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Securities and Exchange Commission

Washington, D.C. 20549




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FORM 10-K



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|  |                                                     
|- | ----------------------------------------------------
|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES AND EXCHANGE ACT OF 1934.


For the fiscal year ended December 31,
2001

OR



|  |                                                         
|- | --------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES AND EXCHANGE ACT OF 1934


For the transition period from

to
 .

Commission File Number 1-12193

ARDEN REALTY, INC.

(Exact name of registrant as specified in its
charter)


|                                                                |  |                           
|--------------------------------------------------------------- |  | --------------------------
|Maryland                                                        |  | 95-4578533                
|(State or other jurisdiction of
	incorporation or organization) |  | (IRS Employer I.D. Number)

11601 Wilshire Boulevard Fourth
Floor

Los Angeles, California 90025-1740


(address of principal executive
office)


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 registered
|                                |  |                                          
|Common Stock, $.01 par value    |  | New York Stock Exchange                  
|Preferred Stock Purchase Rights |  | New York Stock Exchange                  

Securities registered pursuant to
Section 12(g) of the act: None

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

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

The aggregate market value of the shares of
common stock held by non-affiliates was approximately
$1.8 billion based on the closing price on the New York
Stock Exchange for such shares on March 28, 2002.

The number of the Registrants shares of
common stock outstanding was 64,427,210 as of March 28,
2002.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this report incorporates
information by reference from the definitive Proxy Statement for
the 2002 Annual Meeting of Stockholders.



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TABLE OF CONTENTS



|                                                              |                                                                                             |  |  |  |  |  |  | 
|------------------------------------------------------------- | ------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                                       
|                                                              | ITEM 2.Properties                                                                          
|                                                              | ITEM 4.Submission of Matters to a Vote of Security Holders                                 
|PART II                                                      
|                                                              | ITEM 5.Market for Registrants Common Equity and Related Stockholder Matters               
|                                                              | ITEM 6.Selected Financial Data                                                             
|Properties Owned for all of 1999 and 2000                    
|                                                              | ITEM 8.Financial Statements and Supplementary Data                                         
|                                                              | ITEM 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|PART III                                                     
|                                                              | ITEM 10.Directors and Executive Officers of the Registrant                                 
|                                                              | ITEM 11.Executive Compensation                                                             
|                                                              | ITEM 12.Security Ownership of Certain Beneficial Owners and Management                     
|                                                              | ITEM 13.Certain Relationships and Related Transactions                                     
|PART IV                                                      
|                                                              | ITEM 14.Exhibits, Financial Statements, and Reports on Form 8-K                            
|ARDEN REALTY, INC.                                           
|ARDEN REALTY, INC.                                           
|ARDEN REALTY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|ARDEN REALTY, INC.                                           
|Exhibit 4.7                                                  
|Exhibit 4.8                                                  
|EXHIBIT 12.1                                                 
|Exhibit 23.1                                                 



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##### Table of Contents



ARDEN REALTY, INC.

TABLE OF CONTENTS

|         |     |  |  |                                                                                        |  |  |    | 
|-------- | --- |  |  | -------------------------------------------------------------------------------------- |  |  | -- | 
|Item     |     |  |  | Page                                                                                  
|No.      |     |  |  | No.                                                                                   
|         |     |  |  |                                                                                       
|PART I  
|         | 1.  |  |  | Business                                                                               |  |  | 1  | 
|         | 2.  |  |  | Properties                                                                             |  |  | 6  | 
|         | 3.  |  |  | Legal Proceedings                                                                      |  |  | 15 | 
|         | 4.  |  |  | Submission of Matters to a Vote of Security
	Holders                                   |  |  | 16 | 
|PART II 
|         | 5.  |  |  | Market for Registrants Common Equity and
	Related Stockholder Matters                 |  |  | 16 | 
|         | 6.  |  |  | Selected Financial Data                                                                |  |  | 17 | 
|         | 7.  |  |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |  |  | 19 | 
|         | 7A. |  |  | Quantitative and Qualitative Disclosure about
	Market Risk                             |  |  | 32 | 
|         | 8.  |  |  | Financial Statements and Supplementary Data                                            |  |  | 41 | 
|         | 9.  |  |  | Changes in and Disagreements with Accountants on
	Accounting and Financial Disclosure  |  |  | 42 | 
|PART III
|         | 10. |  |  | Directors and Executive Officers of the Registrant                                     |  |  | 42 | 
|         | 11. |  |  | Executive Compensation                                                                 |  |  | 42 | 
|         | 12. |  |  | Security Ownership of Certain Beneficial Owners
	and Management                        |  |  | 42 | 
|         | 13. |  |  | Certain Relationships and Related Transactions                                         |  |  | 42 | 
|PART IV 
|         | 14. |  |  | Exhibits, Financial Statements and Reports on
	Form 8-K                                |  |  | 42 | 

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PART I

ITEM 1. Business

(a) GENERAL

The terms Arden Realty,
us, we and our as used in
this report refer to Arden Realty, Inc. We were incorporated in
Maryland in May 1996 and completed our initial public offering
in October 1996. Commencing with our taxable year ended
December 31, 1996, we have operated and qualified as a real
estate investment trust, or REIT, for federal income tax
purposes. We are a self-administered and self-managed REIT that
owns, manages, leases, develops, renovates and acquires
commercial properties located in Southern California. We are the
sole general partner of Arden Realty Limited Partnership, or the
operating partnership, and as of December 31, 2001, we
owned approximately 97.2% of the operating partnerships
common partnership units. We conduct substantially all of our
operations through the operating partnership and its
consolidated subsidiaries.

(b) INDUSTRY SEGMENTS

We are currently involved in only one industry
segment, namely the operation of commercial real estate located
in Southern California. All of the financial information
contained in this report relates to this industry segment.

(c) DESCRIPTION OF BUSINESS

We are a full-service real estate organization
managed by 10 senior executive officers who have experience in
the real estate industry ranging from 10 to 33 years and
who collectively have an average of 19 years of experience.
We perform all property management, construction management,
accounting, finance and acquisition activities and a majority of
our leasing transactions for our portfolio with our staff of
approximately 300 employees.

As of December 31, 2001, we were Southern
Californias largest publicly traded office landlord as
measured by total net rentable square feet owned. As of
December 31, 2001, our portfolio of primarily suburban
office properties consisted of 133 properties containing
approximately 18.2 million net rentable square feet and two
properties with approximately 566,000 net rentable square feet
under development. As of December 31, 2001, our properties
were 92.2% occupied.

Portfolio
Management

We perform all portfolio management activities,
including management of all lease negotiations, construction
management of tenant improvements, or tenant build-outs,
property renovations, capital expenditures and on-site property
management for our portfolio. We directly manage these
activities from approximately 42 management offices located
throughout our portfolio. The activities of these management
offices are supervised by four regional offices with oversight
by our corporate office to ensure consistency of the application
of our operating policies and procedures. Each regional office
is strategically located within the Southern California
submarkets where our properties are located and is managed by a
regional First Vice President who is responsible for supervising
the day-to-day activities of our management offices. Each
regional office is staffed with leasing, property management,
building engineering, construction and information systems
specialists, our Regional Service Teams. By maintaining a
regionally focused organizational structure led by seasoned
managers, we are able to quickly respond to our tenants
needs and market opportunities.

All of our management and regional offices are
networked with our corporate office and have access to the
Internet and our e-mail, accounting and lease management
systems. Our accounting and lease management systems employ the
latest technology and allow both corporate and field personnel
access to tenant and prospective tenant-related information to
enhance responsiveness and communication of marketing and
leasing activity for each property.

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We currently lease approximately 70% of our
properties using our in-house staff. We employ outside brokers
who are monitored by our regional teams for the remainder of our
properties. Our in-house leasing program allows us to closely
monitor rental rates and lease terms for new and renewal leases
and reduce third-party leasing commissions.

Business Strategies

Our primary business strategy is to actively
manage our portfolio to achieve gains in rental rates and
occupancy, to control operating expenses and to maximize income
from ancillary operations and services. When market conditions
permit, we may also selectively develop or acquire new
properties in submarkets that add value and fit strategically
into our portfolio. We may also sell existing properties and
deploy the proceeds into investments that we believe will
generate higher long-term value.

Through our corporate office and regional
offices, we implement our business strategies by:



| |   |                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | using integrated decision making to provide
	proactive solutions to the space needs of users in the markets
	where we have extensive real estate and technical expertise;          
|
| |  | 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.

We believe the implementation of these operating
practices has been instrumental in maximizing the operating
results of our portfolio.

Integrated Decision Making

We use a multidisciplinary approach to our
decision making by having our regional management, leasing,
construction management, acquisition, disposition and finance
teams coordinate their activities to enhance responsiveness to
market opportunities and to provide proactive solutions to the
space needs of users in the submarkets where we have extensive
real estate and technical expertise. This integrated approach
permits us to analyze the specific requirements of existing and
prospective tenants and the economic terms and costs for each
transaction on a timely and efficient basis. We are therefore
able to commit to leasing, development, acquisition or
disposition terms quickly, which facilitates an efficient
completion of lease negotiation and tenant build-out, shorter
vacancy periods after lease expirations and the timely
completion of development, acquisition or disposition
transactions.

Quality Service and Tenant
Satisfaction

We strive to provide quality service through our
multidisciplinary operating approach resulting in timely
responses to our tenants needs. Our seasoned on-site teams
interact and resolve issues relating to tenant satisfaction and
day-to-day operations. For portfolio-wide operational and
administrative functions, our corporate office provides support
to all regional offices and provides immediate response for
critical operational issues. This customer service approach has
contributed to an average tenant retention rate of approximately
75% since our formation.

Proactive Leasing

The concentration of many of our properties
within particular office submarkets and our relationships with a
broad array of businesses and outside brokers enables us to
pursue proactive leasing strategies, to effectively monitor the
office space requirements of existing and prospective tenants
and to offer tenants a variety of space alternatives across our
portfolio.

Cost
Control and Operating Efficiencies

The size and geographic focus of our portfolio
permits us to enhance portfolio value by controlling operating
costs. We seek to capitalize on the economies of scale and
concentration which result from the

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geographic focus of our portfolio, the ownership
and management of multiple properties within particular
submarkets and the maintenance of a centralized purchasing and
accounting system for cost control at each of our properties.
These cost controls and operating efficiencies allowed us to
achieve a 70.7% ratio of property operating income to total
property revenues in 2001.


Growth
Strategies

Based on our geographic focus in Southern
California, experience in the local real estate markets and our
evaluation of current market conditions, we believe the
following key factors provide us with opportunities to maximize
returns:



| |   |                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the broad diversification and balance of the
	Southern California economy and our tenant base minimizes our
	dependence on any one industry segment;                                                 
|
| |  | the sound fundamentals of the Southern California
	real estate market, as measured by minimal decreases in rental
	rates in our key submarkets during the recent national economic
	downturn; and    
|
| |  | the limited construction of new office properties
	in the Southern California region due to substantial building
	construction limitations and a minimum of developable land in
	many key submarkets.

Internal
Growth

We believe that opportunities exist to increase
cash flow from our existing portfolio. We intend to pursue
internal growth by:



| |   |                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------
| |  | leasing space and renewing leases as they expire
	at rental rates higher than expiring rental rates;             
|
| |  | stabilizing occupancy throughout our portfolio;                                                                  
|
| |  | controlling operating expenses through active
	cost control management and systems;                              
|
| |  | capitalizing on economies of scale and
	concentration due to the size and geographic focus of our
	portfolio; and
|
| |  | sourcing new and innovative revenue streams while
	providing high quality services to our tenants.               

Leasing Space and Renewing Leases as They
Expire at Higher Rates

Due to a steady growth in market rental rates in
most Southern California markets and to the long-term nature of
our leases, in-place rental rates for the majority of our leases
are lower than current market rental rates. During 2001, for all
leases expiring that we renewed or re-leased, rates increased
approximately 22% over the expiring rates on a cash basis and
30% on a GAAP basis. Although it is difficult to predict future
trends for rental rates, we believe we will have opportunities
to increase cash flow by renewing or re-leasing space as leases
expire at higher rental rates.

Stabilizing Portfolio Occupancy

We believe that we have been successful in
attracting, expanding and retaining a diverse tenant base by
actively managing our properties with an emphasis on tenant
satisfaction and retention. Our in-house leasing teams, working
with outside leasing brokers, continuously monitor each market
to identify strong prospective tenants who are in need of new or
additional space. We also strive to be responsive to the needs
of existing tenants through our on-site professional management
staff and by providing them with alternative space within our
portfolio to accommodate their changing space requirements. Our
success in proactively providing services and space solutions to
our tenants is demonstrated, in part, by the number of existing
tenants that have renewed or re-leased their space. Our
retention rate during 2001 was 73%, which is in line with our
historic average.

Cost Control Management and Systems

We plan to continue controlling our operating
expenses through active management at all of our properties. We
focus on cost control in various areas of our operations. We
continuously monitor the operating

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performance of our properties and employ
energy-enhancing and expense recovery technologies when
appropriate. These system enhancements include:




| |   |                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------
| |  | 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 security systems that allow us to
	provide security services to our tenants at a lower cost;                   
|
| |  | enhancement of billing systems, which enable 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.

Capitalizing on Economies of Scale and
Concentration

In order to capitalize on economies of scale and
concentration arising from the size and geographic focus of our
portfolio, our Regional Service Teams are often responsible for
several properties, which spreads administrative and maintenance
costs over those properties and reduces per square foot
expenses. In addition, contracting in bulk for parking
operations, building services and supplies on a portfolio-wide
basis also reduces our overall operating expenses.

Sourcing Additional Revenue While Providing
High Quality Services to Tenants

By implementing the next generation of technology
in our properties, we believe we will be able to further
increase occupancy, tenant retention and rental rates in the
future. In 1998, we entered into an agreement with a national
technology/ access management firm that has successfully
marketed our rooftop space to telecommunications providers as
antennae sites resulting in additional revenue and providing
additional voice and data technology options to our tenants. In
1999, we entered into an agreement with a premium broadband
Internet access and applications services provider to deploy its
building-centric, fiber optic network in a majority of our
portfolio, at their cost. In addition to high-speed Internet
services, this network provides our tenants with a wide range of
next generation business applications and e-commerce tools,
including video and audio conferencing, e-mail and unified
messaging.

We have invested in energy enhancement programs
within our portfolio with the aim of reducing energy
consumption, enhancing efficiency and lowering operating costs.
In 2000 and 2001, we were recognized by the Environmental
Protection Agency with the national Commercial Real Estate
Partner of the Year award for our performance in the Energy
Star Program. The competition involves top commercial real
estate landlords throughout the United States and rigorous
bench-marking procedures that track individual building energy
efficiency. Of the 215 total Energy Star designated office
buildings awarded nationally, 93 were awarded in California; of
those, we had 80 award-winning buildings and were cited for
having the most energy efficient buildings within a single
portfolio in the nation.

In 2001, we formed our taxable REIT subsidiary,
Next>edge to market our expertise in energy solutions and
facilities management. Next>edge has begun to assist
companies to increase their energy efficiency and reduce costs
by employing the latest technologies and the most
energy-efficient operational strategies developed to date. These
technologies include lighting, heating, ventilation and air
conditioning retrofits, energy management system installations,
on-site distributed generation and cogeneration projects and
solar energy systems.

External Growth

We believe in the sound fundamentals, diversity
and potential of the Southern California commercial real estate
market, and we intend to continue to focus our resources
primarily in this region. We have assembled a management team
that has extensive experience and knowledge in this market that
we believe provides us with a competitive advantage in
identifying and capitalizing on selective development,
renovation and acquisition opportunities.

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Subject to capital availability and market
conditions, our approach is to seek development, renovation and
acquisition opportunities in growth markets where we have an
existing presence and where the following conditions exist:



| |   |                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | low vacancy rates;                                                                                                                                                                 
|
| |  | opportunities for rising rents due to employment
	growth and population movements;                                                                                                 
|
| |  | 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

We compete with other owners and developers of
office properties to attract tenants to our properties and
obtain suitable land for development. Ownership of competing
properties is currently diversified among many different types,
from publicly traded companies and institutional investors,
including other REITs, to small enterprises and individual
owners. No one owner or group of owners currently dominate or
significantly influence the markets in which we operate. See
Risk Factors  Competition affects occupancy
levels, rents and the cost of land which could adversely affect
our revenues.

California Electric Utility
Deregulation

Problems associated with deregulation of the
electric industry in California have resulted in intermittent
service interruptions and significantly higher costs in some
areas. Approximately 41% of our buildings and 40% of the total
net rentable square footage of our portfolio are located within
municipalities that either do not produce their own power or
have not entered into long term fixed price contracts. These
properties may be subject to intermittent service interruptions
or rate increases from their utility providers. The remaining
portion of our portfolio is located in areas that are not
expected to be subject to intermittent electric service
interruptions and significant electric rate increases.

Approximately 29% of our buildings and 21% of the
total rentable square footage of our portfolio are subject to
leases that require our tenants to pay all utility costs and the
remainder provide that our tenants will reimburse us for utility
costs in excess of a base year amount. See Risk
Factors  Rising energy costs and power outages in
California may have an adverse effect on our operations and
revenue.

We are also working with other companies to
provide our properties with new applications of distributed
generation, or on-site energy systems, such as solar
microturbines, natural gas reciprocating engines, fuel cells and
other green power alternatives. Lastly, we maintain
ongoing communication with our tenants to assist them in ways to
lower consumption in their workplace.

Employees

As of December 31, 2001, we had
approximately 300 full-time employees that perform all of our
property management, construction management, accounting,
finance and acquisition activities and a majority of our leasing
transactions.

(d) FOREIGN OPERATIONS

We do not engage in any foreign operations or
derive any revenue from foreign sources.

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ITEM 2. Properties

Existing Portfolio

Our portfolio consists of 133 primarily office
properties, containing approximately 18.2 million net
rentable square feet, that individually range from approximately
12,000 to 600,000 net rentable square feet. Of the 133
properties in our portfolio, 131 or 98% are office properties.
All our properties are located in Southern California and most
are in suburban areas in close proximity to main thoroughfares.
We believe that our properties are located within desirable and
established business communities and are well maintained. Our
properties offer an array of amenities including high-speed
Internet access, security, parking, conference facilities,
on-site management, food services and health clubs.

Following is a summary of our property portfolio
as of December 31, 2001:

|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    |                   |           |           |            |            |         |        |        |         |           |           |            |            |    |    |    |   |        |         |         |         |    |    |    |     |  
|---------------------------------- | ----- | -------------------- | ----- | -------------------- | -- | ----------------- | - | ----- | - | ---------- | -- | -------------- | -- | ----- | --- | ----- | -- | ----------------- | --------- | --------- | ---------- | ---------- | ------- | ------ | ------ | ------- | --------- | --------- | ---------- | ---------- | -- | -- | -- | - | ------ | ------- | ------- | ------- | -- | -- | -- | --- | -
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    |                  
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    | Net Operating    
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    | Income for the
|                                   |       |                      |       | Approximate Net      |    | Year Ended       
|                                   |       | Number of Properties |       | Rentable Square Feet |    | December 31, 2001
|                                   |       |                      |       |                      |    |                  
|                                   |       |                      |       | Industrial           |    |                   |   |       |   | Industrial |    |                |    |      
|                                   |       |                      |       | and                  |    |                   |   | % of  |   |            |    | and            |    |       |     | % of  |    |                   |           | % of     
|Location                           |       | Office               |       | Retail               |    | Total             |   | Total |   | Office     |    | Retail         |    | Total |     | Total |    | Total             |           | Total    
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    |                   |           |          
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    |                  
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    | (in thousands and
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    | unaudited)       
|Los Angeles County:                |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    |                   |           |           |            |            |         |        |        |         |           |           |            |            |    |    |    |   |        |         |         |         |    |   
|                                   | West  |                      |       | 29                   |    |                   |   | 1     |   |            |    | 30             |    |       |     | 23    | %  |                   |           | 4,697,608 |            |            |         | 36,959 |        |         |           | 4,734,567 |            |            |    | 26 | %  |   | $      | 109,332 |         |         |    | 37 | % 
|                                   | North |                      |       | 31                   |    |                   |   |      |   |            |    | 31             |    |       |     | 23    | %  |                   |           | 3,372,850 |            |            |         |       |        |         |           | 3,372,850 |            |            |    | 18 | %  |   |        | 48,135  |         |         |    | 16 | % 
|                                   | South |                      |       | 16                   |    |                   |   |      |   |            |    | 16             |    |       |     | 12    | %  |                   |           | 2,688,956 |            |            |         |       |        |         |           | 2,688,956 |            |            |    | 15 | %  |   |        | 34,924  |         |         |    | 12 | % 
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    |                   |           |           |            |            |         |        |        |         |           |           |            |            |    |    |    |   |        |         |         |         |    |   
|                                   |       | Subtotal             |       |                      | 76 |                   |   |       | 1 |            |    |                | 77 |       |     |       | 58 | %                 |           |           | 10,759,414 |            |         |        | 36,959 |         |           |           | 10,796,373 |            |    |    | 59 | % |        |         | 192,391 |         |    |    | 65 | %  
|Orange County                      |       |                      | 24    |                      |    |                   |  |       |   |            | 24 |                |    |       | 18  | %     |    |                   | 3,708,926 |           |            |            |        |        |        |         | 3,708,926 |           |            |            | 20 | %  |    |   | 51,589 |         |         |         | 18 | % 
|San Diego County                   |       |                      | 21    |                      |    |                   |  |       |   |            | 21 |                |    |       | 16  | %     |    |                   | 2,486,777 |           |            |            |        |        |        |         | 2,486,777 |           |            |            | 14 | %  |    |   | 36,574 |         |         |         | 12 | % 
|Ventura/Kern Counties              |       |                      | 6     |                      |    |                   |  |       |   |            | 6  |                |    |       | 4   | %     |    |                   | 778,363   |           |            |            |        |        |        |         | 778,363   |           |            |            | 4  | %  |    |   | 8,772  |         |         |         | 3  | % 
|Riverside/ San Bernardino Counties |       |                      | 4     |                      |    |                   | 1 |       |   |            | 5  |                |    |       | 4   | %     |    |                   | 342,980   |           |            |            | 133,481 |        |        |         | 476,461   |           |            |            | 3  | %  |    |   | 6,623  |         |         |         | 2  | % 
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    |                   |           |           |            |            |         |        |        |         |           |           |            |            |    |    |    |   |        |         |         |         |    |   
|                                   |       |                      | Total |                      |    | 131               |   |       |   | 2          |    |                |    | 133   | (1) |       |    | 100               | %         |           |            | 18,076,460 |         |        |        | 170,440 |           |           |            | 18,246,900 | (1 |    |    |   | ) 100% |         | $       | 295,949 |    |    |    | 100 | %
|                                   |       |                      |       |                      |    |                   |   |       |   |            |    |                |    |       |     |       |    |                   |           |           |            |            |         |        |        |         |           |           |            |            |    |    |    |   |        |         |         |         |    |   




|    |                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Including two properties currently under
	development, our total portfolio consists of 135 properties and
	approximately 18.8 million rentable square feet.

|                                   |       |                         |      |                |      |                           |      |        |      |            |      |       |      |        |      |            |      |       |      |           |      |   |      |      |      |   |       |       |       |  |       |       |       |  |       |       |       |  |       |       |       | 
|---------------------------------- | ----- | ----------------------- | ---- | -------------- | ---- | ------------------------- | ---- | ------ | ---- | ---------- | ---- | ----- | ---- | ------ | ---- | ---------- | ---- | ----- | ---- | --------- | ---- | - | ---- | ---- | ---- | - | ----- | ----- | ----- |  | ----- | ----- | ----- |  | ----- | ----- | ----- |  | ----- | ----- | ----- | 
|                                   |       |                         |      |                |      |                           |      |        |      |            |      |       |      |       
|                                   |       |                         |      |                |      | Annualized Base Rent     
|                                   |       | Percent Occupied        |      | Percent Leased |      | Per Leased Square Foot(1)
|                                   |       |                         |      |                |      |                          
|                                   |       |                         |      |                |      |                           |      | Full  
|                                   |       |                         |      | Industrial     |      |                           |      |        |      | Industrial |      |       |      |        |      | Industrial |      |       |      | Service  
|                                   |       |                         |      | and            |      |                           |      |        |      | and        |      |       |      |        |      | and        |      |       |      | Gross    
|Location                           |       | Office                  |      | Retail         |      | Total                     |      | Office |      | Retail     |      | Total |      | Office |      | Retail     |      | Total |      | Leases(2)
|                                   |       |                         |      |                |      |                           |      |        |      |            |      |       |      |        |      |            |      |       |      |          
|Los Angeles County:                |       |                         |      |                |      |                           |      |        |      |            |      |       |      |        |      |            |      |       |      |           |      |   |      |      |      |   |       |       |       |  |       |       |       |  |       |       |       |  |       |      
|                                   | West  |                         |      | 93.3           | %    |                           |      | 100.0  | %    |            |      | 93.3  | %    |        |      | 93.4       | %    |       |      | 100.0     | %    |   |      | 93.5 | %    |   | $     | 27.29 |       |  | $     | 24.60 |       |  | $     | 27.27 |       |  | $     | 27.36 |      
|                                   | North |                         |      | 89.3           | %    |                           |      |       |      |            |      | 89.3  | %    |        |      | 89.4       | %    |       |      |          |      |   |      | 89.4 | %    |   |       | 20.75 |       |  |       |      |       |  |       | 20.75 |       |  |       | 21.60 |      
|                                   | South |                         |      | 91.3           | %    |                           |      |       |      |            |      | 91.3  | %    |        |      | 91.4       | %    |       |      |          |      |   |      | 91.4 | %    |   |       | 18.06 |       |  |       |      |       |  |       | 18.06 |       |  |       | 19.23 |      
|Orange County                      |       |                         | 94.1 | %              |      |                           |     |        |      |            | 94.1 | %     |      |        | 94.2 | %          |      |       |     |           |      |   | 94.2 | %    |      |   | 17.67 |       |       |  |      |       |       |  | 17.67 |       |       |  | 20.80 |      
|San Diego County                   |       |                         | 91.5 | %              |      |                           |     |        |      |            | 91.5 | %     |      |        | 91.6 | %          |      |       |     |           |      |   | 91.6 | %    |      |   | 17.48 |       |       |  |      |       |       |  | 17.48 |       |       |  | 20.50 |      
|Ventura/Kern Counties              |       |                         | 95.4 | %              |      |                           |     |        |      |            | 95.4 | %     |      |        | 96.1 | %          |      |       |     |           |      |   | 96.1 | %    |      |   | 17.96 |       |       |  |      |       |       |  | 17.96 |       |       |  | 18.11 |      
|Riverside/ San Bernardino Counties |       |                         | 90.4 | %              |      |                           | 88.0 | %      |      |            | 89.7 | %     |      |        | 92.8 | %          |      |       | 88.8 | %         |      |   | 91.7 | %    |      |   | 18.11 |       |       |  | 11.86 |       |       |  | 16.42 |       |       |  | 18.69 |      
|                                   |       |                         |      |                |      |                           |      |        |      |            |      |       |      |        |      |            |      |       |      |           |      |   |      |      |      |   |       |       |       |  |       |       |       |  |       |       |       |  |       |      
|                                   |       | Total/ Weighted Average |      |                | 92.2 | %                         |      |        | 90.6 | %          |      |       | 92.2 | %      |      |            | 92.4 | %     |      |           | 91.2 | % |      |      | 92.4 | % |       | $     | 20.81 |  |       | $     | 14.89 |  |       | $     | 20.75 |  |       | $     | 22.62 | 
|                                   |       |                         |      |                |      |                           |      |        |      |            |      |       |      |        |      |            |      |       |      |           |      |   |      |      |      |   |       |       |       |  |       |       |       |  |       |       |       |  |       |      




|    |                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Based on monthly contractual base rent under
	existing leases as of December 31, 2001, 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 39 properties with approximately
	3.9 million square feet under triple net and modified gross
	leases.                                                                                                                                                                                                                             

6



---



##### Table of Contents



Development
Properties

In addition to the properties listed above, we
currently have two properties under development containing
approximately 566,000 net rentable square feet. These properties
are located in the Howard Hughes Center, a 70-acre commercial
development located two miles north of Los Angeles International
Airport and immediately adjacent to the San Diego Freeway
(I-405), with on- and off-ramps that directly serve the site.

The following table summarizes information about
our properties under development as of December 31, 2001.

|                      |                                                  |                              |  |          |         |               |   |         |         |            |   |               |         |             |  |            |   |           |  |              |  |  |  |              |  |  |   |       |  |  |  |      |   |  |  |      |   | 
|--------------------- | ------------------------------------------------ | ---------------------------- |  | -------- | ------- | ------------- | - | ------- | ------- | ---------- | - | ------------- | ------- | ----------- |  | ---------- | - | --------- |  | ------------ |  |  |  | ------------ |  |  | - | ----- |  |  |  | ---- | - |  |  | ---- | - | 
|                      |                                                  |                              |  |          |         |               |   |         |         |            |   |               |         |             |  |            |   | Estimated
|                      |                                                  |                              |  |          |         |               |   | %       |         | Estimated  |   |               |         | Estimated   |  | Estimated  |   | Year 1   
|                      |                                                  |                              |  | Costs    |         |               |   | Leased  |         | Shell      |   | Estimated     |         | Year 1      |  | Year 1     |   | Annual   
|                      |                                                  | Square                       |  | Incurred |         | Estimated     |   | at      |         | Completion |   | Stabilization |         | Stabilized  |  | Annual     |   | GAAP     
|Property              |                                                  | Feet                         |  | To Date  |         | Total Cost(1) |   | 3/15/02 |         | Date       |   | Date(2)       |         | Cash NOI(3) |  | Cash Yield |   | Yield(4) 
|                      |                                                  |                              |  |          |         |               |   |         |         |            |   |               |         |             |  |            |   |          
|                      |                                                  |                              |  | (000s)  |         | (000s)       |   |         |         |            |   |               |         | (000s)     |  |            |   |          
|Howard Hughes Center: |                                                  |                              |  |          |         |               |   |         |         |            |   |               |         |             |  |            |   |           |  |              |  |  |  |              |  |  |   |       |  |  |  |      |   |  |  |     
|                      | 6080 Center Drive                                |                              |  | 283,000  |         |               | $ | 72,263  |         |            | $ | 75,100        |         |             |  | 85         | % |           |  | Complete     |  |  |  | 2nd Qtr 2002 |  |  | $ | 8,400 |  |  |  | 11.2 | % |  |  | 12.2 | %
|                      | 6100 Center Drive                                |                              |  | 283,000  |         |               |   | 44,559  |         |            |   | 79,000        |         |             |  |           |   |           |  | 2nd Qtr 2002 |  |  |  | 2nd Qtr 2003 |  |  | $ | 8,850 |  |  |  | 11.2 | % |  |  | 12.2 | %
|                      | Unallocated Acquisition and Master Plan Costs(1) |                              |  |         |         |               |   | 16,190  |         |            |   | 19,800        |         |             |  |            |   |           |  |              |  |  |  |              |  |  |   |       |  |  |  |      |   |  |  |      |  
|                      |                                                  |                              |  |          |         |               |   |         |         |            |   |               |         |             |  |            |   |           |  |              |  |  |  |              |  |  |   |       |  |  |  |      |   |  |  |     
|                      |                                                  | Total Development Properties |  |          | 566,000 |               |   | $       | 133,012 |            |   | $             | 173,900 |             |  |            |   |           |  |              |  |  |  |              |  |  |   |       |  |  |  |      |   |  |  |      |   | 
|                      |                                                  |                              |  |          |         |               |   |         |         |            |   |               |         |             |  |            |   |           |  |              |  |  |  |              |  |  |   |       |  |  |  |      |   |  |  |     



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Estimated total cost includes purchase and
	closing costs, capital expenditures, tenant improvements,
	leasing commissions and carrying costs during development, as
	well as an allocation of land and master plan costs. Unallocated
	acquisition and master plan costs consists of unallocated land
	costs, the costs of road and bridge construction and other
	Howard Hughes Center infrastructure and master planning costs.
	We have entitlements to construct an additional approximately
	425,000 net rentable square feet of office space and have two
	parcels entitled for hotel development at the Howard Hughes
	Center.
|   
|(2) | We consider a property to be stabilized in the
	quarter when the property is at least 95% leased.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(3) | We consider Stabilized Cash NOI to be the rental
	revenues from the property less the operating expenses of the
	property on a cash basis before deducting financing costs
	(interest and principal payments) after the property is at least
	95% leased.                                                                                                                                                                                                                                                                                                                                                                             
|   
|(4) | Estimated Year 1 Annual GAAP Yield includes an
	adjustment for straight-line rents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

In addition to the properties above, we have
preliminary architectural designs completed for additional
build-to-suit buildings at the Howard Hughes Center, totaling an
additional approximately 425,000 net rentable square feet.
Build-to-suit buildings consist of properties constructed to the
tenants specifications in return for the tenants
long-term commitment to the property. We do not intend to
commence construction on any additional build-to-suit buildings
at the Howard Hughes Center until development plans and budgets
are finalized and build-to-suit tenant leases are signed with
terms allowing us to achieve yields commensurate with the
projects development risk.

In addition to our development at the Howard
Hughes Center, we have completed preliminary designs and are
marketing an approximately 170,000 net rentable square foot
build-to-suit office building at our Long Beach Airport Business
Park. We do not intend to commence construction on this project
until a build-to-suit tenant lease is signed with terms allowing
us to achieve yields commensurate with the projects
development risk.

We expect to finance our development activities
over the next 24 months through net cash provided by
operating activities, proceeds from asset sales or proceeds from
our lines of credit.

7



---



##### Table of Contents



Acquisitions

We did not acquire any properties in 2001.

Dispositions

The following table summarizes our disposition
activity during 2001.

|                       |                 |        |               |                |  |              |                    |               |  |             |                |             |  |  |                    |            |  |  |         |         |  |   |        |        | 
|---------------------- | --------------- | ------ | ------------- | -------------- |  | ------------ | ------------------ | ------------- |  | ----------- | -------------- | ----------- |  |  | ------------------ | ---------- |  |  | ------- | ------- |  | - | ------ | ------ | 
|Property               |                 | County |               | Submarket      |  | Date of Sale |                    | Property Type |  | Square Feet |                | Sales Price
|                       |                 |        |               |                |  |              |                    |               |  |             |                |            
|                       |                 |        |               |                |  |              |                    |               |  |             |                | (000s)    
|One Venture            |                 |        | Orange County |                |  |              | South County       |               |  |             | May 1, 2001    |             |  |  | Office             |            |  |  | 43,324  |         |  | $ | 8,200  |       
|Ontario Airport        |                 |        |               |                |  |              |                    |               |  |             |                |             |  |  |                    |            |  |  |         |         |  |   |        |       
|                       | Commerce Center |        |               | San Bernardino |  |              |                    | Ontario       |  |             |                | May 1, 2001 |  |  |                    | Industrial |  |  |         | 213,127 |  |   |        | 11,000 | 
|Rancho Plaza           |                 |        | Los Angeles   |                |  |              | Simi/Conejo Valley |               |  |             | Sept. 28, 2001 |             |  |  | Office             |            |  |  | 24,057  |         |  |   | 3,100  |       
|Hunter Business Center |                 |        | Riverside     |                |  |              | Inland Empire East |               |  |             | Sept. 28, 2001 |             |  |  | Office             |            |  |  | 106,782 |         |  |   | 4,900  |       
|Thousand Oaks Plaza    |                 |        | Los Angeles   |                |  |              | Simi/Conejo Valley |               |  |             | Nov. 21, 2001  |             |  |  | Office             |            |  |  | 13,434  |         |  |   | 2,100  |       
|Temecula Portfolio(1)  |                 |        | San Bernadino |                |  |              | Temecula           |               |  |             | Dec. 20, 2001  |             |  |  | Office/ Industrial |            |  |  | 172,200 |         |  |   | 18,500 |       
|                       |                 |        |               |                |  |              |                    |               |  |             |                |             |  |  |                    |            |  |  |         |         |  |   |        |       
|Total                  |                 |        |               |                |  |              |                    |               |  |             |                |             |  |  |                    |            |  |  | 572,924 |         |  | $ | 47,800 |       
|                       |                 |        |               |                |  |              |                    |               |  |             |                |             |  |  |                    |            |  |  |         |         |  |   |        |       



---



|    |                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Portfolio sold consists of three office
	properties (Tower Plaza I, Tower Plaza II and Tower Plaza
	III) and two industrial properties (Highlands I and
	Highlands II).

