    77,532Disposition of property
    
    
    (126,250
    )
    
    
    (196,999
    )
    
    
    (97,632
    )Write offs of fully depreciated assets
    
    
    (48,581
    )
    
    
    (65,591
    )
    
    
    (37,913
    )Direct write offs
    
    
    (3,543
    )
    
    
    
    
    
    
    Acquisition of properties
    
    
    360,518
    
    
    
    97,503
    
    
    
    22,054Transfers from (to) properties under development and land available for
development
    
    
    17,454
    
    
    
    66,528
    
    
    
    Reclassification to other assets
    
    
    
    
    
    
    
    
    
    
    (1,168
    )Balance at end of period
    
    $
    3,299,199
    
    
    $
    3,003,333
    
    
    $
    3,008,081Accumulated Depreciation:Balance at beginning of period
    
    $
    (491,442
    )
    
    $
    (460,732
    )
    
    $
    (392,611
    )Depreciation for period
    
    
    (133,756
    )
    
    
    (125,315
    )
    
    
    (118,416
    )Disposition of property
    
    
    22,585
    
    
    
    29,817
    
    
    
    12,325Write offs of fully depreciated assets
    
    
    48,581
    
    
    
    65,591
    
    
    
    37,913Transfers to (from) properties under development and land available for
development
    
    
    (1,159
    )
    
    
    (803
    )
    
    
    Reclassification to other assets
    
    
    
    
    
    
    
    
    
    
    57Balance at end of period
    
    $
    (555,191
    )
    
    $
    (491,442
    )
    
    $
    (460,732
    )
 F-22