8



---



##### Table of Contents



The following table presents specific information
regarding our 133 properties as of December 31, 2001:

|                             |                                                |                             |  |               |  |            |  |              |         |           | 
|---------------------------- | ---------------------------------------------- | --------------------------- |  | ------------- |  | ---------- |  | ------------ | ------- | --------- | 
|                             |                                                |                             |  |               |  | Year(s)    |  | Approximate 
|Property                     |                                                |                             |  |               |  | Built/     |  | Net Rentable
|Name                         |                                                | Submarket                   |  | Location      |  | Renovated  |  | Square Feet 
|                             |                                                |                             |  |               |  |            |  |             
|Los Angeles County           |                                                |                             |  |               |  |            |  |              |         |          
|Los Angeles West             |                                                |                             |  |               |  |            |  |              |         |          
|9665 Wilshire                |                                                | Beverly Hills/ Century City |  | Beverly Hills |  | 1972/92-93 |  |              | 158,684 |          
|Beverly Atrium               |                                                | Beverly Hills/ Century City |  | Beverly Hills |  | 1989       |  |              | 59,650  |          
|8383 Wilshire                |                                                | Beverly Hills/ Century City |  | Beverly Hills |  | 1971/93    |  |              | 417,463 |          
|120 South Spalding           |                                                | Beverly Hills/ Century City |  | Beverly Hills |  | 1984       |  |              | 60,656  |          
|9100 Wilshire Blvd           |                                                | Beverly Hills/ Century City |  | Beverly Hills |  | 1971/90    |  |              | 326,227 |          
|Century Park Center          |                                                | Beverly Hills/ Century City |  | Los Angeles   |  | 1972/94    |  |              | 243,404 |          
|10350 Santa Monica           |                                                | Beverly Hills/ Century City |  | Los Angeles   |  | 1979       |  |              | 42,292  |          
|10351 Santa Monica           |                                                | Beverly Hills/ Century City |  | Los Angeles   |  | 1984       |  |              | 96,251  |          
|Westwood Terrace             |                                                | Westwood/West Los Angeles   |  | Los Angeles   |  | 1988       |  |              | 135,943 |          
|1950 Sawtelle                |                                                | Westwood/West Los Angeles   |  | Los Angeles   |  | 1988/95    |  |              | 103,106 |          
|10780 Santa Monica           |                                                | Westwood/West Los Angeles   |  | Los Angeles   |  | 1984       |  |              | 92,486  |          
|Wilshire Pacific Plaza       |                                                | Westwood/West Los Angeles   |  | Los Angeles   |  | 1976/87    |  |              | 100,122 |          
|World Savings Center(2)      |                                                | Westwood/West Los Angeles   |  | Los Angeles   |  | 1983       |  |              | 469,115 |          
|11075 Santa Monica           |                                                | Westwood/West Los Angeles   |  | Los Angeles   |  | 1983       |  |              | 35,696  |          
|2730 Wilshire(3)             |                                                | Westwood/West Los Angeles   |  | Santa Monica  |  | 1985       |  |              | 55,080  |          
|2800 28th Street             |                                                | Westwood/West Los Angeles   |  | Santa Monica  |  | 1979       |  |              | 103,506 |          
|1919 Santa Monica            |                                                | Westwood/West Los Angeles   |  | Santa Monica  |  | 1991       |  |              | 43,796  |          
|2001 Wilshire Blvd           |                                                | Westwood/West Los Angeles   |  | Santa Monica  |  | 1980       |  |              | 101,125 |          
|Westwood Center              |                                                | Westwood/West Los Angeles   |  | Santa Monica  |  | 1965/2000  |  |              | 313,000 |          
|400 Corporate Pointe         |                                                | Marina Area/Culver City/LAX |  | Culver City   |  | 1987       |  |              | 164,598 |          
|600 Corporate Pointe         |                                                | Marina Area/Culver City/LAX |  | Culver City   |  | 1989       |  |              | 273,339 |          
|Bristol Plaza                |                                                | Marina Area/Culver City/LAX |  | Culver City   |  | 1982       |  |              | 84,014  |          
|Northpoint                   |                                                | Marina Area/Culver City/LAX |  | Los Angeles   |  | 1991       |  |              | 104,235 |          
|Howard Hughes Spectrum Club  |                                                | Marina Area/Culver City/LAX |  | Los Angeles   |  | 1993       |  |              | 36,959  |          
|Howard Hughes Tower          |                                                | Marina Area/Culver City/LAX |  | Los Angeles   |  | 1987       |  |              | 313,833 |          
|6060 Center Drive            |                                                | Marina Area/Culver City/LAX |  | Los Angeles   |  | 2000       |  |              | 241,928 |          
|Univision                    |                                                | Marina Area/Culver City/LAX |  | Los Angeles   |  | 2001       |  |              | 161,650 |          
|6100 Wilshire                |                                                | Park Mile/West Hollywood    |  | Los Angeles   |  | 1986       |  |              | 202,704 |          
|145 South Fairfax            |                                                | Park Mile/West Hollywood    |  | Los Angeles   |  | 1984       |  |              | 53,994  |          
|Beverly Sunset Medical Plaza |                                                | Park Mile/West Hollywood    |  | Los Angeles   |  | 1963/92-95 |  |              | 139,711 |          
|                             |                                                |                             |  |               |  |            |  |              |         |          
|                             | Subtotal/ Weighted Average  Los
	Angeles West |                             |  |               |  |            |  |              |         | 4,734,567 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                             |                                                |               |     |         |   |            |       |           |   |              |        |         |  |  |     |     |  |   |       |       | 
|---------------------------- | ---------------------------------------------- | ------------- | --- | ------- | - | ---------- | ----- | --------- | - | ------------ | ------ | ------- |  |  | --- | --- |  | - | ----- | ----- | 
|                             |                                                |               |     |         |   |            |       |           |   | Annualized  
|                             |                                                | Percentage of |     |         |   |            |       |           |   | Base Rent   
|                             |                                                | Total         |     |         |   |            |       |           |   | per Leased  
|                             |                                                | Portfolio Net |     |         |   | Annualized |       |           |   | Net Rentable
|Property                     |                                                | Rentable      |     | Percent |   | Base Rent  |       | Number of |   | Square      
|Name                         |                                                | Square Feet   |     | Leased  |   | ($000s)    |       | Leases    |   | Feet(1)     
|                             |                                                |               |     |         |   |            |       |           |   |             
|Los Angeles County           |                                                |               |     |         |   |            |       |           |   |              |        |         |  |  |     |     |  |   |       |      
|Los Angeles West             |                                                |               |     |         |   |            |       |           |   |              |        |         |  |  |     |     |  |   |       |      
|9665 Wilshire                |                                                |               | 0.9 | %       |   |            | 100.0 | %         |   | $            | 5,650  |         |  |  | 21  |     |  | $ | 35.35 |      
|Beverly Atrium               |                                                |               | 0.3 |         |   |            | 97.6  |           |   |              | 1,534  |         |  |  | 13  |     |  |   | 26.35 |      
|8383 Wilshire                |                                                |               | 2.3 |         |   |            | 90.4  |           |   |              | 9,417  |         |  |  | 126 |     |  |   | 24.96 |      
|120 South Spalding           |                                                |               | 0.3 |         |   |            | 100.0 |           |   |              | 2,313  |         |  |  | 14  |     |  |   | 36.95 |      
|9100 Wilshire Blvd           |                                                |               | 1.8 |         |   |            | 95.9  |           |   |              | 8,424  |         |  |  | 78  |     |  |   | 26.92 |      
|Century Park Center          |                                                |               | 1.3 |         |   |            | 89.3  |           |   |              | 4,996  |         |  |  | 106 |     |  |   | 22.97 |      
|10350 Santa Monica           |                                                |               | 0.2 |         |   |            | 100.0 |           |   |              | 1,014  |         |  |  | 19  |     |  |   | 23.89 |      
|10351 Santa Monica           |                                                |               | 0.5 |         |   |            | 100.0 |           |   |              | 2,206  |         |  |  | 17  |     |  |   | 22.90 |      
|Westwood Terrace             |                                                |               | 0.7 |         |   |            | 93.5  |           |   |              | 3,455  |         |  |  | 25  |     |  |   | 27.20 |      
|1950 Sawtelle                |                                                |               | 0.6 |         |   |            | 96.6  |           |   |              | 2,308  |         |  |  | 33  |     |  |   | 23.19 |      
|10780 Santa Monica           |                                                |               | 0.5 |         |   |            | 90.7  |           |   |              | 1,967  |         |  |  | 33  |     |  |   | 23.47 |      
|Wilshire Pacific Plaza       |                                                |               | 0.6 |         |   |            | 92.3  |           |   |              | 2,303  |         |  |  | 41  |     |  |   | 24.93 |      
|World Savings Center(2)      |                                                |               | 2.6 |         |   |            | 94.7  |           |   |              | 13,353 |         |  |  | 54  |     |  |   | 30.04 |      
|11075 Santa Monica           |                                                |               | 0.2 |         |   |            | 99.7  |           |   |              | 859    |         |  |  | 8   |     |  |   | 24.12 |      
|2730 Wilshire(3)             |                                                |               | 0.3 |         |   |            | 100.0 |           |   |              | 1,447  |         |  |  | 32  |     |  |   | 25.78 |      
|2800 28th Street             |                                                |               | 0.6 |         |   |            | 92.5  |           |   |              | 2,589  |         |  |  | 39  |     |  |   | 27.05 |      
|1919 Santa Monica            |                                                |               | 0.2 |         |   |            | 96.3  |           |   |              | 1,149  |         |  |  | 5   |     |  |   | 27.23 |      
|2001 Wilshire Blvd           |                                                |               | 0.6 |         |   |            | 100.0 |           |   |              | 2,786  |         |  |  | 21  |     |  |   | 27.55 |      
|Westwood Center              |                                                |               | 1.7 |         |   |            | 78.1  |           |   |              | 9,401  |         |  |  | 35  |     |  |   | 38.45 |      
|400 Corporate Pointe         |                                                |               | 0.9 |         |   |            | 100.0 |           |   |              | 3,022  |         |  |  | 21  |     |  |   | 18.37 |      
|600 Corporate Pointe         |                                                |               | 1.5 |         |   |            | 94.2  |           |   |              | 5,949  |         |  |  | 23  |     |  |   | 23.09 |      
|Bristol Plaza                |                                                |               | 0.5 |         |   |            | 98.3  |           |   |              | 1,658  |         |  |  | 28  |     |  |   | 20.07 |      
|Northpoint                   |                                                |               | 0.6 |         |   |            | 96.9  |           |   |              | 3,076  |         |  |  | 9   |     |  |   | 30.44 |      
|Howard Hughes Spectrum Club  |                                                |               | 0.2 |         |   |            | 100.0 |           |   |              | 909    |         |  |  | 1   |     |  |   | 24.60 |      
|Howard Hughes Tower          |                                                |               | 1.7 |         |   |            | 79.4  |           |   |              | 6,621  |         |  |  | 28  |     |  |   | 26.57 |      
|6060 Center Drive            |                                                |               | 1.3 |         |   |            | 100.0 |           |   |              | 8,298  |         |  |  | 8   |     |  |   | 33.43 |      
|Univision                    |                                                |               | 0.9 |         |   |            | 100.0 |           |   |              | 4,247  |         |  |  | 2   |     |  |   | 25.53 |      
|6100 Wilshire                |                                                |               | 1.1 |         |   |            | 100.0 |           |   |              | 5,140  |         |  |  | 58  |     |  |   | 24.53 |      
|145 South Fairfax            |                                                |               | 0.3 |         |   |            | 95.5  |           |   |              | 1,164  |         |  |  | 14  |     |  |   | 22.57 |      
|Beverly Sunset Medical Plaza |                                                |               | 0.8 |         |   |            | 78.3  |           |   |              | 3,448  |         |  |  | 55  |     |  |   | 31.53 |      
|                             |                                                |               |     |         |   |            |       |           |   |              |        |         |  |  |     |     |  |   |       |      
|                             | Subtotal/ Weighted Average  Los
	Angeles West |               |     | 26.0    | % |            |       | 93.5      | % |              | $      | 120,703 |  |  |     | 967 |  |   | $     | 27.27 | 

9



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##### Table of Contents



|                             |                                                 |                                     |  |                 |  |              |  |              |         |           | 
|---------------------------- | ----------------------------------------------- | ----------------------------------- |  | --------------- |  | ------------ |  | ------------ | ------- | --------- | 
|                             |                                                 |                                     |  |                 |  | Year(s)      |  | Approximate 
|Property                     |                                                 |                                     |  |                 |  | Built/       |  | Net Rentable
|Name                         |                                                 | Submarket                           |  | Location        |  | Renovated    |  | Square Feet 
|                             |                                                 |                                     |  |                 |  |              |  |             
|Los Angeles North            |                                                 |                                     |  |                 |  |              |  |              |         |          
|Calabasas Commerce Center    |                                                 | Simi/Conejo Valley                  |  | Calabasas       |  | 1990         |  |              | 126,771 |          
|Calabasas Tech               |                                                 | Simi/Conejo Valley                  |  | Calabasas       |  | 1990         |  |              | 273,526 |          
|Pennsfield Plaza             |                                                 | Simi/Conejo Valley                  |  | Thousand Oaks   |  | 1989         |  |              | 21,202  |          
|Conejo Business Center       |                                                 | Simi/Conejo Valley                  |  | Thousand Oaks   |  | 1991         |  |              | 69,017  |          
|Marin Corporate Center       |                                                 | Simi/Conejo Valley                  |  | Thousand Oaks   |  | 1986         |  |              | 51,360  |          
|Hillside Corporate Center    |                                                 | Simi/Conejo Valley                  |  | Westlake        |  | 1998         |  |              | 59,876  |          
|Westlake  5601 Lindero      |                                                 | Simi/Conejo Valley                  |  | Westlake        |  | 1989         |  |              | 105,830 |          
|Renaissance Court            |                                                 | Simi/Conejo Valley                  |  | Westlake        |  | 1981/92      |  |              | 61,245  |          
|Westlake Gardens I           |                                                 | Simi/Conejo Valley                  |  | Westlake        |  | 1998         |  |              | 49,639  |          
|Westlake Gardens II          |                                                 | Simi/Conejo Valley                  |  | Westlake        |  | 1999         |  |              | 48,874  |          
|6800 Owensmouth(2)           |                                                 | West San Fernando Valley            |  | Canoga Park     |  | 1986         |  |              | 80,014  |          
|Woodland Hills               |                                                 | West San Fernando Valley            |  | Woodland Hills  |  | 1972/95      |  |              | 224,955 |          
|Los Angeles Corporate Center |                                                 | San Gabriel Valley                  |  | Monterey Park   |  | 1984/86      |  |              | 389,293 |          
|Clarendon Crest              |                                                 | West San Fernando Valley            |  | Woodland Hills  |  | 1990         |  |              | 43,063  |          
|Lyons Plaza                  |                                                 | Santa Clarita Valley                |  | Santa Clarita   |  | 1990         |  |              | 61,203  |          
|Tourney Pointe               |                                                 | Santa Clarita Valley                |  | Santa Clarita   |  | 1985/98-2000 |  |              | 219,991 |          
|16000 Ventura                |                                                 | Central San Fernando Valley         |  | Encino          |  | 1980/96      |  |              | 174,841 |          
|15250 Ventura                |                                                 | Central San Fernando Valley         |  | Sherman Oaks    |  | 1970/90-91   |  |              | 110,641 |          
|Noble Professional Center    |                                                 | Central San Fernando Valley         |  | Sherman Oaks    |  | 1985/93      |  |              | 51,828  |          
|Sunset Point Plaza           |                                                 | Valencia                            |  | Newhall         |  | 1988         |  |              | 58,105  |          
|303 North Glenoaks           |                                                 | East San Fernando Valley/Tri-Cities |  | Burbank         |  | 1983/96      |  |              | 175,289 |          
|601 S. Glenoaks              |                                                 | East San Fernando Valley/Tri-Cities |  | Burbank         |  | 1990         |  |              | 72,524  |          
|Burbank Executive Plaza      |                                                 | East San Fernando Valley/Tri-Cities |  | Burbank         |  | 1983         |  |              | 60,395  |          
|California Federal Building  |                                                 | East San Fernando Valley/Tri-Cities |  | Burbank         |  | 1978         |  |              | 81,243  |          
|425 West Broadway            |                                                 | East San Fernando Valley/Tri-Cities |  | Glendale        |  | 1984         |  |              | 71,589  |          
|Glendale Corporate Center    |                                                 | East San Fernando Valley/Tri-Cities |  | Glendale        |  | 1985         |  |              | 108,209 |          
|70 South Lake                |                                                 | East San Fernando Valley/Tri-Cities |  | Pasadena        |  | 1982/94      |  |              | 100,133 |          
|150 East Colorado            |                                                 | East San Fernando Valley/Tri-Cities |  | Pasadena        |  | 1979/97      |  |              | 61,168  |          
|299 N. Euclid                |                                                 | East San Fernando Valley/Tri-Cities |  | Pasadena        |  | 1983         |  |              | 73,522  |          
|5161 Lankershim              |                                                 | East San Fernando Valley/Tri-Cities |  | North Hollywood |  | 1985/97      |  |              | 178,317 |          
|535 N. Brand Blvd            |                                                 | East San Fernando Valley/Tri-Cities |  | North Hollywood |  | 1973/92/2000 |  |              | 109,187 |          
|                             |                                                 |                                     |  |                 |  |              |  |              |         |          
|                             | Subtotal/ Weighted Average  Los
	Angeles North |                                     |  |                 |  |              |  |              |         | 3,372,850 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                             |                                                 |               |     |         |   |            |       |           |   |              |       |        |  |  |    |     |  |   |       |       | 
|---------------------------- | ----------------------------------------------- | ------------- | --- | ------- | - | ---------- | ----- | --------- | - | ------------ | ----- | ------ |  |  | -- | --- |  | - | ----- | ----- | 
|                             |                                                 |               |     |         |   |            |       |           |   | Annualized  
|                             |                                                 | Percentage of |     |         |   |            |       |           |   | Base Rent   
|                             |                                                 | Total         |     |         |   |            |       |           |   | per Leased  
|                             |                                                 | Portfolio Net |     |         |   | Annualized |       |           |   | Net Rentable
|Property                     |                                                 | Rentable      |     | Percent |   | Base Rent  |       | Number of |   | Square      
|Name                         |                                                 | Square Feet   |     | Leased  |   | ($000s)    |       | Leases    |   | Feet(1)     
|                             |                                                 |               |     |         |   |            |       |           |   |             
|Los Angeles North            |                                                 |               |     |         |   |            |       |           |   |              |       |        |  |  |    |     |  |   |       |      
|Calabasas Commerce Center    |                                                 |               | 0.7 | %       |   |            | 100.0 | %         |   | $            | 2,269 |        |  |  | 13 |     |  | $ | 17.89 |      
|Calabasas Tech               |                                                 |               | 1.5 |         |   |            | 94.1  |           |   |              | 4,376 |        |  |  | 14 |     |  |   | 16.99 |      
|Pennsfield Plaza             |                                                 |               | 0.1 |         |   |            | 95.0  |           |   |              | 369   |        |  |  | 12 |     |  |   | 18.33 |      
|Conejo Business Center       |                                                 |               | 0.4 |         |   |            | 93.1  |           |   |              | 1,230 |        |  |  | 27 |     |  |   | 19.14 |      
|Marin Corporate Center       |                                                 |               | 0.3 |         |   |            | 99.5  |           |   |              | 1,083 |        |  |  | 33 |     |  |   | 21.19 |      
|Hillside Corporate Center    |                                                 |               | 0.3 |         |   |            | 87.0  |           |   |              | 1,285 |        |  |  | 8  |     |  |   | 24.67 |      
|Westlake  5601 Lindero      |                                                 |               | 0.6 |         |   |            | 100.0 |           |   |              | 1,489 |        |  |  | 2  |     |  |   | 14.07 |      
|Renaissance Court            |                                                 |               | 0.3 |         |   |            | 97.9  |           |   |              | 1,268 |        |  |  | 16 |     |  |   | 21.15 |      
|Westlake Gardens I           |                                                 |               | 0.3 |         |   |            | 93.6  |           |   |              | 1,243 |        |  |  | 17 |     |  |   | 26.73 |      
|Westlake Gardens II          |                                                 |               | 0.3 |         |   |            | 100.0 |           |   |              | 1,243 |        |  |  | 4  |     |  |   | 25.44 |      
|6800 Owensmouth(2)           |                                                 |               | 0.4 |         |   |            | 88.5  |           |   |              | 1,325 |        |  |  | 17 |     |  |   | 18.71 |      
|Woodland Hills               |                                                 |               | 1.2 |         |   |            | 92.2  |           |   |              | 4,732 |        |  |  | 70 |     |  |   | 22.82 |      
|Los Angeles Corporate Center |                                                 |               | 2.1 |         |   |            | 96.8  |           |   |              | 7,473 |        |  |  | 45 |     |  |   | 19.84 |      
|Clarendon Crest              |                                                 |               | 0.2 |         |   |            | 65.7  |           |   |              | 585   |        |  |  | 12 |     |  |   | 20.68 |      
|Lyons Plaza                  |                                                 |               | 0.3 |         |   |            | 88.0  |           |   |              | 1,219 |        |  |  | 24 |     |  |   | 22.64 |      
|Tourney Pointe               |                                                 |               | 1.2 |         |   |            | 74.7  |           |   |              | 2,651 |        |  |  | 25 |     |  |   | 16.14 |      
|16000 Ventura                |                                                 |               | 1.0 |         |   |            | 96.4  |           |   |              | 3,649 |        |  |  | 48 |     |  |   | 21.65 |      
|15250 Ventura                |                                                 |               | 0.6 |         |   |            | 89.2  |           |   |              | 2,230 |        |  |  | 40 |     |  |   | 22.60 |      
|Noble Professional Center    |                                                 |               | 0.3 |         |   |            | 99.9  |           |   |              | 1,131 |        |  |  | 20 |     |  |   | 21.83 |      
|Sunset Point Plaza           |                                                 |               | 0.3 |         |   |            | 88.6  |           |   |              | 1,268 |        |  |  | 25 |     |  |   | 24.65 |      
|303 North Glenoaks           |                                                 |               | 1.0 |         |   |            | 59.4  |           |   |              | 2,528 |        |  |  | 21 |     |  |   | 24.27 |      
|601 S. Glenoaks              |                                                 |               | 0.4 |         |   |            | 95.0  |           |   |              | 1,425 |        |  |  | 17 |     |  |   | 20.67 |      
|Burbank Executive Plaza      |                                                 |               | 0.3 |         |   |            | 88.9  |           |   |              | 1,264 |        |  |  | 13 |     |  |   | 23.54 |      
|California Federal Building  |                                                 |               | 0.5 |         |   |            | 62.2  |           |   |              | 1,225 |        |  |  | 9  |     |  |   | 24.23 |      
|425 West Broadway            |                                                 |               | 0.4 |         |   |            | 95.1  |           |   |              | 1,433 |        |  |  | 13 |     |  |   | 21.04 |      
|Glendale Corporate Center    |                                                 |               | 0.6 |         |   |            | 88.8  |           |   |              | 1,985 |        |  |  | 23 |     |  |   | 20.64 |      
|70 South Lake                |                                                 |               | 0.6 |         |   |            | 97.1  |           |   |              | 2,457 |        |  |  | 17 |     |  |   | 25.27 |      
|150 East Colorado            |                                                 |               | 0.3 |         |   |            | 72.0  |           |   |              | 992   |        |  |  | 16 |     |  |   | 22.51 |      
|299 N. Euclid                |                                                 |               | 0.4 |         |   |            | 100.0 |           |   |              | 1,475 |        |  |  | 3  |     |  |   | 20.03 |      
|5161 Lankershim              |                                                 |               | 1.0 |         |   |            | 85.1  |           |   |              | 3,422 |        |  |  | 8  |     |  |   | 22.54 |      
|535 N. Brand Blvd            |                                                 |               | 0.6 |         |   |            | 94.4  |           |   |              | 2,274 |        |  |  | 37 |     |  |   | 22.07 |      
|                             |                                                 |               |     |         |   |            |       |           |   |              |       |        |  |  |    |     |  |   |       |      
|                             | Subtotal/ Weighted Average  Los
	Angeles North |               |     | 18.5    | % |            |       | 89.4      | % |              | $     | 62,598 |  |  |    | 649 |  |   | $     | 20.75 | 

10



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##### Table of Contents



|                                 |                                                 |                             |  |                  |  |            |  |              |         |           | 
|-------------------------------- | ----------------------------------------------- | --------------------------- |  | ---------------- |  | ---------- |  | ------------ | ------- | --------- | 
|                                 |                                                 |                             |  |                  |  | Year(s)    |  | Approximate 
|Property                         |                                                 |                             |  |                  |  | Built/     |  | Net Rentable
|Name                             |                                                 | Submarket                   |  | Location         |  | Renovated  |  | Square Feet 
|                                 |                                                 |                             |  |                  |  |            |  |             
|Los Angeles South                |                                                 |                             |  |                  |  |            |  |              |         |          
|Long Beach Airport Bldg D(2)     |                                                 | Long Beach                  |  | Long Beach       |  | 1987/95    |  |              | 121,610 |          
|Long Beach Airport Bldg F & G(2) |                                                 | Long Beach                  |  | Long Beach       |  | 1987/95    |  |              | 150,403 |          
|5000 East Spring(2)              |                                                 | Long Beach                  |  | Long Beach       |  | 1989/95    |  |              | 163,358 |          
|100 Broadway                     |                                                 | Long Beach                  |  | Long Beach       |  | 1987/96    |  |              | 191,727 |          
|1501 Hughes Way                  |                                                 | Long Beach                  |  | Long Beach       |  | 1983/97    |  |              | 77,060  |          
|3901 Via Oro                     |                                                 | Long Beach                  |  | Long Beach       |  | 1986/97    |  |              | 53,195  |          
|Oceangate Tower                  |                                                 | Long Beach                  |  | Long Beach       |  | 1971/93-94 |  |              | 210,907 |          
|Continental Grand Plaza          |                                                 | El Segundo                  |  | El Segundo       |  | 1986       |  |              | 235,926 |          
|Grand Avenue Plaza               |                                                 | El Segundo                  |  | El Segundo       |  | 1979/80    |  |              | 81,448  |          
|5200 West Century                |                                                 | Marina Area/Culver City/LAX |  | Culver City      |  | 1982/98-99 |  |              | 310,910 |          
|Skyview Center                   |                                                 | Marina Area/Culver City/LAX |  | Los Angeles      |  | 1981/87/95 |  |              | 391,675 |          
|South Bay Centre                 |                                                 | Torrance                    |  | Gardena          |  | 1984       |  |              | 202,830 |          
|Harbor Corporate Center          |                                                 | Torrance                    |  | Gardena          |  | 1985       |  |              | 63,925  |          
|Pacific Gateway                  |                                                 | Torrance                    |  | Torrance         |  | 1982/90    |  |              | 223,731 |          
|Mariner Court                    |                                                 | Torrance                    |  | Torrance         |  | 1989       |  |              | 105,436 |          
|South Bay Tech                   |                                                 | Torrance                    |  | Torrance         |  | 1984       |  |              | 104,815 |          
|                                 |                                                 |                             |  |                  |  |            |  |              |         |          
|                                 | Subtotal/ Weighted Average  Los
	Angeles South |                             |  |                  |  |            |  |              |         | 2,688,956 | 
|Orange County                    |                                                 |                             |  |                  |  |            |  |              |         |          
|Whittier                         |                                                 | San Gabriel Valley          |  | Whittier         |  | 1967/82    |  |              | 135,415 |          
|1370 Valley Vista                |                                                 | San Gabriel Valley          |  | Diamond Bar      |  | 1988       |  |              | 84,081  |          
|5832 Bolsa                       |                                                 | West County                 |  | Huntington Beach |  | 1985       |  |              | 49,355  |          
|Huntington Beach Plaza I & II    |                                                 | West County                 |  | Huntington Beach |  | 1984/96    |  |              | 52,186  |          
|5702 Bolsa                       |                                                 | West County                 |  | Huntington Beach |  | 1987/97    |  |              | 27,731  |          
|5672 Bolsa                       |                                                 | West County                 |  | Huntington Beach |  | 1987       |  |              | 11,968  |          
|5632 Bolsa                       |                                                 | West County                 |  | Huntington Beach |  | 1987       |  |              | 21,568  |          
|Huntington Commerce Center       |                                                 | West County                 |  | Huntington Beach |  | 1987       |  |              | 67,551  |          
|City Centre                      |                                                 | West County                 |  | Fountain Valley  |  | 1982       |  |              | 302,519 |          
|Fountain Valley Plaza            |                                                 | West County                 |  | Fountain Valley  |  | 1982       |  |              | 107,252 |          
|3300 Irvine Avenue               |                                                 | Greater Airport Area        |  | Newport Beach    |  | 1981/97    |  |              | 74,224  |          
|1821 Dyer                        |                                                 | Greater Airport Area        |  | Irvine           |  | 1980/88    |  |              | 115,061 |          
|Von Karman Corporate Center      |                                                 | Greater Airport Area        |  | Irvine           |  | 1981/84    |  |              | 451,477 |          
|Norwalk                          |                                                 | Long Beach                  |  | Norwalk          |  | 1978/94    |  |              | 122,175 |          
|91 Freeway Center                |                                                 | Mid-Cities                  |  | Artesia          |  | 1986/97    |  |              | 93,277  |          
|1503 South Coast                 |                                                 | Greater Airport Area        |  | Costa Mesa       |  | 1979/97    |  |              | 60,605  |          
|222 South Harbor(2)              |                                                 | Tri-Freeway Area            |  | Anaheim          |  | 1986/91    |  |              | 175,391 |          

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                 |                                                 |               |     |         |   |            |       |           |   |              |       |        |  |  |    |     |  |   |       |       | 
|-------------------------------- | ----------------------------------------------- | ------------- | --- | ------- | - | ---------- | ----- | --------- | - | ------------ | ----- | ------ |  |  | -- | --- |  | - | ----- | ----- | 
|                                 |                                                 |               |     |         |   |            |       |           |   | Annualized  
|                                 |                                                 | Percentage of |     |         |   |            |       |           |   | Base Rent   
|                                 |                                                 | Total         |     |         |   |            |       |           |   | per Leased  
|                                 |                                                 | Portfolio Net |     |         |   | Annualized |       |           |   | Net Rentable
|Property                         |                                                 | Rentable      |     | Percent |   | Base Rent  |       | Number of |   | Square      
|Name                             |                                                 | Square Feet   |     | Leased  |   | ($000s)    |       | Leases    |   | Feet(1)     
|                                 |                                                 |               |     |         |   |            |       |           |   |             
|Los Angeles South                |                                                 |               |     |         |   |            |       |           |   |              |       |        |  |  |    |     |  |   |       |      
|Long Beach Airport Bldg D(2)     |                                                 |               | 0.7 | %       |   |            | 100.0 | %         |   | $            | 1,211 |        |  |  | 1  |     |  | $ | 9.96  |      
|Long Beach Airport Bldg F & G(2) |                                                 |               | 0.8 |         |   |            | 100.0 |           |   |              | 1,353 |        |  |  | 1  |     |  |   | 9.00  |      
|5000 East Spring(2)              |                                                 |               | 0.9 |         |   |            | 80.9  |           |   |              | 3,157 |        |  |  | 27 |     |  |   | 23.89 |      
|100 Broadway                     |                                                 |               | 1.0 |         |   |            | 97.6  |           |   |              | 4,093 |        |  |  | 31 |     |  |   | 21.87 |      
|1501 Hughes Way                  |                                                 |               | 0.4 |         |   |            | 100.0 |           |   |              | 1,378 |        |  |  | 7  |     |  |   | 17.81 |      
|3901 Via Oro                     |                                                 |               | 0.3 |         |   |            | 96.8  |           |   |              | 893   |        |  |  | 4  |     |  |   | 17.35 |      
|Oceangate Tower                  |                                                 |               | 1.2 |         |   |            | 84.5  |           |   |              | 3,084 |        |  |  | 36 |     |  |   | 17.31 |      
|Continental Grand Plaza          |                                                 |               | 1.3 |         |   |            | 80.5  |           |   |              | 4,730 |        |  |  | 33 |     |  |   | 24.90 |      
|Grand Avenue Plaza               |                                                 |               | 0.4 |         |   |            | 94.4  |           |   |              | 1,284 |        |  |  | 5  |     |  |   | 16.70 |      
|5200 West Century                |                                                 |               | 1.7 |         |   |            | 99.5  |           |   |              | 5,280 |        |  |  | 39 |     |  |   | 17.07 |      
|Skyview Center                   |                                                 |               | 2.1 |         |   |            | 82.5  |           |   |              | 5,559 |        |  |  | 54 |     |  |   | 17.20 |      
|South Bay Centre                 |                                                 |               | 1.1 |         |   |            | 95.0  |           |   |              | 3,539 |        |  |  | 36 |     |  |   | 18.37 |      
|Harbor Corporate Center          |                                                 |               | 0.4 |         |   |            | 87.9  |           |   |              | 949   |        |  |  | 19 |     |  |   | 16.90 |      
|Pacific Gateway                  |                                                 |               | 1.2 |         |   |            | 96.4  |           |   |              | 4,410 |        |  |  | 39 |     |  |   | 20.45 |      
|Mariner Court                    |                                                 |               | 0.6 |         |   |            | 96.1  |           |   |              | 1,923 |        |  |  | 37 |     |  |   | 18.97 |      
|South Bay Tech                   |                                                 |               | 0.6 |         |   |            | 89.6  |           |   |              | 1,542 |        |  |  | 10 |     |  |   | 16.42 |      
|                                 |                                                 |               |     |         |   |            |       |           |   |              |       |        |  |  |    |     |  |   |       |      
|                                 | Subtotal/ Weighted Average  Los
	Angeles South |               |     | 14.7    | % |            |       | 91.4      | % |              | $     | 44,385 |  |  |    | 379 |  |   | $     | 18.06 | 
|Orange County                    |                                                 |               |     |         |   |            |       |           |   |              |       |        |  |  |    |     |  |   |       |      
|Whittier                         |                                                 |               | 0.7 | %       |   |            | 95.3  | %         |   | $            | 2,930 |        |  |  | 40 |     |  | $ | 22.71 |      
|1370 Valley Vista                |                                                 |               | 0.4 |         |   |            | 99.3  |           |   |              | 1,711 |        |  |  | 16 |     |  |   | 20.48 |      
|5832 Bolsa                       |                                                 |               | 0.3 |         |   |            | 100.0 |           |   |              | 681   |        |  |  | 1  |     |  |   | 13.80 |      
|Huntington Beach Plaza I & II    |                                                 |               | 0.3 |         |   |            | 70.9  |           |   |              | 590   |        |  |  | 16 |     |  |   | 15.95 |      
|5702 Bolsa                       |                                                 |               | 0.1 |         |   |            | 100.0 |           |   |              | 215   |        |  |  | 2  |     |  |   | 7.75  |      
|5672 Bolsa                       |                                                 |               | 0.1 |         |   |            | 100.0 |           |   |              | 95    |        |  |  | 1  |     |  |   | 7.92  |      
|5632 Bolsa                       |                                                 |               | 0.1 |         |   |            | 100.0 |           |   |              | 181   |        |  |  | 1  |     |  |   | 8.40  |      
|Huntington Commerce Center       |                                                 |               | 0.4 |         |   |            | 91.9  |           |   |              | 514   |        |  |  | 19 |     |  |   | 8.29  |      
|City Centre                      |                                                 |               | 1.6 |         |   |            | 94.6  |           |   |              | 4,988 |        |  |  | 20 |     |  |   | 17.42 |      
|Fountain Valley Plaza            |                                                 |               | 0.6 |         |   |            | 100.0 |           |   |              | 2,165 |        |  |  | 9  |     |  |   | 20.09 |      
|3300 Irvine Avenue               |                                                 |               | 0.4 |         |   |            | 96.2  |           |   |              | 1,750 |        |  |  | 29 |     |  |   | 24.50 |      
|1821 Dyer                        |                                                 |               | 0.6 |         |   |            | 100.0 |           |   |              | 1,471 |        |  |  | 4  |     |  |   | 11.53 |      
|Von Karman Corporate Center      |                                                 |               | 2.5 |         |   |            | 89.0  |           |   |              | 8,230 |        |  |  | 26 |     |  |   | 20.48 |      
|Norwalk                          |                                                 |               | 0.7 |         |   |            | 96.8  |           |   |              | 2,086 |        |  |  | 9  |     |  |   | 17.63 |      
|91 Freeway Center                |                                                 |               | 0.5 |         |   |            | 94.2  |           |   |              | 1,698 |        |  |  | 27 |     |  |   | 19.32 |      
|1503 South Coast                 |                                                 |               | 0.3 |         |   |            | 75.3  |           |   |              | 840   |        |  |  | 20 |     |  |   | 18.41 |      
|222 South Harbor(2)              |                                                 |               | 1.0 |         |   |            | 94.8  |           |   |              | 3,319 |        |  |  | 17 |     |  |   | 19.96 |      

11



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##### Table of Contents



|                            |                                                |                             |  |                   |  |            |  |              |         |           | 
|--------------------------- | ---------------------------------------------- | --------------------------- |  | ----------------- |  | ---------- |  | ------------ | ------- | --------- | 
|                            |                                                |                             |  |                   |  | Year(s)    |  | Approximate 
|Property                    |                                                |                             |  |                   |  | Built/     |  | Net Rentable
|Name                        |                                                | Submarket                   |  | Location          |  | Renovated  |  | Square Feet 
|                            |                                                |                             |  |                   |  |            |  |             
|Crown Cabot Financial       |                                                | South County                |  | Laguna Niguel     |  | 1989       |  |              | 172,900 |          
|625 The City                |                                                | Tri-Freeway Area            |  | Orange            |  | 1985/97    |  |              | 139,806 |          
|Orange Financial Center     |                                                | Central County              |  | Orange            |  | 1985/95    |  |              | 305,439 |          
|Centerpointe La Palma       |                                                | North County                |  | La Palma          |  | 1986/88/90 |  |              | 597,550 |          
|Lambert Office Plaza        |                                                | North County                |  | Brea              |  | 1986/97    |  |              | 32,807  |          
|Savi Tech Center            |                                                | North County                |  | Yorba Linda       |  | 1989       |  |              | 341,446 |          
|Yorba Linda Business Park   |                                                | North County                |  | Yorba Linda       |  | 1988       |  |              | 167,142 |          
|                            |                                                |                             |  |                   |  |            |  |              |         |          
|                            | Subtotal/ Weighted Average 
	Orange County    |                             |  |                   |  |            |  |              |         | 3,708,926 | 
|San Diego County            |                                                |                             |  |                   |  |            |  |              |         |          
|701 B Street(2)             |                                                | Downtown                    |  | San Diego         |  | 1982/96    |  |              | 540,413 |          
|Foremost Professional Plaza |                                                | I-15 Corridor               |  | San Diego         |  | 1992       |  |              | 60,534  |          
|Activity Business Center    |                                                | I-15 Corridor               |  | San Diego         |  | 1987       |  |              | 167,045 |          
|Bernardo Regency            |                                                | I-15 Corridor               |  | San Diego         |  | 1986       |  |              | 47,916  |          
|Carlsbad Corporate Center   |                                                | North Coast                 |  | Carlsbad          |  | 1996       |  |              | 125,000 |          
|10180 Scripps               |                                                | I-15 Corridor               |  | San Diego         |  | 1978/96    |  |              | 43,560  |          
|Cymer Technology Center     |                                                | I-15 Corridor               |  | Rancho Bernardino |  | 1986       |  |              | 155,612 |          
|Via Frontera                |                                                | I-15 Corridor               |  | Rancho Bernardino |  | 1982/97    |  |              | 77,920  |          
|Poway Industrial            |                                                | I-15 Corridor               |  | Poway             |  | 1991/96    |  |              | 112,000 |          
|Balboa Corporate Center     |                                                | Mission Valley/ Kearny Mesa |  | San Diego         |  | 1990       |  |              | 69,890  |          
|Panorama Corporate Center   |                                                | Mission Valley/ Kearny Mesa |  | San Diego         |  | 1991       |  |              | 133,149 |          
|Ruffin Corporate Center     |                                                | Mission Valley/ Kearny Mesa |  | San Diego         |  | 1990       |  |              | 45,059  |          
|Skypark Office Plaza        |                                                | Mission Valley/ Kearny Mesa |  | San Diego         |  | 1986       |  |              | 202,164 |          
|Governor Park Plaza         |                                                | North City                  |  | San Diego         |  | 1986       |  |              | 104,065 |          
|Westridge                   |                                                | North City                  |  | San Diego         |  | 1984/96    |  |              | 48,955  |          
|5120 Shoreham               |                                                | North City                  |  | San Diego         |  | 1984       |  |              | 37,759  |          
|Morehouse Tech Center       |                                                | North City                  |  | San Diego         |  | 1984       |  |              | 181,207 |          
|Torreyanna Science Park     |                                                | North City                  |  | La Jolla          |  | 1980/97    |  |              | 81,204  |          
|Waples Tech Center          |                                                | North City                  |  | San Diego         |  | 1990       |  |              | 28,119  |          
|Genesee Executive Plaza     |                                                | North City                  |  | San Diego         |  | 1984       |  |              | 155,820 |          
|10251 Vista Sorrento        |                                                | North City                  |  | San Diego         |  | 1981/95    |  |              | 69,386  |          
|                            |                                                |                             |  |                   |  |            |  |              |         |          
|                            | Subtotal/ Weighted Average 
	San Diego County |                             |  |                   |  |            |  |              |         | 2,486,777 | 
|Ventura & Kern Counties     |                                                |                             |  |                   |  |            |  |              |         |          
|Parkway Center I            |                                                | Bakersfield                 |  | Bakersfield       |  | 1992/95    |  |              | 61,333  |          
|California Twin Center      |                                                | Bakersfield                 |  | Bakersfield       |  | 1983       |  |              | 155,189 |          
|Center Promenade            |                                                | West County                 |  | Ventura           |  | 1982       |  |              | 174,837 |          

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                            |                                                |               |     |         |   |            |       |           |   |              |        |        |  |  |    |     |  |   |       |       | 
|--------------------------- | ---------------------------------------------- | ------------- | --- | ------- | - | ---------- | ----- | --------- | - | ------------ | ------ | ------ |  |  | -- | --- |  | - | ----- | ----- | 
|                            |                                                |               |     |         |   |            |       |           |   | Annualized  
|                            |                                                | Percentage of |     |         |   |            |       |           |   | Base Rent   
|                            |                                                | Total         |     |         |   |            |       |           |   | per Leased  
|                            |                                                | Portfolio Net |     |         |   | Annualized |       |           |   | Net Rentable
|Property                    |                                                | Rentable      |     | Percent |   | Base Rent  |       | Number of |   | Square      
|Name                        |                                                | Square Feet   |     | Leased  |   | ($000s)    |       | Leases    |   | Feet(1)     
|                            |                                                |               |     |         |   |            |       |           |   |             
|Crown Cabot Financial       |                                                |               | 0.9 |         |   |            | 88.8  |           |   |              | 4,337  |        |  |  | 36 |     |  |   | 28.25 |      
|625 The City                |                                                |               | 0.8 |         |   |            | 94.8  |           |   |              | 2,669  |        |  |  | 33 |     |  |   | 20.14 |      
|Orange Financial Center     |                                                |               | 1.7 |         |   |            | 93.2  |           |   |              | 5,963  |        |  |  | 33 |     |  |   | 20.95 |      
|Centerpointe La Palma       |                                                |               | 3.3 |         |   |            | 93.2  |           |   |              | 10,147 |        |  |  | 82 |     |  |   | 18.21 |      
|Lambert Office Plaza        |                                                |               | 0.2 |         |   |            | 94.5  |           |   |              | 647    |        |  |  | 9  |     |  |   | 20.87 |      
|Savi Tech Center            |                                                |               | 1.9 |         |   |            | 100.0 |           |   |              | 3,146  |        |  |  | 4  |     |  |   | 9.21  |      
|Yorba Linda Business Park   |                                                |               | 0.9 |         |   |            | 93.9  |           |   |              | 1,335  |        |  |  | 60 |     |  |   | 8.51  |      
|                            |                                                |               |     |         |   |            |       |           |   |              |        |        |  |  |    |     |  |   |       |      
|                            | Subtotal/ Weighted Average 
	Orange County    |               |     | 20.3    | % |            |       | 94.2      | % |              | $      | 61,708 |  |  |    | 514 |  |   | $     | 17.67 | 
|San Diego County            |                                                |               |     |         |   |            |       |           |   |              |        |        |  |  |    |     |  |   |       |      
|701 B Street(2)             |                                                |               | 3.0 | %       |   |            | 94.1  | %         |   | $            | 10,380 |        |  |  | 94 |     |  | $ | 20.41 |      
|Foremost Professional Plaza |                                                |               | 0.3 |         |   |            | 90.9  |           |   |              | 1,407  |        |  |  | 31 |     |  |   | 25.57 |      
|Activity Business Center    |                                                |               | 0.9 |         |   |            | 86.9  |           |   |              | 1,992  |        |  |  | 36 |     |  |   | 13.73 |      
|Bernardo Regency            |                                                |               | 0.3 |         |   |            | 97.7  |           |   |              | 1,187  |        |  |  | 16 |     |  |   | 25.35 |      
|Carlsbad Corporate Center   |                                                |               | 0.7 |         |   |            |      |           |   |              |       |        |  |  |   |     |  |   |      |      
|10180 Scripps               |                                                |               | 0.2 |         |   |            | 100.0 |           |   |              | 428    |        |  |  | 1  |     |  |   | 9.83  |      
|Cymer Technology Center     |                                                |               | 0.8 |         |   |            | 100.0 |           |   |              | 1,760  |        |  |  | 2  |     |  |   | 11.31 |      
|Via Frontera                |                                                |               | 0.4 |         |   |            | 100.0 |           |   |              | 873    |        |  |  | 6  |     |  |   | 11.08 |      
|                           
|Poway Industrial            |                                                |               | 0.6 |         |   |            | 100.0 |           |   |              | 605    |        |  |  | 1  |     |  |   | 5.40  |      
|Balboa Corporate Center     |                                                |               | 0.4 |         |   |            | 100.0 |           |   |              | 843    |        |  |  | 1  |     |  |   | 12.06 |      
|Panorama Corporate Center   |                                                |               | 0.7 |         |   |            | 100.0 |           |   |              | 2,317  |        |  |  | 1  |     |  |   | 17.40 |      
|Ruffin Corporate Center     |                                                |               | 0.2 |         |   |            | 100.0 |           |   |              | 471    |        |  |  | 1  |     |  |   | 10.45 |      
|Skypark Office Plaza        |                                                |               | 1.1 |         |   |            | 99.5  |           |   |              | 3,882  |        |  |  | 18 |     |  |   | 19.30 |      
|Governor Park Plaza         |                                                |               | 0.6 |         |   |            | 97.4  |           |   |              | 2,152  |        |  |  | 22 |     |  |   | 21.24 |      
|Westridge                   |                                                |               | 0.3 |         |   |            | 100.0 |           |   |              | 651    |        |  |  | 4  |     |  |   | 13.30 |      
|5120 Shoreham               |                                                |               | 0.2 |         |   |            | 100.0 |           |   |              | 698    |        |  |  | 1  |     |  |   | 18.49 |      
|Morehouse Tech Center       |                                                |               | 1.0 |         |   |            | 100.0 |           |   |              | 3,237  |        |  |  | 9  |     |  |   | 17.84 |      
|Torreyanna Science Park     |                                                |               | 0.4 |         |   |            | 100.0 |           |   |              | 1,838  |        |  |  | 1  |     |  |   | 22.64 |      
|Waples Tech Center          |                                                |               | 0.2 |         |   |            | 100.0 |           |   |              | 403    |        |  |  | 3  |     |  |   | 14.34 |      
|Genesee Executive Plaza     |                                                |               | 0.9 |         |   |            | 85.9  |           |   |              | 3,514  |        |  |  | 19 |     |  |   | 26.26 |      
|10251 Vista Sorrento        |                                                |               | 0.4 |         |   |            | 100.0 |           |   |              | 1,158  |        |  |  | 1  |     |  |   | 16.69 |      
|                            |                                                |               |     |         |   |            |       |           |   |              |        |        |  |  |    |     |  |   |       |      
|                            | Subtotal/ Weighted Average 
	San Diego County |               |     | 13.6    | % |            |       | 91.6      | % |              | $      | 39,796 |  |  |    | 268 |  |   | $     | 17.48 | 
|Ventura & Kern Counties     |                                                |               |     |         |   |            |       |           |   |              |        |        |  |  |    |     |  |   |       |      
|Parkway Center I            |                                                |               | 0.3 | %       |   |            | 89.3  | %         |   | $            | 1,035  |        |  |  | 12 |     |  | $ | 18.92 |      
|California Twin Center      |                                                |               | 0.9 |         |   |            | 90.6  |           |   |              | 2,393  |        |  |  | 18 |     |  |   | 17.01 |      
|Center Promenade            |                                                |               | 1.0 |         |   |            | 94.3  |           |   |              | 2,785  |        |  |  | 59 |     |  |   | 16.89 |      

12



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##### Table of Contents



|                                       |                                                                     |                    |  |                  |  |           |  |              |         |            | 
|-------------------------------------- | ------------------------------------------------------------------- | ------------------ |  | ---------------- |  | --------- |  | ------------ | ------- | ---------- | 
|                                       |                                                                     |                    |  |                  |  | Year(s)   |  | Approximate 
|Property                               |                                                                     |                    |  |                  |  | Built/    |  | Net Rentable
|Name                                   |                                                                     | Submarket          |  | Location         |  | Renovated |  | Square Feet 
|                                       |                                                                     |                    |  |                  |  |           |  |             
|1000 Town Center                       |                                                                     | West County        |  | Oxnard           |  | 1989      |  |              | 107,656 |           
|Solar Drive Business Center            |                                                                     | West County        |  | Oxnard           |  | 1982      |  |              | 125,132 |           
|Camarillo Business Park                |                                                                     | West County        |  | Camarillo        |  | 1984/97   |  |              | 154,216 |           
|                                       |                                                                     |                    |  |                  |  |           |  |              |         |           
|                                       | Subtotal/ Weighted Average 
	Ventura & Kern Counties               |                    |  |                  |  |           |  |              |         | 778,363    | 
|Riverside and San Bernardino
	Counties |                                                                     |                    |  |                  |  |           |  |              |         |           
|Centrelake Plaza                       |                                                                     | Inland Empire West |  | Ontario          |  | 1989      |  |              | 110,763 |           
|Tower Plaza Retail                     |                                                                     | Temecula           |  | Temecula         |  | 1970/97   |  |              | 133,481 |           
|Chicago Avenue Business Park           |                                                                     | Inland Empire East |  | Riverside        |  | 1986      |  |              | 47,482  |           
|Havengate Center                       |                                                                     | Inland Empire East |  | Rancho Cucamonga |  | 1985      |  |              | 80,557  |           
|HDS Plaza                              |                                                                     | Inland Empire East |  | San Bernardino   |  | 1987      |  |              | 104,178 |           
|                                       |                                                                     |                    |  |                  |  |           |  |              |         |           
|                                       | Subtotal/ Weighted Average 
	Riverside and San Bernardino Counties |                    |  |                  |  |           |  |              |         | 476,461    | 
|                                       |                                                                     |                    |  |                  |  |           |  |              |         |           
|                                       | Portfolio Total/
	Weighted Average                                  |                    |  |                  |  |           |  |              |         | 18,246,900 | 
|                                       |                                                                     |                    |  |                  |  |           |  |              |         |           

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                       |                                                                     |               |     |         |   |            |       |           |   |              |       |         |  |  |    |       |  |   |       |       | 
|-------------------------------------- | ------------------------------------------------------------------- | ------------- | --- | ------- | - | ---------- | ----- | --------- | - | ------------ | ----- | ------- |  |  | -- | ----- |  | - | ----- | ----- | 
|                                       |                                                                     |               |     |         |   |            |       |           |   | Annualized  
|                                       |                                                                     | Percentage of |     |         |   |            |       |           |   | Base Rent   
|                                       |                                                                     | Total         |     |         |   |            |       |           |   | per Leased  
|                                       |                                                                     | Portfolio Net |     |         |   | Annualized |       |           |   | Net Rentable
|Property                               |                                                                     | Rentable      |     | Percent |   | Base Rent  |       | Number of |   | Square      
|Name                                   |                                                                     | Square Feet   |     | Leased  |   | ($000s)    |       | Leases    |   | Feet(1)     
|                                       |                                                                     |               |     |         |   |            |       |           |   |             
|1000 Town Center                       |                                                                     |               | 0.6 |         |   |            | 97.6  |           |   |              | 2,083 |         |  |  | 10 |       |  |   | 19.83 |      
|Solar Drive Business Center            |                                                                     |               | 0.7 |         |   |            | 100.0 |           |   |              | 2,360 |         |  |  | 39 |       |  |   | 17.55 |      
|Camarillo Business Park                |                                                                     |               | 0.8 |         |   |            | 96.3  |           |   |              | 2,785 |         |  |  | 24 |       |  |   | 18.75 |      
|                                       |                                                                     |               |     |         |   |            |       |           |   |              |       |         |  |  |    |       |  |   |       |      
|                                       | Subtotal/ Weighted Average 
	Ventura & Kern Counties               |               |     | 4.3     | % |            |       | 96.1      | % |              | $     | 13,441  |  |  |    | 162   |  |   | $     | 17.96 | 
|Riverside and San Bernardino
	Counties |                                                                     |               |     |         |   |            |       |           |   |              |       |         |  |  |    |       |  |   |       |      
|Centrelake Plaza                       |                                                                     |               | 0.6 | %       |   |            | 95.0  | %         |   | $            | 2,218 |         |  |  | 23 |       |  | $ | 21.07 |      
|Tower Plaza Retail                     |                                                                     |               | 0.7 |         |   |            | 88.8  |           |   |              | 1,406 |         |  |  | 21 |       |  |   | 11.86 |      
|Chicago Avenue Business Park           |                                                                     |               | 0.3 |         |   |            | 89.6  |           |   |              | 612   |         |  |  | 7  |       |  |   | 14.38 |      
|Havengate Center                       |                                                                     |               | 0.4 |         |   |            | 87.8  |           |   |              | 1,179 |         |  |  | 18 |       |  |   | 16.68 |      
|HDS Plaza                              |                                                                     |               | 0.6 |         |   |            | 95.8  |           |   |              | 1,756 |         |  |  | 13 |       |  |   | 17.60 |      
|                                       |                                                                     |               |     |         |   |            |       |           |   |              |       |         |  |  |    |       |  |   |       |      
|                                       | Subtotal/ Weighted Average 
	Riverside and San Bernardino Counties |               |     | 2.6     | % |            |       | 91.7      | % |              |       | 7,171   |  |  |    | 82    |  |   | $     | 16.42 | 
|                                       |                                                                     |               |     |         |   |            |       |           |   |              |       |         |  |  |    |       |  |   |       |      
|                                       | Portfolio Total/
	Weighted Average                                  |               |     | 100.0   | % |            |       | 92.4      | % |              | $     | 349,802 |  |  |    | 3,021 |  |   | $     | 20.75 | 
|                                       |                                                                     |               |     |         |   |            |       |           |   |              |       |         |  |  |    |       |  |   |       |      




|    |                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Calculated as monthly contractual base rent under
	existing leases as of December 31, 2001, 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.                                                                                                                                                                                                                                  
|   
|(3) | Amounts for 2730 Wilshire exclude the
	100%-occupied 12,740 square foot, 16-unit apartment complex we
	also own.                                                                                                                                                                                                                                 

13



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##### Table of Contents



Tenant
Information

As of December 31, 2001, we had over 3,000
tenants, with no one tenant representing more than 2.2% of the
aggregate annualized base rent of our properties, and only four
tenants individually representing more than 1.0% of our
aggregate annualized base rent. Our properties are leased to
local, national and foreign companies engaged in a variety of
businesses including financial services, entertainment, health
care services, accounting, law, education, publishing and local,
state and federal government entities.

Our leases are typically structured for terms of
three, five or ten years. Leases typically contain
provisions permitting tenants to renew expiring leases at
prevailing market rates. Approximately 79% of our total rentable
square footage is under full service gross leases under which
tenants typically pay for all real estate taxes and operating
expenses above those for an established base year or expense
stop. Our remaining square footage is under triple net and
modified gross leases. Triple net and modified gross leases are
those where tenants pay not only base rent, but also some or all
real estate taxes and operating expenses of the leased property.
Tenants generally reimburse us the full direct cost, without
regard to a base year or expense stop, for use of lighting,
heating and air conditioning during non-business hours, and for
on-site monthly employee and visitor parking. We are generally
responsible for structural repairs.

The following table presents information as of
December 31, 2001 derived from our ten largest tenants,
based on the percentage of aggregate portfolio annualized base
rent:

|                                     |                            |           |    |            |  |               |     |               |  |               |      |       |   |  |      |       |   |  |           |  | 
|------------------------------------ | -------------------------- | --------- | -- | ---------- |  | ------------- | --- | ------------- |  | ------------- | ---- | ----- | - |  | ---- | ----- | - |  | --------- |  | 
|                                     |                            |           |    | Weighted   |  | Percentage of |     | Percentage of |  |              
|                                     |                            |           |    | Average    |  | Aggregate     |     | Aggregate     |  |              
|                                     |                            |           |    | Remaining  |  | Portfolio     |     | Portfolio     |  | Senior Debt  
|                                     |                            | Number of |    | Lease Term |  | Leased        |     | Annualized    |  | Rating       
|Tenant                               |                            | Leases    |    | in Months  |  | Square Feet   |     | Base Rent(1)  |  | (Moodys/S&P)
|                                     |                            |           |    |            |  |               |     |               |  |              
|State of California                  |                            |           | 47 |            |  |               | 54  |               |  |               | 2.18 | %     |   |  | 2.17 | %     |   |  | A1/A+     | 
|University of Phoenix                |                            |           | 20 |            |  |               | 34  |               |  |               | 1.43 |       |   |  | 1.24 |       |   |  | Not Rated | 
|Univision                            |                            |           | 2  |            |  |               | 238 |               |  |               | 0.99 |       |   |  | 1.21 |       |   |  | Baa3/BB+  | 
|Vivendi Universal                    |                            |           | 1  |            |  |               | 110 |               |  |               | 0.59 |       |   |  | 1.02 |       |   |  | Baa2/BBB  | 
|Pacific Bell (Consolidated Entities) |                            |           | 8  |            |  |               | 37  |               |  |               | 0.85 |       |   |  | 0.83 |       |   |  | Aa3/AA-   | 
|Sony (Consolidated Entities)         |                            |           | 8  |            |  |               | 25  |               |  |               | 0.80 |       |   |  | 0.82 |       |   |  | Aa3/A+    | 
|Boeing                               |                            |           | 2  |            |  |               | 46  |               |  |               | 1.61 |       |   |  | 0.73 |       |   |  | A2/AA-    | 
|Atlantic Richfield                   |                            |           | 13 |            |  |               | 56  |               |  |               | 0.75 |       |   |  | 0.73 |       |   |  | Aa1/AA+   | 
|U.S. Government                      |                            |           | 21 |            |  |               | 43  |               |  |               | 0.69 |       |   |  | 0.73 |       |   |  | Aaa/AAA   | 
|GTE (Consolidated Entities)          |                            |           | 8  |            |  |               | 32  |               |  |               | 0.93 |       |   |  | 0.73 |       |   |  | A2/A+     | 
|                                     |                            |           |    |            |  |               |     |               |  |               |      |       |   |  |      |       |   |  |           | 
|                                     | Total/ Weighted Average(2) |           |    | 130        |  |               |     | 64            |  |               |      | 10.82 | % |  |      | 10.21 | % |  |           |  | 
|                                     |                            |           |    |            |  |               |     |               |  |               |      |       |   |  |      |       |   |  |           | 




|    |                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Annualized base rent is calculated as monthly
	contractual base rent under existing leases as of
	December 31, 2001, 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.                                                                                                                                                                                                                          

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##### Table of Contents



Lease
Distribution

The following table presents information relating
to the distribution of the leases for our 133 properties, based
on leased net rentable square feet, as of December 31, 2001:

|                        |                 |                         |     |         |       |        |      |             |        |            |           |              |            |             |       |       |        |   |        |        |         |  |       |       |        |   |       |       |       | 
|----------------------- | --------------- | ----------------------- | --- | ------- | ----- | ------ | ---- | ----------- | ------ | ---------- | --------- | ------------ | ---------- | ----------- | ----- | ----- | ------ | - | ------ | ------ | ------- |  | ----- | ----- | ------ | - | ----- | ----- | ----- | 
|                        |                 |                         |     |         |       |        |      | Percent     |        |            |           |              |            |            
|                        |                 |                         |     |         |       |        |      | of          |        | Annualized |           | Percentage   |            |            
|                        |                 |                         |     |         |       | Total  |      | Aggregate   |        | Base Rent  |           | of Aggregate |            | Average    
|                        |                 | Number                  |     | Percent |       | Leased |      | Portfolio   |        | of         |           | Portfolio    |            | Base Rent  
|                        |                 | of                      |     | of All  |       | Square |      | Leased      |        | Leases(1)  |           | Annualized   |            | per Leased 
|Square Feet Under Lease |                 | Leases                  |     | Leases  |       | Feet   |      | Square Feet |        | ($000s)    |           | Base Rent    |            | Square Foot
|                        |                 |                         |     |         |       |        |      |             |        |            |           |              |            |            
|                        | 2,500 and under |                         |     | 1,531   |       |        |      | 50.68       | %      |            |           | 2,106,464    |            |             |       | 12.50 | %      |   | $      | 50,443 |         |  |       | 13.35 | %      |   | $     | 23.95 |      
|                        | 2,501  5,000   |                         |     | 703     |       |        |      | 23.27       |        |            |           | 2,466,592    |            |             |       | 14.63 |        |   |        | 58,778 |         |  |       | 15.56 |        |   |       | 23.83 |      
|                        | 5,001  7,500   |                         |     | 254     |       |        |      | 8.41        |        |            |           | 1,556,671    |            |             |       | 9.24  |        |   |        | 36,497 |         |  |       | 9.66  |        |   |       | 23.45 |      
|                        | 7,501  10,000  |                         |     | 172     |       |        |      | 5.69        |        |            |           | 1,487,475    |            |             |       | 8.83  |        |   |        | 33,962 |         |  |       | 8.99  |        |   |       | 22.83 |      
|10,001  20,000         |                 |                         | 234 |         |       |        | 7.75 |             |        |            | 3,310,420 |              |            |             | 19.64 |       |        |   | 77,502 |        |         |  | 20.51 |       |        |   | 23.41 |      
|20,001  40,000         |                 |                         | 69  |         |       |        | 2.28 |             |        |            | 1,939,001 |              |            |             | 11.50 |       |        |   | 42,743 |        |         |  | 11.31 |       |        |   | 22.04 |      
|40,001 and over         |                 |                         | 58  |         |       |        | 1.92 |             |        |            | 3,987,912 |              |            |             | 23.66 |       |        |   | 77,901 |        |         |  | 20.62 |       |        |   | 19.53 |      
|                        |                 |                         |     |         |       |        |      |             |        |            |           |              |            |             |       |       |        |   |        |        |         |  |       |       |        |   |       |      
|                        |                 | Total/ Weighted Average |     |         | 3,021 |        |      |             | 100.00 | %          |           |              | 16,854,535 |             |       |       | 100.00 | % |        | $      | 377,826 |  |       |       | 100.00 | % |       | $     | 22.42 | 
|                        |                 |                         |     |         |       |        |      |             |        |            |           |              |            |             |       |       |        |   |        |        |         |  |       |       |        |   |       |      




|    |                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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

The following table presents a summary schedule
of the total lease expirations for our 133 properties for leases
in place at December 31, 2001. This table assumes that none
of the tenants exercise renewal options or termination rights,
if any, at or prior to the scheduled expirations:

|                         |                         |           |     |            |  |               |           |              |  |              |       |                  |   |   |        |         |  |  |       |        |   |   |       |       | 
|------------------------ | ----------------------- | --------- | --- | ---------- |  | ------------- | --------- | ------------ |  | ------------ | ----- | ---------------- | - | - | ------ | ------- |  |  | ----- | ------ | - | - | ----- | ----- | 
|                         |                         |           |     |            |  | Percentage of |           | Annualized   |  | Percentage   |       | Average         
|                         |                         |           |     | Square     |  | Aggregate     |           | Base Rent of |  | of Aggregate |       | Base Rent       
|                         |                         | Number of |     | Footage of |  | Portfolio     |           | Expiring     |  | Portfolio    |       | Per Net Rentable
|                         |                         | Leases    |     | Expiring   |  | Leased        |           | Leases(1)    |  | Annualized   |       | Square Foot of  
|Year of Lease Expiration |                         | Expiring  |     | Leases     |  | Square Feet   |           | ($000s)      |  | Base Rent    |       | Expiring Leases 
|                         |                         |           |     |            |  |               |           |              |  |              |       |                 
|Month-to-Month           |                         |           | 137 |            |  |               | 241,880   |              |  |              | 1.44  | %                |   | $ | 4,949  |         |  |  | 1.31  | %      |   | $ | 20.46 |      
|2002                     |                         |           | 606 |            |  |               | 2,311,774 |              |  |              | 13.72 |                  |   |   | 44,151 |         |  |  | 11.69 |        |   |   | 19.10 |      
|2003                     |                         |           | 617 |            |  |               | 3,008,249 |              |  |              | 17.85 |                  |   |   | 62,182 |         |  |  | 16.46 |        |   |   | 20.67 |      
|2004                     |                         |           | 588 |            |  |               | 3,118,206 |              |  |              | 18.50 |                  |   |   | 66,885 |         |  |  | 17.70 |        |   |   | 21.45 |      
|2005                     |                         |           | 415 |            |  |               | 2,769,985 |              |  |              | 16.43 |                  |   |   | 59,765 |         |  |  | 15.82 |        |   |   | 21.58 |      
|2006                     |                         |           | 327 |            |  |               | 2,174,329 |              |  |              | 12.90 |                  |   |   | 50,778 |         |  |  | 13.44 |        |   |   | 23.35 |      
|2007                     |                         |           | 109 |            |  |               | 729,393   |              |  |              | 4.33  |                  |   |   | 17,922 |         |  |  | 4.74  |        |   |   | 24.57 |      
|2008                     |                         |           | 50  |            |  |               | 613,736   |              |  |              | 3.64  |                  |   |   | 16,773 |         |  |  | 4.44  |        |   |   | 27.33 |      
|2009                     |                         |           | 36  |            |  |               | 454,043   |              |  |              | 2.69  |                  |   |   | 10,714 |         |  |  | 2.84  |        |   |   | 23.60 |      
|2010                     |                         |           | 51  |            |  |               | 708,023   |              |  |              | 4.20  |                  |   |   | 19,508 |         |  |  | 5.16  |        |   |   | 27.55 |      
|2011                     |                         |           | 24  |            |  |               | 283,031   |              |  |              | 1.68  |                  |   |   | 10,548 |         |  |  | 2.79  |        |   |   | 37.27 |      
|2012                     |                         |           | 13  |            |  |               | 89,767    |              |  |              | 0.53  |                  |   |   | 3,203  |         |  |  | 0.85  |        |   |   | 35.68 |      
|2013+                    |                         |           | 48  |            |  |               | 352,119   |              |  |              | 2.09  |                  |   |   | 10,448 |         |  |  | 2.76  |        |   |   | 29.67 |      
|                         |                         |           |     |            |  |               |           |              |  |              |       |                  |   |   |        |         |  |  |       |        |   |   |       |      
|                         | Total/ Weighted Average |           |     | 3,021      |  |               |           | 16,854,535   |  |              |       | 100.00           | % |   | $      | 377,826 |  |  |       | 100.00 | % |   | $     | 22.42 | 
|                         |                         |           |     |            |  |               |           |              |  |              |       |                  |   |   |        |         |  |  |       |        |   |   |       |      




|    |                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.

ITEM 3. Legal Proceedings

We are presently subject to various lawsuits,
claims and proceedings of a nature considered normal to our
ordinary course of business. We expect most of these legal
proceedings to be covered by our liability insurance. The most
significant of these contingencies not covered by insurance is
described below.

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##### Table of Contents



In December 2001, the owner of the entertainment
center at our Howard Hughes Center project asserted a claim
against us for indemnification arising out of a Los Angeles
Superior Court judgment against them, which invalidated a
transfer of in-lieu credits that Arden Realty made in August of
1999 as part of our sale of the land for the entertainment
center. The value of these in-lieu credits was approximately
$6.0 million and were transferred to satisfy certain
Transportation Impact Assessment fees related to the
entertainment center. The owner of the entertainment center is
currently appealing the judgment.

Based on our review of the current facts and
circumstances and advice of our outside counsel, we are not able
to express an opinion as to the ultimate outcome of this matter.
However, we do not believe that the resolution of this matter or
any of our ongoing legal proceedings will have a material
adverse effect on our consolidated results of operations, cash
flow or financial position.




ITEM 4. Submission of Matters to a Vote of
Security Holders

No matters were submitted to a vote of our
stockholders during the fourth quarter of the year ended
December 31, 2001.




PART II




ITEM 5. Market for Registrants Common
Equity and Related Stockholder Matters

Our common stock is traded on the New York Stock
Exchange, or NYSE, under the symbol ARI. On
March 28, 2002, the last reported sales price per share of
common stock on the NYSE was $28.40 and there were approximately
192 registered holders of record of our common stock. The
table below sets forth the quarterly high and low closing sales
price per share of our common stock as reported on the NYSE and
the cash dividends per share we declared with respect to each
period.

|               |  |      |       |     |  |           |       |  |  |   |       | 
|-------------- |  | ---- | ----- | --- |  | --------- | ----- |  |  | - | ----- | 
|               |  |      |       |     |  | Dividends
|               |  | High |       | Low |  | Declared 
|               |  |      |       |     |  |          
|2000           |  |      |       |     |  |           |       |  |  |   |       | 
|First Quarter  |  | $    | 21.69 |     |  | $         | 19.56 |  |  | $ | 0.465 | 
|Second Quarter |  | $    | 24.81 |     |  | $         | 21.06 |  |  | $ | 0.465 | 
|Third Quarter  |  | $    | 27.06 |     |  | $         | 24.19 |  |  | $ | 0.465 | 
|Fourth Quarter |  | $    | 26.19 |     |  | $         | 23.69 |  |  | $ | 0.465 | 
|2001           |  |      |       |     |  |           |       |  |  |   |       | 
|First Quarter  |  | $    | 23.38 |     |  | $         | 21.39 |  |  | $ | 0.49  | 
|Second Quarter |  | $    | 25.87 |     |  | $         | 21.68 |  |  | $ | 0.49  | 
|Third Quarter  |  | $    | 26.83 |     |  | $         | 23.73 |  |  | $ | 0.49  | 
|Fourth Quarter |  | $    | 26.50 |     |  | $         | 23.55 |  |  | $ | 0.49  | 

We pay quarterly cash dividends to common
stockholders at the discretion of our Board of Directors. The
amount of each quarterly cash dividend depends on our funds from
operations, financial condition and capital requirements, annual
distribution requirements under the REIT provisions of the
Internal Revenue Code and such other factors as the Board of
Directors deems relevant.

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##### Table of Contents






ITEM 6. Selected Financial
Data

You should read the following consolidated
financial and operating data for Arden Realty together with our
Managements Discussion and Analysis of Financial
Condition and Results of Operations and our consolidated
financial statements included elsewhere in this Form 10-K.

|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |        | 
|----------------------------------------------- | ------- | -------------------------------------------------- | -------- | ------ |  | ---- | -------- | ------ |  | ---- | -------- | ------ |  | - | ---------- | ------ |  | - | -------- | ------ | 
|                                                |         |                                                   
|                                                |         | For the Years Ended                               
|                                                |         | December 31,                                      
|                                                |         |                                                   
|                                                |         | 2001                                               |          | 2000   |  | 1999 |          | 1998   |  | 1997
|                                                |         |                                                    |          |        |  |      |          |        |  |     
|                                                |         |                                                   
|                                                |         | (in thousands, except ratio and per share amounts)
|Operating Data:                                 |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|Revenues                                        |         | $                                                  | 421,466  |        |  | $    | 388,117  |        |  | $    | 340,675  |        |  | $ | 284,582    |        |  | $ | 135,447  |       
|Property operating expenses                     |         |                                                    | 122,576  |        |  |      | 110,917  |        |  |      | 101,284  |        |  |   | 86,570     |        |  |   | 44,332   |       
|General and administrative expense              |         |                                                    | 12,143   |        |  |      | 9,336    |        |  |      | 7,393    |        |  |   | 6,665      |        |  |   | 4,322    |       
|Depreciation and amortization                   |         |                                                    | 101,819  |        |  |      | 87,267   |        |  |      | 69,837   |        |  |   | 51,822     |        |  |   | 20,260   |       
|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|                                                |         |                                                    | 184,928  |        |  |      | 180,597  |        |  |      | 162,161  |        |  |   | 139,525    |        |  |   | 66,533   |       
|Interest expense                                |         |                                                    | (84,195  | )      |  |      | (78,406  | )      |  |      | (60,239  | )      |  |   | (43,403    | )      |  |   | (19,511  | )     
|Gain on sale of property                        |         |                                                    | 4,591    |        |  |      | 2,132    |        |  |      |         |        |  |   |           |        |  |   |         |       
|Loss on valuation of derivative                 |         |                                                    |         |        |  |      |         |        |  |      |         |        |  |   |           |        |  |   | (3,111   | )     
|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|Income before minority interest                 |         |                                                    | 105,324  |        |  |      | 104,323  |        |  |      | 101,922  |        |  |   | 96,122     |        |  |   | 43,911   |       
|Minority interest                               |         |                                                    | (7,565   | )      |  |      | (7,613   | )      |  |      | (5,296   | )      |  |   | (5,447     | )      |  |   | (4,281   | )     
|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|Net income                                      |         | $                                                  | 97,759   |        |  | $    | 96,710   |        |  | $    | 96,626   |        |  | $ | 90,675     |        |  | $ | 39,630   |       
|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|Earnings per share:                             |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|                                                | Basic   |                                                    | $        | 1.53   |  |      | $        | 1.53   |  |      | $        | 1.53   |  |   | $          | 1.55   |  |   | $        | 1.43   | 
|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|                                                | Diluted |                                                    | $        | 1.53   |  |      | $        | 1.52   |  |      | $        | 1.53   |  |   | $          | 1.54   |  |   | $        | 1.41   | 
|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|Weighted average common shares outstanding:     |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|                                                | Basic   |                                                    |          | 63,754 |  |      |          | 63,408 |  |      |          | 63,016 |  |   |            | 58,660 |  |   |          | 27,794 | 
|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|                                                | Diluted |                                                    |          | 64,014 |  |      |          | 63,598 |  |      |          | 63,072 |  |   |            | 58,814 |  |   |          | 28,039 | 
|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|Cash dividends declared per common share        |         | $                                                  | 1.96     |        |  | $    | 1.86     |        |  | $    | 1.78     |        |  | $ | 1.68       |        |  | $ | 1.60     |       
|                                                |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|Other Data:                                     |         |                                                    |          |        |  |      |          |        |  |      |          |        |  |   |            |        |  |   |          |       
|Cash provided by operating activities           |         | $                                                  | 204,667  |        |  | $    | 192,152  |        |  | $    | 170,354  |        |  | $ | 152,273    |        |  | $ | 39,156   |       
|Cash used in investing activities               |         |                                                    | (115,854 | )      |  |      | (216,024 | )      |  |      | (283,574 | )      |  |   | (1,099,833 | )      |  |   | (659,670 | )     
|Cash (used in) provided by financing activities |         |                                                    | (57,204  | )      |  |      | 22,248   |        |  |      | 115,698  |        |  |   | 946,838    |        |  |   | 618,182  |       
|Funds from Operations(1)                        |         |                                                    | 198,240  |        |  |      | 185,146  |        |  |      | 170,405  |        |  |   | 147,369    |        |  |   | 64,171   |       
|EBITDA(2)                                       |         |                                                    | 286,747  |        |  |      | 267,864  |        |  |      | 231,998  |        |  |   | 191,347    |        |  |   | 86,793   |       
|Ratio of EBITDA to interest expense(2)          |         |                                                    | 3.41     |        |  |      | 3.42     |        |  |      | 3.85     |        |  |   | 4.41       |        |  |   | 4.45     |       
|Ratio of EBITDA to fixed charges(2)(3)          |         |                                                    | 2.94     |        |  |      | 2.81     |        |  |      | 3.26     |        |  |   | 3.66       |        |  |   | 4.20     |       
|Ratio of earnings to fixed charges(3)(4)        |         |                                                    | 1.86     |        |  |      | 1.84     |        |  |      | 2.20     |        |  |   | 2.56       |        |  |   | 2.86     |       




Selected financial data continues on next
page


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##### Table of Contents



|                              |  |              |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|----------------------------- |  | ------------ | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                              |  |             
|                              |  | December 31,
|                              |  |             
|                              |  | 2001         |           | 2000 |  | 1999 |           | 1998 |  | 1997
|                              |  |              |           |      |  |      |           |      |  |     
|Balance Sheet Data:           |  |              |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|Net investment in real estate |  | $            | 2,622,980 |      |  | $    | 2,603,566 |      |  | $    | 2,479,111 |  |  | $ | 2,260,433 |  |  | $ | 1,247,701 | 
|Total assets                  |  |              | 2,761,443 |      |  |      | 2,705,597 |      |  |      | 2,570,458 |  |  |   | 2,331,919 |  |  |   | 1,284,004 | 
|Total indebtedness            |  |              | 1,251,483 |      |  |      | 1,177,769 |      |  |      | 1,029,656 |  |  |   | 840,377   |  |  |   | 477,566   | 
|Other liabilities(5)          |  |              | 62,685    |      |  |      | 56,885    |      |  |      | 50,555    |  |  |   | 35,720    |  |  |   | 23,205    | 
|Minority interests            |  |              | 78,661    |      |  |      | 86,176    |      |  |      | 86,294    |  |  |   | 56,222    |  |  |   | 95,973    | 
|Total Stockholders Equity    |  |              | 1,337,206 |      |  |      | 1,355,171 |      |  |      | 1,375,758 |  |  |   | 1,373,390 |  |  |   | 672,983   | 



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We consider funds from operations, as defined by
	the National Association of Real Estate Investment Trusts, or
	NAREIT, to be a useful financial measure of our operating
	performance. We believe that funds from operations provides
	investors with an additional basis to evaluate our ability to
	service debt and to fund acquisitions and other capital
	expenditures. Funds from operations should not be considered an
	alternative to net income determined in accordance with
	generally accepted accounting principles, or GAAP, as an
	indicator of our financial performance or as a substitute for
	cash flow from operating activities determined in accordance
	with GAAP as a measure of our liquidity. Funds from operations
	also is not necessarily indicative of funds available to fund
	our cash needs, including our ability to make distributions or
	to service our debt.
|   
|    | The White Paper on funds from operations approved
	by the Board of Governors of NAREIT in October 1999 defines
	funds from operations as net income or loss computed in
	accordance with 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 compute funds from
	operations in accordance with standards established by the White
	Paper which may differ from the standards used by other REITs
	and, accordingly, our funds from operations may not be
	comparable to other REITs.                                                                                                                                                                                                  
|   
|(2) | As used in this Form 10-K, earnings before
	interest, taxes, depreciation and amortization, or EBITDA, means
	revenue less property operating expenses and general and
	administrative expenses. EBITDA does not represent cash
	generated from operating activities in accordance with GAAP and
	should not be considered as an alternative to operating income
	or net income as an indicator of performance or as a substitute
	for cash flow from operating activities determined in accordance
	with GAAP as a measure of our liquidity. We have included
	information with respect to EBITDA because we understand that
	this information may be used as one measure of operating
	performance.                                                                                                                                                                                                
|   
|(3) | Fixed charges consist of interest costs, whether
	expensed or capitalized, amortization of deferred financing
	costs, amortization of discounts or premiums related to
	indebtedness and preferred unit distributions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(4) | The ratios of earnings to fixed charges were
	computed by dividing earnings by fixed charges. For this
	purpose, earnings have been calculated by adding fixed charges,
	excluding capitalized interest and preferred unit distributions,
	to income or loss before extraordinary items.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

(5) Excludes dividends payable.

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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.

We are a self-administered and self-managed real
estate investment trust that owns, manages, leases, develops,
renovates and acquires commercial properties located in Southern
California. We are a full-service real estate organization
managed by 10 senior executive officers who have experience
in the real estate industry ranging from 10 to 33 years and
who collectively have an average of 19 years experience. We
perform all property management, construction management,
accounting, finance and acquisition activities and a majority of
our leasing transactions with our staff of approximately
300 employees.

As of December 31, 2001, we are Southern
Californias largest publicly traded office landlord as
measured by total net rentable square feet owned. As of that
date, our portfolio consisted of 133 primarily suburban
office properties containing approximately 18.2 million net
rentable square feet and two properties with approximately
566,000 net rentable square feet under development. As of
December 31, 2001, our properties were 92.2% occupied.

Our primary business strategy is to actively
manage our portfolio to achieve gains in rental rates and
occupancy, control operating expenses and to maximize income
from ancillary operations and services. When market conditions
permit, we may also selectively develop or acquire new
properties that add value and fit strategically into our
portfolio. We may also sell existing properties and redeploy the
proceeds into investments that we believe will generate higher
long-term value.

Critical
Accounting Policies

Revenue Recognition

Minimum rent, including rental abatements and
contractual fixed increases attributable to operating leases, is
recognized on a straight-line basis over the term of the related
lease.

Qualification as a REIT

Since our taxable year ended December 31,
1996, we have been organized and operated, and intend to
continue to operate, so as to qualify for taxation as a REIT
under the Internal Revenue Code. Our qualification and taxation
as a REIT depends on our ability to meet, through actual annual
operating results, asset diversification, distribution levels
and diversity of stock ownership, numerous requirements
established under highly technical and complex Internal Revenue
Code provisions subject to interpretation.

If we failed to qualify as a REIT in any taxable
year, we would be subject to federal income tax, including any
applicable alternative minimum tax, on our taxable income at
regular corporate rates. Moreover, unless entitled to relief
under specific statutory provisions, we also would be
disqualified as a REIT for the four taxable years following the
year during which qualification was lost. For additional
information see Risk Factors  We may suffer
adverse tax consequences and be unable to attract capital if we
fail to qualify as a REIT, and Our operating
partnership intends to qualify as a partnership, but we cannot
guarantee that it will qualify, elsewhere in this
Form 10-K.

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Depreciation

Depreciation is calculated under the
straight-line method using depreciable lives of ten to forty
seven years for building and building improvements and five-year
lives for furniture, fixtures and equipment. Amortization of
tenant improvements is calculated using the straight-line method
over the term of the related lease.

The carrying amount of all properties is
evaluated periodically to determine if adjustment to the useful
life is warranted. During 2001, the useful lives of certain
building and building improvements were adjusted to more
accurately reflect their estimated usefulness. The effect of
this change in estimate in 2001 was an increase to net income of
approximately $10.1 million or $0.16 per common share. This
change in estimate did not have an impact on our 2001 cash flows
or funds from operations.

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##### Table of Contents



Results Of
Operations

Our financial position and operating results are
primarily comprised of our portfolio of properties and income
derived from those properties. Therefore, the comparability of
financial data from period to period will be affected by the
timing of significant property renovations, development,
acquisitions and dispositions.

Comparison of the year ended December 31,
2001 to the year ended December 31, 2000

(in thousands, except number of properties and
percentages)


|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |     |    |  
|----------- | ------------------------------- | --------------------------------------------- | ----------------------- | ---- | ------- | ------- |  | ------ | ------- | ------- |  | - | ------ | ------ |  |  | --- | -- | -
|            |                                 |                                               |                         |      |         |        
|            |                                 | Year Ended December 31,                       |                         |      |         |        
|            |                                 |                                               |                         |      |         | Percent
|            |                                 | 2001                                          |                         | 2000 |         | Change  |  | Change
|            |                                 |                                               |                         |      |         |         |  |       
|Revenue     |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            | Revenue from rental operations: |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |    
|            |                                 | Rental                                        |                         | $    | 355,622 |         |  | $      | 328,460 |         |  | $ | 27,162 |        |  |  | 8   | % 
|            |                                 | Tenant reimbursements                         |                         |      | 22,732  |         |  |        | 16,371  |         |  |   | 6,361  |        |  |  | 39  |   
|            |                                 | Parking, net of expense                       |                         |      | 22,025  |         |  |        | 18,348  |         |  |   | 3,677  |        |  |  | 20  |   
|            |                                 | Other rental operations                       |                         |      | 18,146  |         |  |        | 21,411  |         |  |   | (3,265 | )      |  |  | (15 | ) 
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            |                                 |                                               | Total                   |      |         | 418,525 |  |        |         | 384,590 |  |   |        | 33,935 |  |  |     | 9  |  
|            |                                 | Interest and other income                     |                         |      | 2,941   |         |  |        | 3,527   |         |  |   | (586   | )      |  |  | (17 | ) 
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            |                                 |                                               | Total revenue           |      | $       | 421,466 |  |        | $       | 388,117 |  |   | $      | 33,349 |  |  |     | 9  | %
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|Expenses    |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            | Property expenses:              |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |    
|            |                                 | Repairs and maintenance                       |                         | $    | 36,715  |         |  | $      | 35,390  |         |  | $ | 1,325  |        |  |  | 4   | % 
|            |                                 | Utilities                                     |                         |      | 33,894  |         |  |        | 29,872  |         |  |   | 4,022  |        |  |  | 13  |   
|            |                                 | Real estate taxes                             |                         |      | 29,404  |         |  |        | 26,808  |         |  |   | 2,596  |        |  |  | 10  |   
|            |                                 | Insurance                                     |                         |      | 5,727   |         |  |        | 4,203   |         |  |   | 1,524  |        |  |  | 36  |   
|            |                                 | Ground rent                                   |                         |      | 1,885   |         |  |        | 1,214   |         |  |   | 671    |        |  |  | 55  |   
|            |                                 | Administrative                                |                         |      | 14,951  |         |  |        | 13,430  |         |  |   | 1,521  |        |  |  | 11  |   
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            |                                 |                                               | Total property expenses |      |         | 122,576 |  |        |         | 110,917 |  |   |        | 11,659 |  |  |     | 11 |  
|            |                                 | General and administrative                    |                         |      | 12,143  |         |  |        | 9,336   |         |  |   | 2,807  |        |  |  | 30  |   
|            |                                 | Interest                                      |                         |      | 84,195  |         |  |        | 78,406  |         |  |   | 5,789  |        |  |  | 7   |   
|            |                                 | Depreciation and amortization                 |                         |      | 101,819 |         |  |        | 87,267  |         |  |   | 14,552 |        |  |  | 17  |   
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            |                                 |                                               | Total expenses          |      | $       | 320,733 |  |        | $       | 285,926 |  |   | $      | 34,807 |  |  |     | 12 | %
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|Other Data: |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            | Number of properties:           |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |    
|            |                                 | Acquired during period                        |                         |      |        |         |  |        |        |         |  |   |        |        |  |  |     |   
|            |                                 | Completed and placed in service during period |                         |      | 1       |         |  |        | 1       |         |  |   |        |        |  |  |     |   
|            |                                 | Disposed of during period                     |                         |      | (10     | )       |  |        | (1      | )       |  |   |        |        |  |  |     |   
|            |                                 | Owned at end of period                        |                         |      | 133     |         |  |        | 142     |         |  |   |        |        |  |  |     |   
|            | Net rentable square feet:       |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |    
|            |                                 | Acquired during period                        |                         |      |        |         |  |        |        |         |  |   |        |        |  |  |     |   
|            |                                 | Completed and placed in service during period |                         |      | 162     |         |  |        | 242     |         |  |   |        |        |  |  |     |   
|            |                                 | Disposed of during period                     |                         |      | (573    | )       |  |        | (76     | )       |  |   |        |        |  |  |     |   
|            |                                 | Owned at end of period                        |                         |      | 18,247  |         |  |        | 18,658  |         |  |   |        |        |  |  |     |   

Variances for revenue from rental operations and
property expenses are discussed below.

Interest and other income decreased by
approximately $586,000 in 2001 as compared to 2000, primarily
due to lower interest income earned in 2001 from our restricted
cash balances required by mortgage loans on lower effective
interest rates in 2001.

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General and administrative expenses increased
approximately $2.8 million in 2001 as compared to 2000.
This increase was primarily related to higher personnel costs in
2001, including approximately $1.3 million in non-cash
compensation expense from restricted stock awards granted to key
executives in July and December of 2000 and July of 2001 and
approximately $850,000 in salaries for employees hired after
January 1, 2000.

Interest expense increased approximately
$5.8 million or 7% during 2001, as compared to 2000. This
increase was primarily due to higher outstanding balances in
2001, resulting from the funding of development, tenant
improvements and leasing commission costs which was partially
offset by lower effective interest rates in 2001.

Depreciation and amortization expense increased
by approximately $14.6 million or 17% during 2001 compared
to 2000, primarily due to depreciation related to newly
developed and renovated properties, capital expenditures, tenant
improvements and leasing commissions placed in service
subsequent to January 1, 2000, net of a decrease of
approximately $10.1 million in 2001 due to a change in the
estimated useful lives of certain building and building
improvements.

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##### Table of Contents



Variances for Revenue from Rental Operations
and Property Operating Expenses

The increase in revenue from rental operations
and property operating expenses in 2001 as compared to 2000 was
partially due to a development property placed in service in
2000, one development project placed in service in 2001, a
property sold in 2000, five properties sold in 2001, and three
properties under renovation for all or a portion of the periods
presented. Operating results for properties under renovation may
significantly vary from period to period depending on the status
of the renovation and occupancy levels maintained during the
renovation.

Following is a summary of the increase in revenue
from rental operations and property operating expenses that
relates to the eleven properties that were either sold, placed
in service after January 1, 2000 or were under renovation
for all or a portion of the period beginning after
January 1, 2000 and for the 133
non-renovation/non-development properties we owned for all 2000
and 2001 (in thousands, except number of properties).

|                                |                          |                |        |                       |   |                  |        |        |   |   |        |        |  
|------------------------------- | ------------------------ | -------------- | ------ | --------------------- | - | ---------------- | ------ | ------ | - | - | ------ | ------ | -
|                                |                          |                |        |                       |   | Non-Renovation/ 
|                                |                          |                |        | Properties Sold,      |   | Non-Development 
|                                |                          |                |        | Placed in Service or  |   | Properties Owned
|                                |                          |                |        | Under Renovation      |   | for all of 2000 
|                                |                          | Total Variance |        | after January 1, 2000 |   | and 2001(1)     
|                                |                          |                |        |                       |   |                 
|Revenue from Rental Operations: |                          |                |        |                       |   |                  |        |        |   |   |        |       
|                                | Rental                   |                | $      | 27,162                |   |                  | $      | 13,571 |   |   | $      | 13,591 |  
|                                | Tenant reimbursements    |                |        | 6,361                 |   |                  |        | 480    |   |   |        | 5,881  |  
|                                | Parking, net of expense  |                |        | 3,677                 |   |                  |        | 1,017  |   |   |        | 2,660  |  
|                                | Other rental operations  |                |        | (3,265                | ) |                  |        | (991   | ) |   |        | (2,274 | )
|                                |                          |                |        |                       |   |                  |        |        |   |   |        |       
|                                |                          | $              | 33,935 |                       |   | $                | 14,077 |        |   | $ | 19,858 |       
|                                |                          |                |        |                       |   |                  |        |        |   |   |        |       
|Property Expenses:              |                          |                |        |                       |   |                  |        |        |   |   |        |       
|                                | Repairs and maintenance  |                |        | 1,325                 |   |                  |        | 1,157  |   |   |        | 168    |  
|                                | Utilities                |                |        | 4,022                 |   |                  |        | 837    |   |   |        | 3,185  |  
|                                | Real estate taxes        |                |        | 2,596                 |   |                  |        | 1,253  |   |   |        | 1,343  |  
|                                | Insurance                |                |        | 1,524                 |   |                  |        | 156    |   |   |        | 1,368  |  
|                                | Ground rent              |                |        | 671                   |   |                  |        | 386    |   |   |        | 285    |  
|                                | Administrative           |                |        | 1,521                 |   |                  |        | 302    |   |   |        | 1,219  |  
|                                |                          |                |        |                       |   |                  |        |        |   |   |        |       
|                                |                          | $              | 11,659 |                       |   | $                | 4,091  |        |   | $ | 7,568  |       
|                                |                          |                |        |                       |   |                  |        |        |   |   |        |       
|Other Data:                     |                          |                |        |                       |   |                  |        |        |   |   |        |       
|                                | Number of properties     |                |        |                       |   |                  |        | 11     |   |   |        | 133    |  
|                                | Net rentable square feet |                |        |                       |   |                  |        | 1,447  |   |   |        | 17,373 |  




|    |                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | See analysis of Properties Owned for all of 2000
	and 2001 below. Includes the Temecula portfolio of five
	properties sold at the end of 2001 since these properties were
	owned for all of 2000 and 2001.

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Properties Owned for all of 2000 and
2001

Following is a comparison of property operating
data computed under the GAAP basis and cash basis for the 133
non-renovation/non-development properties we owned for all of
2000 and 2001 (in thousands, except number of properties and
percentages).

|                         |                                |              |         |         |  |         |         |         |  |   |        |        |  |  |     |     |  
|------------------------ | ------------------------------ | ------------ | ------- | ------- |  | ------- | ------- | ------- |  | - | ------ | ------ |  |  | --- | --- | -
|                         |                                |              |         |         |  |        
|                         |                                | Year Ended   |         |         |  |        
|                         |                                | December 31, |         |         |  |        
|                         |                                |              |         | Dollar  |  | Percent
|                         |                                | 2001         |         | 2000    |  | Change  |         | Change 
|                         |                                |              |         |         |  |         |         |        
|GAAP Basis:              |                                |              |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|                         | Revenue from rental operations |              | $       | 378,137 |  |         | $       | 358,279 |  |   | $      | 19,858 |  |  |     | 5.5 | %
|                         | Property expenses              |              |         | 113,619 |  |         |         | 106,051 |  |   |        | 7,568  |  |  |     | 7.1 |  
|                         |                                |              |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|                         |                                | $            | 264,518 |         |  | $       | 252,228 |         |  | $ | 12,290 |        |  |  | 4.9 | %  
|                         |                                |              |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|Cash Basis(1):           |                                |              |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|                         | Revenue from rental operations |              | $       | 372,030 |  |         | $       | 351,235 |  |   | $      | 20,795 |  |  |     | 5.9 | %
|                         | Property expenses              |              |         | 113,619 |  |         |         | 106,051 |  |   |        | 7,568  |  |  |     | 7.1 |  
|                         |                                |              |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|                         |                                | $            | 258,411 |         |  | $       | 245,184 |         |  | $ | 13,227 |        |  |  | 5.4 | %  
|                         |                                |              |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|Number of properties     |                                |              | 133     |         |  |         | 133     |         |  |   |        |        |  |  |     |    
|Average occupancy        |                                |              | 93.8    | %       |  |         | 94.5    | %       |  |   |        |        |  |  |     |    
|Net rentable square feet |                                |              | 17,373  |         |  |         | 17,373  |         |  |   |        |        |  |  |     |    



---

|    |                                         
|--- | ----------------------------------------
|(1) | Excludes straight-line rent adjustments.

Revenue from rental operations for these
properties, computed on a GAAP basis, increased by approximately
$19.9 million, or 5.5%, during 2001 as compared to 2000.
Approximately $14.5 million of this difference was related
to higher rental revenue in 2001. The increase in rental revenue
was primarily attributable to increases in rental rates in 2001.
Revenue from rental operations was also higher due to an
approximate $5.9 million increase in tenant reimbursements
and an approximate $2.7 million increase in parking income
offset by an approximate $2.3 million decrease in revenue
from other rental operations. Tenant reimbursements increased
primarily due to higher operating expenses in 2001, as discussed
below. Parking income increased in 2001 primarily due to
increases in parking rates, while revenue from other rental
operations decreased due to the timing of revenues from
non-scheduled sources. Revenue from other rental operations
includes after-hour utility billings, signage and lease
termination settlements.

Straight-line rents for these properties in 2001
were approximately $937,000 less than in 2000.

Property expenses for these properties increased
by approximately $7.6 million, or 7.1%, during 2001 as
compared to 2000, primarily due to a $3.2 million increase
in utility expenses, a $1.3 million increase in real estate
taxes, a $1.4 million increase in insurance expense and a
$1.2 million increase in administrative expenses in 2001.
The increase in utility expenses was primarily due to rate
increases in 2001. Real estate taxes increased in 2001 due to
normal annual increases and final assessments on certain
properties. Insurance expense increased due to increases in
industry-wide insurance rates in 2001, while administrative
expenses increased primarily due to higher personnel costs in
2001. As noted above, the increase in operating expenses was the
primary reason for the $5.9 million increase in tenant
reimbursements.

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##### Table of Contents



Comparison of the year ended December 31,
2000 to the year ended December 31, 1999

(in thousands, except number of properties and
percentages)


|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |    |    |  
|----------- | ------------------------------- | --------------------------------------------- | ----------------------- | ---- | ------- | ------- |  | ------ | ------- | ------- |  | - | ------ | ------ |  |  | -- | -- | -
|            |                                 |                                               |                         |      |         |        
|            |                                 | Year Ended December 31,                       |                         |      |         |        
|            |                                 |                                               |                         |      |         | Percent
|            |                                 | 2000                                          |                         | 1999 |         | Change  |  | Change
|            |                                 |                                               |                         |      |         |         |  |       
|Revenue     |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            | Revenue from rental operations: |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |   
|            |                                 | Rental                                        |                         | $    | 328,460 |         |  | $      | 292,688 |         |  | $ | 35,772 |        |  |  | 12 | % 
|            |                                 | Tenant reimbursements                         |                         |      | 16,371  |         |  |        | 13,863  |         |  |   | 2,508  |        |  |  | 18 |   
|            |                                 | Parking, net of expense                       |                         |      | 18,348  |         |  |        | 14,384  |         |  |   | 3,964  |        |  |  | 28 |   
|            |                                 | Other rental operations                       |                         |      | 21,411  |         |  |        | 16,918  |         |  |   | 4,493  |        |  |  | 27 |   
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            |                                 |                                               | Total                   |      |         | 384,590 |  |        |         | 337,853 |  |   |        | 46,737 |  |  |    | 14 |  
|            |                                 | Interest and other income                     |                         |      | 3,527   |         |  |        | 2,822   |         |  |   | 705    |        |  |  | 25 |   
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            |                                 |                                               | Total revenue           |      | $       | 388,117 |  |        | $       | 340,675 |  |   | $      | 47,442 |  |  |    | 14 | %
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|Expenses    |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            | Property expenses:              |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |   
|            |                                 | Repairs and maintenance                       |                         | $    | 35,390  |         |  | $      | 32,902  |         |  | $ | 2,488  |        |  |  | 8  | % 
|            |                                 | Utilities                                     |                         |      | 29,872  |         |  |        | 28,305  |         |  |   | 1,567  |        |  |  | 6  |   
|            |                                 | Real estate taxes                             |                         |      | 26,808  |         |  |        | 23,167  |         |  |   | 3,641  |        |  |  | 16 |   
|            |                                 | Insurance                                     |                         |      | 4,203   |         |  |        | 3,993   |         |  |   | 210    |        |  |  | 5  |   
|            |                                 | Ground rent                                   |                         |      | 1,214   |         |  |        | 891     |         |  |   | 323    |        |  |  | 36 |   
|            |                                 | Administrative                                |                         |      | 13,430  |         |  |        | 12,026  |         |  |   | 1,404  |        |  |  | 12 |   
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            |                                 |                                               | Total property expenses |      |         | 110,917 |  |        |         | 101,284 |  |   |        | 9,633  |  |  |    | 10 |  
|            |                                 | General and administrative                    |                         |      | 9,336   |         |  |        | 7,393   |         |  |   | 1,943  |        |  |  | 26 |   
|            |                                 | Interest                                      |                         |      | 78,406  |         |  |        | 60,239  |         |  |   | 18,167 |        |  |  | 30 |   
|            |                                 | Depreciation and amortization                 |                         |      | 87,267  |         |  |        | 69,837  |         |  |   | 17,430 |        |  |  | 25 |   
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            |                                 |                                               | Total expenses          |      | $       | 285,926 |  |        | $       | 238,753 |  |   | $      | 47,173 |  |  |    | 20 | %
|            |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|Other Data: |                                 |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  | 
|            | Number of properties:           |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |   
|            |                                 | Acquired during period                        |                         |      |        |         |  |        | 4       |         |  |   |        |        |  |  |    |   
|            |                                 | Completed and placed in service during period |                         |      | 1       |         |  |        |        |         |  |   |        |        |  |  |    |   
|            |                                 | Disposed of during period                     |                         |      | (1      | )       |  |        |        |         |  |   |        |        |  |  |    |   
|            |                                 | Owned at end of period                        |                         |      | 142     |         |  |        | 142     |         |  |   |        |        |  |  |    |   
|            | Net rentable square feet:       |                                               |                         |      |         |         |  |        |         |         |  |   |        |        |  |  |   
|            |                                 | Acquired during period                        |                         |      |        |         |  |        | 524     |         |  |   |        |        |  |  |    |   
|            |                                 | Completed and placed in service during period |                         |      | 242     |         |  |        |        |         |  |   |        |        |  |  |    |   
|            |                                 | Disposed of during period                     |                         |      | (76     | )       |  |        |        |         |  |   |        |        |  |  |    |   
|            |                                 | Owned at end of period                        |                         |      | 18,658  |         |  |        | 18,492  |         |  |   |        |        |  |  |    |   

Variances for revenue from rental operations and
property expenses are discussed below.

Interest and other income increased by
approximately $705,000 in 2000 as compared to 1999, primarily
due to increases in management fees for owner associations we
manage and from higher interest income earned in 2000 on higher
restricted cash balances required by mortgage loans entered into
after January 1, 1999.

General and administrative expenses were
approximately $9.3 million, or 2.4% of total revenue, in
2000 as compared to $7.4 million, or 2.2% of total revenue,
in 1999. This increase was primarily related to higher personnel
costs in 2000, including approximately $590,000 in non-cash
compensation expense from restricted stock awards granted to
several key executives.

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Interest expense increased approximately
$18.2 million in 2000 as compared to 1999. This increase
was primarily due to both higher outstanding balances in 2000
resulting from the funding of acquisitions, tenant improvement,
leasing commission costs and development and renovation projects
placed in service during the periods presented, and higher
average interest rates in 2000.

Depreciation and amortization expense increased
by approximately $17.4 million in 2000, primarily due to
depreciation related to properties acquired in 1999, newly
developed and renovated properties, and capital expenditures,
tenant improvements and leasing commissions placed in service in
2000.

Variances for Revenue from Rental Operations
and Property Operating Expenses

The increase in revenue from rental operations
and property operating expenses in 2000 as compared to 1999 was
partially due to the four properties we acquired during 1999, a
development property placed in service in 2000, a property sold
in 2000 and five properties under renovation for all or a
portion of the periods presented. Operating results for
properties under renovation may significantly vary from period
to period depending on the status of the renovation and
occupancy levels maintained during the renovation.

Following is a summary of the increase in revenue
from rental operations and property operating expenses that
relates to the eleven properties that were either acquired, sold
or placed in service after January 1, 1999 or were under
renovation for all or a portion of the period beginning after
January 1, 1999 and for the 132 non-renovation properties
we owned for all 1999 and 2000 (in thousands, except number of
properties).

|                                |                          |                |        |                            |  |                  |        |        |  |   |        |        |  
|------------------------------- | ------------------------ | -------------- | ------ | -------------------------- |  | ---------------- | ------ | ------ |  | - | ------ | ------ | -
|                                |                          |                |        |                            |  | Non-Renovation/ 
|                                |                          |                |        |                            |  | Non-Development 
|                                |                          |                |        | Properties Acquired, Sold, |  | Properties Owned
|                                |                          |                |        | Placed in Service or       |  | for all of      
|                                |                          |                |        | Under Renovation           |  | 1999 and        
|                                |                          | Total Variance |        | after January 1, 1999      |  | 2000(1)         
|                                |                          |                |        |                            |  |                 
|Revenue from Rental Operations: |                          |                |        |                            |  |                  |        |        |  |   |        |       
|                                | Rental                   |                | $      | 35,772                     |  |                  | $      | 17,122 |  |   | $      | 18,650 |  
|                                | Tenant reimbursements    |                |        | 2,508                      |  |                  |        | 185    |  |   |        | 2,323  |  
|                                | Parking, net of expense  |                |        | 3,964                      |  |                  |        | 1,442  |  |   |        | 2,522  |  
|                                | Other rental operations  |                |        | 4,493                      |  |                  |        | 6,882  |  |   |        | (2,389 | )
|                                |                          |                |        |                            |  |                  |        |        |  |   |        |       
|                                |                          | $              | 46,737 |                            |  | $                | 25,631 |        |  | $ | 21,106 |       
|                                |                          |                |        |                            |  |                  |        |        |  |   |        |       
|Property Expenses:              |                          |                |        |                            |  |                  |        |        |  |   |        |       
|                                | Repairs and maintenance  |                |        | 2,488                      |  |                  |        | 1,955  |  |   |        | 533    |  
|                                | Utilities                |                |        | 1,567                      |  |                  |        | 1,432  |  |   |        | 135    |  
|                                | Real estate taxes        |                |        | 3,641                      |  |                  |        | 1,401  |  |   |        | 2,240  |  
|                                | Insurance                |                |        | 210                        |  |                  |        | 165    |  |   |        | 45     |  
|                                | Ground rent              |                |        | 323                        |  |                  |        |       |  |   |        | 323    |  
|                                | Administrative           |                |        | 1,404                      |  |                  |        | 738    |  |   |        | 666    |  
|                                |                          |                |        |                            |  |                  |        |        |  |   |        |       
|                                |                          | $              | 9,633  |                            |  | $                | 5,691  |        |  | $ | 3,942  |       
|                                |                          |                |        |                            |  |                  |        |        |  |   |        |       
|Other Data:                     |                          |                |        |                            |  |                  |        |        |  |   |        |       
|                                | Number of properties     |                |        |                            |  |                  |        | 11     |  |   |        | 132    |  
|                                | Net rentable square feet |                |        |                            |  |                  |        | 1,910  |  |   |        | 16,824 |  




|    |                                                                  
|--- | -----------------------------------------------------------------
|(1) | See analysis of Properties Owned for all of 1999
	and 2000 below.

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Properties Owned for all of 1999 and
2000

Following is a comparison of property operating
data computed under the GAAP basis and cash basis for the 132
non-renovation/non-development properties we owned for all of
1999 and 2000 (in thousands, except number of properties and
percentages).

|                         |                                |                         |         |         |  |         |         |         |  |   |        |        |  |  |     |     |  
|------------------------ | ------------------------------ | ----------------------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------ | ------ |  |  | --- | --- | -
|                         |                                |                         |         |         |  |        
|                         |                                | Year Ended December 31, |         |         |  |        
|                         |                                |                         |         | Dollar  |  | Percent
|                         |                                | 2000                    |         | 1999    |  | Change  |         | Change 
|                         |                                |                         |         |         |  |         |         |        
|GAAP Basis:              |                                |                         |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|                         | Revenue from rental operations |                         | $       | 343,045 |  |         | $       | 321,939 |  |   | $      | 21,106 |  |  |     | 6.6 | %
|                         | Property expenses              |                         |         | 100,714 |  |         |         | 96,772  |  |   |        | 3,942  |  |  |     | 4.1 |  
|                         |                                |                         |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|                         |                                | $                       | 242,331 |         |  | $       | 225,167 |         |  | $ | 17,164 |        |  |  | 7.6 | %  
|                         |                                |                         |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|Cash Basis(1):           |                                |                         |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|                         | Revenue from rental operations |                         | $       | 334,915 |  |         | $       | 315,498 |  |   | $      | 19,417 |  |  |     | 6.2 | %
|                         | Property expenses              |                         |         | 100,714 |  |         |         | 96,772  |  |   |        | 3,942  |  |  |     | 4.1 |  
|                         |                                |                         |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|                         |                                | $                       | 234,201 |         |  | $       | 218,726 |         |  | $ | 15,475 |        |  |  | 7.1 | %  
|                         |                                |                         |         |         |  |         |         |         |  |   |        |        |  |  |     |    
|Number of properties     |                                |                         | 132     |         |  |         | 132     |         |  |   |        |        |  |  |     |    
|Average occupancy        |                                |                         | 95.1    | %       |  |         | 93.9    | %       |  |   |        |        |  |  |     |    
|Net rentable square feet |                                |                         | 16,824  |         |  |         | 16,824  |         |  |   |        |        |  |  |     |    



---



|    |                                         
|--- | ----------------------------------------
|(1) | Excludes straight-line rent adjustments.

Revenue from rental operations for these
properties, computed on a GAAP basis, increased by approximately
$21.1 million, or 6.6%, during 2000, compared to 1999.
Approximately $18.7 million of this increase was from
rental revenue, of which $17.0 million was related to
scheduled rents and $1.7 million was from straight-line
rent. Approximately 55% of the increase in scheduled rents was
due to increases in rental rates in 2000 and the remaining 45%
was related to higher average occupancy in 2000. The increase in
straight-line rent was primarily due to new leases and
extensions signed with higher rental rate escalations than in
1999. Revenue from rental operations was also higher due to an
approximate $2.3 million increase in tenant reimbursements,
a $2.5 million increase in parking income net of an
approximate $2.4 million decrease in other revenue from
rental operations. In addition to recoveries of approximately
$688,000 from increases in utility rates for our San Diego
properties, tenant reimbursements and parking income primarily
increased due to the approximate 1.2% increase in average
occupancy in 2000, while other rental operations decreased
primarily due to lower lease termination settlement fees in 2000.

Excluding only the straight-line rent adjustment
for these properties, revenue from rental operations computed on
a cash basis, increased by approximately $19.4 million or
6.2%.

Property operating expenses for these properties
increased by approximately $3.9 million, or 4.1%, during
2000, compared to 1999, primarily due to higher real estate
taxes, repairs and maintenance, contingent ground rent and
property administrative expenses in 2000. Real estate taxes
increased by approximately $2.2 million in 2000 due to
normal annual increases and final assessments on certain
properties. Repairs and maintenance increased by $533,000
primarily due to the 1.2% increase in average occupancy in 2000.
Ground rent expense increased by $323,000 due to higher
operating income from one of our properties with a participating
ground lease. Property administrative expenses, comprised
primarily of personnel and related costs, were approximately
$666,000 higher in 2000, primarily due to our continued focus on
raising our portfolio-wide occupancy. Utility costs increased by
approximately $135,000 in 2000 due to both higher average
occupancy and rate increases for our San Diego properties,
partially offset by savings achieved from energy enhancing
capital improvements completed during 1999.

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##### Table of Contents



Liquidity and Capital Resources

Cash
Flows

Cash provided by operating activities increased
by approximately $12.5 million to $204.7 million in
2001, as compared to $192.2 million in 2000, primarily due
to improved operating results for the 133 properties we owned
for both years presented and from cash flows for four
development/ renovation properties placed in service subsequent
to January 1, 2000. This increase was partially offset by
the loss of operating cash flows on a property we sold in the
fourth quarter of 2000 and ten properties sold in 2001.

Cash used in investing activities decreased by
approximately $100.1 million to $115.9 million in
2001, as compared to $216.0 million in 2000. The decrease
was primarily due to the completion of several of our
development and renovation projects during 2000 which resulted
in an approximate $65.9 million reduction in cash used in
our development and renovation projects in 2001. In addition,
proceeds from property sales were approximately
$34.2 million higher in 2001.

Cash used in financing activities decreased by
$79.4 million to an outflow of $57.2 million in 2001,
as compared to an inflow of $22.2 million in 2000. Cash
used in financing activities for the year ended
December 31, 2001 consisted primarily of repayments of
mortgage loans, net paydowns of our unsecured lines of credit
and distributions to our stockholders, which were partially
offset by the net proceeds from an offering of unsecured senior
notes.

Capital
Commitments

As of December 31, 2001, we had
approximately $9.2 million outstanding in capital
commitments related to tenant improvements, development and
property-related capital expenditures. We expect to fund short
term capital commitments through cash flow generated by
operating activities and proceeds from asset sales or proceeds
from our lines of credit.

Available
Borrowings, Cash Balances and Capital Resources

We have an unsecured line of credit with a group
of banks led by Wells Fargo. This line of credit provides for
borrowings up to $275 million with an option to increase
the amount to $325 million and bears interest at a rate
ranging between LIBOR plus 1.15% and LIBOR plus 1.80% (including
an annual facility fee ranging from .20% to .40% based on the
aggregate amount of the facility), depending on our unsecured
debt rating. In addition, as long as we maintain an unsecured
debt rating of BBB-/Baa3 or better, the agreement contains a
competitive bid option, whereby the lenders on this line of
credit may bid on the interest rate to be charged for up to
$137.5 million of the unsecured line of credit. Under
certain circumstances, we also have the option to convert the
interest rate on this line of credit to the greater of the
Federal Funds rate plus 0.5% or Wells Fargos prime rate.
This line of credit matures in April 2003. As of
December 31, 2001, there was approximately
$105.4 million outstanding on this line of credit and
approximately $169.6 million was available for additional
borrowing.

We also have a $75 million unsecured line of
credit with Lehman Brothers. Borrowings on this line of credit
bear interest at a rate ranging between LIBOR plus 1.05% and
LIBOR plus 1.70%, depending on our unsecured debt rating. We
also have the option to convert the interest rate to the prime
rate plus 0.5%. This line of credit matures in July 2002 with an
option to extend the maturity date for one year. As of
December 31, 2001, there was $75 million outstanding
on this line of credit.

We also have an unsecured line of credit with a
total commitment of $10 million from City National Bank.
This line of credit accrues interest at the City National Bank
Prime Rate less 0.875% and is scheduled to mature on
August 1, 2002. Proceeds from this line of credit are used,
among other things, to provide funds for tenant improvements and
capital expenditures and provide for working capital and other
corporate purposes. As of December 31, 2001, there was no
outstanding balance on this line of credit and $10 million
was available for additional borrowings.

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On May 1, 2001, we sold an approximate
43,000 square foot office property located in Irvine, California
for approximately $8.2 million. On that date, we also sold
an approximate 213,000 square foot industrial property located
in Ontario, California for approximately $11.0 million. On
September 28, 2001, we sold an approximate 24,000 square
foot office property located in Simi Valley, California for
approximately $3.1 million and an approximate 107,000
square foot office property located in Riverside, California for
approximately $4.9 million. On November 21, 2001, we
sold an approximate 13,000 square foot office property located
Thousand Oaks, California for approximately $2.1 million
and on December 20, 2001, we sold an approximate 172,000
square foot portfolio of three office properties and two
industrial properties located in Temecula, California for
approximately $18.5 million. The net proceeds from these
dispositions were used to reduce the outstanding balance on our
Wells Fargo unsecured line of credit.

On June 27, 2001, we and our operating
partnership filed a Form S-3 shelf registration statement
with the Securities and Exchange Commission, or SEC, providing
for the issuance of up to $400 million of debt securities
by the operating partnership and up to $257.2 million of
our $.01 par value common stock or our $.01 par value preferred
stock. The terms of these securities will be determined at the
time of any debt or equity offering. This registration statement
was declared effective by the SEC on July 24, 2001.

On November 9, 2001, our operating
partnership completed a public offering of $150 million,
7.00% unsecured notes due 2007, from the shelf registration
statement, with interest payable semi-annually on May 15
and November 15 of each year. The net proceeds from this
offering were used to reduce the outstanding balance on our
Wells Fargo unsecured line of credit.

Following is a summary of scheduled principal
payments for our total outstanding indebtedness as of
December 31, 2001 (in thousands):

|           |       |        |         |           | 
|---------- | ----- | ------ | ------- | --------- | 
|Year       |       | Amount
|           |       |       
|2002       |       |        | 77,578  | (1)      
|2003       |       |        | 110,648 | (2)      
|2004       |       |        | 182,062 |          
|2005       |       |        | 207,678 |          
|2006       |       |        | 15,063  |          
|Thereafter |       |        | 658,454 |          
|           |       |        |         |          
|           | Total |        | $       | 1,251,483 | 
|           |       |        |         |          




|    |                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------
|(1) | Primarily consists of $75.0 million
	outstanding on our Lehman Brothers line of credit which has a
	one year extension.
|   
|(2) | Primarily consists of $105.4 million
	outstanding on our Wells Fargo line of credit.                                   

The following is other information related to our
indebtedness as of December 31, 2001 (in thousands, except
percentage and interest rate data):

Unsecured
and Secured Debt:

|               |                         |         |         |            |  |                  |    |     |   |  |      |      |  
|-------------- | ----------------------- | ------- | ------- | ---------- |  | ---------------- | -- | --- | - |  | ---- | ---- | -
|               |                         |         |         | Percent of |  | Weighted Average
|               |                         | Balance |         | Total Debt |  | Interest Rate(1)
|               |                         |         |         |            |  |                 
|Unsecured debt |                         | $       | 678,031 |            |  |                  | 54 | %   |   |  | 7.36 | %   
|Secured debt   |                         |         | 573,452 |            |  |                  | 46 | %   |   |  | 7.36 | %   
|               |                         |         |         |            |  |                  |    |     |   |  |      |     
|               | Total/ Weighted average |         | $       | 1,251,483  |  |                  |    | 100 | % |  |      | 7.36 | %
|               |                         |         |         |            |  |                  |    |     |   |  |      |     

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##### Table of Contents



Floating
and Fixed Rate Debt:

|              |                         |         |           |            |  |                  |    |     |   |  |      |      |  
|------------- | ----------------------- | ------- | --------- | ---------- |  | ---------------- | -- | --- | - |  | ---- | ---- | -
|              |                         |         |           | Percent of |  | Weighted Average
|              |                         | Balance |           | Total Debt |  | Interest Rate(1)
|              |                         |         |           |            |  |                 
|Floating rate |                         | $       | 180,350   |            |  |                  | 14 | %   |   |  | 4.12 | %   
|Fixed rate    |                         |         | 1,071,133 |            |  |                  | 86 | %   |   |  | 7.91 | %   
|              |                         |         |           |            |  |                  |    |     |   |  |      |     
|              | Total/ Weighted average |         | $         | 1,251,483  |  |                  |    | 100 | % |  |      | 7.36 | %
|              |                         |         |           |            |  |                  |    |     |   |  |      |     




|    |                                                  
|--- | -------------------------------------------------
|(1) | Includes amortization of prepaid financing costs.

Total interest incurred and the amount
capitalized was as follows (unaudited and in thousands):

|                        |  |                     |        |      |  |      |         |   |  |   |        |  
|----------------------- |  | ------------------- | ------ | ---- |  | ---- | ------- | - |  | - | ------ | -
|                        |  |                    
|                        |  | For the Years Ended
|                        |  | December 31,       
|                        |  |                    
|                        |  | 2001                |        | 2000 |  | 1999
|                        |  |                     |        |      |  |     
|Total interest incurred |  | $                   | 93,290 |      |  | $    | 91,052  |   |  | $ | 69,826 |  
|Amount capitalized      |  |                     | (9,095 | )    |  |      | (12,646 | ) |  |   | (9,587 | )
|                        |  |                     |        |      |  |      |         |   |  |   |        |  
|Amount expensed         |  | $                   | 84,195 |      |  | $    | 78,406  |   |  | $ | 60,239 |  
|                        |  |                     |        |      |  |      |         |   |  |   |        |  

As of December 31, 2001, we had
approximately $55.8 million in cash and cash equivalents,
including $18.8 million in restricted cash. Restricted cash
includes $13.7 million in interest-bearing cash deposits
required by some of our mortgage loans payable. Included in cash
and cash equivalents was $18.5 million in short-term
investments and $5.1 million in cash impound accounts for
real estate taxes and insurance as required by several of our
mortgage loans payable.

We may sell assets over the next twelve to
twenty-four months. Due to market conditions beyond our control,
it is difficult to predict the actual period and amount of these
asset sales. Also depending on market conditions, at the time
any such sales proceeds are realized, we expect to redeploy such
amounts into investments that we believe will generate higher
long-term value, which may include development of office
buildings, acquisitions or repurchase of our common stock. In
addition, we expect to use a portion of any proceeds to pay down
portions of our debt in order to maintain our conservative
leverage and coverage ratios.

We expect to continue meeting our short-term
liquidity and capital requirements generally through net cash
provided by operating activities and proceeds from our lines of
credit or proceeds from asset sales. We believe that the net
cash provided by operating activities will continue to be
sufficient to pay any distributions necessary to enable us to
continue qualifying as a REIT. We also believe the foregoing
sources of liquidity will be sufficient to fund our short-terms
liquidity needs over the next twelve months, including recurring
non-revenue enhancing capital expenditures, tenant improvements
and leasing commissions.

We expect to meet our long-term liquidity and
capital requirements such as scheduled principal repayments,
development costs, property acquisitions, if any, and other
non-recurring capital expenditures through net cash provided by
operations, refinancing of existing indebtedness, proceeds from
asset sales and/or the issuance of long-term debt and equity
securities.

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##### Table of Contents



Funds From Operations and Funds Available for
Distribution

The following table reflects the calculation of
our funds from operations and funds available for distribution
for the years ended December 31, 2001, 2000 and 1999 (in
thousands):

|                                     |                                                                                   |                                  |         |         |   |      |         |         |   |   |         |         |  
|------------------------------------ | --------------------------------------------------------------------------------- | -------------------------------- | ------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- | -
|                                     |                                                                                   |                                 
|                                     |                                                                                   | For the Years Ended December 31,
|                                     |                                                                                   |                                 
|                                     |                                                                                   | 2001                             |         | 2000    |   | 1999
|                                     |                                                                                   |                                  |         |         |   |     
|Funds from Operations(1):            |                                                                                   |                                  |         |         |   |      |         |         |   |   |         |        
|                                     | Net Income                                                                        |                                  | $       | 97,759  |   |      | $       | 96,710  |   |   | $       | 96,626  |  
|                                     | Depreciation and amortization                                                     |                                  |         | 101,819 |   |      |         | 87,267  |   |   |         | 69,837  |  
|                                     | Minority interest                                                                 |                                  |         | 7,565   |   |      |         | 7,613   |   |   |         | 5,296   |  
|                                     | Gain on disposition of property                                                   |                                  |         | (4,591  | ) |      |         | (2,132  | ) |   |         |        |  
|                                     | Distributions on Preferred Operating Partnership
	Units                           |                                  |         | (4,312  | ) |      |         | (4,312  | ) |   |         | (1,354  | )
|                                     |                                                                                   |                                  |         |         |   |      |         |         |   |   |         |        
|Funds from Operations(2)             |                                                                                   |                                  | 198,240 |         |   |      | 185,146 |         |   |   | 170,405 |        
|                                     | Arden Realtys percentage share(3)                                                |                                  |         | 96.8    | % |      |         | 96.7    | % |   |         | 96.2    | %
|                                     |                                                                                   |                                  |         |         |   |      |         |         |   |   |         |        
|                                     | Arden Realtys share of Funds from Operations                                     |                                  | $       | 191,896 |   |      | $       | 179,036 |   |   | $       | 163,930 |  
|                                     |                                                                                   |                                  |         |         |   |      |         |         |   |   |         |        
|Funds Available for Distribution(4): |                                                                                   |                                  |         |         |   |      |         |         |   |   |         |        
|                                     | Funds From Operations                                                             |                                  | $       | 198,240 |   |      | $       | 185,146 |   |   | $       | 170,405 |  
|                                     | Straight-line rent adjustment                                                     |                                  |         | (9,208  | ) |      |         | (8,078  | ) |   |         | (7,680  | )
|                                     | Capital expenditure, tenant improvement and
	leasing commission reserve           |                                  |         | (31,500 | ) |      |         | (30,494 | ) |   |         | (27,272 | )
|                                     |                                                                                   |                                  |         |         |   |      |         |         |   |   |         |        
|Funds Available for Distribution     |                                                                                   | $                                | 157,532 |         |   | $    | 146,574 |         |   | $ | 135,453 |        
|                                     |                                                                                   |                                  |         |         |   |      |         |         |   |   |         |        
|                                     | Weighted average shares common operating
	partnership units outstanding  Diluted |                                  |         | 66,132  |   |      |         | 65,759  |   |   |         | 65,566  |  
|                                     |                                                                                   |                                  |         |         |   |      |         |         |   |   |         |        



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We consider funds from operations, as defined by
	The National Association of Real Estate Investment Trusts, or
	NAREIT, to be a useful financial measure of our operating
	performance. We believe that funds from operations provides
	investors with an additional basis to evaluate our ability to
	service debt and to fund acquisitions and other capital
	expenditures. Funds from operations should not be considered an
	alternative to net income determined in accordance with GAAP, as
	an indicator of our financial performance, as a substitute for
	cash flow from operating activities determined in accordance
	with GAAP or as a measure of our liquidity. Funds from
	operations also is not necessarily indicative of funds available
	to fund our cash needs, including our ability to service our
	debt.
|   
|    | The White Paper on funds from operations approved
	by the Board of Governors of NAREIT in October 1999 defines
	funds from operations as net income or loss computed in
	accordance with 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 compute funds from
	operations in accordance with standards established by the White
	Paper which may differ from the standards used by other REITs
	and, accordingly, our funds from operations may not be
	comparable to other REITs.                                                                                                                            
|   
|(2) | Includes approximately $1.9 million and
	$586,000 in non-cash compensation expense for the years ended
	December 31, 2001 and 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(3) | Represents Arden Realtys weighted average
	ownership percentage during the respective twelve month period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(4) | Funds available for distribution consists of
	funds from operations, excluding straight-line rent adjustments
	and less a reserve for capital expenditures, tenant improvements
	and leasing commissions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Current Economic Climate

Our short and long-term liquidity is
significantly impacted by the operating results of our
properties, all of which are located in Southern California. Our
ability to lease available space and increase rates when leases
expire is largely dependent on the demand for office space in
the markets where our properties are located. National and local
economic trends may affect demand for our properties and our
ability to collect amounts due from our tenants.

We believe uncertainty over the current national
and Southern California economic environment are causing tenants
to take longer to commit to leasing transactions, resulting in a
decrease in the occupancy of

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our portfolio from 94.4% as of December 31,
2000 to 92.2% as of December 31, 2001. Problems associated
with deregulation of the electric industry in California have
also resulted in significantly higher costs in some areas of the
state.


The timing and extent of future changes in the
national and local economy and their effects on our properties
and results of operations are difficult to accurately predict.
It is possible, however, that these national and regional issues
may more directly affect us and our operating results in the
future, making it more difficult for us to lease and renew
available space, to increase or maintain rental rates as leases
expire and to collect amounts due from our tenants. For
additional information, see Risk Factors 
Further declines in the economic activity of Southern California
will adversely affect our operating results,
 The financial condition and solvency of our
tenants may reduce our cash flow, and
 Rising energy costs and power outages in
California may have an adverse effect on our operations and
revenue.

Forward-Looking Statements

This Form 10-K, including the documents
incorporated herein by reference, contains forward-looking
statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act
pertaining to, among other things, our future results of
operations, cash available for distribution, acquisitions, lease
renewals, property development, property renovation, capital
requirements and general business, industry and economic
conditions applicable to us. Also, documents we subsequently
file with the SEC and incorporated herein by reference will
contain forward-looking statements. Actual results could differ
materially from those projected in the forward-looking
statements as a result of the risk factors set forth below and
the matters set forth or incorporated in this Form 10-K
generally. We caution you, however, that this list of factors
may not be exhaustive, particularly with respect to future
filings.

ITEM 7A. Quantitative and Qualitative
Disclosure About Market Risk

Market risk is the exposure or loss resulting
from changes in interest rates, foreign currency exchange rates,
commodity prices and equity prices. The primary market risk to
which we are exposed is interest rate risk, which is sensitive
to many factors, including governmental monetary and tax
policies, domestic and international economic and political
considerations and other factors that are beyond our control.

Interest
Rate Risk.

Even though we currently have no such agreements,
in order to modify and manage the interest characteristics of
our outstanding debt and limit the effects of interest rates on
our operations, we may use a variety of financial instruments,
including interest rate swaps, caps, floors and other interest
rate exchange contracts. The use of these types of instruments
to hedge our exposure to changes in interest rates carries
additional risks such as counter-party credit risk and legal
enforceability of hedging contracts. We do not enter into any
transactions for speculative or trading purposes.

Some of our future earnings, cash flows and fair
values relating to financial instruments are dependent upon
prevailing market rates of interest, such as LIBOR. Based on
interest rates and outstanding balances as of December 31,
2001, a 1% increase in interest rates on our $180.4 million
of floating rate debt would decrease annual future earnings and
cash flows by approximately $1.8 million and would not have
an impact on the fair value of the floating rate debt. A 1%
decrease in interest rates on our $180.4 million of
floating rate debt would increase annual future earnings and
cash flows by approximately $1.8 million and would not have
an impact on the fair value of the floating rate debt. A 1%
increase or decrease in interest rates on our secured notes
receivable would not have a material impact on annual future
earnings, cash flows and the fair value of the secured notes
receivable. The weighted average interest rate on our floating
debt as of December 31, 2001 was 4.12%.

Our fixed rate debt totaled $1,071.1 million
as of December 31, 2001 with a weighted average interest
rate of 7.91%. and a total fair value of approximately
$1,097.1 million. A 1% decrease in interest rates on our
$1,071.1 million of fixed rate debt would increase its fair
value by approximately $49.3 million and would not have an
impact on annual future earnings and cash flows. A 1% increase
in interest rates in our

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$1,071.1 million of fixed rate debt would
decrease its fair value by approximately $46.6 million and
would not have an impact of annual future earnings and cash
flows.


These amounts are determined by considering the
impact of hypothetical interest rates on our borrowing cost.
These analyses do not consider the effects of the reduced level
of overall economic activity that could exist in that
environment. Further, in the event of a change of this
magnitude, we would consider taking actions to further mitigate
our exposure to the change. Due to the uncertainty of the
specific actions that would be taken and their possible effects,
however, this sensitivity analysis assumes no changes in our
capital structure.

RISK FACTORS

In addition to the other information contained or
incorporated by reference in this Form 10-K readers should
carefully consider the following risk factors.

Real Estate Investment Risks



| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | An inability to retain tenants or rent space
	upon lease expirations may adversely affect our ability to
	service our debt.

Through 2006, 2,690 leases, including
month-to-month leases comprising approximately 81% of our leased
net rentable square footage and approximately 76% of our
annualized base rents at December 31, 2001 will expire as
follows:

|     |  |                 |     |                     |  |                      |      |   |  |  |      |  
|---- |  | --------------- | --- | ------------------- |  | -------------------- | ---- | - |  |  | ---- | -
|     |  |                 |     | Percentage of       |  | Percentage of       
|     |  | Number of       |     | Aggregate Portfolio |  | Aggregate Portfolio 
|Year |  | Leases Expiring |     | Leased Square Feet  |  | Annualized Base Rent
|     |  |                 |     |                     |  |                     
|2002 |  |                 | 743 |                     |  |                      | 15.1 | % |  |  | 13.0 | %
|2003 |  |                 | 617 |                     |  |                      | 17.8 | % |  |  | 16.5 | %
|2004 |  |                 | 588 |                     |  |                      | 18.5 | % |  |  | 17.7 | %
|2005 |  |                 | 415 |                     |  |                      | 16.4 | % |  |  | 15.8 | %
|2006 |  |                 | 327 |                     |  |                      | 12.9 | % |  |  | 13.4 | %

If we are unable to promptly relet or renew
leases for all or a substantial portion of this space, or if the
rent upon renewal or reletting are significantly lower than
expected, our cash flow and business could be adversely affected.



| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | Further declines in the economic activity of
	Southern California will adversely affect our operating
	results.

All of our properties are located in Southern
California. In 2001, many sectors of the California economy as
well as the rest of the country experienced a slowdown or
contraction in economic activity. As a result, in 2001, there
was a decrease in occupancy in the majority of our sub-markets
as well as a slight decrease in rental rates. At
December 31, 2001 our portfolio was 92.2% occupied as
compared to 94.4% occupied at December 31, 2000. During
2002, a total of approximately 2.6 million square feet of
occupied space, representing approximately 15.1% of our total
net rentable space, including month-to-month leases, will
expire. Further deterioration of the local and national economy
may result in further erosion of occupancy and rental rates and
would most likely negatively affect our operating performance
and property values.



| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Competition affects occupancy levels rents and
	cost of land which could adversely affect our
	revenues.

Many office properties compete with our
properties in attracting tenants to lease space. Some of the
competing properties may be newer, better located or owned by
parties better capitalized than we are. Although ownership of
these competing properties is currently diversified among many
different types, from publicly traded companies and
institutional investors to small enterprises and individual
owners, and no one or group of owners currently dominate or
significantly influence the market, consolidation of owners
could create efficiencies and marketing advantages for the
consolidated group that could adversely affect us. These
competitive advantages, the number of competitors and the number
of competitive commercial properties in a

33



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particular area could have a material adverse
effect on the rents we can charge, our ability to lease space in
our existing properties or at newly acquired or developed
properties and the prices we have to pay for developable land.




| |                                                                               
| | ------------------------------------------------------------------------------
| | The financial condition and solvency of our
	tenants may reduce our cash flow.

Tenants may experience a downturn in their
business which may cause them to miss rental payments when due
or to seek the protection of bankruptcy laws, which could result
in rejection and termination of their leases or a delay in
recovering possession of their premises. Although we have not
experienced material losses from tenant bankruptcies, we cannot
assure you that tenants will not file for bankruptcy protection
in the future or, if any tenants file, that they will affirm
their leases and continue to make rental payments in a timely
manner.



| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | Because real estate investments are illiquid,
	we may not be able to sell properties when
	appropriate.

Equity real estate investments are relatively
illiquid. That illiquidity will tend to limit our ability to
vary our portfolio promptly in response to changes in economic
or other conditions. In addition, the Internal Revenue Code of
1986, as amended, may under specified circumstances impose a
100% prohibited transaction tax on the profits derived from our
sale of properties held for fewer than four years, which could
affect our ability to sell our properties.



| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | Rising energy costs and power outages in
	California may have an adverse effect on our operations and
	revenue.

Problems associated with deregulation of the
electric industry in California have resulted in intermittent
service interruptions and significantly higher costs in some
areas. Approximately 41% of our buildings and approximately 40%
of the total net rentable square footage of our portfolio are
located within municipalities that either do not produce their
own power or have not entered into long term fixed price
contracts. These properties may be subject to intermittent
service interruptions or significant rate increases from their
utility providers. The remaining portion of our portfolio is
located in areas that are not expected to be subject to
intermittent electric service interruptions and significant
electric rate increases.

Approximately 29% of our buildings and 21% of the
total rentable square footage of our portfolio are subject to
leases that require our tenants to pay all utility costs. The
remainder of our leases provide that tenants will reimburse us
for utility costs in excess of a base year amount. We estimate
that we will be able to recover approximately 90% of any utility
cost increases from our tenants.

Although we have not experienced any material
losses resulting from electric deregulation, it is possible that
some of our tenants will not fulfill their lease obligations and
reimburse us for their share of any significant electric rate
increases and that we will not be able to retain or replace our
tenants if energy problems in California continue.



| |                                                                            
| | ---------------------------------------------------------------------------
| | Increases in taxes and regulatory compliance
	costs may reduce our revenue.

Except for our triple net leases, we may not be
able to pass all real estate tax increases through to some of
our tenants. Therefore, any tax increases may adversely affect
our cash flow and our ability to pay or refinance our debt
obligations. Our properties are also subject to various federal,
California and local regulatory requirements, such as
requirements of the Americans with Disabilities Act, and
California and local fire and life safety requirements. Failure
to comply with these requirements could result in the imposition
of fines by governmental authorities or awards of damages to
private litigants. We believe that our properties are currently
in substantial compliance with these regulatory requirements. We
cannot assure you, however, that these requirements will not be
changed or that new requirements will not be imposed that would
require significant unanticipated expenditures by us and could
have an adverse effect on our cash flow and the amounts
available for distributions and to our business.

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| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | Lack of availability of insurance coverage for
	terrorist acts could adversely affect our financial
	condition.

Our annual insurance policy expired in February
of 2002. We have been notified by our insurance-broker that in
the aftermath of the September 11th attack, insurance
carriers are either specifically excluding terrorist acts from
property insurance coverage or offering this type of coverage at
prohibitive costs. Although we did not derive more than 4.6% of
our 2001 net operating income from any one of the properties in
our portfolio, a terrorist attack damaging several of our
properties could materially deteriorate our operating results
and overall financial condition.



| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may acquire properties through partnerships
	or joint ventures with third parties that could result in
	financial dependency and management conflicts.

Although we currently do not have plans to do so,
we may participate with other entities in property ownership
through joint ventures or partnerships in the future. Depending
on the characteristics and business objectives of the joint
venture or partnership, we may not have voting control over the
joint venture or partnership. Partnership or joint venture
investments may, under certain circumstances, involve risks not
otherwise present, including:



| |   |                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                 

Neither the limited partnership agreement of our
operating partnership nor our governing documents prevent us
from participating in joint ventures with our affiliates.
Because a joint venture with an affiliate may not be negotiated
in a traditional arms length transaction, terms of the
joint venture may not be as favorable to us as we could obtain
if we entered into a joint venture with an outside third party.



| |                                                              
| | -------------------------------------------------------------
| | We may not be able to integrate or finance our
	acquisitions.

As we acquire additional properties, we will be
subject to risks associated with managing new properties,
including building systems not operating as expected, delay in
or failure to lease vacant space and tenants failing to renew
leases as they expire. In addition, our ability to manage our
growth effectively will require us to successfully integrate our
new acquisitions into our existing accounting systems and
property management structure. We cannot assure you that we will
be able to succeed with that integration or effectively manage
additional properties or that newly acquired properties will
perform as expected. Changing market conditions, including
competition from other purchasers of suburban office properties,
may diminish our opportunities for attractive additional
acquisitions. Moreover, acquisition costs of a property may
exceed original estimates, possibly making the property
uneconomical.



| |                                                               
| | --------------------------------------------------------------
| | Our acquisitions and renovations may not
	perform as expected.

Although we currently have no plans to
significantly expand or renovate our properties, we may do so in
the future. Expansion and renovation projects may inconvenience
and displace existing tenants, require us to engage in time
consuming up-front planning and engineering activities and
expend capital, and require us to obtain various government and
other approvals, the receipt of which cannot be assured. While
our policies with respect to expansion and renovation activities
are intended to limit some of the risks otherwise associated
with these activities, we will nevertheless incur risks,
including expenditures of funds on, and devotion of our time to,
projects that may not be completed.

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| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Our development activities may be more
	expensive than anticipated and may not yield our anticipated
	results.

We currently have two properties under
development at the Howard Hughes Center in Los Angeles,
California. The estimated total costs for these two properties
is approximately $154.1 million. In addition, we have
preliminary architectural designs completed for additional
build-to-suit buildings at the Howard Hughes Center and have
completed preliminary designs on a build-to-suit office building
at our Long Beach Airport Business Park, but do not intend to
commence construction on any of these projects until development
plans and budgets are finalized and build-to-suit tenant leases
are signed with terms allowing us to achieve yields commensurate
with the projects development risk. We also intend to
review, from time to time, other opportunities for developing
and constructing office buildings and other commercial
properties in accordance with our development and underwriting
policies.

We expect to finance our development activities
over the next 24 months through net cash provided by
operating activities, proceeds from asset sales or proceeds from
our lines of credit.

Risks associated with our development activities
may include:



| |   |                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.

Our governing documents do not restrict the
amount or percentage of our assets that we may invest in a
single property or geographic area. All of our properties are
currently in Southern California and we have no immediate plans
to invest outside of Southern California. This lack of
diversification in our investments makes us more highly
susceptible to changes affecting the Southern California economy
and real estate markets or damages from regional events such as
earthquakes.

We may not be
able to expand into new markets successfully.

While our business is currently limited to the
Southern California market, it is possible that we will in the
future expand our business to new geographic markets. We will
not initially possess the same level of familiarity with new
markets outside of Southern California, which could adversely
affect our ability to manage, lease, develop or acquire
properties in new localities.

Financing Risks



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | Our significant amount of debt could limit our
	operational flexibility or otherwise adversely affect our
	financial condition.

As of December 31, 2001, we had total debt
of approximately $1.25 billion, consisting of approximately
$573 million in secured debt and approximately
$678 million of unsecured debt. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources.

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Our substantial indebtedness could:



| |   |                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                       



| |                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------
| | We may be able to incur substantially more
	debt which would increase the risks associated with our
	substantial leverage.

Despite current indebtedness levels, we may still
be able to incur substantially more debt in the future. Neither
the limited partnership agreement of our operating partnership
nor our governing documents limit the amount or the percentage
of indebtedness that we may incur. We may borrow up to a maximum
of $360 million under our three lines of credit. In
addition, we have the option to increase our $275 million
unsecured line of credit by $50 million. If we exercised
the option, we would be able to borrow up to $410 million
under our three lines of credit. As of December 31, 2001,
we had the ability to borrow an additional approximately
$179.6 million under these three lines of credit. If new
debt is added to our current debt levels, the related risks that
we now face could intensify and could increase the risk of
default on our indebtedness.



| |                                                                         
| | ------------------------------------------------------------------------
| | Scheduled debt payments could adversely affect
	our financial condition.

Our cash flow could be insufficient to meet
required payments of principal and interest when due. In
addition, we may not be able to refinance existing indebtedness,
which in virtually all cases requires substantial principal
payments at maturity, and, if we can refinance, the terms of the
refinancing might not be as favorable as the terms of our
existing indebtedness. As of December 31, 2001,
approximately $77.6 million of principal will be coming due
over the next twelve months. If principal payments cannot be
refinanced, extended or paid with proceeds of other capital
transactions, such as new equity capital, our cash flow will not
be sufficient in all years to repay all maturing debt and
continue to service and repay our debt obligations.



| |                                                                         
| | ------------------------------------------------------------------------
| | Rises in interest rates could adversely affect
	our financial condition.

An increase in prevailing interest rates would
have an immediate effect on the interest rates charged on our
variable rate debt which rise and fall upon changes in interest
rates. At December 31, 2001, approximately 14% of our debt
was variable rate debt. Increases in interest rates would also
impact the refinancing of our fixed rate debt. If interest rates
are higher when our fixed debt becomes due, we may be forced to
borrow at the higher rates. If prevailing interest rates or
other factors result in higher interest rates, the increased
interest expense would adversely affect our cash flow and our
ability to service our debt, including the exchange notes. As a
protection against rising interest rates, we may enter into
agreements such as interest rate swaps, caps, floors and other
interest rate exchange contracts. These agreements, however,
increase our risks as to the other parties to the agreements not
performing or that the agreements could be unenforceable. As of
December 31, 2001, we were not a party to any such
agreements.



| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

We currently have outstanding five mortgage
financings totaling $554.6 million that are secured by 67
of our properties. The properties in each of these financings
are fully cross-collateralized and cross-defaulted. To the
extent two or more mortgages are cross-defaulted, a default in
one mortgage will trigger a default in the other mortgages. The
cross-defaults can give the lender a number of remedies
depending on the circumstances such as the right to increase the
interest rate, demand additional collateral, accelerate the
maturity date of the

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mortgages or foreclose on and sell the
properties. To the extent two or more mortgages are
cross-collateralized, a default in one mortgage will allow the
mortgage lender to foreclose upon and sell the properties that
are not the primary collateral for the loan in default. Four
additional properties are subject to single property mortgages
totaling approximately $18.9 million at December 31,
2001. If we are unable to meet our obligations under these
mortgages, we could be forced to pay higher interest rates or
provide additional collateral or the properties subject to the
mortgages could be foreclosed upon and sold, which could have a
material adverse effect on us and our ability to pay or
refinance our debt obligations.


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.

In order to qualify as a REIT and avoid federal
income tax liability, we must distribute to our stockholders at
least 90% of our net taxable income, excluding net capital gain,
and to avoid income taxation, our distributions must not be less
than 100% of our net taxable income, including capital gains. To
avoid excise tax liability, our distributions to our
stockholders for the year must exceed the sum of 85% of its
ordinary income, 95% of its capital gain net income, and any
undistributed taxable income from prior years. As a result of
these distribution requirements, we do not expect to accumulate
significant amounts of cash. Accordingly, these distributions
could significantly reduce the cash available to us in
subsequent periods to make payments on our debt obligations and
to fund future growth.



| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Our operating partnership intends to qualify
	as a partnership, but we cannot guarantee that it will
	qualify.

Our operating partnership intends to qualify as a
partnership for federal income tax purposes. However, if the
operating partnership were a publicly traded
partnership, it would be treated as a corporation instead
of a partnership for federal income tax purposes unless at least
90% of its income is qualifying income as defined in the
Internal Revenue Code. The income requirements applicable to
REITs and the definition of qualifying income for
purposes of this 90% test are similar in most respects.
Qualifying income for the 90% test generally includes passive
income, such as specified types of real property rents,
dividends and interest. We believe that the operating
partnership would meet this 90% test, but we cannot guarantee
that it would. If the operating partnership were to be taxed as
a corporation, it would incur substantial tax liabilities and we
would fail to qualify as a REIT for federal income tax purposes.



| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | We may suffer adverse tax consequences and be
	unable to attract capital if we fail to qualify as a
	REIT.

We believe that since our taxable year ended
December 31, 1996, we have been organized and operated, and
intend to continue to operate, so as to qualify for taxation as
a REIT under the Internal Revenue Code. Although we believe that
we have been and will continue to be organized and have operated
and will continue to operate so as to qualify for taxation as a
REIT, we cannot assure you that we have been or will continue to
be organized or operated in a manner so as to qualify or remain
so qualified. For us to qualify as a REIT, we must satisfy
numerous requirements established under highly technical and
complex Internal Revenue Code provisions for which there are
only limited judicial and administrative interpretations and
tests regarding various factual matters and circumstances not
entirely within Arden Realtys control. The complexity of
these provisions and of the applicable Treasury Regulations that
have been promulgated under the Internal Revenue Code is greater
in the case of a REIT, like us, that hold our assets through an
investment in a partnership. No assurance can be given that
legislation, new regulations, administrative interpretations or
court decisions will not significantly change the tax laws with
respect to qualification as a REIT or the federal income tax
consequences of qualification. We are, however, not aware of any
pending legislation that would adversely affect our ability to
operate as a REIT. Our qualification and taxation as a REIT
depends on our ability to meet, through actual annual operating
results, asset diversification, distribution levels and
diversity of stock ownership, the various qualification tests
imposed under the Internal Revenue Code, the results of which
have not been and will not be reviewed by our tax counsel.

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If we failed to qualify as a REIT in any taxable
year, we would be subject to federal income tax, including any
applicable alternative minimum tax, on our taxable income at
regular corporate rates. Moreover, unless entitled to relief
under specific statutory provisions, we also would be
disqualified as a REIT for the four taxable years following the
year during which qualification was lost. If we were
disqualified as a REIT, our ability to raise additional capital
could be significantly impaired. This could reduce the funds we
would have available to pay distributions to our stockholders
and to service our debt.

Even if we qualify for and maintain our REIT
status, we will be subject to certain federal, state and local
taxes on our income and property. For example, if we have net
income from a prohibited transaction, specifically sales or
other taxable dispositions of property held primarily for sale
to customers in the ordinary course of business, that income
will be subject to a 100% tax.

Other Risks



| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | We are subject to agreements and policies that
	may deter change in control offers that might be attractive to
	our stockholders.

Certain provisions of our charter and bylaws as
well as our stockholder rights plan, which is described below,
may delay, defer or prevent a third party from making offers to
acquire us or control over us. For example, such provisions may:



| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.

Our charter contains a provision designed to
prevent a concentration of ownership among our stockholders that
would cause us to fail to qualify as a REIT. Under the Internal
Revenue Code, not more than 50% in value of our outstanding
shares of common stock may be owned, actually or constructively,
by five or fewer individuals, including specific kinds of
entities, at any time during the last half of our taxable year.
In addition, if we, or an owner of 10% or more of our common
stock, actually or constructively owns 10% or more of a tenant
of ours, or a tenant of any partnership in which we are a
partner, the rent received by us from that tenant will not be
qualifying income for purposes of the REIT gross income tests.
In order to protect us against the risk of losing REIT status,
the ownership limit included in our charter limits actual or
constructive ownership of our outstanding shares of common stock
by any single stockholder to 9.0%, by value or by number of
shares, whichever is more restrictive, of the then outstanding
shares of common stock. Actual or constructive ownership of
shares of common stock in excess of the ownership limit will
cause the violative transfer or ownership to be void with
respect to the transferee or owner as to that number of shares
in excess of the ownership limit and such shares will be
automatically transferred to a trust for the exclusive benefit
of one or more qualified charitable organizations. That
transferee or owner will have no right to vote such shares or be
entitled to dividends or other distributions with respect to
such shares.

Although our Board of Directors presently has no
intention of doing so, except as described below, our Board of
Directors could waive this restriction with respect to a
particular stockholder if it were satisfied, based upon the
advice of counsel or a ruling from the Internal Revenue Service,
that ownership by such stockholder in excess of the ownership
limit would not jeopardize our status as a REIT and our Board of
Directors otherwise decided such action would be in our best
interests. Our Board of Directors has waived our ownership limit
with respect to Mr. Ziman and certain family members and
affiliates and has permitted these parties to actually and
constructively own up to 13.0% of the outstanding shares of
common stock.

Our charter authorizes our Board of Directors to
cause us to issue authorized but unissued shares of common stock
or preferred stock and to reclassify any unissued shares of
common stock or classify any unissued and reclassify any
previously classified but unissued shares of preferred stock
and, with respect to the preferred stock, to set the
preferences, rights and other terms of such classified or
unclassified shares. Although our Board of Directors has no such
intention at the present time, it could establish a series of
preferred stock that could, depending on the terms of such
series, delay, defer or prevent a transaction or a

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change in control that might involve a premium
price for the common stock or otherwise be in the best interest
of our stockholders.


Our Board of Directors is divided into three
classes of directors. Directors of each class are chosen for
three-year terms upon the expiration of their current terms and
each year one class of directors will be elected by the
stockholders. The staggered terms of directors may reduce the
possibility of a tender offer or an attempt to change control
even though a tender offer or change in control might be in the
best interest of our stockholders.

In August 1998, we declared a dividend
distribution of one preferred share purchase right on each
outstanding share of our common stock pursuant to a stockholder
plan. Subject to limited exceptions, these rights will be
exercisable if a person or group acquires 15% or more of our
common stock or announces a tender offer for 15% or more of our
common stock. Under certain circumstances, each right will
entitle stockholders to buy one one-hundredth of a share of our
newly created Class A Junior Participating Preferred Stock
at an exercise price of $75. Our Board of Directors will be
entitled to redeem the rights at $.01 per right at any time
before a person has acquired 15% or more of the outstanding
common stock. The rights plan will expire in August 2008.

Each right entitles its holder to purchase, at
the rights then-current exercise price, a number of our
common shares having a market value at that time of twice the
rights exercise price. Rights held by the person or group
seeking to acquire 15% or more of our common stock will become
void and will not be exercisable to purchase shares at the
bargain purchase price. If we are acquired in a merger or other
business combination transaction which has not been approved by
our Board of Directors, each right will entitle its holder to
purchase, at the rights then-current exercise price, a
number of the acquiring companys common shares having a
market value at that time of twice the rights exercise
price.

Losses
in excess of our insurance coverage or uninsured losses could
adversely affect our cash flow.

We carry comprehensive liability, fire, extended
coverage and rental loss insurance policies which currently
cover all of our properties with specifications and insured
limits that we believe are adequate and appropriate under the
circumstances. Some losses, however, are generally not insured
against because it is not economically feasible to do so. Should
an uninsured loss or a loss in excess of insured limits occur,
we could lose our capital invested in the property, as well as
the anticipated future revenue from the property and, in the
case of debt which is recourse to us, we would remain obligated
for any mortgage debt or other financial obligations related to
the property. Any loss would adversely affect our cash flow with
respect to the property subject to the loss. Moreover, we would
generally be liable for any unsatisfied obligations other than
non-recourse obligations with respect to the property subject to
the loss.

An
earthquake could adversely affect our business.

All of our properties are located in Southern
California which is a high risk geographical area for
earthquakes. Depending upon its magnitude, an earthquake could
severely damage our properties which would adversely affect our
business. We maintain earthquake insurance for our properties
and the resulting business interruption. We cannot assure you
that our insurance will be sufficient if there is a major
earthquake.

Our
properties may be subject to environmental
liabilities.

Under federal, state and local environmental
laws, a current or previous owner or operator of real estate may
be required to investigate and clean up hazardous or toxic
substances or petroleum product releases at the property and may
be held liable to a governmental entity or to third parties for
property damage and for investigation and clean-up costs in
connection with the contamination. These laws typically impose
clean-up responsibility and liability without regard to whether
the owner knew of or caused the presence of the contaminants,
and the liability under these laws has been interpreted to be
joint and several unless the harm is divisible and there is a
reasonable basis for allocation of responsibility. These costs
may be substantial, and the presence of these substances, or the
failure to remediate the contamination on the property, may
adversely affect the owners ability to sell or rent the
property or to borrow against the property. Persons who arrange
for

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the disposal or treatment of hazardous or toxic
substances at a disposal or treatment facility also may be
liable for the costs of removal or remediation of a release of
hazardous or toxic substances at the disposal or treatment
facility, whether or not the facility is owned or operated by
that person. Some laws create a lien on the contaminated site in
favor of the government for damages and costs incurred in
connection with the contamination. Finally, third parties may
have claims against the owner of the site based on damages and
costs resulting from environmental contamination emanating from
that site.


Specific federal, state and local laws,
regulations and ordinances govern the removal, encapsulation or
disturbance of asbestos-containing materials when those
materials are in poor condition or in the event of construction,
remodeling, renovation or demolition of a building. These laws
may impose liability for release of asbestos-containing material
and may provide for third parties to seek recovery from owners
or operators of real properties for personal injury associated
with asbestos-containing materials. In connection with the
ownership and operation of our properties, we may be potentially
liable for those costs.

In the past few years, independent environmental
consultants have conducted or updated Phase I environmental
assessments and other environmental investigations as
appropriate at some of our properties. The environmental site
assessments and investigations have identified a total of
28 properties in our portfolio, representing approximately
28.35% of the total rentable square feet in the portfolio,
affected by environmental concerns. These environmental concerns
include properties that may be impacted by known or suspected
(a) contamination caused by third party sources or
(b) soil and/or groundwater contamination which has been
remediated, and (c) those containing underground storage
tanks or asbestos.

Of these properties, one is believed to be
affected by contamination caused by third party sources and also
houses an underground storage tank, four (4) contain
friable asbestos, twelve (12) contain non-friable asbestos,
and eleven (11) house underground storage tanks only. The
property affected by contamination is primarily affected by
petroleum and solvent substances, and a third party has
indemnified us for any and all problems associated with this
contamination. With regard to those properties affected by
asbestos, asbestos does not pose a health hazard if it is not
disturbed in such a way to cause an airborne release of
asbestos. Asbestos is friable when it can be crumbled,
pulverized or reduced to powder by hand pressure, and
non-friable when hand pressure cannot release encapsulated
asbestos fibers. Friable asbestos is more likely to be released
into the air than no-friable asbestos. We manage all asbestos in
ways that minimize its potential to become airborne or otherwise
threaten human health. Regarding underground storage tanks,
subsurface leakage of the materials contained within the tank
constitutes the primary risk posed by these devices. We comply
with all applicable laws, including double-wall construction,
testing protocols, placement of tanks within bermed areas, and
the installation of leak and spill detection equipment, to
minimize the risks posed by underground storage tanks.

The environmental site assessments and
investigations have not, however, revealed any environmental
liability that we believe would have a material adverse effect
on our business, assets or results of operations taken as a
whole, nor are we aware of any material environmental liability.
Nevertheless, it is possible that our environmental site
assessments do not reveal all environmental liabilities or that
there are material environmental liabilities of which we are
unaware.

We believe that our properties are in compliance
in all material respects with all federal, state and local laws
regarding hazardous or toxic substances or petroleum products,
except as noted above. We have not been notified by any
governmental authority, and are not otherwise aware, of any
material noncompliance, liability or claim relating to hazardous
or toxic substances or petroleum products in connection with any
of our present properties, other than as noted above. It is
possible that future laws will impose material environmental
liabilities on us and that the current environmental condition
of our properties will be affected by tenants, by the condition
of land or operations in the vicinity of our properties, such as
the presence of underground storage tanks, or by third parties
unrelated to us.






ITEM 8. Financial Statements and
Supplementary Data


The financial statements and supplementary data
required by Regulation S-X are included in this Report on
Form 10-K commencing on page F-1.

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##### Table of Contents








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


None.






PART III


The information required by Part III is
incorporated by reference from our definitive proxy statement
for our 2002 Annual Meeting of Stockholders.






ITEM 10. Directors and Executive
Officers of the Registrant


The information contained in the section
captioned Proposal I; Election of Directors of
the proxy statement is incorporated herein by reference.






ITEM 11. Executive
Compensation


The information contained in the section
captioned Executive Compensation of the definitive
proxy statement is incorporated herein by reference.






ITEM 12. Security Ownership of Certain
Beneficial Owners and Management


The information contained in the section
captioned Principal and Management Stockholders of
the definitive proxy statement is incorporated herein by
reference.






ITEM 13. Certain Relationships and
Related Transactions


The information contained in the section
captioned Certain Relationships and Related
Transactions of the definitive proxy statement is
incorporated herein by reference.






PART IV







ITEM 14. Exhibits, Financial
Statements, and Reports on Form 8-K


(a) Financial Statements

The following consolidated financial information
is included as a separate section of this Annual Report on
Form 10-K:

|                  |                                                                                                        |      |  |     | 
|----------------- | ------------------------------------------------------------------------------------------------------ | ---- |  | --- | 
|                  |                                                                                                        | Page
|                  |                                                                                                        |     
|ARDEN REALTY, INC |                                                                                                        |      |  |    
|                  | Report of Independent Auditors                                                                         |      |  | F-1 | 
|                  | Consolidated Balance Sheets as of
	December 31, 2001 and 2000                                          |      |  | F-2 | 
|                  | Consolidated Statements of Income for the years
	ended December 31, 2001, 2000 and 1999                |      |  | F-3 | 
|                  | Consolidated Statements of Stockholders
	Equity for the years ended December 31, 2001, 2000
	and 1999 |      |  | F-4 | 
|                  | Consolidated Statements of Cash Flows for the
	years ended December 31, 2001, 2000 and 1999            |      |  | F-5 | 
|                  | Notes to Financial Statements                                                                          |      |  | F-6 | 

All other schedules are omitted since the
required information is not present in amounts sufficient to
require submission of the schedule or because the information
required is included in the financial statements and notes
thereto.

(b) Reports on Form 8-K

We filed the following report on Form 8-K
during the quarter ended December 31, 2001.

|                 |  |                |   |                     |  |  |    | 
|---------------- |  | -------------- | - | ------------------- |  |  | -- | 
|Date of Filing   |  | Items Reported |   | Financial Statement
|                 |  |                |   |                    
|November 9, 2001 |  |                | 5 |                     |  |  | No | 

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Form 8-K was filed on November 9, 2001.
Under Item 5  Other Events, we reported that our
operating partnership placed $150 million of 7.0% senior
unsecured notes due November 2007.

(c) Exhibits

|        |        |             |  |                                                                                                                                                                                                                                                                                                              
|------- | ------ | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|Number  |        | Description
|        |        |            
|        | 3.1*   |             |  | Amended and Restated Articles of Incorporation as
	filed as an exhibit to Arden Realty Registration Statement on
	Form S-11 (No. 333-8163).                                                                                                                                                                  
|        | 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 10-K dated March 27, 2000.                                                                                                                              
|        | 3.4*   |             |  | By-laws of Registrant as filed as an exhibit to
	Arden Realtys on Form S-11 (No. 333-8163).                                                                                                                                                                                                                 
|        | 3.5*   |             |  | Certificate of Amendment of the By-laws 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
	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).                                                                                      
|        | 4.4*   |             |  | 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 with the Commission 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.                                                                                                                                  
|        | 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.                                                                                                                                                                 
|        | 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 with the Commission on November 9, 2001.                                    
|        | 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. 333-8163).                                                                                                              
|        | 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 with the Commission on
	June 23, 1998.                                                                              
|        | 10.3* |             |  | Form of Officers and Directors Indemnification
	Agreement as filed as an exhibit to Arden Realtys
	registration statement on Form S-11 (No. 333-8163).                                                                                                                                                      
|        | 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 of Form 10-Q filed with the
	Commission on August 14, 1998.

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|        |        |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | ------ | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|Number  |        | Description
|        |        |            
|        | 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 with the Commission 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 with the Commission 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 with the
	Commission on August 14, 1998.
|        | 10.11* |             |  | Security Agreement is 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
	with the Commission 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
	with the Commission on August 14, 1998.                                                                                                                                                   
|        | 10.13* |             |  | Letter agreement 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
	with the Commission 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 with the Commission 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).                                                                                                                                                                                                                       
|        | 10.16* |             |  | 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 with the Commission 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 with the Commission on August 14, 1998.                                                                                           

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|        |         |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | ------- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |            
|Number  |         | Description
|        |         |            
|        | 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 with the
	Commission on August 14, 1998.
|        | 10.21*  |             |  | Security Agreement is 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 with the Commission 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 with the
	Commission on August 14, 1998.                                                                           
|        | 10.23*  |             |  | Letter agreement 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
	with the Commission on August 14, 1998.                                                                                                                                                             
|        | 10.24* |             |  | Amended and Restated Employment Agreement dated
	August 4, 1998, between Arden Realty and Mr. Herbert
	Porter, filed as an exhibit to Arden Realtys quarterly
	report on Form 10-Q/ A filed with the Commission on
	December 15, 1998.                                                                                                                                                                                            
|        | 10.25* |             |  | 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 with the Commission on
	August 8, 2000.                                                                                                                                                                                                
|        | 10.26*  |             |  | 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-II (No. 333-8163).                                                                                                                                                                                                                       
|        | 10.27*  |             |  | 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 with the
	Commission on May 12, 2000.                                                                                                               
|        | 10.28*  |             |  | 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 of Form S-11 (No. 333-30059).                      
|        | 10.29*  |             |  | 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 Form 8-K filed with the
	Commission on April 20, 1999.                                                                                                                                                                                 
|        | 10.30*  |             |  | 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 with the Commission on
	April 20, 1999.                                                                                                                         
|        | 10.31*  |             |  | 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
	with the Commission on April 20, 1999.                                                                                                                                                               
|        | 10.32*  |             |  | 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 with the Commission on April 20, 1999.                                                                                                                                                        
|        | 10.33*  |             |  | 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 with the Commission on
	April 20, 1999.                                                                                                                                   

45



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##### Table of Contents



|        |         |             |  |                                                                                                                                                                                                                                                
|------- | ------- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |            
|Number  |         | Description
|        |         |            
|        | 10.34*  |             |  | Senior Unsecured Credit Agreement between Arden
	Realty Limited Partnership and Lehman Brothers Inc. dated
	July 27, 2000 filed as an exhibit to Arden Realtys
	quarterly report on Form 10-Q filed with the Commission on
	November 12, 2000.
|        | 10.35* |             |  | 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).               
|        | 10.36* |             |  | 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).       
|        | 10.37* |             |  | 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).      
|        | 10.38* |             |  | 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 with the Commission on April 25, 2000.                         
|        | 12.1    |             |  | Statement regarding computation of ratios.                                                                                                                                                                                                     
|        | 21.1*   |             |  | Subsidiaries of Arden Realty Limited Partnership
	as filed as an exhibit to Arden Realty Limited
	Partnerships registration statement on Form S-4
	(No. 333-53376).                                                                           
|        | 23.1    |             |  | Consent of independent auditors.                                                                                                                                                                                                               



---



|    |                           
|--- | --------------------------
|(*) | Incorporated by reference.



|    |                                                                                                   
|--- | --------------------------------------------------------------------------------------------------
|() | Management contract or compensatory plan or
	arrangement required to be identified by Item 14(a)3.

46



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on March 29, 2002.



| |                   
| | ------------------
| | ARDEN REALTY, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ RICHARD S. ZIMAN

| |                            
| | ---------------------------
| |                            
| | Richard S. Ziman           
| | Chairman of the Board      
| | and Chief Executive Officer

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

|                                       |  |                                                              |  |               
|-------------------------------------- |  | ------------------------------------------------------------ |  | --------------
|Name                                   |  | Title                                                        |  | Date          
|                                       |  |                                                              |  |               
|/s/ RICHARD S. ZIMANRichard S. Ziman   |  | Chairman of the Board, Chief Executive
	Officer and Director |  | March 29, 2002
|                                      
|/s/ VICTOR J. COLEMANVictor J. Coleman |  | President, Chief Operating Officer
	and Director             |  | March 29, 2002
|                                      
|/s/ ANDREW J. SOBELAndrew J. Sobel     |  | Executive Vice President Strategic Planning
	and Operations  |  | March 29, 2002
|                                      
|/s/ RICHARD S. DAVISRichard S. Davis   |  | Senior Vice President, and
	Chief Financial Officer          |  | March 29, 2002
|                                      
|/s/ LARRY S. FLAXLarry S. Flax         |  | Director                                                     |  | March 29, 2002
|                                      
|/s/ CARL D. COVITZCarl D. Covitz       |  | Director                                                     |  | March 29, 2002
|                                      
|/s/ PETER S. GOLDPeter S. Gold         |  | Director                                                     |  | March 29, 2002
|                                      
|/s/ STEVEN C. GOODSteven C. Good       |  | Director                                                     |  | March 29, 2002

47



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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders

Arden Realty, Inc.


We have audited the accompanying consolidated
balance sheets of Arden Realty, Inc. as of December 31,
2001 and 2000 and the related consolidated statements of
operations, stockholders equity, and cash flows for each
of the three years in the period ended December 31, 2001.
These financial statements are the responsibility of the
management of Arden Realty, Inc. Our responsibility is to
express an opinion on these financial statements based on our
audits.

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

In our opinion, the financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Arden Realty, Inc. at
December 31, 2001 and 2000 and the consolidated results of
its operations and its cash flows for each of the three years in
the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.



| |                      
| | ---------------------
| | /s/ ERNST & YOUNG LLP

Los Angeles, California

January 30, 2002


F-1



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##### Table of Contents



ARDEN REALTY, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |           |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------- | ------------------------------------------ | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                                                                                                                       |                                       |                                           
|                                                                                                                                                       |                                       | December 31,                              
|                                                                                                                                                       |                                       |                                           
|                                                                                                                                                       |                                       | 2001                                       |           | 2000     
|                                                                                                                                                       |                                       |                                            |           |          
|Assets                                                                                                                                                 |                                       |                                            |           |           |           |   |           |          
|Commercial properties:                                                                                                                                 |                                       |                                            |           |           |           |   |           |          
|                                                                                                                                                       | Land                                  |                                            | $         | 447,753   |           |   | $         | 466,426   |          
|                                                                                                                                                       | Buildings and improvements            |                                            |           | 1,975,427 |           |   |           | 1,985,950 |          
|                                                                                                                                                       | Tenant improvements and leasing costs |                                            |           | 251,201   |           |   |           | 225,620   |          
|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |          
|                                                                                                                                                       |                                       |                                            | 2,674,381 |           |           |   | 2,677,996 |          
|                                                                                                                                                       | Less: accumulated depreciation        |                                            |           | (293,385  | )         |   |           | (227,463  | )        
|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |          
|                                                                                                                                                       |                                       |                                            | 2,380,996 |           |           |   | 2,450,533 |          
|                                                                                                                                                       | Properties under development          |                                            |           | 133,012   |           |   |           | 93,384    |          
|                                                                                                                                                       | Properties held for disposition, net  |                                            |           | 108,972   |           |   |           | 59,649    |          
|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |          
|                                                                                                                                                       | Net investment in real estate         |                                            |           | 2,622,980 |           |   |           | 2,603,566 |          
|Cash and cash equivalents                                                                                                                              |                                       |                                            | 37,041    |           |           |   | 5,432     |          
|Restricted cash                                                                                                                                        |                                       |                                            | 18,768    |           |           |   | 19,367    |          
|Rent and other receivables, net of allowance of
	$3,770 and $1,705 at December 31, 2001 and 2000,
	respectively                                        |                                       |                                            | 9,685     |           |           |   | 13,198    |          
|Mortgage notes receivable, net of discount of
	$1,096 and $1,555 at December 31, 2001 and 2000,
	respectively                                          |                                       |                                            | 13,495    |           |           |   | 13,761    |          
|Deferred rent                                                                                                                                          |                                       |                                            | 38,989    |           |           |   | 31,588    |          
|Prepaid financing costs, expenses and other
	assets, net of accumulated amortization of $8,774 and $5,456 at
	December 31, 2001 and 2000, respectively |                                       |                                            | 20,485    |           |           |   | 18,685    |          
|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |          
|                                                                                                                                                       |                                       | Total assets                               |           | $         | 2,761,443 |   |           | $         | 2,705,597 | 
|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |          
|Liabilities and Stockholders
	Equity                                                                                                                  |                                       |                                            |           |           |           |   |           |          
|Mortgage loans payable                                                                                                                                 |                                       | $                                          | 573,452   |           |           | $ | 576,055   |          
|Unsecured lines of credit                                                                                                                              |                                       |                                            | 180,350   |           |           |   | 253,350   |          
|Unsecured senior notes, net of discount                                                                                                                |                                       |                                            | 497,681   |           |           |   | 348,364   |          
|Accounts payable and accrued expenses                                                                                                                  |                                       |                                            | 43,002    |           |           |   | 37,415    |          
|Security deposits                                                                                                                                      |                                       |                                            | 19,683    |           |           |   | 19,470    |          
|Dividends payable                                                                                                                                      |                                       |                                            | 31,408    |           |           |   | 29,596    |          
|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |          
|                                                                                                                                                       |                                       | Total liabilities                          |           |           | 1,345,576 |   |           |           | 1,264,250 | 
|Minority interests                                                                                                                                     |                                       |                                            | 78,661    |           |           |   | 86,176    |          
|Stockholders Equity                                                                                                                                   |                                       |                                            |           |           |           |   |           |          
|Preferred stock, $.01 par value, 20,000,000
	shares authorized, none issued                                                                            |                                       |                                            |          |           |           |   |          |          
|Common stock, $.01 par value, 100,000,000 shares
	authorized, 64,098,110 and 63,646,871 issued and outstanding,
	respectively                          |                                       |                                            | 641       |           |           |   | 637       |          
|Additional paid-in capital                                                                                                                             |                                       |                                            | 1,345,698 |           |           |   | 1,363,407 |          
|Deferred compensation                                                                                                                                  |                                       |                                            | (9,133    | )         |           |   | (8,873    | )        
|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |          
|                                                                                                                                                       |                                       | Total stockholders equity                 |           |           | 1,337,206 |   |           |           | 1,355,171 | 
|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |          
|                                                                                                                                                       |                                       | Total liabilities and stockholders equity |           | $         | 2,761,443 |   |           | $         | 2,705,597 | 
|                                                                                                                                                       |                                       |                                            |           |           |           |   |           |          

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)


|                                          |         |                     |         |        |  |      |         |        |  |   |         |        | 
|----------------------------------------- | ------- | ------------------- | ------- | ------ |  | ---- | ------- | ------ |  | - | ------- | ------ | 
|                                          |         |                    
|                                          |         | For the Years Ended
|                                          |         | December 31,       
|                                          |         |                    
|                                          |         | 2001                |         | 2000   |  | 1999
|                                          |         |                     |         |        |  |     
|Revenue                                   |         | $                   | 418,525 |        |  | $    | 384,590 |        |  | $ | 337,853 |       
|Property operating expenses               |         |                     | 122,576 |        |  |      | 110,917 |        |  |   | 101,284 |       
|                                          |         |                     |         |        |  |      |         |        |  |   |         |       
|                                          |         |                     | 295,949 |        |  |      | 273,673 |        |  |   | 236,569 |       
|General and administrative                |         |                     | 12,143  |        |  |      | 9,336   |        |  |   | 7,393   |       
|Interest                                  |         |                     | 84,195  |        |  |      | 78,406  |        |  |   | 60,239  |       
|Depreciation and amortization             |         |                     | 101,819 |        |  |      | 87,267  |        |  |   | 69,837  |       
|Interest and other income                 |         |                     | (2,941  | )      |  |      | (3,527  | )      |  |   | (2,822  | )     
|                                          |         |                     |         |        |  |      |         |        |  |   |         |       
|Income before gain and minority interest  |         |                     | 100,733 |        |  |      | 102,191 |        |  |   | 101,922 |       
|Gain on sale of property                  |         |                     | 4,591   |        |  |      | 2,132   |        |  |   |        |       
|                                          |         |                     |         |        |  |      |         |        |  |   |         |       
|Income before minority interest           |         |                     | 105,324 |        |  |      | 104,323 |        |  |   | 101,922 |       
|Minority interest                         |         |                     | (7,565  | )      |  |      | (7,613  | )      |  |   | (5,296  | )     
|                                          |         |                     |         |        |  |      |         |        |  |   |         |       
|Net income                                |         | $                   | 97,759  |        |  | $    | 96,710  |        |  | $ | 96,626  |       
|                                          |         |                     |         |        |  |      |         |        |  |   |         |       
|Net income per common share:              |         |                     |         |        |  |      |         |        |  |   |         |       
|                                          | Basic   |                     | $       | 1.53   |  |      | $       | 1.53   |  |   | $       | 1.53   | 
|                                          |         |                     |         |        |  |      |         |        |  |   |         |       
|                                          | Diluted |                     | $       | 1.53   |  |      | $       | 1.52   |  |   | $       | 1.53   | 
|                                          |         |                     |         |        |  |      |         |        |  |   |         |       
|Weighted average number of common shares: |         |                     |         |        |  |      |         |        |  |   |         |       
|                                          | Basic   |                     |         | 63,754 |  |      |         | 63,408 |  |   |         | 63,016 | 
|                                          |         |                     |         |        |  |      |         |        |  |   |         |       
|                                          | Diluted |                     |         | 64,014 |  |      |         | 63,598 |  |   |         | 63,072 | 
|                                          |         |                     |         |        |  |      |         |        |  |   |         |       

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)


|                             |                                             |              |            |            |   |          |     |          |  |                  |           |               |   |        |   |         |   |   |        |        |   |   |        |       |   |   |           |          |  
|---------------------------- | ------------------------------------------- | ------------ | ---------- | ---------- | - | -------- | --- | -------- |  | ---------------- | --------- | ------------- | - | ------ | - | ------- | - | - | ------ | ------ | - | - | ------ | ----- | - | - | --------- | -------- | -
|                             |                                             |              |            |            |   |          |     |          |  |                  |           |              
|                             |                                             | Common Stock |            | Additional |   |          |     |          |  |                  |           | Total        
|                             |                                             |              |            | Paid in    |   | Retained |     | Deferred |  | Notes Receivable |           | Stockholders
|                             |                                             | Shares       |            | Amount     |   | Capital  |     | Earnings |  | Compensation     |           | From Officers |   | Equity
|                             |                                             |              |            |            |   |          |     |          |  |                  |           |               |   |       
|Balance at January 1, 1999   |                                             |              | 62,407,737 |            |   | $        | 624 |          |  | $                | 1,374,813 |               |   | $      |  |         |   | $ |       |        |   | $ | (2,047 | )     |   | $ | 1,373,390 |         
|                             | OP units converted                          |              |            | 951,240    |   |          |     | 9        |  |                  |           | 19,233        |   |        |   |        |   |   |        |       |   |   |        |      |   |   |           | 19,242   |  
|                             | Preferred partnership units issuance costs  |              |            |           |   |          |     |         |  |                  |           | (1,000        | ) |        |   |        |   |   |        |       |   |   |        |      |   |   |           | (1,000   | )
|                             | Interest on notes receivable from officers  |              |            |           |   |          |     |         |  |                  |           |              |   |        |   |        |   |   |        |       |   |   |        | (120  | ) |   |           | (120     | )
|                             | Net income                                  |              |            |           |   |          |     |         |  |                  |           |              |   |        |   | 96,626  |   |   |        |       |   |   |        |      |   |   |           | 96,626   |  
|                             | Dividends declared and payable              |              |            |           |   |          |     |         |  |                  |           | (15,754       | ) |        |   | (96,626 | ) |   |        |       |   |   |        |      |   |   |           | (112,380 | )
|                             |                                             |              |            |            |   |          |     |          |  |                  |           |               |   |        |   |         |   |   |        |        |   |   |        |       |   |   |           |         
|Balance at December 31, 1999 |                                             |              | 63,358,977 |            |   |          | 633 |          |  |                  | 1,377,292 |               |   |        |  |         |   |   |       |        |   |   | (2,167 | )     |   |   | 1,375,758 |         
|                             |                                             |              |            |            |   |          |     |          |  |                  |           |               |   |        |   |         |   |   |        |        |   |   |        |       |   |   |           |         
|                             | Surrender of restricted stock by officers   |              |            | (85,106    | ) |          |     |         |  |                  |           | (1,920        | ) |        |   |        |   |   |        |       |   |   |        |      |   |   |           | (1,920   | )
|                             | Notes and interest receivable from officers |              |            |           |   |          |     |         |  |                  |           |              |   |        |   |        |   |   |        |       |   |   |        | 2,167 |   |   |           | 2,167    |  
|                             | Stock compensation                          |              |            | 373,000    |   |          |     | 4        |  |                  |           | 9,455         |   |        |   |        |   |   |        | (9,459 | ) |   |        |      |   |   |           |         |  
|                             | Amortization of stock compensation          |              |            |           |   |          |     |         |  |                  |           |              |   |        |   |        |   |   |        | 586    |   |   |        |      |   |   |           | 586      |  
|                             | Preferred partnership units issuance costs  |              |            |           |   |          |     |         |  |                  |           | (119          | ) |        |   |        |   |   |        |       |   |   |        |      |   |   |           | (119     | )
|                             | Net income                                  |              |            |           |   |          |     |         |  |                  |           |              |   |        |   | 96,710  |   |   |        |       |   |   |        |      |   |   |           | 96,710   |  
|                             | Dividends declared and payable              |              |            |           |   |          |     |         |  |                  |           | (21,301       | ) |        |   | (96,710 | ) |   |        |       |   |   |        |      |   |   |           | (118,011 | )
|                             |                                             |              |            |            |   |          |     |          |  |                  |           |               |   |        |   |         |   |   |        |        |   |   |        |       |   |   |           |         
|Balance at December 31, 2000 |                                             |              | 63,646,871 |            |   |          | 637 |          |  |                  | 1,363,407 |               |   |        |  |         |   |   | (8,873 | )      |   |   |       |       |   |   | 1,355,171 |         
|                             |                                             |              |            |            |   |          |     |          |  |                  |           |               |   |        |   |         |   |   |        |        |   |   |        |       |   |   |           |         
|                             | OP units converted                          |              |            | 335,573    |   |          |     | 3        |  |                  |           | 6,583         |   |        |   |        |   |   |        |       |   |   |        |      |   |   |           | 6,586    |  
|                             | Stock options exercised                     |              |            | 21,166     |   |          |     |         |  |                  |           | 463           |   |        |   |        |   |   |        |       |   |   |        |      |   |   |           | 463      |  
|                             | Stock compensation                          |              |            | 94,500     |   |          |     | 1        |  |                  |           | 2,532         |   |        |   |        |   |   |        | (2,533 | ) |   |        |      |   |   |           |         |  
|                             | Amortization of stock compensation          |              |            |           |   |          |     |         |  |                  |           |              |   |        |   |        |   |   |        | 2,273  |   |   |        |      |   |   |           | 2,273    |  
|                             | Net income                                  |              |            |           |   |          |     |         |  |                  |           |              |   |        |   | 97,759  |   |   |        |       |   |   |        |      |   |   |           | 97,759   |  
|                             | Dividends declared and payable              |              |            |           |   |          |     |         |  |                  |           | (27,287       | ) |        |   | (97,759 | ) |   |        |       |   |   |        |      |   |   |           | (125,046 | )
|                             |                                             |              |            |            |   |          |     |          |  |                  |           |               |   |        |   |         |   |   |        |        |   |   |        |       |   |   |           |         
|Balance at December 31, 2001 |                                             |              | 64,098,110 |            |   | $        | 641 |          |  | $                | 1,345,698 |               |   | $      |  |         |   | $ | (9,133 | )      |   | $ |       |       |   | $ | 1,337,206 |         
|                             |                                             |              |            |            |   |          |     |          |  |                  |           |               |   |        |   |         |   |   |        |        |   |   |        |       |   |   |           |         

See accompanying notes to financial
statements.

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##### Table of Contents






ARDEN REALTY, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(in thousands)


|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |        |        |  
|---------------------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------------- | -------- | ------- | ------ | ---- | -------- | ------ | ------ | - | -------- | ------ | ------ | -
|                                                                                   |                                              |                                                   
|                                                                                   |                                              | For the Years Ended                               
|                                                                                   |                                              | December 31,                                      
|                                                                                   |                                              |                                                   
|                                                                                   |                                              | 2001                                               |          | 2000    |        | 1999
|                                                                                   |                                              |                                                    |          |         |        |     
|Operating Activities:                                                              |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Net income                                                                         |                                              | $                                                  | 97,759   |         |        | $    | 96,710   |        |        | $ | 96,626   |       
|Adjustments to reconcile net income to net cash
	provided by operating activities: |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|                                                                                   | Minority interests                           |                                                    |          | 7,565   |        |      |          | 7,613  |        |   |          | 5,296  |       
|                                                                                   | Depreciation and amortization                |                                                    |          | 101,819 |        |      |          | 87,267 |        |   |          | 69,837 |       
|                                                                                   | Amortization of loan costs and fees          |                                                    |          | 3,568   |        |      |          | 3,568  |        |   |          | 2,868  |       
|                                                                                   | Gain on sale of property                     |                                                    |          | (4,591  | )      |      |          | (2,132 | )      |   |          |       |       
|                                                                                   | Amortization of deferred compensation        |                                                    |          | 1,938   |        |      |          | 586    |        |   |          |       |       
|                                                                                   | Changes in operating assets and liabilities: |                                                    |          |         |        |      |          |        |        |   |          |        |       
|                                                                                   |                                              | Rent and other receivables                         |          |         | 3,775  |      |          |        | (1,080 | ) |          |        | (2,279 | )
|                                                                                   |                                              | Deferred rent                                      |          |         | (7,401 | )    |          |        | (7,656 | ) |          |        | (6,928 | )
|                                                                                   |                                              | Prepaid financing costs, expenses and other assets |          |         | (4,366 | )    |          |        | (7,480 | ) |          |        | (1,456 | )
|                                                                                   |                                              | Accounts payable and accrued expenses              |          |         | 4,388  |      |          |        | 11,359 |   |          |        | 4,250  |  
|                                                                                   |                                              | Security deposits                                  |          |         | 213    |      |          |        | 3,397  |   |          |        | 2,140  |  
|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Net cash provided by operating activities                                          |                                              |                                                    | 204,667  |         |        |      | 192,152  |        |        |   | 170,354  |       
|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Investing Activities:                                                              |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Acquisitions and improvements to commercial
	properties                            |                                              |                                                    | (161,785 | )       |        |      | (227,707 | )      |        |   | (283,574 | )     
|Proceeds from sales of properties                                                  |                                              |                                                    | 45,931   |         |        |      | 11,683   |        |        |   |         |       
|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Net cash used in investing activities                                              |                                              |                                                    | (115,854 | )       |        |      | (216,024 | )      |        |   | (283,574 | )     
|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Financing Activities:                                                              |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Proceeds from mortgage loans                                                       |                                              |                                                    |         |         |        |      | 45,052   |        |        |   | 310,038  |       
|Repayment of mortgage loans                                                        |                                              |                                                    | (2,603   | )       |        |      | (209,804 | )      |        |   | (113,259 | )     
|Proceeds from unsecured lines of credit                                            |                                              |                                                    | 140,500  |         |        |      | 238,000  |        |        |   | 209,661  |       
|Repayments of unsecured lines of credit                                            |                                              |                                                    | (213,500 | )       |        |      | (273,500 | )      |        |   | (217,261 | )     
|Proceeds from issuances of unsecured senior
	notes, net of discount                |                                              |                                                    | 149,064  |         |        |      | 348,364  |        |        |   |         |       
|Decrease(Increase) in restricted cash                                              |                                              |                                                    | 599      |         |        |      | (854     | )      |        |   | (6,104   | )     
|Proceeds from issuance of common stock, net of
	offering costs                     |                                              |                                                    | 463      |         |        |      |         |        |        |   |         |       
|Distributions to and contributions from minority
	interests, net                   |                                              |                                                    | (4,182   | )       |        |      | (3,968   | )      |        |   | (4,629   | )     
|Distributions to preferred operating partnership
	units holder                     |                                              |                                                    | (4,312   | )       |        |      | (4,312   | )      |        |   | (1,354   | )     
|Dividends paid                                                                     |                                              |                                                    | (123,233 | )       |        |      | (116,611 | )      |        |   | (110,394 | )     
|Proceeds from issuance of preferred operating
	partnership units                   |                                              |                                                    |         |         |        |      |         |        |        |   | 50,000   |       
|Preferred operating partnership units issuance
	cost                               |                                              |                                                    |         |         |        |      | (119     | )      |        |   | (1,000   | )     
|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Net cash (used in) provided by financing
	activities                               |                                              |                                                    | (57,204  | )       |        |      | 22,248   |        |        |   | 115,698  |       
|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Net increase (decrease) in cash and cash
	equivalents                              |                                              |                                                    | 31,609   |         |        |      | (1,624   | )      |        |   | 2,478    |       
|Cash and cash equivalents at beginning of period                                   |                                              |                                                    | 5,432    |         |        |      | 7,056    |        |        |   | 4,578    |       
|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Cash and cash equivalents at end of period                                         |                                              | $                                                  | 37,041   |         |        | $    | 5,432    |        |        | $ | 7,056    |       
|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Supplemental Disclosure of Cash Flow
	Information:                                 |                                              |                                                    |          |         |        |      |          |        |        |   |          |       
|Cash paid during the period for interest, net of
	amount capitalized               |                                              | $                                                  | 83,809   |         |        | $    | 70,139   |        |        | $ | 58,365   |       
|                                                                                   |                                              |                                                    |          |         |        |      |          |        |        |   |          |       

See accompanying notes to financial
statements.

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##### Table of Contents






ARDEN REALTY, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

1. Business

Description of Business

The terms Arden Realty,
us, we and our as used in
these financial statements refer to Arden Realty, Inc. We are a
self-administered and self-managed real estate investment trust,
or REIT, that owns, manages, leases, develops, renovates and
acquires commercial properties located in Southern California.

Organization and Formation of the
Company

We were incorporated in Maryland in May 1996 and
are the sole general partner of Arden Realty Limited
Partnership, or the operating partnership. We conduct
substantially all of our business through the operating
partnership and certain other majority owned subsidiaries, which
hold our interests in our real estate assets. Commencing with
our taxable year ended December 31, 1996, we have operated
and qualified as a REIT for federal income tax purposes.

As of December 31, 2001, our portfolio
consisted of 133 primarily suburban office properties containing
approximately 18.2 million net rentable square feet and two
properties with approximately 566,000 net rentable square feet
under development. As of December 31, 2001, our properties
were 92.2% occupied.

2. Basis of Presentation and Summary of
Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial
statements include the accounts of Arden Realty, the operating
partnership, and our subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.

The minority interests at December 31, 2001
and December 31, 2000 consisted of limited partnership
interests in the operating partnership of approximately 2.8% and
3.3%, respectively, exclusive of ownership interests of our
preferred units holders.

Risks and Uncertainties

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

Our properties are all located in Southern
California. As a result of our geographic concentration, the
operations of these properties could be affected by the economic
conditions in this region.

Segment Information

We view our operations as principally one
segment, namely the operation of commercial real estate located
in Southern California, and the financial information disclosed
herein represents all of the financial information related to
this principal operating segment.

Commercial Properties

Our properties are stated at depreciated cost.
When indicators of impairment exist, write-downs to estimated
fair value would be recognized if a propertys estimated
undiscounted future cash flows, before interest charges, are
less than its book value. Properties held for disposition are
carried at the lower of

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depreciated cost or fair value. Based on our
assessment, no write-downs to estimated fair value were
necessary as of December 31, 2001 and 2000, respectively.


Costs related to the acquisition, development,
construction and improvement of properties are capitalized.
Interest, real estate taxes, insurance and other development
related costs incurred during construction periods are
capitalized and depreciated on the same basis as the related
assets.

Repair and maintenance costs are charged to
expenses as incurred and significant replacements and
betterments are capitalized. Repairs and maintenance costs
include all costs that do not extend the useful life of a an
asset or increase its operating efficiency. Significant
replacements and betterments represent costs that extend an
assets useful life or increase its operating efficiency.

Depreciation is calculated under the
straight-line method using depreciable lives of ten to forty
seven years for building and building improvements and five-year
lives for furniture, fixtures and equipment. Amortization of
tenant improvements is calculated using the straight-line method
over the term of the related lease.

The carrying amount of all commercial properties
is evaluated periodically to determine if adjustment to the
useful life is warranted. During 2001, the useful lives of
certain building and building improvements were adjusted to more
accurately reflect their estimated usefulness. The effect of
this change in estimate in 2001 was an increase to net income of
approximately $10.1 million or $0.16 per common share. This
change in estimate did not have an impact on our 2001 cash flows.

Costs associated with leasing properties are
capitalized and amortized to expense on a straight-line basis
over the related lease term.

Cash Equivalents

Cash equivalents consist of highly liquid
investments with original maturities of three months or less
when acquired.

Restricted Cash

Restricted cash at December 31, 2001 and
2000 primarily consists of $13.7 million and
$13.9 million, respectively, in cash deposits as required
by certain of our mortgage loans payable and $5.1 million
and $5.5 million, respectively, in impound accounts for
real estate taxes and insurance, as required by certain of our
mortgage loans payable.

Prepaid Financing Costs

Costs associated with obtaining long-term
financing are capitalized and amortized to interest expense over
the term of the related loan.

Revenue Recognition

Minimum rent, including rental abatements and
contractual fixed increases attributable to operating leases, is
recognized on a straight-line basis over the term of the related
lease. Amounts expected to be received in later years are
included in deferred rents. Property operating expense
reimbursements due from tenants for common area maintenance,
real estate taxes and other recoverable costs are recognized in
the period the related expenses are incurred.

Income Taxes

We generally will not be subject to federal
income taxes as long as we continue to qualify as a REIT. A REIT
will generally not be subject to federal income taxation on that
portion of income that qualifies as REIT taxable income and to
the extent that it distributes such taxable income to its
stockholders and complies with certain requirements. As a REIT,
we are allowed to reduce taxable income by all or a portion of
distributions to stockholders and must distribute at least 90%
of our taxable income to qualify as a REIT. As dividends have

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eliminated taxable income, and compliance with
certain requirements have been met, no Federal income tax
provision has been reflected in the accompanying consolidated
financial statements. State income tax requirements are
essentially the equivalent of the Federal rules.


During 2001, 2000 and 1999, we declared dividends
of $1.96, $1.86 and 1.78 per share, respectively.

Fair Value of Financial
Instruments

Our disclosures of estimated fair value of
financial instruments at December 31, 2001 and 2000,
respectively, were determined using available market information
and appropriate valuation methodologies. Considerable judgment
is necessary to interpret market data and develop estimated fair
value. The use of different market assumptions or estimation
methodologies may have a material effect on the estimated fair
value amounts.

Our cash equivalents, mortgage notes receivable,
unsecured lines of credit, accounts payable and other financial
instruments are carried at amounts that reasonably approximate
their fair value amounts.

The estimated fair value of our mortgage loans
payable as unsecured senior notes is as follows (in thousands):

|                       |  |                   |         |                   |  |          |         |            |  |   |         |  |  |   |         | 
|---------------------- |  | ----------------- | ------- | ----------------- |  | -------- | ------- | ---------- |  | - | ------- |  |  | - | ------- | 
|                       |  |                   |         |                  
|                       |  | December 31, 2001 |         | December 31, 2000
|                       |  |                   |         |                  
|                       |  | Carrying          |         | Estimated         |  | Carrying |         | Estimated 
|                       |  | Amount            |         | Fair Value        |  | Amount   |         | Fair Value
|                       |  |                   |         |                   |  |          |         |           
|Mortgage loans payable |  | $                 | 573,452 |                   |  | $        | 580,799 |            |  | $ | 576,055 |  |  | $ | 576,780 | 
|                       |  |                   |         |                   |  |          |         |            |  |   |         |  |  |   |         | 
|Unsecured senior notes |  | $                 | 497,681 |                   |  | $        | 516,273 |            |  | $ | 348,364 |  |  | $ | 367,904 | 
|                       |  |                   |         |                   |  |          |         |            |  |   |         |  |  |   |         | 

The estimated fair value is based on interest
rates available at each of the dates presented for issuance of
debt with similar terms and remaining maturities. The estimated
fair value amounts of our notes payable above are not
necessarily indicative of the amounts that we could realize in a
current market exchange.

New Accounting Standards

In June 1998, June 1999 and June 2000,
respectively, the Financial Accounting Standards Board issued
Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, Statement
No. 137, Accounting for Derivative Instruments and
Hedging Activities  Deferral of the Effective Date of
Statement No. 133, and Statement No. 138,
Accounting for Certain Derivative Instruments and Certain
Hedging Activities  an Amendment of Statement
No. 133. These statements outline the accounting
treatment for all derivative activity. We adopted on
January 1, 2001 Statement No. 133 and its adoption did
not have a significant effect on our consolidated results of
operations or financial position.

In August 2001, the Financial Accounting
Standards Board issued Statement No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets. This
statement provides guidance in differentiating and accounting
for assets held and used, held for sale and held for disposal
other than by sale. We will adopt Statement No. 144
effective January 1, 2002 and do not expect its adoption to
significantly impact our consolidated result of operations or
financial position.

3. Commercial Properties

Acquisitions

We did not acquire any properties in 2001.

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Dispositions

The following table sets forth information
regarding our disposition activities during 2001.

|                                |       |        |                |           |  |                    |              |          |                |             |               |                |        |                   |            |  |         |  |         |         |        |   |        |        | 
|------------------------------- | ----- | ------ | -------------- | --------- |  | ------------------ | ------------ | -------- | -------------- | ----------- | ------------- | -------------- | ------ | ----------------- | ---------- |  | ------- |  | ------- | ------- | ------ | - | ------ | ------ | 
|                                |       |        |                |           |  |                    |              | Property |                |             |               | Sales Price   
|Property                        |       | County |                | Submarket |  | Date of Sale       |              | Type     |                | Square Feet |               | (in thousands)
|                                |       |        |                |           |  |                    |              |          |                |             |               |               
|One Venture                     |       |        | Orange County  |           |  |                    | South County |          |                |             | May 1, 2001   |                |        |                   | Office     |  |         |  | 43,324  |         |        | $ | 8,200  |       
|Ontario Airport Commerce Center |       |        | San Bernardino |           |  |                    | Ontario      |          |                |             | May 1, 2001   |                |        |                   | Industrial |  |         |  | 213,127 |         |        |   | 11,000 |       
|Rancho Plaza                    |       |        | Los Angeles    |           |  | Simi/Conejo Valley |              |          | Sept. 28, 2001 |             |               |                | Office |                   |            |  | 24,057  |  |         |         | 3,100  |  
|Hunter Business Center          |       |        | Riverside      |           |  | Inland Empire East |              |          | Sept. 28, 2001 |             |               |                | Office |                   |            |  | 106,782 |  |         |         | 4,900  |  
|Thousand Oaks Plaza             |       |        | Los Angeles    |           |  | Simi/Conejo Valley |              |          | Nov. 21, 2001  |             |               |                | Office |                   |            |  | 13,434  |  |         |         | 2,100  |  
|Temecula Portfolio(1)           |       |        | San Bernardino |           |  |                    | Temecula     |          |                |             | Dec. 20, 2001 |                |        | Office/Industrial |            |  | 172,200 |  |         |         | 18,500 |  
|                                |       |        |                |           |  |                    |              |          |                |             |               |                |        |                   |            |  |         |  |         |         |        |   |        |       
|                                | Total |        |                |           |  |                    |              |          |                |             |               |                |        |                   |            |  |         |  |         | 572,924 |        |   | $      | 47,800 | 
|                                |       |        |                |           |  |                    |              |          |                |             |               |                |        |                   |            |  |         |  |         |         |        |   |        |       




|    |                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Portfolio sold consists of three office
	properties (Tower Plaza I, Tower Plaza II and Tower
	Plaza III) and two industrial properties
	(Highlands I and Highlands II).

Properties held for
Disposition

As of December 31, 2001 properties held for
disposition consist of eleven properties representing
approximately 923,000 rentable square feet and at
December 31, 2000 it consisted of nine properties
containing approximately 551,000 rentable square feet and one
land parcel. There were no properties held for disposition in
1999.

The table below summarizes the results of
operations for these properties for the years ended
December 31, 2001 and 2000 as follows (in thousands):

|                              |                      |      |        |        |  |   |        |       | 
|----------------------------- | -------------------- | ---- | ------ | ------ |  | - | ------ | ----- | 
|                              |                      | 2001 |        | 2000  
|                              |                      |      |        |       
|Revenue                       |                      | $    | 19,638 |        |  | $ | 8,509  |      
|Property operating expenses   |                      |      | (6,361 | )      |  |   | (2,491 | )    
|                              |                      |      |        |        |  |   |        |      
|                              | Net operating income |      |        | 13,277 |  |   |        | 6,018 | 
|Depreciation and amortization |                      |      | (699   | )      |  |   | (319   | )    
|Interest                      |                      |      |       |        |  |   | (367   | )    
|                              |                      |      |        |        |  |   |        |      
|                              |                      | $    | 12,578 |        |  | $ | 5,332  |      
|                              |                      |      |        |        |  |   |        |      

Due to market conditions beyond our control, it
is difficult to predict the actual timing and amount of these
asset sales. At the time any such sales proceeds are realized,
we expect to redeploy such amounts into investments that we
believe will generate higher long-term value, which may include
development of office buildings, acquisitions or repurchase of
our common stock.

Capitalized Interest

We capitalize interest and taxes related to
buildings under construction and renovation to the extent those
assets qualify for capitalization.

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Total interest incurred and the amount
capitalized for the years ended December 31, 2001, 2000,
and 1999 were as follows (in thousands):

|                        |  |      |        |      |  |      |         |   |  |   |        |  
|----------------------- |  | ---- | ------ | ---- |  | ---- | ------- | - |  | - | ------ | -
|                        |  | 2001 |        | 2000 |  | 1999
|                        |  |      |        |      |  |     
|Total interest incurred |  | $    | 93,290 |      |  | $    | 91,052  |   |  | $ | 69,826 |  
|Interest capitalized    |  |      | (9,095 | )    |  |      | (12,646 | ) |  |   | (9,587 | )
|                        |  |      |        |      |  |      |         |   |  |   |        |  
|Interest expensed       |  | $    | 84,195 |      |  | $    | 78,406  |   |  | $ | 60,239 |  
|                        |  |      |        |      |  |      |         |   |  |   |        |  

Future Minimum Lease
Payments

Future minimum lease payments to be received
under noncancelable operating leases existing as of
December 31, 2001, are as follows (in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2002       |  | $ | 317,399 | 
|2003       |  |   | 269,336 | 
|2004       |  |   | 211,827 | 
|2005       |  |   | 153,180 | 
|2006       |  |   | 103,714 | 
|Thereafter |  |   | 288,714 | 

The above future minimum lease payments do not
include payments received for tenant reimbursements of specified
operating expenses.

We lease the land underlying the office buildings
or parking structures at six of our buildings. Ground lease
expense, including amounts netted against parking revenues, was
approximately $2.9 million, $2.3 million and
$1.7 million for the years ended December 31, 2001,
2000 and 1999, respectively. Future minimum ground lease
payments due under existing ground leases are as follows (in
thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2002       |  | $ | 1,754   | 
|2003       |  |   | 1,754   | 
|2004       |  |   | 1,785   | 
|2005       |  |   | 1,815   | 
|2006       |  |   | 1,840   | 
|Thereafter |  |   | 114,666 | 

4. Mortgage Notes
Receivable

In September 1997, we purchased two mortgage
notes receivable, secured by a single commercial office
property, with an aggregate balance of approximately
$17.6 million, for approximately $14.4 million. The
notes bear interest at the Eleventh District Cost of Funds (as
defined) plus 3.25% per annum, require monthly payments of
principal, interest, and additional net cash flow from the
office property and mature on May 31, 2004. These notes had
an effective interest rate of 10.02% at December 31, 2001
including the amortization of the purchase discount.

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5. Mortgage Loans and Unsecured
Indebtedness

A summary of mortgage loans payable, unsecured
lines of credit and unsecured senior notes is as follows:

|                            |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       |  | 
|--------------------------- | ---------- | -------------- | ------- | ------------ |  | ----------------- | ------- | -------------- |  | ---------- | ---- | -------- |  |  | ------------------ | - |  |  | ------- | - |  |  | ----- |  | 
|                            |            |                |         |              |  |                   |         |                |  | Number     |      |         
|                            |            |                |         |              |  |                   |         |                |  | of         |      |         
|                            |            |                |         |              |  | Stated Annual     |         |                |  | Properties |      | Maturity
|                            |            | December 31,   |         | December 31, |  | Interest Rate at  |         | Rate           |  | Securing   |      | Month/  
|Type of Debt                |            | 2001           |         | 2000         |  | December 31, 2001 |         | Fixed/Floating |  | Loan       |      | Year    
|                            |            |                |         |              |  |                   |         |                |  |            |      |         
|                            |            |                |         |              |  |                   |         |                |  |           
|                            |            | (in thousands) |         |              |  |                   |         |                |  |           
|Mortgage Loans Payable:     |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|Fixed Rate                  |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|Mortgage Financing I(1)     |            | $              | 175,000 |              |  | $                 | 175,000 |                |  |            | 7.52 | %        |  |  | Fixed              |   |  |  | 18      |   |  |  | 6/04  | 
|Mortgage Financing III(2)   |            |                | 136,100 |              |  |                   | 136,100 |                |  |            | 6.74 | %        |  |  | Fixed              |   |  |  | 22      |   |  |  | 4/08  | 
|Mortgage Financing IV(2)    |            |                | 111,200 |              |  |                   | 111,200 |                |  |            | 6.61 | %        |  |  | Fixed              |   |  |  | 12      |   |  |  | 4/08  | 
|Mortgage Financing V(3)     |            |                | 110,253 |              |  |                   | 112,212 |                |  |            | 6.94 | %        |  |  | Fixed              |   |  |  | 12      |   |  |  | 4/09  | 
|Mortgage Financing VI(3)    |            |                | 22,036  |              |  |                   | 22,241  |                |  |            | 7.54 | %        |  |  | Fixed              |   |  |  | 3       |   |  |  | 4/09  | 
|Activity Business Center(3) |            |                | 7,737   |              |  |                   | 7,881   |                |  |            | 8.85 | %        |  |  | Fixed              |   |  |  | 1       |   |  |  | 5/06  | 
|145 South Fairfax(3)        |            |                | 3,987   |              |  |                   | 4,021   |                |  |            | 8.93 | %        |  |  | Fixed              |   |  |  | 1       |   |  |  | 1/27  | 
|Marin Corporate Center(3)   |            |                | 2,966   |              |  |                   | 3,071   |                |  |            | 9.00 | %        |  |  | Fixed              |   |  |  | 1       |   |  |  | 7/15  | 
|Conejo Business Center(3)   |            |                | 2,911   |              |  |                   | 3,017   |                |  |            | 8.75 | %        |  |  | Fixed              |   |  |  | (Note 4 | ) |  |  | 7/15  | 
|Conejo Business Center(3)   |            |                | 1,262   |              |  |                   | 1,312   |                |  |            | 7.88 | %        |  |  | Fixed              |   |  |  | (Note 4 | ) |  |  | 7/15  | 
|                            |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|                            |            |                | 573,452 |              |  |                   | 576,055 |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|Unsecured Lines of Credit:  |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|Floating Rate               |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|Wells Fargo(1)              |            |                | 105,350 |              |  |                   | 172,350 |                |  |            | 3.09 | %        |  |  | LIBOR + 1.15       | % |  |  |        |   |  |  | 4/03  | 
|                            |            |                |         |              |  |                   |         |                |  |            |      |          |  |  | (Note 5            | ) |  |  |         |   |  |  |       | 
|Lehman Brothers(1) and (6)  |            |                | 75,000  |              |  |                   | 75,000  |                |  |            | 3.35 | %        |  |  | LIBOR + 1.30       | % |  |  |        |   |  |  | 7/02  | 
|City National Bank(1)       |            |                |        |              |  |                   | 6,000   |                |  |            |     |          |  |  | Prime Rate  0.875 | % |  |  |        |   |  |  | 8/02  | 
|                            |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|                            |            |                | 180,350 |              |  |                   | 253,350 |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|Unsecured Senior Notes:     |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|Fixed Rate                  |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|2005 Notes(7)               |            |                | 199,667 |              |  |                   | 199,564 |                |  |            | 8.88 | %        |  |  | Fixed              |   |  |  |        |   |  |  | 3/05  | 
|2010 Notes(7)               |            |                | 49,663  |              |  |                   | 49,622  |                |  |            | 9.15 | %        |  |  | Fixed              |   |  |  |        |   |  |  | 3/10  | 
|2010 Notes(7)               |            |                | 99,262  |              |  |                   | 99,178  |                |  |            | 8.50 | %        |  |  | Fixed              |   |  |  |        |   |  |  | 11/10 | 
|2007 Notes(7)               |            |                | 149,089 |              |  |                   |        |                |  |            | 7.00 | %        |  |  | Fixed              |   |  |  |        |   |  |  | 11/07 | 
|                            |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|                            |            |                | 497,681 |              |  |                   | 348,364 |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|                            |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 
|                            | Total Debt |                | $       | 1,251,483    |  |                   | $       | 1,177,769      |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       |  | 
|                            |            |                |         |              |  |                   |         |                |  |            |      |          |  |  |                    |   |  |  |         |   |  |  |       | 




|    |                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------
|(1) | Requires monthly payments of interest only, with
	outstanding principal balance due upon maturity.                    
|   
|(2) | Requires monthly payments of interest only for
	five years and monthly payments of principal and interest
	thereafter.
|   
|(3) | Requires monthly payments of principal and
	interest.                                                                 
|   
|(4) | Both mortgage loans are secured by the Conejo
	Business Center property.                                              
|   
|(5) | This line of credit also has an annual 25 bp
	facility fee on the entire $275 million commitment amount.              
|   
|(6) | This line of credit has a one-year extension
	option.                                                                 
|   
|(7) | Requires semi-annual interest payments only, with
	principal balance due upon maturity.                               

Unsecured Lines of
Credit

We have an unsecured line of credit with a group
of banks led by Wells Fargo. This line of credit provides for
borrowing up to $275 million with an option to increase the
amount to $325 million and bears interest at a rate ranging
between LIBOR plus 1.15% and LIBOR plus 1.80%
(including an annual facility fee ranging from .20% to .40%
based on the aggregate amount of the facility), depending on our
unsecured debt rating. In addition, as long as we maintain an
unsecured debt rating of BBB-/Baa3 or better, the agreement
contains a competitive bid option, whereby the lenders on this
line of credit may bid on the interest rate to be charged for up
to $137.5 million of the unsecured line of credit. Under
certain circumstances, we also have the option to convert the
interest rate on this line of credit to the greater of the
Federal Funds rate plus 0.5% or Wells

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Fargos prime rate. This line of credit
matures in April 2003. As of December 31, 2001, there was
approximately $105.4 million outstanding on this line of
credit and approximately $169.6 million was available for
additional borrowings.


This line of credit is subject to customary
conditions to borrowing; contains representations, warranties
and defaults customary in REIT financings; and contains
financial covenants, including requirements for a minimum
tangible net worth, maximum liabilities to asset values, and
minimum interest, unsecured interest and fixed charge coverage
ratios, all calculated as defined in the Wells Fargo line of
credit documentation, and requirements to maintain a pool of
unencumbered properties that meet certain defined
characteristics and are approved by the group of banks led by
Wells Fargo. This line of credit also contains restrictions on,
among other things, indebtedness, investments, distributions,
liens and mergers. Proceeds from this line of credit have been
used to provide funds for tenant improvements and capital
expenditures and to provide for working capital and other
purposes.

We also have a $75 million unsecured line of
credit with Lehman Brothers. Borrowings on this line of credit
bear interest at a rate ranging between LIBOR plus 1.05% and
LIBOR plus 1.70%, depending on our unsecured debt rating. We
also have the option to convert the interest rate to the prime
rate plus 0.5%. This line of credit matures in July 2002 with an
option to extend the maturity date for one year. As of
December 31, 2001, there was $75 million outstanding
on this line of credit.

We also have an unsecured line of credit with a
total commitment of $10 million from City National Bank.
This line of credit accrues interest at the City National Bank
Prime Rate less 0.875% and is scheduled to mature on
August 1, 2002. Proceeds from this line of credit are used,
among other things, to provide funds for tenant improvements and
capital expenditures and provide for working capital and other
corporate purposes. As of December 31, 2001, there was no
outstanding balance on this line of credit and $10 million
was available for additional borrowings.

Unsecured Senior Notes

On June 27, 2001, we and our operating
partnership filed a Form S-3 shelf registration statement
with the Securities and Exchange Commission, or SEC, providing
for the issuance of up to $400 million of debt securities
by the operating partnership and up to $257.2 million of
our $.01 par value common stock or our $.01 par value preferred
stock. The terms of these securities will be determined at the
time of any debt or equity offering. This registration statement
was declared effective by the SEC on July 24, 2001.

On November 9, 2001, our operating
partnership completed a public offering of $150 million,
7.00% unsecured notes due 2007, from the shelf registration
statement, with interest payable semi-annually on May 15
and November 15 of each year. The net proceeds from this
offering were used to reduce the outstanding balance on our
Wells Fargo unsecured line of credit.

Following is a summary of scheduled principal
payments for our total debt outstanding as of December 31,
2001 (in thousands):

|             |  |        |           | 
|------------ |  | ------ | --------- | 
|Year Ended   |  |       
|December 31, |  | Amount
|             |  |       
|2002         |  | $      | 77,578    | 
|2003         |  |        | 110,648   | 
|2004         |  |        | 182,062   | 
|2005         |  |        | 207,678   | 
|2006         |  |        | 15,063    | 
|Thereafter   |  |        | 658,454   | 
|             |  |        |           | 
|             |  | $      | 1,251,483 | 
|             |  |        |           | 

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6. Stockholders
Equity

During 2001 and 2000, we issued a total of 94,500
and 373,000, respectively, in restricted stock awards to several
key executive officers. The restriction on these restricted
stock awards prohibits the sale or transfer of such shares. At
the time of their issuance, these restricted stock awards began
vesting equally on the anniversary date of the awards over four
years for 100,000 shares and over five years for 367,500 shares.
We recorded deferred compensation charges of approximately
$2.5 million and $9.5 million during 2001 and 2000,
respectively, based on the market value of these shares on the
date of award in the accompanying consolidated statement of
stockholders equity and began amortizing such charges on a
straight-line basis over the restriction period for each award.
In 2001 and 2000, we recorded approximately $1.9 million
and $586,000, respectively, in non-cash compensation expense
related to these restricted stock awards.

On September 7, 1999, our operating
partnership completed a $50 million private placement of
8 5/8% Series B Cumulative Redeemable Preferred
operating partnership units, or Preferred OP Units, to an
institutional investor. The Preferred OP Units are callable by
us after five years and are exchangeable after ten years by the
holder into our 8 5/8% Series B Cumulative Redeemable
Preferred Stock, on a one-for-one basis. The Preferred OP Units
have no stated maturity or mandatory redemption and are
subordinate to all debt. We used the net proceeds from this
private placement to repay a portion of our lines of credit.

An operating partnership Unit, or OP Unit, and a
share of common stock have essentially the same economic
characteristics as they share equally in the total net income or
loss and distributions of the operating partnership. An OP Unit
may be redeemed for cash or, at our election, for shares of
common stock on a one-for-one basis.

A dividend was declared on December 5, 2001
to stockholders of record on December 28, 2001 of $0.49 per
common share, for the quarter ended December 31, 2001. This
dividend was paid on January 23, 2002. Arden Realty
declared dividends of $1.96 per common share for the year ended
December 31, 2001.

7. Commitments and
Contingencies

Capital Commitments

As of December 31, 2001, we had
approximately $9.2 million outstanding in capital
commitments related to tenant improvements, renovation costs and
general property-related capital expenditures.

Litigation

We are presently subject to various lawsuits,
claims and proceedings of a nature considered normal to our
ordinary course of business. We expect most of these legal
proceedings to be covered by our liability insurance. The most
significant of these contingencies not covered by insurance is
described below.

In December 2001, the owner of the entertainment
center at our Howard Hughes Center project asserted a claim
against us for indemnification arising out of a Los Angeles
Superior Court judgment against them, which invalidated a
transfer of in-lieu credits that Arden Realty made in August of
1999 as part of our sale of the land for the entertainment
center. The value of these in-lieu credits was approximately
$6.0 million and were transferred to satisfy certain
Transportation Impact Assessment fees related to the
entertainment center. The owner of the entertainment center is
currently appealing the judgment.

Based on our review of the current facts and
circumstances and advice of our outside counsel, we are not able
to express an opinion as to the ultimate outcome of this matter.
However, we do not believe that the resolution of this matter or
any of our ongoing legal proceedings will have a material
adverse effect on our consolidated results of operations, cash
flow or financial position.

Concentration
of Credit Risk

We maintain our cash and cash equivalents at
financial institutions. The combined account balances at each
institution periodically exceed FDIC insurance coverage, and as
a result, there is a concentration of

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credit risk related to amounts on deposit in
excess of FDIC insurance coverage. Management believes that the
risk is not significant.


We generally do not require collateral or other
security from our tenants, other than security deposits.

8. Related Party
Transactions

Promissory
Notes Receivable from Officers

On July 19, 2001 and September 28,
2001, four officers executed promissory notes totaling
approximately $416,000 primarily for the purpose of meeting
payroll taxes due upon the vesting of stock grants. These notes
mature between July 19, 2006 and September 28, 2011
and bear interest at an annual rate of between 5.75% and 6.00%.
These loans are personally guaranteed by the respective officers
and are included as part of other receivables in our balance
sheet at December 31, 2001. See footnote 13.

9. Revenue from Rental Operations
and Property Operating Expenses

Revenue from rental operations and property
operating expenses for the years ended December 31, 2001,
2000 and 1999 are summarized as follows (in thousands):

|                                |                          |      |         |         |  |      |         |         |  |   |         |         | 
|------------------------------- | ------------------------ | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                |                          | 2001 |         | 2000    |  | 1999
|                                |                          |      |         |         |  |     
|Revenue From Rental Operations: |                          |      |         |         |  |      |         |         |  |   |         |        
|                                | Scheduled Rents          |      | $       | 346,414 |  |      | $       | 320,383 |  |   | $       | 285,008 | 
|                                | Straight-line Rents      |      |         | 9,208   |  |      |         | 8,077   |  |   |         | 7,680   | 
|                                | Tenant reimbursements    |      |         | 22,732  |  |      |         | 16,371  |  |   |         | 13,863  | 
|                                | Parking, net of expenses |      |         | 22,025  |  |      |         | 18,348  |  |   |         | 14,384  | 
|                                | Other rental operations  |      |         | 18,146  |  |      |         | 21,411  |  |   |         | 16,918  | 
|                                |                          |      |         |         |  |      |         |         |  |   |         |        
|                                |                          |      | 418,525 |         |  |      | 384,590 |         |  |   | 337,853 |        
|                                |                          |      |         |         |  |      |         |         |  |   |         |        
|Property Operating Expenses:    |                          |      |         |         |  |      |         |         |  |   |         |        
|                                | Repairs and maintenance  |      |         | 36,715  |  |      |         | 35,390  |  |   |         | 32,902  | 
|                                | Utilities                |      |         | 33,894  |  |      |         | 29,872  |  |   |         | 28,305  | 
|                                | Real estate taxes        |      |         | 29,404  |  |      |         | 26,808  |  |   |         | 23,167  | 
|                                | Insurance                |      |         | 5,727   |  |      |         | 4,203   |  |   |         | 3,993   | 
|                                | Ground rent              |      |         | 1,885   |  |      |         | 1,214   |  |   |         | 891     | 
|                                | Administrative           |      |         | 14,951  |  |      |         | 13,430  |  |   |         | 12,026  | 
|                                |                          |      |         |         |  |      |         |         |  |   |         |        
|                                |                          |      | 122,576 |         |  |      | 110,917 |         |  |   | 101,284 |        
|                                |                          |      |         |         |  |      |         |         |  |   |         |        
|                                |                          | $    | 295,949 |         |  | $    | 273,673 |         |  | $ | 236,569 |        
|                                |                          |      |         |         |  |      |         |         |  |   |         |        

10. Earnings Per Share

The following table sets forth the computation of
basic and diluted net income per share for the years ended
December 31, 2001, 2000 and 1999 (in thousands, except per
share amounts):

|                                        |  |      |        |      |  |      |        |  |  |   |        | 
|--------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                        |  | 2001 |        | 2000 |  | 1999
|                                        |  |      |        |      |  |     
|Net income                              |  | $    | 97,759 |      |  | $    | 96,710 |  |  | $ | 96,626 | 
|                                        |  |      |        |      |  |      |        |  |  |   |        | 
|Weighted average shares  basic         |  |      | 63,754 |      |  |      | 63,408 |  |  |   | 63,016 | 
|Weighted average dilutive stock options |  |      | 260    |      |  |      | 190    |  |  |   | 56     | 
|                                        |  |      |        |      |  |      |        |  |  |   |        | 
|Weighted average shares  diluted       |  |      | 64,014 |      |  |      | 63,598 |  |  |   | 63,072 | 
|                                        |  |      |        |      |  |      |        |  |  |   |        | 
|Basic net income per share              |  | $    | 1.53   |      |  | $    | 1.53   |  |  | $ | 1.53   | 
|                                        |  |      |        |      |  |      |        |  |  |   |        | 
|Diluted net income per share            |  | $    | 1.53   |      |  | $    | 1.52   |  |  | $ | 1.53   | 
|                                        |  |      |        |      |  |      |        |  |  |   |        | 

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11. Stock Option Plan

We have elected to follow Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25) and related
interpretations in accounting for our employee and directors
stock options because, as discussed below, the alternative fair
value accounting provided for under FASB Statement
No. 123, Accounting for Stock-Based
Compensation (Statement 123) requires use of
option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, because the
exercise price of employee and director stock options we granted
equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized.

We established a stock option plan for the
purpose of attracting and retaining executive officers,
directors and other key employees. As of December 31, 2001,
6,500,000 of our authorized shares of common stock have been
reserved for issuance under that plan.

All holders of the above options have a ten-year
period to exercise such options and all options were granted at
exercise prices equal to the market prices at the date of the
grant.

Pro forma information regarding net income and
earnings per share is required by Statement 123, and has
been determined as if we had accounted for its employee stock
options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using
a Black-Scholes option pricing model with the following
weighted-average assumptions for 2001, 2000 and 1999,
respectively: risk-free interest rate of 4.39%, 6.13% and 6.67%,
dividend yield of 7.60%, 7.75% and 5.79% and a volatility factor
of the expected market price of our common stock of .191, .198
and .245. The weighted average expected life of the options
ranges between seven and 10 years.

The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options
which have no vesting restriction and are fully transferable. In
addition, option valuation models require the input of highly
subjective assumptions including the expected stock price
volatility. Because our employee and director stock options have
characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in
managements opinion, the existing models do not
necessarily provide a reliable single measure of the fair value
of our employee and director stock options.

For purposes of pro forma disclosures, the
estimated fair value of the options is amortized to expense over
the options vesting periods. Our pro forma information for
the years ended December 31, 2001, 2000 and 1999 follows
(in thousands, except earnings per share information):

|                               |  |      |        |      |  |      |        |  |  |   |        | 
|------------------------------ |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                               |  | 2001 |        | 2000 |  | 1999
|                               |  |      |        |      |  |     
|Pro forma net income           |  | $    | 95,660 |      |  | $    | 92,266 |  |  | $ | 92,490 | 
|                               |  |      |        |      |  |      |        |  |  |   |        | 
|Pro forma net income per share |  | $    | 1.49   |      |  | $    | 1.45   |  |  | $ | 1.46   | 
|                               |  |      |        |      |  |      |        |  |  |   |        | 

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A summary of Arden Realtys stock option
activity, and related information for the years ended
December 31, 2001, 2000 and 1999 follows:

|                                               |  |         |       |           |  |         |       |           |  |         |       |           |  |   |       |  |  |   |       |   |  |   |       | 
|---------------------------------------------- |  | ------- | ----- | --------- |  | ------- | ----- | --------- |  | ------- | ----- | --------- |  | - | ----- |  |  | - | ----- | - |  | - | ----- | 
|                                               |  |         |       |           |  |        
|                                               |  | 2001    |       | 2000      |  | 1999   
|                                               |  |         |       |           |  |        
|                                               |  |         |       | Weighted- |  |         |       | Weighted- |  |         |       | Weighted-
|                                               |  |         |       | Average   |  |         |       | Average   |  |         |       | Average  
|                                               |  | Options |       | Exercise  |  | Options |       | Exercise  |  | Options |       | Exercise 
|                                               |  | (000s)  |       | Price     |  | (000s)  |       | Price     |  | (000s)  |       | Price    
|                                               |  |         |       |           |  |         |       |           |  |         |       |          
|Outstanding, beginning of period               |  |         | 4,083 |           |  | $       | 24.40 |           |  |         | 3,599 |           |  | $ | 23.98 |  |  |   | 2,899 |   |  | $ | 24.99 | 
|Granted                                        |  |         | 381   |           |  |         | 26.80 |           |  |         | 1,367 |           |  |   | 25.05 |  |  |   | 710   |   |  |   | 19.27 | 
|Exercised                                      |  |         | (21   | )         |  |         | 21.89 |           |  |         | (373  | )         |  |   | 25.17 |  |  |   |      |   |  |   |      | 
|Forfeited                                      |  |         | (32   | )         |  |         | 24.43 |           |  |         | (510  | )         |  |   | 25.38 |  |  |   | (10   | ) |  |   | 25.94 | 
|                                               |  |         |       |           |  |         |       |           |  |         |       |           |  |   |       |  |  |   |       |   |  |   |       | 
|Outstanding at end of year                     |  |         | 4,411 |           |  | $       | 24.53 |           |  |         | 4,083 |           |  | $ | 24.40 |  |  |   | 3,599 |   |  | $ | 23.98 | 
|                                               |  |         |       |           |  |         |       |           |  |         |       |           |  |   |       |  |  |   |       |   |  |   |       | 
|Exercisable at end of the period               |  |         | 3,353 |           |  | $       | 24.61 |           |  |         | 2,529 |           |  | $ | 24.89 |  |  |   | 1,617 |   |  | $ | 24.67 | 
|                                               |  |         |       |           |  |         |       |           |  |         |       |           |  |   |       |  |  |   |       |   |  |   |       | 
|Weighted-average fair value of options granted |  | $       | 1.49  |           |  |         |       |           |  | $       | 2.13  |           |  |   |       |  |  | $ | 3.35  |   |  |   |       | 
|                                               |  |         |       |           |  |         |       |           |  |         |       |           |  |   |       |  |  |   |       |   |  |   |       | 

Exercise prices for options outstanding as of
December 31, 2001 ranged from $19.13 to $32.25. The
weighted average remaining contractual life of those options is
5.5 years.

12. Employee Retirement Savings
Plan

Effective June 12, 1997, we adopted a
retirement savings plan pursuant to Section 401(k) of the
Internal Revenue Code whereby participants may contribute a
portion of their compensation to their respective retirement
accounts in an amount not to exceed the maximum allowed under
the Internal Revenue Code. The plan provides for matching
contributions by us, which amounted to approximately $803,000 in
2001, $517,000 in 2000 and $385,000 in 1999. Plan participants
are immediately vested in their contributions and are vested
equally over four years in matching contributions by us.

13. Subsequent Event 
Unaudited

In February 2002, two of the officers with
promissory notes made in 2001 totaling approximately $125,000
described in Footnote 8 above repaid their notes in full,
including accrued interest.

In March 2002, Mr. Andrew Sobel, our
Executive Vice President  Strategic Planning and
Operations replaced a note payable to us in the amount of
$194,936 with an annual interest rate of 6.56% due on
February 18, 2002 with a new note for the same principal
amount, bearing annual interest at LIBOR +1.10% and maturing on
February 18, 2007.

Dividend
Declaration

On March 14, 2002, we declared a first
quarter dividend of $0.505 per share to stockholders of record
on March 29, 2002.

F-16



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##### Table of Contents



14. Quarterly Results

Following is a quarterly summary of our revenue
and expenses for the years ended December 31, 2001, 2000
and 1999. Revenue and expenses may fluctuate significantly from
quarter to quarter due to our development, renovation,
acquisition and sales activity (unaudited).

|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |      | 
|----------------------------- | ------- | ---------------------------------------------------------- | ------- | ------------- |  | ------------------ | ------- | ----------------- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                              |         |                                                           
|                              |         | For the Quarter Ended (in thousands, except share amounts)
|                              |         |                                                           
|                              |         | March 31, 2001                                             |         | June 30, 2001 |  | September 30, 2001 |         | December 31, 2001
|                              |         |                                                            |         |               |  |                    |         |                  
|Revenue                       |         | $                                                          | 103,121 |               |  | $                  | 102,980 |                   |  | $ | 105,831 |      |  | $ | 106,593 |     
|Property operating expenses   |         |                                                            | (29,842 | )             |  |                    | (29,274 | )                 |  |   | (32,016 | )    |  |   | (31,444 | )   
|General and administrative    |         |                                                            | (2,866  | )             |  |                    | (2,716  | )                 |  |   | (2,505  | )    |  |   | (4,056  | )   
|Interest expense              |         |                                                            | (21,158 | )             |  |                    | (21,081 | )                 |  |   | (20,819 | )    |  |   | (21,137 | )   
|Depreciation and amortization |         |                                                            | (24,146 | )             |  |                    | (24,176 | )                 |  |   | (25,854 | )    |  |   | (27,643 | )   
|Interest and other income     |         |                                                            | 861     |               |  |                    | 764     |                   |  |   | 706     |      |  |   | 610     |     
|Gain on sale of properties    |         |                                                            |        |               |  |                    | 3,551   |                   |  |   | 24      |      |  |   | 1,016   |     
|Minority interests            |         |                                                            | (1,897  | )             |  |                    | (2,031  | )                 |  |   | (1,878  | )    |  |   | (1,759  | )   
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     
|Net Income                    |         | $                                                          | 24,073  |               |  | $                  | 28,017  |                   |  | $ | 23,489  |      |  | $ | 22,180  |     
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     
|Net income per share:         |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     
|                              | Basic   |                                                            | $       | 0.38          |  |                    | $       | 0.44              |  |   | $       | 0.37 |  |   | $       | 0.35 | 
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     
|                              | Diluted |                                                            | $       | 0.38          |  |                    | $       | 0.44              |  |   | $       | 0.37 |  |   | $       | 0.35 | 
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     

|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |      | 
|----------------------------- | ------- | ---------------------------------------------------------- | ------- | ------------- |  | ------------------ | ------- | ----------------- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                              |         |                                                           
|                              |         | For the Quarter Ended (in thousands, except share amounts)
|                              |         |                                                           
|                              |         | March 31, 2000                                             |         | June 30, 2000 |  | September 30, 2000 |         | December 31, 2000
|                              |         |                                                            |         |               |  |                    |         |                  
|Revenue                       |         | $                                                          | 89,678  |               |  | $                  | 92,856  |                   |  | $ | 99,031  |      |  | $ | 103,025 |     
|Property operating expenses   |         |                                                            | (25,347 | )             |  |                    | (26,721 | )                 |  |   | (29,516 | )    |  |   | (29,333 | )   
|General and administrative    |         |                                                            | (1,821  | )             |  |                    | (1,838  | )                 |  |   | (2,297  | )    |  |   | (3,380  | )   
|Interest expense              |         |                                                            | (17,852 | )             |  |                    | (18,770 | )                 |  |   | (20,345 | )    |  |   | (21,439 | )   
|Depreciation and amortization |         |                                                            | (20,147 | )             |  |                    | (21,277 | )                 |  |   | (22,528 | )    |  |   | (23,315 | )   
|Interest and other income     |         |                                                            | 855     |               |  |                    | 770     |                   |  |   | 948     |      |  |   | 954     |     
|Gain on sale of property      |         |                                                            |        |               |  |                    |        |                   |  |   |        |      |  |   | 2,132   |     
|Minority interest             |         |                                                            | (1,875  | )             |  |                    | (1,822  | )                 |  |   | (1,921  | )    |  |   | (1,995  | )   
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     
|Net income                    |         | $                                                          | 23,491  |               |  | $                  | 23,198  |                   |  | $ | 23,372  |      |  | $ | 26,649  |     
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     
|Net income per share:         |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     
|                              | Basic   |                                                            | $       | 0.37          |  |                    | $       | 0.37              |  |   | $       | 0.37 |  |   | $       | 0.42 | 
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     
|                              | Diluted |                                                            | $       | 0.37          |  |                    | $       | 0.37              |  |   | $       | 0.37 |  |   | $       | 0.42 | 
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |      |  |   |         |     

|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |     |  |   |         |     | 
|----------------------------- | ------- | ---------------------------------------------------------- | ------- | ------------- |  | ------------------ | ------- | ----------------- |  | - | ------- | --- |  | - | ------- | --- | 
|                              |         |                                                           
|                              |         | For the Quarter Ended (in thousands, except share amounts)
|                              |         |                                                           
|                              |         | March 31, 1999                                             |         | June 30, 1999 |  | September 30, 1999 |         | December 31, 1999
|                              |         |                                                            |         |               |  |                    |         |                  
|Revenue                       |         | $                                                          | 79,336  |               |  | $                  | 82,712  |                   |  | $ | 86,723  |     |  | $ | 89,082  |    
|Property operating expenses   |         |                                                            | (23,510 | )             |  |                    | (24,444 | )                 |  |   | (26,744 | )   |  |   | (26,586 | )  
|General and administrative    |         |                                                            | (1,496  | )             |  |                    | (1,687  | )                 |  |   | (1,832  | )   |  |   | (2,378  | )  
|Interest expense              |         |                                                            | (13,183 | )             |  |                    | (14,455 | )                 |  |   | (16,047 | )   |  |   | (16,554 | )  
|Depreciation and amortization |         |                                                            | (16,215 | )             |  |                    | (17,173 | )                 |  |   | (17,810 | )   |  |   | (18,639 | )  
|Interest and other income     |         |                                                            | 670     |               |  |                    | 671     |                   |  |   | 751     |     |  |   | 730     |    
|Minority interests            |         |                                                            | (1,211  | )             |  |                    | (971    | )                 |  |   | (1,120  | )   |  |   | (1,994  | )  
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |     |  |   |         |    
|Net Income                    |         | $                                                          | 24,391  |               |  | $                  | 24,653  |                   |  | $ | 23,921  |     |  | $ | 23,661  |    
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |     |  |   |         |    
|Net income per share:         |         |                                                            |         |               |  |                    |         |                   |  |   |         |     |  |   |         |    
|                              | Basic   |                                                            | $       | .39           |  |                    | $       | .39               |  |   | $       | .38 |  |   | $       | .37 | 
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |     |  |   |         |    
|                              | Diluted |                                                            | $       | .39           |  |                    | $       | .39               |  |   | $       | .38 |  |   | $       | .37 | 
|                              |         |                                                            |         |               |  |                    |         |                   |  |   |         |     |  |   |         |    

F-17



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##### Table of Contents



15. Schedule of Commercial Properties and
Accumulated Depreciation

December 31, 2001


(in thousands, except square foot
data)


|                          |  |         |         |               |  |               |       |      |  |              |        |                   |  |   |     |  |  |   |       |  |  |   |        | 
|------------------------- |  | ------- | ------- | ------------- |  | ------------- | ----- | ---- |  | ------------ | ------ | ----------------- |  | - | --- |  |  | - | ----- |  |  | - | ------ | 
|                          |  |         |         |               |  |               |       |     
|                          |  |         |         | Initial Costs |  | Basis Step Up |       |     
|                          |  |         |         |               |  |               |       |     
|                          |  |         |         |               |  | Buildings     |       |      |  | Buildings    |        | Costs Capitalized
|                          |  | Square  |         |               |  | and           |       |      |  | and          |        | Subsequent to    
|                          |  | Footage |         | Land          |  | Improvements  |       | Land |  | Improvements |        | Acquisition(2)   
|                          |  |         |         |               |  |               |       |      |  |              |        |                  
|Century Park Center       |  |         | 243,404 |               |  | $             | 7,189 |      |  | $            | 16,742 |                   |  | $ |    |  |  | $ |      |  |  | $ | 10,376 | 
|Beverly Atrium            |  |         | 59,650  |               |  |               | 4,127 |      |  |              | 11,513 |                   |  |   | 117 |  |  |   | 328   |  |  |   | 3,055  | 
|Woodland Hills            |  |         | 224,955 |               |  |               | 6,566 |      |  |              | 14,754 |                   |  |   | 365 |  |  |   | 880   |  |  |   | 7,022  | 
|Anaheim City Centre       |  |         | 175,391 |               |  |               | 515   |      |  |              | 11,199 |                   |  |   | 94  |  |  |   | 2,075 |  |  |   | 4,850  | 
|425 West Broadway         |  |         | 71,589  |               |  |               | 1,500 |      |  |              | 4,436  |                   |  |   | 305 |  |  |   | 918   |  |  |   | 2,730  | 
|1950 Sawtelle             |  |         | 103,106 |               |  |               | 1,988 |      |  |              | 7,263  |                   |  |   |    |  |  |   |      |  |  |   | 2,199  | 
|Bristol Plaza             |  |         | 84,014  |               |  |               | 1,820 |      |  |              | 3,380  |                   |  |   | 257 |  |  |   | 485   |  |  |   | 2,692  | 
|16000 Ventura             |  |         | 174,841 |               |  |               | 1,700 |      |  |              | 17,189 |                   |  |   | 185 |  |  |   | 1,929 |  |  |   | 4,622  | 
|5000 East Spring          |  |         | 163,358 |               |  |               |      |      |  |              | 11,658 |                   |  |   |    |  |  |   | 424   |  |  |   | 3,296  | 
|70 South Lake             |  |         | 100,133 |               |  |               | 1,360 |      |  |              | 9,097  |                   |  |   |    |  |  |   |      |  |  |   | 2,893  | 
|Westwood Terrace          |  |         | 135,943 |               |  |               | 2,103 |      |  |              | 16,850 |                   |  |   |    |  |  |   |      |  |  |   | 2,746  | 
|Westlake  5601 Lindero   |  |         | 105,830 |               |  |               | 2,576 |      |  |              | 6,067  |                   |  |   |    |  |  |   |      |  |  |   | 2,699  | 
|6100 Wilshire             |  |         | 202,704 |               |  |               | 1,200 |      |  |              | 19,902 |                   |  |   |    |  |  |   |      |  |  |   | 4,980  | 
|Calabasas Commerce Center |  |         | 126,771 |               |  |               | 1,262 |      |  |              | 9,725  |                   |  |   |    |  |  |   |      |  |  |   | 2,182  | 
|Long Beach Airport  DF&G |  |         | 272,013 |               |  |               |      |      |  |              | 14,452 |                   |  |   |    |  |  |   |      |  |  |   | 501    | 
|Skyview Center            |  |         | 391,675 |               |  |               | 6,514 |      |  |              | 33,701 |                   |  |   |    |  |  |   |      |  |  |   | 5,906  | 
|400 Corporate Pointe      |  |         | 164,598 |               |  |               | 3,382 |      |  |              | 17,527 |                   |  |   | 75  |  |  |   | 390   |  |  |   | 3,591  | 
|5832 Bolsa                |  |         | 49,355  |               |  |               | 690   |      |  |              | 3,526  |                   |  |   | 15  |  |  |   | 80    |  |  |   | 1,616  | 
|9665 Wilshire             |  |         | 158,684 |               |  |               | 6,697 |      |  |              | 22,230 |                   |  |   | 139 |  |  |   | 473   |  |  |   | 8,468  | 
|701 B. Street             |  |         | 540,413 |               |  |               | 3,722 |      |  |              | 35,184 |                   |  |   | 64  |  |  |   | 625   |  |  |   | 13,137 | 
|100 Broadway              |  |         | 191,727 |               |  |               | 4,570 |      |  |              | 15,255 |                   |  |   |    |  |  |   |      |  |  |   | 2,017  | 
|Norwalk                   |  |         | 122,175 |               |  |               | 4,508 |      |  |              | 5,532  |                   |  |   |    |  |  |   |      |  |  |   | 4,302  | 
|303 Glenoaks              |  |         | 175,289 |               |  |               | 6,500 |      |  |              | 18,132 |                   |  |   |    |  |  |   |      |  |  |   | 3,568  | 
|10351 Santa Monica        |  |         | 96,251  |               |  |               | 3,080 |      |  |              | 7,906  |                   |  |   |    |  |  |   |      |  |  |   | 1,386  | 
|2730 Wilshire             |  |         | 55,080  |               |  |               | 3,515 |      |  |              | 5,944  |                   |  |   |    |  |  |   |      |  |  |   | 1,772  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                          |  |             |       |              |  |       |        |                 |  |              |        |             |  |   |        |  |  |   |        |     |  |  |            | 
|------------------------- |  | ----------- | ----- | ------------ |  | ----- | ------ | --------------- |  | ------------ | ------ | ----------- |  | - | ------ |  |  | - | ------ | --- |  |  | ---------- | 
|                          |  |             |       |              |  |       |        |                 |  |             
|                          |  | Total Costs |       |              |  |       |        |                 |  |             
|                          |  |             |       |              |  |       |        |                 |  |             
|                          |  |             |       | Buildings    |  |       |        |                 |  |              |        |            
|                          |  |             |       | and          |  |       |        | Accumulated     |  |              |        | Year Built/
|                          |  | Land        |       | Improvements |  | Total |        | Depreciation(1) |  | Encumbrances |        | Renovated  
|                          |  |             |       |              |  |       |        |                 |  |              |        |            
|Century Park Center       |  | $           | 7,189 |              |  | $     | 27,118 |                 |  | $            | 34,307 |             |  | $ | 6,320  |  |  | $ |       |     |  |  | 1972       | 
|Beverly Atrium            |  |             | 4,244 |              |  |       | 14,896 |                 |  |              | 19,140 |             |  |   | 3,489  |  |  |   | 5,268  | (3) |  |  | 1989       | 
|Woodland Hills            |  |             | 6,931 |              |  |       | 22,656 |                 |  |              | 29,587 |             |  |   | 5,750  |  |  |   | 14,564 | (3) |  |  | 1972/95    | 
|Anaheim City Centre       |  |             | 609   |              |  |       | 18,124 |                 |  |              | 18,733 |             |  |   | 4,569  |  |  |   | 8,914  | (3) |  |  | 1986       | 
|425 West Broadway         |  |             | 1,805 |              |  |       | 8,084  |                 |  |              | 9,889  |             |  |   | 1,611  |  |  |   | 4,734  | (3) |  |  | 1984       | 
|1950 Sawtelle             |  |             | 1,988 |              |  |       | 9,462  |                 |  |              | 11,450 |             |  |   | 2,163  |  |  |   | 6,855  | (3) |  |  | 1988/95    | 
|Bristol Plaza             |  |             | 2,077 |              |  |       | 6,557  |                 |  |              | 8,634  |             |  |   | 1,699  |  |  |   | 4,082  | (3) |  |  | 1982       | 
|16000 Ventura             |  |             | 1,885 |              |  |       | 23,740 |                 |  |              | 25,625 |             |  |   | 4,824  |  |  |   | 11,634 | (3) |  |  | 1980/96    | 
|5000 East Spring          |  |             |      |              |  |       | 15,378 |                 |  |              | 15,378 |             |  |   | 3,311  |  |  |   |       |     |  |  | 1989/95    | 
|70 South Lake             |  |             | 1,360 |              |  |       | 11,990 |                 |  |              | 13,350 |             |  |   | 2,228  |  |  |   | 6,677  | (3) |  |  | 1982/94    | 
|Westwood Terrace          |  |             | 2,103 |              |  |       | 19,596 |                 |  |              | 21,699 |             |  |   | 3,687  |  |  |   |       |     |  |  | 1988       | 
|Westlake  5601 Lindero   |  |             | 2,576 |              |  |       | 8,766  |                 |  |              | 11,342 |             |  |   | 1,981  |  |  |   | 6,225  | (3) |  |  | 1989       | 
|6100 Wilshire             |  |             | 1,200 |              |  |       | 24,882 |                 |  |              | 26,082 |             |  |   | 4,910  |  |  |   | 11,566 | (3) |  |  | 1986       | 
|Calabasas Commerce Center |  |             | 1,262 |              |  |       | 11,907 |                 |  |              | 13,169 |             |  |   | 2,442  |  |  |   | 8,103  | (3) |  |  | 1990       | 
|Long Beach Airport  DF&G |  |             |      |              |  |       | 14,953 |                 |  |              | 14,953 |             |  |   | 2,331  |  |  |   |       |     |  |  | 1987/95    | 
|Skyview Center            |  |             | 6,514 |              |  |       | 39,607 |                 |  |              | 46,121 |             |  |   | 7,502  |  |  |   | 27,604 | (3) |  |  | 1981/87/95 | 
|400 Corporate Pointe      |  |             | 3,457 |              |  |       | 21,508 |                 |  |              | 24,965 |             |  |   | 3,751  |  |  |   | 15,583 | (3) |  |  | 1987       | 
|5832 Bolsa                |  |             | 705   |              |  |       | 5,222  |                 |  |              | 5,927  |             |  |   | 843    |  |  |   | 2,675  | (3) |  |  | 1985       | 
|9665 Wilshire             |  |             | 6,836 |              |  |       | 31,171 |                 |  |              | 38,007 |             |  |   | 5,371  |  |  |   |       |     |  |  | 1972/92/93 | 
|701 B. Street             |  |             | 3,786 |              |  |       | 48,946 |                 |  |              | 52,732 |             |  |   | 10,267 |  |  |   |       |     |  |  | 1982/96    | 
|100 Broadway              |  |             | 4,570 |              |  |       | 17,272 |                 |  |              | 21,842 |             |  |   | 2,979  |  |  |   | 15,120 | (3) |  |  | 1987/96    | 
|Norwalk                   |  |             | 4,508 |              |  |       | 9,834  |                 |  |              | 14,342 |             |  |   | 1,626  |  |  |   | 7,186  | (3) |  |  | 1978       | 
|303 Glenoaks              |  |             | 6,500 |              |  |       | 21,700 |                 |  |              | 28,200 |             |  |   | 3,231  |  |  |   | 13,104 | (3) |  |  | 1983/96    | 
|10351 Santa Monica        |  |             | 3,080 |              |  |       | 9,292  |                 |  |              | 12,372 |             |  |   | 1,359  |  |  |   | 5,541  | (3) |  |  | 1984       | 
|2730 Wilshire             |  |             | 3,515 |              |  |       | 7,716  |                 |  |              | 11,231 |             |  |   | 1,276  |  |  |   | 4,770  | (3) |  |  | 1985       | 

F-18



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##### Table of Contents



|                             |  |         |         |               |  |               |        |      |  |              |        |                   |  |  |   |  |  |  |   |  |  |  |        | 
|---------------------------- |  | ------- | ------- | ------------- |  | ------------- | ------ | ---- |  | ------------ | ------ | ----------------- |  |  | - |  |  |  | - |  |  |  | ------ | 
|                             |  |         |         |               |  |               |        |     
|                             |  |         |         | Initial Costs |  | Basis Step Up |        |     
|                             |  |         |         |               |  |               |        |     
|                             |  |         |         |               |  | Buildings     |        |      |  | Buildings    |        | Costs Capitalized
|                             |  | Square  |         |               |  | and           |        |      |  | and          |        | Subsequent to    
|                             |  | Footage |         | Land          |  | Improvements  |        | Land |  | Improvements |        | Acquisition(2)   
|                             |  |         |         |               |  |               |        |      |  |              |        |                  
|Grand Avenue Plaza           |  |         | 81,448  |               |  |               | 620    |      |  |              | 2,832  |                   |  |  |  |  |  |  |  |  |  |  | 4,512  | 
|Burbank Executive Plaza      |  |         | 60,395  |               |  |               | 1,100  |      |  |              | 4,384  |                   |  |  |  |  |  |  |  |  |  |  | 2,219  | 
|California Federal Building  |  |         | 81,243  |               |  |               | 1,500  |      |  |              | 5,981  |                   |  |  |  |  |  |  |  |  |  |  | 1,710  | 
|Center Promenade             |  |         | 174,837 |               |  |               | 2,310  |      |  |              | 9,266  |                   |  |  |  |  |  |  |  |  |  |  | 3,338  | 
|Los Angeles Corporate Center |  |         | 389,293 |               |  |               | 26,781 |      |  |              | 15,139 |                   |  |  |  |  |  |  |  |  |  |  | 11,250 | 
|5200 West Century            |  |         | 310,910 |               |  |               | 2,080  |      |  |              | 9,360  |                   |  |  |  |  |  |  |  |  |  |  | 20,923 | 
|15250 Ventura                |  |         | 110,641 |               |  |               | 2,560  |      |  |              | 10,257 |                   |  |  |  |  |  |  |  |  |  |  | 3,413  | 
|10350 Santa Monica           |  |         | 42,292  |               |  |               | 861    |      |  |              | 3,456  |                   |  |  |  |  |  |  |  |  |  |  | 792    | 
|535 N. Brand Blvd            |  |         | 109,187 |               |  |               | 1,600  |      |  |              | 8,427  |                   |  |  |  |  |  |  |  |  |  |  | 12,793 | 
|10780 Santa Monica           |  |         | 92,486  |               |  |               | 2,625  |      |  |              | 7,997  |                   |  |  |  |  |  |  |  |  |  |  | 1,680  | 
|California Twin Center       |  |         | 155,189 |               |  |               | 4,680  |      |  |              | 14,877 |                   |  |  |  |  |  |  |  |  |  |  | 2,747  | 
|Whittier                     |  |         | 135,415 |               |  |               | 3,575  |      |  |              | 10,798 |                   |  |  |  |  |  |  |  |  |  |  | 2,006  | 
|6800 Owensmouth              |  |         | 80,014  |               |  |               | 1,725  |      |  |              | 5,851  |                   |  |  |  |  |  |  |  |  |  |  | 1,195  | 
|Clarendon Crest              |  |         | 43,063  |               |  |               | 1,300  |      |  |              | 3,951  |                   |  |  |  |  |  |  |  |  |  |  | 325    | 
|Noble Professional Center    |  |         | 51,828  |               |  |               | 1,657  |      |  |              | 5,096  |                   |  |  |  |  |  |  |  |  |  |  | 987    | 
|South Bay Centre             |  |         | 202,830 |               |  |               | 4,775  |      |  |              | 14,365 |                   |  |  |  |  |  |  |  |  |  |  | 4,167  | 
|8383 Wilshire                |  |         | 417,463 |               |  |               | 13,570 |      |  |              | 45,505 |                   |  |  |  |  |  |  |  |  |  |  | 10,148 | 
|Parkway Center I             |  |         | 61,333  |               |  |               | 1,480  |      |  |              | 5,941  |                   |  |  |  |  |  |  |  |  |  |  | 985    | 
|Centerpointe La Palma        |  |         | 597,550 |               |  |               | 16,011 |      |  |              | 64,400 |                   |  |  |  |  |  |  |  |  |  |  | 6,122  | 
|299 N. Euclid                |  |         | 73,522  |               |  |               | 1,050  |      |  |              | 6,110  |                   |  |  |  |  |  |  |  |  |  |  | 5,522  | 
|2800 28th Street             |  |         | 103,506 |               |  |               | 2,937  |      |  |              | 9,063  |                   |  |  |  |  |  |  |  |  |  |  | 2,639  | 
|Harbor Corporate Center      |  |         | 63,925  |               |  |               | 870    |      |  |              | 3,538  |                   |  |  |  |  |  |  |  |  |  |  | 875    | 
|1000 Town Center             |  |         | 107,656 |               |  |               | 2,800  |      |  |              | 11,260 |                   |  |  |  |  |  |  |  |  |  |  | 977    | 
|Mariner Court                |  |         | 105,436 |               |  |               | 2,350  |      |  |              | 9,461  |                   |  |  |  |  |  |  |  |  |  |  | 1,847  | 
|Pacific Gateway II           |  |         | 223,731 |               |  |               | 6,287  |      |  |              | 19,191 |                   |  |  |  |  |  |  |  |  |  |  | 6,091  | 
|1821 Dyer                    |  |         | 115,061 |               |  |               | 1,808  |      |  |              | 5,474  |                   |  |  |  |  |  |  |  |  |  |  | 4,190  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                             |  |             |        |              |  |       |        |                 |  |              |        |             |  |  |       |  |  |  |        |     |  |  |              | 
|---------------------------- |  | ----------- | ------ | ------------ |  | ----- | ------ | --------------- |  | ------------ | ------ | ----------- |  |  | ----- |  |  |  | ------ | --- |  |  | ------------ | 
|                             |  |             |        |              |  |       |        |                 |  |             
|                             |  | Total Costs |        |              |  |       |        |                 |  |             
|                             |  |             |        |              |  |       |        |                 |  |             
|                             |  |             |        | Buildings    |  |       |        |                 |  |              |        |            
|                             |  |             |        | and          |  |       |        | Accumulated     |  |              |        | Year Built/
|                             |  | Land        |        | Improvements |  | Total |        | Depreciation(1) |  | Encumbrances |        | Renovated  
|                             |  |             |        |              |  |       |        |                 |  |              |        |            
|Grand Avenue Plaza           |  |             | 620    |              |  |       | 7,344  |                 |  |              | 7,964  |             |  |  | 2,020 |  |  |  | 5,864  | (3) |  |  | 1980         | 
|Burbank Executive Plaza      |  |             | 1,100  |              |  |       | 6,603  |                 |  |              | 7,703  |             |  |  | 2,009 |  |  |  | 4,188  | (3) |  |  | 1978/83      | 
|California Federal Building  |  |             | 1,500  |              |  |       | 7,691  |                 |  |              | 9,191  |             |  |  | 544   |  |  |  | 4,188  | (3) |  |  | 1978/83      | 
|Center Promenade             |  |             | 2,310  |              |  |       | 12,604 |                 |  |              | 14,914 |             |  |  | 2,039 |  |  |  |       |     |  |  | 1982         | 
|Los Angeles Corporate Center |  |             | 26,781 |              |  |       | 26,389 |                 |  |              | 53,170 |             |  |  | 4,856 |  |  |  | 21,043 | (3) |  |  | 1986         | 
|5200 West Century            |  |             | 2,080  |              |  |       | 30,283 |                 |  |              | 32,363 |             |  |  | 4,789 |  |  |  |       |     |  |  | 1982         | 
|15250 Ventura                |  |             | 2,560  |              |  |       | 13,670 |                 |  |              | 16,230 |             |  |  | 2,171 |  |  |  |       |     |  |  | 1970/90-91   | 
|10350 Santa Monica           |  |             | 861    |              |  |       | 4,248  |                 |  |              | 5,109  |             |  |  | 656   |  |  |  | 2,280  | (3) |  |  | 1979         | 
|535 N. Brand Blvd            |  |             | 1,600  |              |  |       | 21,220 |                 |  |              | 22,820 |             |  |  | 2,391 |  |  |  |       |     |  |  | 1973/92/2000 | 
|10780 Santa Monica           |  |             | 2,625  |              |  |       | 9,677  |                 |  |              | 12,302 |             |  |  | 1,637 |  |  |  |       |     |  |  | 1984         | 
|California Twin Center       |  |             | 4,680  |              |  |       | 17,624 |                 |  |              | 22,304 |             |  |  | 2,723 |  |  |  |       |     |  |  | 1983         | 
|Whittier                     |  |             | 3,575  |              |  |       | 12,804 |                 |  |              | 16,379 |             |  |  | 1,982 |  |  |  |       |     |  |  | 1967/82      | 
|6800 Owensmouth              |  |             | 1,725  |              |  |       | 7,046  |                 |  |              | 8,771  |             |  |  | 905   |  |  |  |       |     |  |  | 1986         | 
|Clarendon Crest              |  |             | 1,300  |              |  |       | 4,276  |                 |  |              | 5,576  |             |  |  | 577   |  |  |  | 3,210  | (3) |  |  | 1990         | 
|Noble Professional Center    |  |             | 1,657  |              |  |       | 6,083  |                 |  |              | 7,740  |             |  |  | 924   |  |  |  | 3,580  | (3) |  |  | 1985/93      | 
|South Bay Centre             |  |             | 4,775  |              |  |       | 18,532 |                 |  |              | 23,307 |             |  |  | 2,576 |  |  |  | 13,230 | (3) |  |  | 1984         | 
|8383 Wilshire                |  |             | 13,570 |              |  |       | 55,653 |                 |  |              | 69,223 |             |  |  | 8,463 |  |  |  |       |     |  |  | 1971/93      | 
|Parkway Center I             |  |             | 1,480  |              |  |       | 6,926  |                 |  |              | 8,406  |             |  |  | 1,009 |  |  |  | 5,029  | (3) |  |  | 1992/95      | 
|Centerpointe La Palma        |  |             | 16,011 |              |  |       | 70,522 |                 |  |              | 86,533 |             |  |  | 9,966 |  |  |  | 33,831 | (3) |  |  | 1986/88/90   | 
|299 N. Euclid                |  |             | 1,050  |              |  |       | 11,632 |                 |  |              | 12,682 |             |  |  | 1,879 |  |  |  |       |     |  |  | 1983         | 
|2800 28th Street             |  |             | 2,937  |              |  |       | 11,702 |                 |  |              | 14,639 |             |  |  | 1,787 |  |  |  |       |     |  |  | 1979         | 
|Harbor Corporate Center      |  |             | 870    |              |  |       | 4,413  |                 |  |              | 5,283  |             |  |  | 603   |  |  |  |       |     |  |  | 1985         | 
|1000 Town Center             |  |             | 2,800  |              |  |       | 12,237 |                 |  |              | 15,037 |             |  |  | 1,544 |  |  |  |       |     |  |  | 1989         | 
|Mariner Court                |  |             | 2,350  |              |  |       | 11,308 |                 |  |              | 13,658 |             |  |  | 1,711 |  |  |  | 7,095  | (3) |  |  | 1989         | 
|Pacific Gateway II           |  |             | 6,287  |              |  |       | 25,282 |                 |  |              | 31,569 |             |  |  | 3,869 |  |  |  |       |     |  |  | 1982/90      | 
|1821 Dyer                    |  |             | 1,808  |              |  |       | 9,664  |                 |  |              | 11,472 |             |  |  | 967   |  |  |  |       |     |  |  | 1980/88      | 

F-19



---



##### Table of Contents



|                             |  |         |         |               |  |               |        |      |  |              |         |                   |  |  |   |  |  |  |   |  |  |  |        | 
|---------------------------- |  | ------- | ------- | ------------- |  | ------------- | ------ | ---- |  | ------------ | ------- | ----------------- |  |  | - |  |  |  | - |  |  |  | ------ | 
|                             |  |         |         |               |  |               |        |     
|                             |  |         |         | Initial Costs |  | Basis Step Up |        |     
|                             |  |         |         |               |  |               |        |     
|                             |  |         |         |               |  | Buildings     |        |      |  | Buildings    |         | Costs Capitalized
|                             |  | Square  |         |               |  | and           |        |      |  | and          |         | Subsequent to    
|                             |  | Footage |         | Land          |  | Improvements  |        | Land |  | Improvements |         | Acquisition(2)   
|                             |  |         |         |               |  |               |        |      |  |              |         |                  
|Crown Cabot Financial        |  |         | 172,900 |               |  |               | 7,056  |      |  |              | 21,360  |                   |  |  |  |  |  |  |  |  |  |  | 7,753  | 
|120 South Spalding           |  |         | 60,656  |               |  |               | 2,775  |      |  |              | 8,544   |                   |  |  |  |  |  |  |  |  |  |  | 6,014  | 
|South Bay Tech               |  |         | 104,815 |               |  |               | 1,600  |      |  |              | 4,782   |                   |  |  |  |  |  |  |  |  |  |  | 1,552  | 
|1370 Valley Vista            |  |         | 84,081  |               |  |               | 2,698  |      |  |              | 8,141   |                   |  |  |  |  |  |  |  |  |  |  | 1,450  | 
|Renaissance Court            |  |         | 61,245  |               |  |               | 1,580  |      |  |              | 5,477   |                   |  |  |  |  |  |  |  |  |  |  | 1,307  | 
|Foremost Professional Plaza  |  |         | 60,534  |               |  |               | 2,049  |      |  |              | 6,196   |                   |  |  |  |  |  |  |  |  |  |  | 844    | 
|Northpoint                   |  |         | 104,235 |               |  |               | 1,800  |      |  |              | 20,272  |                   |  |  |  |  |  |  |  |  |  |  | 1,545  | 
|Pennsfield Plaza             |  |         | 21,202  |               |  |               | 800    |      |  |              | 2,383   |                   |  |  |  |  |  |  |  |  |  |  | 422    | 
|Conejo Business Center       |  |         | 69,017  |               |  |               | 2,489  |      |  |              | 7,359   |                   |  |  |  |  |  |  |  |  |  |  | 986    | 
|Marin Corporate Center       |  |         | 51,360  |               |  |               | 1,956  |      |  |              | 5,915   |                   |  |  |  |  |  |  |  |  |  |  | 713    | 
|145 South Fairfax            |  |         | 53,994  |               |  |               | 1,825  |      |  |              | 5,551   |                   |  |  |  |  |  |  |  |  |  |  | 1,338  | 
|Bernardo Regency             |  |         | 47,916  |               |  |               | 1,625  |      |  |              | 4,937   |                   |  |  |  |  |  |  |  |  |  |  | 919    | 
|City Centre                  |  |         | 302,519 |               |  |               | 8,250  |      |  |              | 24,951  |                   |  |  |  |  |  |  |  |  |  |  | 3,800  | 
|Wilshire Pacific Plaza       |  |         | 100,122 |               |  |               | 3,750  |      |  |              | 11,317  |                   |  |  |  |  |  |  |  |  |  |  | 3,477  | 
|Glendale Corporate Center    |  |         | 108,209 |               |  |               | 2,750  |      |  |              | 12,734  |                   |  |  |  |  |  |  |  |  |  |  | 1,640  | 
|World Savings Center         |  |         | 469,115 |               |  |               |       |      |  |              | 110,382 |                   |  |  |  |  |  |  |  |  |  |  | 12,664 | 
|Beverly Sunset Medical Plaza |  |         | 139,711 |               |  |               | 7,180  |      |  |              | 21,666  |                   |  |  |  |  |  |  |  |  |  |  | 7,385  | 
|Sunset Point Plaza           |  |         | 58,105  |               |  |               | 2,075  |      |  |              | 6,362   |                   |  |  |  |  |  |  |  |  |  |  | 952    | 
|Activity Business Center     |  |         | 167,045 |               |  |               | 3,650  |      |  |              | 11,303  |                   |  |  |  |  |  |  |  |  |  |  | 1,218  | 
|Westlake Gardens I           |  |         | 49,639  |               |  |               | 1,831  |      |  |              | 5,550   |                   |  |  |  |  |  |  |  |  |  |  | 2,123  | 
|9100 Wilshire Boulevard      |  |         | 326,227 |               |  |               | 16,250 |      |  |              | 48,950  |                   |  |  |  |  |  |  |  |  |  |  | 7,913  | 
|Westwood Center              |  |         | 313,000 |               |  |               | 3,159  |      |  |              | 24,920  |                   |  |  |  |  |  |  |  |  |  |  | 77,289 | 
|1919 Santa Monica            |  |         | 43,796  |               |  |               | 2,580  |      |  |              | 7,772   |                   |  |  |  |  |  |  |  |  |  |  | 616    | 
|600 Corporate Pointe         |  |         | 273,339 |               |  |               | 8,575  |      |  |              | 35,325  |                   |  |  |  |  |  |  |  |  |  |  | 5,196  | 
|150 East Colorado            |  |         | 61,168  |               |  |               | 1,988  |      |  |              | 5,841   |                   |  |  |  |  |  |  |  |  |  |  | 1,715  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                             |  |             |        |              |  |       |         |                 |  |              |         |             |  |  |        |  |  |  |        |     |  |  |            | 
|---------------------------- |  | ----------- | ------ | ------------ |  | ----- | ------- | --------------- |  | ------------ | ------- | ----------- |  |  | ------ |  |  |  | ------ | --- |  |  | ---------- | 
|                             |  |             |        |              |  |       |         |                 |  |             
|                             |  | Total Costs |        |              |  |       |         |                 |  |             
|                             |  |             |        |              |  |       |         |                 |  |             
|                             |  |             |        | Buildings    |  |       |         |                 |  |              |         |            
|                             |  |             |        | and          |  |       |         | Accumulated     |  |              |         | Year Built/
|                             |  | Land        |        | Improvements |  | Total |         | Depreciation(1) |  | Encumbrances |         | Renovated  
|                             |  |             |        |              |  |       |         |                 |  |              |         |            
|Crown Cabot Financial        |  |             | 7,056  |              |  |       | 29,113  |                 |  |              | 36,169  |             |  |  | 3,949  |  |  |  |       |     |  |  | 1989       | 
|120 South Spalding           |  |             | 2,775  |              |  |       | 14,558  |                 |  |              | 17,333  |             |  |  | 2,446  |  |  |  | 8,461  | (3) |  |  | 1984       | 
|South Bay Tech               |  |             | 1,600  |              |  |       | 6,334   |                 |  |              | 7,934   |             |  |  | 1,137  |  |  |  |       |     |  |  | 1984       | 
|1370 Valley Vista            |  |             | 2,698  |              |  |       | 9,591   |                 |  |              | 12,289  |             |  |  | 1,232  |  |  |  | 5,532  | (3) |  |  | 1988       | 
|Renaissance Court            |  |             | 1,580  |              |  |       | 6,784   |                 |  |              | 8,364   |             |  |  | 473    |  |  |  |       |     |  |  | 1981/92    | 
|Foremost Professional Plaza  |  |             | 2,049  |              |  |       | 7,040   |                 |  |              | 9,089   |             |  |  | 951    |  |  |  |       |     |  |  | 1992       | 
|Northpoint                   |  |             | 1,800  |              |  |       | 21,817  |                 |  |              | 23,617  |             |  |  | 2,993  |  |  |  |       |     |  |  | 1991       | 
|Pennsfield Plaza             |  |             | 800    |              |  |       | 2,805   |                 |  |              | 3,605   |             |  |  | 232    |  |  |  |       |     |  |  | 1989       | 
|Conejo Business Center       |  |             | 2,489  |              |  |       | 8,345   |                 |  |              | 10,834  |             |  |  | 534    |  |  |  | 4,173  |     |  |  | 1991       | 
|Marin Corporate Center       |  |             | 1,956  |              |  |       | 6,628   |                 |  |              | 8,584   |             |  |  | 407    |  |  |  | 2,966  |     |  |  | 1986       | 
|145 South Fairfax            |  |             | 1,825  |              |  |       | 6,889   |                 |  |              | 8,714   |             |  |  | 703    |  |  |  | 3,987  |     |  |  | 1984       | 
|Bernardo Regency             |  |             | 1,625  |              |  |       | 5,856   |                 |  |              | 7,481   |             |  |  | 798    |  |  |  |       |     |  |  | 1986       | 
|City Centre                  |  |             | 8,250  |              |  |       | 28,751  |                 |  |              | 37,001  |             |  |  | 3,224  |  |  |  |       |     |  |  | 1982       | 
|Wilshire Pacific Plaza       |  |             | 3,750  |              |  |       | 14,794  |                 |  |              | 18,544  |             |  |  | 2,186  |  |  |  |       |     |  |  | 1976/87    | 
|Glendale Corporate Center    |  |             | 2,750  |              |  |       | 14,374  |                 |  |              | 17,124  |             |  |  | 1,839  |  |  |  |       |     |  |  | 1985       | 
|World Savings Center         |  |             |       |              |  |       | 123,046 |                 |  |              | 123,046 |             |  |  | 15,227 |  |  |  |       |     |  |  | 1983       | 
|Beverly Sunset Medical Plaza |  |             | 7,180  |              |  |       | 29,051  |                 |  |              | 36,231  |             |  |  | 3,306  |  |  |  |       |     |  |  | 1963/92-95 | 
|Sunset Point Plaza           |  |             | 2,075  |              |  |       | 7,314   |                 |  |              | 9,389   |             |  |  | 952    |  |  |  | 3,452  | (3) |  |  | 1988       | 
|Activity Business Center     |  |             | 3,650  |              |  |       | 12,521  |                 |  |              | 16,171  |             |  |  | 1,455  |  |  |  | 7,737  |     |  |  | 1987       | 
|Westlake Gardens I           |  |             | 1,831  |              |  |       | 7,673   |                 |  |              | 9,504   |             |  |  | 1,141  |  |  |  |       |     |  |  | 1998       | 
|9100 Wilshire Boulevard      |  |             | 16,250 |              |  |       | 56,863  |                 |  |              | 73,113  |             |  |  | 7,499  |  |  |  |       |     |  |  | 1971/90    | 
|Westwood Center              |  |             | 3,159  |              |  |       | 102,209 |                 |  |              | 105,368 |             |  |  | 3,525  |  |  |  |       |     |  |  | 1965/2000  | 
|1919 Santa Monica            |  |             | 2,580  |              |  |       | 8,388   |                 |  |              | 10,968  |             |  |  | 896    |  |  |  | 3,724  | (3) |  |  | 1991       | 
|600 Corporate Pointe         |  |             | 8,575  |              |  |       | 40,521  |                 |  |              | 49,096  |             |  |  | 4,592  |  |  |  | 17,692 | (3) |  |  | 1989       | 
|150 East Colorado            |  |             | 1,988  |              |  |       | 7,556   |                 |  |              | 9,544   |             |  |  | 926    |  |  |  | 4,937  | (3) |  |  | 1979/97    | 

F-20



---



##### Table of Contents



|                              |  |         |         |               |  |               |        |      |  |              |        |                   |  |  |   |  |  |  |   |  |  |  |       |  
|----------------------------- |  | ------- | ------- | ------------- |  | ------------- | ------ | ---- |  | ------------ | ------ | ----------------- |  |  | - |  |  |  | - |  |  |  | ----- | -
|                              |  |         |         |               |  |               |        |     
|                              |  |         |         | Initial Costs |  | Basis Step Up |        |     
|                              |  |         |         |               |  |               |        |     
|                              |  |         |         |               |  | Buildings     |        |      |  | Buildings    |        | Costs Capitalized
|                              |  | Square  |         |               |  | and           |        |      |  | and          |        | Subsequent to    
|                              |  | Footage |         | Land          |  | Improvements  |        | Land |  | Improvements |        | Acquisition(2)   
|                              |  |         |         |               |  |               |        |      |  |              |        |                  
|5161 Lankershim               |  |         | 178,317 |               |  |               | 5,016  |      |  |              | 25,568 |                   |  |  |  |  |  |  |  |  |  |  | 3,471 |  
|1501 Hughes Way               |  |         | 77,060  |               |  |               | 1,348  |      |  |              | 4,058  |                   |  |  |  |  |  |  |  |  |  |  | 3,301 |  
|3901 Via Oro                  |  |         | 53,195  |               |  |               | 692    |      |  |              | 2,081  |                   |  |  |  |  |  |  |  |  |  |  | 1,729 |  
|Huntington Beach Plaza I & II |  |         | 52,186  |               |  |               | 1,109  |      |  |              | 3,317  |                   |  |  |  |  |  |  |  |  |  |  | 686   |  
|Fountain Valley Plaza         |  |         | 107,252 |               |  |               | 2,949  |      |  |              | 9,377  |                   |  |  |  |  |  |  |  |  |  |  | 2,300 |  
|3300 Irvine Avenue            |  |         | 74,224  |               |  |               | 2,215  |      |  |              | 6,697  |                   |  |  |  |  |  |  |  |  |  |  | 1,478 |  
|Von Karman Corporate Center   |  |         | 451,477 |               |  |               | 11,513 |      |  |              | 34,783 |                   |  |  |  |  |  |  |  |  |  |  | 9,167 |  
|1503 South Coast              |  |         | 60,605  |               |  |               | 1,570  |      |  |              | 4,731  |                   |  |  |  |  |  |  |  |  |  |  | 648   |  
|625 The City                  |  |         | 139,806 |               |  |               | 4,792  |      |  |              | 14,470 |                   |  |  |  |  |  |  |  |  |  |  | 2,246 |  
|Orange Financial Center       |  |         | 305,439 |               |  |               | 10,379 |      |  |              | 34,415 |                   |  |  |  |  |  |  |  |  |  |  | 7,193 |  
|Lambert Office Plaza          |  |         | 32,807  |               |  |               | 1,095  |      |  |              | 3,296  |                   |  |  |  |  |  |  |  |  |  |  | 643   |  
|Carlsbad Corporate Center     |  |         | 125,000 |               |  |               | 3,722  |      |  |              | 15,061 |                   |  |  |  |  |  |  |  |  |  |  | 3,129 |  
|Balboa Corporate Center       |  |         | 69,890  |               |  |               | 2,759  |      |  |              | 8,303  |                   |  |  |  |  |  |  |  |  |  |  | (126  | )
|Panorama Corporate Center     |  |         | 133,149 |               |  |               | 6,512  |      |  |              | 19,593 |                   |  |  |  |  |  |  |  |  |  |  | 351   |  
|Ruffin Corporate Center       |  |         | 45,059  |               |  |               | 1,766  |      |  |              | 5,315  |                   |  |  |  |  |  |  |  |  |  |  | (36   | )
|Skypark Office Plaza          |  |         | 202,164 |               |  |               | 5,733  |      |  |              | 21,608 |                   |  |  |  |  |  |  |  |  |  |  | 2,327 |  
|Governor Park Plaza           |  |         | 104,065 |               |  |               | 3,382  |      |  |              | 10,177 |                   |  |  |  |  |  |  |  |  |  |  | 2,270 |  
|5120 Shoreham                 |  |         | 37,759  |               |  |               | 1,224  |      |  |              | 4,073  |                   |  |  |  |  |  |  |  |  |  |  | 188   |  
|Morehouse Tech Center         |  |         | 181,207 |               |  |               | 6,841  |      |  |              | 21,067 |                   |  |  |  |  |  |  |  |  |  |  | 3,162 |  
|Torreyanna Science Park       |  |         | 81,204  |               |  |               | 5,035  |      |  |              | 15,148 |                   |  |  |  |  |  |  |  |  |  |  | 352   |  
|Waples Tech Center            |  |         | 28,119  |               |  |               | 1,010  |      |  |              | 3,027  |                   |  |  |  |  |  |  |  |  |  |  | 746   |  
|10251 Vista Sorrento          |  |         | 69,386  |               |  |               | 1,839  |      |  |              | 7,202  |                   |  |  |  |  |  |  |  |  |  |  | 204   |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                              |  |             |        |              |  |       |        |                 |  |              |        |             |  |  |       |  |  |  |        |     |  |  |         | 
|----------------------------- |  | ----------- | ------ | ------------ |  | ----- | ------ | --------------- |  | ------------ | ------ | ----------- |  |  | ----- |  |  |  | ------ | --- |  |  | ------- | 
|                              |  |             |        |              |  |       |        |                 |  |             
|                              |  | Total Costs |        |              |  |       |        |                 |  |             
|                              |  |             |        |              |  |       |        |                 |  |             
|                              |  |             |        | Buildings    |  |       |        |                 |  |              |        |            
|                              |  |             |        | and          |  |       |        | Accumulated     |  |              |        | Year Built/
|                              |  | Land        |        | Improvements |  | Total |        | Depreciation(1) |  | Encumbrances |        | Renovated  
|                              |  |             |        |              |  |       |        |                 |  |              |        |            
|5161 Lankershim               |  |             | 5,016  |              |  |       | 29,039 |                 |  |              | 34,055 |             |  |  | 3,807 |  |  |  | 13,573 | (3) |  |  | 1985/97 | 
|1501 Hughes Way               |  |             | 1,348  |              |  |       | 7,359  |                 |  |              | 8,707  |             |  |  | 1,006 |  |  |  |       |     |  |  | 1983/97 | 
|3901 Via Oro                  |  |             | 692    |              |  |       | 3,810  |                 |  |              | 4,502  |             |  |  | 1,045 |  |  |  |       |     |  |  | 1986/97 | 
|Huntington Beach Plaza I & II |  |             | 1,109  |              |  |       | 4,003  |                 |  |              | 5,112  |             |  |  | 517   |  |  |  | 1,509  | (3) |  |  | 1984/96 | 
|Fountain Valley Plaza         |  |             | 2,949  |              |  |       | 11,677 |                 |  |              | 14,626 |             |  |  | 1,688 |  |  |  | 4,833  | (3) |  |  | 1982    | 
|3300 Irvine Avenue            |  |             | 2,215  |              |  |       | 8,175  |                 |  |              | 10,390 |             |  |  | 1,087 |  |  |  | 3,244  | (3) |  |  | 1981/97 | 
|Von Karman Corporate Center   |  |             | 11,513 |              |  |       | 43,950 |                 |  |              | 55,463 |             |  |  | 5,984 |  |  |  | 19,108 | (3) |  |  | 1981/84 | 
|1503 South Coast              |  |             | 1,570  |              |  |       | 5,379  |                 |  |              | 6,949  |             |  |  | 571   |  |  |  | 2,262  | (3) |  |  | 1979/97 | 
|625 The City                  |  |             | 4,792  |              |  |       | 16,716 |                 |  |              | 21,508 |             |  |  | 2,166 |  |  |  | 7,055  | (3) |  |  | 1985/97 | 
|Orange Financial Center       |  |             | 10,379 |              |  |       | 41,608 |                 |  |              | 51,987 |             |  |  | 5,386 |  |  |  | 18,184 | (3) |  |  | 1985/95 | 
|Lambert Office Plaza          |  |             | 1,095  |              |  |       | 3,939  |                 |  |              | 5,034  |             |  |  | 561   |  |  |  |       |     |  |  | 1986/97 | 
|Carlsbad Corporate Center     |  |             | 3,722  |              |  |       | 18,190 |                 |  |              | 21,912 |             |  |  | 1,807 |  |  |  | 9,327  | (3) |  |  | 1996    | 
|Balboa Corporate Center       |  |             | 2,759  |              |  |       | 8,177  |                 |  |              | 10,936 |             |  |  | 842   |  |  |  | 5,944  | (3) |  |  | 1990    | 
|Panorama Corporate Center     |  |             | 6,512  |              |  |       | 19,944 |                 |  |              | 26,456 |             |  |  | 2,065 |  |  |  | 12,963 | (3) |  |  | 1991    | 
|Ruffin Corporate Center       |  |             | 1,766  |              |  |       | 5,279  |                 |  |              | 7,045  |             |  |  | 546   |  |  |  | 3,547  | (3) |  |  | 1990    | 
|Skypark Office Plaza          |  |             | 5,733  |              |  |       | 23,935 |                 |  |              | 29,668 |             |  |  | 2,667 |  |  |  |       |     |  |  | 1986    | 
|Governor Park Plaza           |  |             | 3,382  |              |  |       | 12,447 |                 |  |              | 15,829 |             |  |  | 1,768 |  |  |  | 5,026  | (3) |  |  | 1986    | 
|5120 Shoreham                 |  |             | 1,224  |              |  |       | 4,261  |                 |  |              | 5,485  |             |  |  | 650   |  |  |  | 3,092  | (3) |  |  | 1984    | 
|Morehouse Tech Center         |  |             | 6,841  |              |  |       | 24,229 |                 |  |              | 31,070 |             |  |  | 2,821 |  |  |  |       |     |  |  | 1984    | 
|Torreyanna Science Park       |  |             | 5,035  |              |  |       | 15,500 |                 |  |              | 20,535 |             |  |  | 1,610 |  |  |  | 9,500  | (3) |  |  | 1980/97 | 
|Waples Tech Center            |  |             | 1,010  |              |  |       | 3,773  |                 |  |              | 4,783  |             |  |  | 546   |  |  |  |       |     |  |  | 1990    | 
|10251 Vista Sorrento          |  |             | 1,839  |              |  |       | 7,406  |                 |  |              | 9,245  |             |  |  | 772   |  |  |  | 3,882  | (3) |  |  | 1981/95 | 

F-21



---



##### Table of Contents



|                              |  |         |         |               |  |               |        |      |  |              |        |                   |  |  |       |  |  |  |   |  |  |  |        | 
|----------------------------- |  | ------- | ------- | ------------- |  | ------------- | ------ | ---- |  | ------------ | ------ | ----------------- |  |  | ----- |  |  |  | - |  |  |  | ------ | 
|                              |  |         |         |               |  |               |        |     
|                              |  |         |         | Initial Costs |  | Basis Step Up |        |     
|                              |  |         |         |               |  |               |        |     
|                              |  |         |         |               |  | Buildings     |        |      |  | Buildings    |        | Costs Capitalized
|                              |  | Square  |         |               |  | and           |        |      |  | and          |        | Subsequent to    
|                              |  | Footage |         | Land          |  | Improvements  |        | Land |  | Improvements |        | Acquisition(2)   
|                              |  |         |         |               |  |               |        |      |  |              |        |                  
|Camarillo Business Park       |  |         | 154,216 |               |  |               | 3,522  |      |  |              | 10,602 |                   |  |  |      |  |  |  |  |  |  |  | 3,610  | 
|Centrelake Plaza              |  |         | 110,763 |               |  |               | 1,570  |      |  |              | 9,473  |                   |  |  |      |  |  |  |  |  |  |  | 3,094  | 
|Chicago Avenue Business Park  |  |         | 47,482  |               |  |               | 1,223  |      |  |              | 3,687  |                   |  |  |      |  |  |  |  |  |  |  | 453    | 
|Havengate Center              |  |         | 80,557  |               |  |               | 1,913  |      |  |              | 5,759  |                   |  |  |      |  |  |  |  |  |  |  | 2,289  | 
|HDS Plaza                     |  |         | 104,178 |               |  |               | 2,604  |      |  |              | 7,838  |                   |  |  |      |  |  |  |  |  |  |  | 1,134  | 
|5702 Bolsa                    |  |         | 27,731  |               |  |               | 589    |      |  |              | 1,775  |                   |  |  |      |  |  |  |  |  |  |  | 87     | 
|5672 Bolsa                    |  |         | 11,968  |               |  |               | 254    |      |  |              | 767    |                   |  |  |      |  |  |  |  |  |  |  | 177    | 
|5632 Bolsa                    |  |         | 21,568  |               |  |               | 458    |      |  |              | 1,381  |                   |  |  |      |  |  |  |  |  |  |  | 41     | 
|Huntington Commerce Center    |  |         | 67,551  |               |  |               | 992    |      |  |              | 2,997  |                   |  |  |      |  |  |  |  |  |  |  | 339    | 
|Savi Tech Center              |  |         | 341,446 |               |  |               | 8,280  |      |  |              | 24,911 |                   |  |  |      |  |  |  |  |  |  |  | 3,537  | 
|Yorba Linda Business Park     |  |         | 167,142 |               |  |               | 2,629  |      |  |              | 7,913  |                   |  |  |      |  |  |  |  |  |  |  | 664    | 
|Cymer Technology Center       |  |         | 155,612 |               |  |               | 5,446  |      |  |              | 16,387 |                   |  |  |      |  |  |  |  |  |  |  | 2,498  | 
|Poway Industrial              |  |         | 112,000 |               |  |               | 1,876  |      |  |              | 5,646  |                   |  |  |      |  |  |  |  |  |  |  | 178    | 
|10180 Scripps Ranch           |  |         | 43,560  |               |  |               | 1,165  |      |  |              | 3,507  |                   |  |  |      |  |  |  |  |  |  |  | 175    | 
|Via Frontera                  |  |         | 77,920  |               |  |               | 1,792  |      |  |              | 5,391  |                   |  |  |      |  |  |  |  |  |  |  | 1,060  | 
|Westridge                     |  |         | 48,955  |               |  |               | 1,807  |      |  |              | 5,591  |                   |  |  |      |  |  |  |  |  |  |  | 693    | 
|Tower Plaza Retail            |  |         | 133,481 |               |  |               | 4,531  |      |  |              | 13,660 |                   |  |  |      |  |  |  |  |  |  |  | 181    | 
|6060 Center Drive             |  |         | 241,928 |               |  |               | 1,990  |      |  |              |       |                   |  |  | 2,303 |  |  |  |  |  |  |  | 59,623 | 
|Howard Hughes  Spectrum Club |  |         | 36,959  |               |  |               | 2,500  |      |  |              | 7,500  |                   |  |  |      |  |  |  |  |  |  |  | 36     | 
|Howard Hughes  Univision     |  |         | 161,650 |               |  |               |       |      |  |              |       |                   |  |  | 1,529 |  |  |  |  |  |  |  | 42,294 | 
|11075 Santa Monica            |  |         | 35,696  |               |  |               | 1,225  |      |  |              | 3,746  |                   |  |  |      |  |  |  |  |  |  |  | 1,475  | 
|Continental Grand Plaza       |  |         | 235,926 |               |  |               | 7,125  |      |  |              | 40,451 |                   |  |  |      |  |  |  |  |  |  |  | 4,698  | 
|Calabasas Tech                |  |         | 273,526 |               |  |               | 11,513 |      |  |              | 34,591 |                   |  |  |      |  |  |  |  |  |  |  | 4,891  | 
|Oceangate Tower               |  |         | 210,907 |               |  |               | 3,080  |      |  |              | 20,386 |                   |  |  |      |  |  |  |  |  |  |  | 2,782  | 
|Lyons Plaza                   |  |         | 61,203  |               |  |               | 2,078  |      |  |              | 6,267  |                   |  |  |      |  |  |  |  |  |  |  | 895    | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                              |  |             |        |              |  |       |        |                 |  |              |        |             |  |  |       |  |  |  |        |     |  |  |            | 
|----------------------------- |  | ----------- | ------ | ------------ |  | ----- | ------ | --------------- |  | ------------ | ------ | ----------- |  |  | ----- |  |  |  | ------ | --- |  |  | ---------- | 
|                              |  |             |        |              |  |       |        |                 |  |             
|                              |  | Total Costs |        |              |  |       |        |                 |  |             
|                              |  |             |        |              |  |       |        |                 |  |             
|                              |  |             |        | Buildings    |  |       |        |                 |  |              |        |            
|                              |  |             |        | and          |  |       |        | Accumulated     |  |              |        | Year Built/
|                              |  | Land        |        | Improvements |  | Total |        | Depreciation(1) |  | Encumbrances |        | Renovated  
|                              |  |             |        |              |  |       |        |                 |  |              |        |            
|Camarillo Business Park       |  |             | 3,522  |              |  |       | 14,212 |                 |  |              | 17,734 |             |  |  | 2,075 |  |  |  | 8,628  | (3) |  |  | 1984/97    | 
|Centrelake Plaza              |  |             | 1,570  |              |  |       | 12,567 |                 |  |              | 14,137 |             |  |  | 1,840 |  |  |  |       |     |  |  | 1989       | 
|Chicago Avenue Business Park  |  |             | 1,223  |              |  |       | 4,140  |                 |  |              | 5,363  |             |  |  | 510   |  |  |  |       |     |  |  | 1986       | 
|Havengate Center              |  |             | 1,913  |              |  |       | 8,048  |                 |  |              | 9,961  |             |  |  | 1,007 |  |  |  |       |     |  |  | 1985       | 
|HDS Plaza                     |  |             | 2,604  |              |  |       | 8,972  |                 |  |              | 11,576 |             |  |  | 1,147 |  |  |  |       |     |  |  | 1987       | 
|5702 Bolsa                    |  |             | 589    |              |  |       | 1,862  |                 |  |              | 2,451  |             |  |  | 199   |  |  |  | 941    | (3) |  |  | 1987/97    | 
|5672 Bolsa                    |  |             | 254    |              |  |       | 944    |                 |  |              | 1,198  |             |  |  | 152   |  |  |  | 330    | (3) |  |  | 1987       | 
|5632 Bolsa                    |  |             | 458    |              |  |       | 1,422  |                 |  |              | 1,880  |             |  |  | 150   |  |  |  | 845    | (3) |  |  | 1987       | 
|Huntington Commerce Center    |  |             | 992    |              |  |       | 3,336  |                 |  |              | 4,328  |             |  |  | 413   |  |  |  | 1,555  | (3) |  |  | 1987       | 
|Savi Tech Center              |  |             | 8,280  |              |  |       | 28,448 |                 |  |              | 36,728 |             |  |  | 3,045 |  |  |  | 14,728 | (3) |  |  | 1989       | 
|Yorba Linda Business Park     |  |             | 2,629  |              |  |       | 8,577  |                 |  |              | 11,206 |             |  |  | 1,004 |  |  |  | 4,170  | (3) |  |  | 1988       | 
|Cymer Technology Center       |  |             | 5,446  |              |  |       | 18,885 |                 |  |              | 24,331 |             |  |  | 1,810 |  |  |  | 10,918 | (3) |  |  | 1986       | 
|Poway Industrial              |  |             | 1,876  |              |  |       | 5,824  |                 |  |              | 7,700  |             |  |  | 614   |  |  |  | 3,492  | (3) |  |  | 1991/96    | 
|10180 Scripps Ranch           |  |             | 1,165  |              |  |       | 3,682  |                 |  |              | 4,847  |             |  |  | 386   |  |  |  | 1,997  | (3) |  |  | 1978/96    | 
|Via Frontera                  |  |             | 1,792  |              |  |       | 6,451  |                 |  |              | 8,243  |             |  |  | 894   |  |  |  | 2,875  | (3) |  |  | 1982/97    | 
|Westridge                     |  |             | 1,807  |              |  |       | 6,284  |                 |  |              | 8,091  |             |  |  | 740   |  |  |  | 2,972  | (3) |  |  | 1984/96    | 
|Tower Plaza Retail            |  |             | 4,531  |              |  |       | 13,841 |                 |  |              | 18,372 |             |  |  | 1,638 |  |  |  |       |     |  |  | 1970/97    | 
|6060 Center Drive             |  |             | 4,293  |              |  |       | 59,623 |                 |  |              | 63,916 |             |  |  | 2,043 |  |  |  |       |     |  |  | 2000       | 
|Howard Hughes  Spectrum Club |  |             | 2,500  |              |  |       | 7,536  |                 |  |              | 10,036 |             |  |  | 713   |  |  |  |       |     |  |  | 1993       | 
|Howard Hughes  Univision     |  |             | 1,529  |              |  |       | 42,294 |                 |  |              | 43,823 |             |  |  | 185   |  |  |  |       |     |  |  | 2001       | 
|11075 Santa Monica            |  |             | 1,225  |              |  |       | 5,221  |                 |  |              | 6,446  |             |  |  | 689   |  |  |  |       |     |  |  | 1983       | 
|Continental Grand Plaza       |  |             | 7,125  |              |  |       | 45,149 |                 |  |              | 52,274 |             |  |  | 5,330 |  |  |  | 27,707 | (3) |  |  | 1986       | 
|Calabasas Tech                |  |             | 11,513 |              |  |       | 39,482 |                 |  |              | 50,995 |             |  |  | 4,460 |  |  |  |       |     |  |  | 1990       | 
|Oceangate Tower               |  |             | 3,080  |              |  |       | 23,168 |                 |  |              | 26,248 |             |  |  | 2,796 |  |  |  |       |     |  |  | 1971/93/94 | 
|Lyons Plaza                   |  |             | 2,078  |              |  |       | 7,162  |                 |  |              | 9,240  |             |  |  | 802   |  |  |  |       |     |  |  | 1990       | 

F-22



---



##### Table of Contents



|                           |  |         |            |               |  |               |         |      |  |              |           |                   |  |   |       |  |  |   |       |  |  |   |         | 
|-------------------------- |  | ------- | ---------- | ------------- |  | ------------- | ------- | ---- |  | ------------ | --------- | ----------------- |  | - | ----- |  |  | - | ----- |  |  | - | ------- | 
|                           |  |         |            |               |  |               |         |     
|                           |  |         |            | Initial Costs |  | Basis Step Up |         |     
|                           |  |         |            |               |  |               |         |     
|                           |  |         |            |               |  | Buildings     |         |      |  | Buildings    |           | Costs Capitalized
|                           |  | Square  |            |               |  | and           |         |      |  | and          |           | Subsequent to    
|                           |  | Footage |            | Land          |  | Improvements  |         | Land |  | Improvements |           | Acquisition(2)   
|                           |  |         |            |               |  |               |         |      |  |              |           |                  
|Genesee Executive Plaza    |  |         | 155,820    |               |  |               | 6,750   |      |  |              | 20,178    |                   |  |   |      |  |  |   |      |  |  |   | 3,089   | 
|Solar Business Center      |  |         | 125,132    |               |  |               | 4,250   |      |  |              | 12,770    |                   |  |   |      |  |  |   |      |  |  |   | 1,088   | 
|91 Freeway Center          |  |         | 93,277     |               |  |               | 2,900   |      |  |              | 9,179     |                   |  |   |      |  |  |   |      |  |  |   | 1,319   | 
|601 S. Glenoaks            |  |         | 72,524     |               |  |               | 2,450   |      |  |              | 7,519     |                   |  |   |      |  |  |   |      |  |  |   | 523     | 
|Tourney Pointe             |  |         | 219,991    |               |  |               | 6,047   |      |  |              | 21,334    |                   |  |   |      |  |  |   |      |  |  |   | 9,026   | 
|Mini Suites                |  |         |           |               |  |               |        |      |  |              |          |                   |  |   |      |  |  |   |      |  |  |   | 353     | 
|Hillside Corporate Center  |  |         | 59,876     |               |  |               | 2,213   |      |  |              | 7,336     |                   |  |   |      |  |  |   |      |  |  |   | 2,069   | 
|Westlake Gardens II        |  |         | 48,874     |               |  |               | 1,832   |      |  |              | 5,493     |                   |  |   |      |  |  |   |      |  |  |   | 1,887   | 
|Howard Hughes Tower        |  |         | 313,833    |               |  |               | 5,830   |      |  |              | 47,170    |                   |  |   |      |  |  |   |      |  |  |   | 5,882   | 
|2001 Wilshire Blvd         |  |         | 101,125    |               |  |               | 5,007   |      |  |              | 14,893    |                   |  |   |      |  |  |   |      |  |  |   | 645     | 
|Howard Hughes Hotel Parcel |  |         |           |               |  |               | 1,663   |      |  |              |          |                   |  |   |      |  |  |   |      |  |  |   | 1,402   | 
|                           |  |         |            |               |  |               |         |      |  |              |           |                   |  |   |       |  |  |   |       |  |  |   |         | 
|                           |  |         | 18,246,900 |               |  | $             | 467,892 |      |  | $            | 1,738,599 |                   |  | $ | 5,448 |  |  | $ | 8,607 |  |  | $ | 576,506 | 
|                           |  |         |            |               |  |               |         |      |  |              |           |                   |  |   |       |  |  |   |       |  |  |   |         | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                           |  |             |         |              |  |       |           |                 |  |              |           |             |  |   |         |  |  |   |         |     |  |  |              | 
|-------------------------- |  | ----------- | ------- | ------------ |  | ----- | --------- | --------------- |  | ------------ | --------- | ----------- |  | - | ------- |  |  | - | ------- | --- |  |  | ------------ | 
|                           |  |             |         |              |  |       |           |                 |  |             
|                           |  | Total Costs |         |              |  |       |           |                 |  |             
|                           |  |             |         |              |  |       |           |                 |  |             
|                           |  |             |         | Buildings    |  |       |           |                 |  |              |           |            
|                           |  |             |         | and          |  |       |           | Accumulated     |  |              |           | Year Built/
|                           |  | Land        |         | Improvements |  | Total |           | Depreciation(1) |  | Encumbrances |           | Renovated  
|                           |  |             |         |              |  |       |           |                 |  |              |           |            
|Genesee Executive Plaza    |  |             | 6,750   |              |  |       | 23,267    |                 |  |              | 30,017    |             |  |   | 2,848   |  |  |   | 16,945  | (3) |  |  | 1984         | 
|Solar Business Center      |  |             | 4,250   |              |  |       | 13,858    |                 |  |              | 18,108    |             |  |   | 1,523   |  |  |   |        |     |  |  | 1982         | 
|91 Freeway Center          |  |             | 2,900   |              |  |       | 10,498    |                 |  |              | 13,398    |             |  |   | 1,179   |  |  |   |        |     |  |  | 1986/97      | 
|601 S. Glenoaks            |  |             | 2,450   |              |  |       | 8,042     |                 |  |              | 10,492    |             |  |   | 748     |  |  |   | 5,896   | (3) |  |  | 1990         | 
|Tourney Pointe             |  |             | 6,047   |              |  |       | 30,360    |                 |  |              | 36,407    |             |  |   | 2,219   |  |  |   |        |     |  |  | 1985/98/2000 | 
|Mini Suites                |  |             |        |              |  |       | 353       |                 |  |              | 353       |             |  |   | 96      |  |  |   |        |     |  |  | N/A          | 
|Hillside Corporate Center  |  |             | 2,213   |              |  |       | 9,405     |                 |  |              | 11,618    |             |  |   | 830     |  |  |   |        |     |  |  | 1998         | 
|Westlake Gardens II        |  |             | 1,832   |              |  |       | 7,380     |                 |  |              | 9,212     |             |  |   | 740     |  |  |   |        |     |  |  | 1999         | 
|Howard Hughes Tower        |  |             | 5,830   |              |  |       | 53,052    |                 |  |              | 58,882    |             |  |   | 4,594   |  |  |   |        |     |  |  | 1987         | 
|2001 Wilshire Blvd         |  |             | 5,007   |              |  |       | 15,538    |                 |  |              | 20,545    |             |  |   | 1,011   |  |  |   |        |     |  |  | 1980         | 
|Howard Hughes Hotel Parcel |  |             | 1,663   |              |  |       | 1,402     |                 |  |              | 3,065     |             |  |   |        |  |  |   |        |     |  |  |              | 
|                           |  |             |         |              |  |       |           |                 |  |              |           |             |  |   |         |  |  |   |         |     |  |  |              | 
|                           |  | $           | 473,340 |              |  | $     | 2,323,712 |                 |  | $            | 2,797,052 |             |  | $ | 307,082 |  |  | $ | 573,452 |     |  |  |              | 
|                           |  |             |         |              |  |       |           |                 |  |              |           |             |  |   |         |  |  |   |         |     |  |  |              | 



---



|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The depreciable life for buildings and
	improvements ranges from ten 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
	$45.6 million.                                                                     
|   
|(3) | All of these properties are collateral for our
	$554.6 million mortgage financings. The encumbrance
	allocated to an individual property is based on the related
	individual release price.

F-23



---



##### Table of Contents






ARDEN REALTY, INC.

16. Schedule of Commercial Properties and
Accumulated Depreciation

The changes in our investment in commercial
properties and related accumulated depreciation for each of the
periods in the three years ended December 31, are as
follows (in thousands):

|                          |                                                  |                                 |   |           |   |      |   |           |   |  |   |           |  
|------------------------- | ------------------------------------------------ | ------------------------------- | - | --------- | - | ---- | - | --------- | - |  | - | --------- | -
|                          |                                                  |                                
|                          |                                                  | Arden Realty, Inc.             
|                          |                                                  |                                
|                          |                                                  |                                
|                          |                                                  | For the Years Ended December 31
|                          |                                                  |                                
|                          |                                                  | 2001                            |   | 2000      |   | 1999
|                          |                                                  |                                 |   |           |   |     
|Commercial Properties:    |                                                  |                                 |   |           |   |      |   |           |   |  |   |          
|                          | Balance at beginning of period                   |                                 | $ | 2,741,681 |   |      | $ | 2,453,370 |   |  | $ | 2,198,580 |  
|                          | Improvements                                     |                                 |   | 78,580    |   |      |   | 159,163   |   |  |   | 122,127   |  
|                          | Disposition of property                          |                                 |   | (44,773   | ) |      |   | (10,078   | ) |  |   |          |  
|                          | Write offs of fully depreciated assets           |                                 |   | (21,412   | ) |      |   | (13,723   | ) |  |   | (591      | )
|                          | Acquisition of properties                        |                                 |   |          |   |      |   |          |   |  |   | 89,800    |  
|                          | Transfers from (to) properties under development |                                 |   | 42,976    |   |      |   | 152,949   |   |  |   | 43,454    |  
|                          |                                                  |                                 |   |           |   |      |   |           |   |  |   |          
|                          | Balance at end of period                         |                                 | $ | 2,797,052 |   |      | $ | 2,741,681 |   |  | $ | 2,453,370 |  
|                          |                                                  |                                 |   |           |   |      |   |           |   |  |   |          
|Accumulated Depreciation: |                                                  |                                 |   |           |   |      |   |           |   |  |   |          
|                          | Balance at beginning of period                   |                                 | $ | (231,499  | ) |      | $ | (157,608  | ) |  | $ | (88,863   | )
|                          | Depreciation for period                          |                                 |   | (100,789  | ) |      |   | (87,126   | ) |  |   | (68,203   | )
|                          | Disposition of property                          |                                 |   | 3,794     |   |      |   | 531       |   |  |   |          |  
|                          | Write offs of fully depreciated assets           |                                 |   | 21,412    |   |      |   | 13,723    |   |  |   | 591       |  
|                          | Transfers to (from) properties under development |                                 |   |          |   |      |   | (1,019    | ) |  |   | (1,133    | )
|                          |                                                  |                                 |   |           |   |      |   |           |   |  |   |          
|                          | Balance at end of period                         |                                 | $ | (307,082  | ) |      | $ | (231,499  | ) |  | $ | (157,608  | )
|                          |                                                  |                                 |   |           |   |      |   |           |   |  |   |          

F-24